The soon-to-be-local Ave Maria School of Law was one of 114 private colleges nationwide to fail a federal financial responsibility test this year, according to a report last week in a national higher education newspaper.I know what will correct this "low asset-to-debt ratio": financial independence. Think back 2 1/2 years ago and recall the infamous "Falvey Report." The report indicated that AMSL's original financial plan submitted to the ABA in Fall 2004 projected financial independence from Monaghan and the Ave Maria Foundation by 2009. The Falvey Report called on the school to return to this plan for financial independence. But Monaghan/Dobranski/the BOG rejected the Falvey Report and since that time, has never seriously tried to become financially independent. Why?
But the law school said its inclusion on a U.S. Department of Education list of schools with low financial ratings, "represents no change in our fiscal health and should not be cause for concern."
The report, in the Chronicle of Higher Education, lists the Ave Maria School of Law as the sixth worst in the country based on the department's metrics of financial responsibility. Ave Maria is also the only law school on the list.
Ave Maria reported a $2.9 million deficit in its most recent audit, which covered the year ending June 30, 2008.
In a statement about the Chronicle report, the 10-year-old law school said its low asset-to-debt ratio was "typical of recently founded institutions."
The Naples News has also published AMSL's official statement in response to the news about failing the financial report. Here is the first part of AMSL's statement:
The Chronicle of Higher Education recently included Ave Maria School of Law on a list of schools and colleges scoring low on a Department of Education financial strength test. This represents no change in our fiscal health and should not be cause for concern. Typical of recently founded institutions (we have graduated only seven classes), Ave Maria School of Law has a low asset-to-debt ratio. We fully anticipate that this situation will reverse itself over time, as we increase net tuition revenue and build endowment.This plan to build an endowment is news to me. Wouldn't that involve financial independence from Monaghan? Is there a current plan for an endowment that I'm not aware of? I've always been under the impression that the official position of AMSL was that developing an endowment was something to be done well in the future and not possible at the moment with such a small donor base. It doesn't seem that AMSL is putting money away in an endowment fund. Isn't it the case that every year, AMSL cannot save any money, operates at a significant deficit, and Monaghan covers the shortfall?
The Naples News article also had some more information on Cooley Law School's take-over of the AMSL-Michigan law school building:
Cooley President and Dean Don LeDuc said Cooley and Ave Maria agreed to a three-year lease for Cooley to use the facility with an option to purchase. Ave Maria's last audit valued the facility at $16.5 million.Naples News, thank you, and keep up the good investigative reporting!