Purdue University Global Loses $21 million in Second Full Year

One of the biggest stories in postsecondary online education before the pandemic was the partnership between Purdue University and Kaplan University, where KU was transferred to Purdue and rebranded as Purdue University Global under a 30-year contract. The high-profile move, announced in March 2017 and finalized in April 2018, converted the 30k+ university from a for-profit into a public nonprofit under the Purdue brand while turning Kaplan Higher Education into a single-client Online Program Management (OPM) vendor, which has since inspired other instances of what I called instant global campus movement.

Last year I reported that Purdue Global lost $43 million, which a Purdue spokesperson attributed to “a deliberate one-time, $28.5 million marketing investment” and that for “FY20, we have every expectation that Purdue Global will generate an operating surplus.”

We finally have the Purdue University Financial Report for the period ending June 30, 2020, and it appears that despite improvements in enrollment and retention at Purdue Global, the school did not generate an operating surplus. While the numbers were better than last year’s, Purdue Global lost $21 million in its second full year of operations.

Financial Report

The July 1, 2019 through June 30, 2020 statement of activities (p. 84) shows the revenue and losses. Due to accounting rules that govern how higher education institutions report their financials, the key numbers are in the Decrease in Net Position line.

This is the bare minimum of reporting – remember that Purdue University staff crafted a last-minute bill in the Indiana legislature that exempts Purdue Global from public records laws and public accounting of finances – so we cannot draw too many conclusions from this statement. Last year I obtained the operating budget, and without this year’s version it will be difficult to see where the money went.

The financial report had one other table, showing the statement of cash flows. In this statement, there is a remarkable change from last year. The Cash Used by Operating Activities amount changed from $114 million in FY2019 to just $51 million in FY2020. I have no idea (yet) what could account for that change, but it is the primary reason that Purdue Global’s Cash and Cash Equivalents has improved from $45 million to $77 million this year.

Total Revenue Down

Last year I obtained the Purdue Global budget, which at the time forecast FY2020 total revenues to increase from $396 to $412 million. Looking at the numbers above (combining Operating Revenues and Non Operating Revenues), Purdue Global ended up with lower revenues, decreasing to $389 million.

Changes in Transparency and Enrollments

The Purdue University Board of Trustees used to post meeting materials on their web page, and President Mitch Daniels also used to list his presentations for the board. Used to. As of 2020, the Board meetings materials and meeting minutes are no longer publicly available, and President Daniels’ presentation page has not updated since Aug 2019, and the links to past presentations no longer work. This is a public university that seems to be going out of its way to prevent public scrutiny of its operations.

Despite the reduction in revenue, however, it appears that Purdue Global has been able to improve its enrollments, increasing from 29,500 last year to 31,500 this year. Graham Holdings (the parent company of Kaplan Higher Education) also reported improvements based on its Q32020 earnings:

Keep in mind that the financials only factor in roughly three months of the Covid pandemic and its associated increases in demand for primarily online universities. We’ll have to wait for more information before diving any deeper, but for now it is safe to say that Purdue Global is improving enrollments and net financial performance, but it is still decreasing in revenue and losing money to the tune of $21 million per year as of Summer 2020. And there is a major, unexplained change in its cash position.

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