The University of San Francisco is facing a serious financial test, but its public records do not describe an institution on the verge of closing. Its audited statements show substantial assets, meaningful endowment resources, and access to credit. They also show pressure where it matters most: enrollment has fallen, net tuition is under strain, and core operations have required difficult changes.
USF’s public records show a university with resources and options, but the central governance question is whether borrowing and reductions will buy time for durable operating repair while protecting educational quality and equitable student access.
This analysis is written for students, faculty, staff, alumni, donors, families, and community partners who want to understand the numbers without needing a finance degree. The problem it addresses is simple: public discussion can blur audited results, budget assumptions, projections, and analysis into one alarming headline. Those categories need to be separated.
MFFCE Staff reviewed the available public records through an education, economic empowerment, equity, and community-accountability lens. MFFCE’s broader approach to research and impact treats data as a tool for public understanding, not a substitute for community voice. [6]
By the end, readers will understand:
- What USF’s audited financial statements actually show.
- Why the $50 million figure refers to several different financial concepts.
- Which questions trustees and stakeholders should monitor as the recovery plan unfolds.
The question behind the $50 million
The phrase “$50 million” sounds like one hole that must be filled. It is not. USF’s records contain several figures near that size, but they describe different things.
The audited statements report net cash used in operating activities of $31.687 million in fiscal year 2024 and $15.584 million in fiscal year 2025. Added together, those figures equal $47.271 million, but they should not be described as one cumulative operating loss. They are annual cash-flow measures, and cash flow is not the same thing as change in net assets or annual deficit. (USF FY2025 audited financial statements) [1]
The three-year financial plan separately describes approximately $50 million to $60 million in base budget reductions over fiscal years 2027 and 2028. That is a planned restructuring program. It is not cash already lost.
Finally, the plan anticipates increasing the current line of credit from $25 million to $50 million as a bridge for structural changes and continued cost-saving work. That is borrowing capacity, not revenue and not savings. (USF Three-Year Financial Plan and FY2027 Budget) [2]
The distinction matters because precision produces better accountability. Fear is loud. Financial literacy is more useful.
What the audited statements actually show
USF’s independent auditors issued an unmodified opinion dated October 24, 2025. In plain language, the auditors concluded that the consolidated financial statements fairly present the university’s financial position, activities, and cash flows in accordance with generally accepted accounting principles. That is a meaningful strength, although an audit opinion does not guarantee that the university’s future budget assumptions will succeed. [1]
At May 31, 2025, USF reported:
- Total assets of $1.399 billion.
- Total liabilities of $392.294 million.
- Net assets of $1.007 billion.
- Unrestricted net assets of $493.497 million.
- Donor-restricted net assets of $513.685 million.
- Bonds payable, net, of $235.942 million.
- Notes payable, net, of $63.385 million.
Bonds and notes together totaled $299.327 million. USF also reported $84.315 million in financial assets available to meet general expenditure needs within one year. The university had a $25 million line of credit available at year end, with no outstanding loans associated with that agreement on May 31, 2025. The audit later disclosed that USF drew $20 million in June 2025 for general operations and repaid it in August 2025. [1]
That combination tells a more complicated story than either “USF is fine” or “USF is collapsing.” The university had assets and financing options. It also needed short-term borrowing for general operations after the audited year ended.
Enrollment fell faster than budgeted staff positions
USF’s staff-position audit provides a useful planning comparison. It is not a complete workforce census. It measures unrestricted budgeted staff positions in full-time equivalents, or FTEs, and its vacant-position calculations use a specified budget floor. Still, it offers a consistent view of institutional scale. (USF FY2026 Staff Position Audit) [3]
In fall 2017, USF reported 11,080 students and 1,026 unrestricted staff FTEs. In fall 2025, it reported 8,796 students and 916 staff FTEs. That represents an approximate 20.6% decline in student headcount and a 10.7% decline in staff FTEs. The student-headcount-to-staff-FTE ratio moved from 10.8 to 9.6. [3]
These numbers do not prove that staffing is excessive or that reductions have been mishandled. Universities carry fixed costs that do not shrink in direct proportion to enrollment. Public safety, facilities, technology, compliance, accreditation, financial aid administration, and academic infrastructure still require capacity.
But the figures do establish a scale problem. When enrollment changes substantially, leaders must explain how the institution’s staffing model, academic portfolio, student services, and physical footprint fit the university that exists now. The right question is not the tired slogan of “administrative bloat.” The better question is whether every unit has been redesigned for today’s USF while preserving the work students actually depend on.
Financial aid protects access and increases pressure
Financial aid sits at the center of USF’s mission and its financial challenge. It helps students attend who might otherwise be priced out. It also reduces the amount of tuition revenue the university retains.
The audited statements report financial aid to students of $156.019 million in fiscal 2025 and $157.901 million in fiscal 2024. In fiscal 2025, reported tuition and fees before financial aid were $430.569 million, while net tuition and fees were $274.550 million. [1]
USF’s FY2027 budget projects an unrestricted financial aid budget of $163.9 million, an increase of $21.9 million, or 15.4%, from the FY2026 Board budget. The plan reports an unfunded discount rate of 37.1%, a total discount rate of 37.6%, an undergraduate total rate of 45.8%, and a graduate total rate of 16.7%. At the same time, FY2027 net tuition is budgeted at $277.8 million, down $8.1 million, or 2.8%, from the FY2026 Board budget. [2]
This does not make financial aid the enemy. That framing is both inaccurate and unhelpful. Access is part of educational quality.
It does mean trustees need stronger evidence about which aid strategies improve enrollment, retention, graduation, and net tuition contribution. A public scorecard should show results by student cohort, including income, race and ethnicity, first-generation status, program, geography, and academic preparation. USF cannot protect access by ignoring sustainability, and it cannot achieve sustainability by treating access as a line item with no human consequences.
Debt and liquidity are tools, not solutions
The audited statements report bonds and notes totaling $299.327 million at May 31, 2025. They also disclose that USF received waivers for certain long-term debt covenants at year end and had satisfied creditor requirements. Moody’s Ratings downgraded USF to Baa3 with a stable outlook on August 3, 2026. Baa3 is Moody’s lowest investment-grade category. The stable outlook offers some near-term reassurance, but the downgrade remains an external signal of credit pressure and should be read alongside USF’s operating deficits, enrollment decline, liquidity needs, and recovery plan. [5] The university’s finance page states that all borrowings require Board of Trustees approval and that the Finance and Treasury office manages bonds, bank credit facilities, and working-capital lines of credit. [4]
USF’s three-year plan anticipates increasing its current line of credit from $25 million to $50 million. The plan describes that financing as a bridge for structural changes and continued cost savings during fiscal years 2027 and 2028. [2]
A bridge can be sensible. Large organizations often need working capital while savings take effect, contracts change, positions turn over, and enrollment initiatives develop. But a credit line does not repair an operating model. It buys time. Time is valuable only if the institution uses it to produce recurring improvement.
Trustees should attach clear conditions to expanded borrowing:
- A rolling 24-month cash forecast.
- Minimum liquidity thresholds.
- Limits on draw size and duration.
- Regular covenant and debt reporting.
- A named repayment source.
- A downside scenario based on enrollment remaining near current levels.
Endowment resources are not one open checking account
USF reported endowment funds totaling $587.849 million at May 31, 2025. Of that amount, $449.511 million was donor-restricted and $138.338 million was Board-designated. The audited statements report a 4.5% spending policy based on a three-year moving average. In fiscal 2025, endowment appropriation for expenditure totaled $22.619 million, including $5.674 million from Board-designated funds and $16.945 million from donor-restricted funds. [1]
Those figures are related, but they are not interchangeable.
Donor-restricted principal must be used consistently with donor intent and the Uniform Prudent Management of Institutional Funds Act. Board-designated funds are classified without donor restrictions and offer the Board more discretion, although trustees still have fiduciary duties to current and future students.
Liquidity also matters. Some investments can be converted to cash quickly. Others cannot. The audit reports that USF’s investment portfolio includes private capital and real asset funds that cannot be redeemed on demand. [1]
A limited use of Board-designated funds might be defensible for finite restructuring costs, debt retirement, or initiatives with measurable returns. Repeatedly using endowment resources to cover annual operating losses would be different. It could weaken future financial aid and academic capacity while avoiding the central issue: recurring expenses must align with recurring revenue.
The recovery plan depends on execution
The March 27, 2026 financial plan projects FY2027 operating revenue of $507.3 million and expenses of $541.6 million. That produces a projected operating gap of approximately $34.3 million. The plan includes $25 million in FY2027 base budget savings and projects an additional $25 million in FY2028 within a stated range of $25 million to $30 million. [2]
The plan identifies $15.2 million in FY2027 compensation-related savings. Academic Affairs accounts for $11.82 million, or 47.3%, of the $25 million division-savings target. The plan also states that FY2027 compensation represents 45.8% of budgeted expenses and that total university reserves are budgeted at $18.4 million, or 3.4% of the $541.6 million expense budget. These are budget figures, not audited outcomes. [2]
Enrollment is central to the plan. USF projects headcount of 8,880 for fall 2026 and 10,362 by fall 2029 in the Strategic Enrollment Management section. The plan itself makes clear that projections are not outcomes and that FY2028 and FY2029 budgets remain under development. Market volatility also affects investment-return projections. [2]
A serious recovery plan needs early warning points for deposits, first-year yield, transfers, graduate starts, retention, discount rates, and net tuition per student. If the university misses those markers, trustees should know in advance which actions follow.
Case example: the School of Management
The School of Management illustrates both the potential and the cost of restructuring. According to its FY2027 plan section, graduate enrollment fell from 732 students in fall 2015 to 411 in fall 2025, while undergraduate enrollment fell from 2,291 to 994. The school attributes much of that decline to a collapse in international enrollment. These are statements presented in USF’s plan, not independently audited MFFCE findings. [2]
The school responded by redesigning its undergraduate business core from 52 units to 40, launching an accelerated dual BS/MS program, sunsetting four graduate programs, launching three online programs and a Master in Management in Business Tech, and redesigning most remaining programs.
It also reduced full-time faculty from 86 to 47 and professional staff from 72 to 37 between FY2016 and FY2026, primarily through retirements and vacant lines being left unfilled. The plan reports that the school avoided layoffs and non-renewals during the FY2027 savings process. It also describes expanded partnerships, diversified revenue, and recognition from an AACSB peer-review team.
The tradeoff is blunt. A leaner organization may become more focused, but it may also have less room to sustain advising, experiential learning, research, and faculty development. The School of Management’s own plan says FY2028 will present harder choices and warns that further cuts could increase burnout and jeopardize program delivery. That is precisely why restructuring should be judged by both financial results and mission outcomes. [2]
What Smart Critics Argue
Criticism: Financial aid may be too generous for sustainability.
The concern is valid. The plan projects a 37.1% unfunded discount rate and declining net tuition, even as financial aid grows. The response should not be to defend every discount automatically. Trustees should publish cohort-level evidence showing which aid awards improve enrollment, retention, completion, and net tuition contribution. [2]
Criticism: Reductions may damage educational quality.
That risk is real. The plan attributes $11.82 million in savings to Academic Affairs and describes school-level faculty, staff, library, and Student Life pressures. The response should require educational and equity impact statements that track course access, advising loads, class size, academic progress, student employment, and support for students with greater financial need. [2]
Criticism: Borrowing only delays the problem.
Borrowing can delay a problem if it funds recurring losses without repayment conditions. It can also provide useful transition capital when a credible restructuring is underway. The difference is governance: borrowing should be tied to cash forecasts, enrollment triggers, liquidity minimums, and a documented repayment plan. [2] [4]
Criticism: Endowment resources may be restricted or illiquid.
Correct. Donor-restricted funds must follow donor intent, and some investments cannot be redeemed on demand. Board-designated funds are more flexible, but they are not cost-free. Trustees should compare borrowing with any endowment draw using the same assumptions about liquidity, returns, debt costs, and mission protection. [1]
Criticism: Enrollment projections may be very optimistic.
That is also fair. USF projects growth from 8,880 students in fall 2026 to 10,362 by fall 2029, but projections depend on yield, retention, aid strategy, market conditions, and program demand. The response is not cynicism. It is scenario planning, with predetermined actions for downside, base, and upside cases. [2]
What accountable governance should require
USF’s future should not be judged by one budget year or one headline number. The relevant test is whether recurring revenue and recurring expenses move toward durable balance without hollowing out the education students are paying for.
Trustees and stakeholders should ask for:
- Monthly cash reporting across a rolling 24-month horizon.
- Scenario-based enrollment triggers tied to management action.
- Net tuition and financial-aid performance by student cohort.
- Program contribution margins paired with mission outcomes.
- Equity and educational impact statements for major reductions.
- A clear borrowing and endowment comparison showing cost, liquidity, restrictions, risk, and repayment.
This is the same basic principle that guides MFFCE’s education work: access and quality belong in the same conversation. [7] A balanced budget that weakens advising, faculty capacity, student employment, or academic support may look better on paper while creating new problems for students and families.
Timeline of the financial test
| Milestone | What the record shows | |
|---|---|---|
| Fall 2017 | USF reported 11,080 students and 1,026 unrestricted staff FTEs. [3] | |
| Fall 2024 | USF reported 8,913 students and 950 unrestricted staff FTEs. [3] | |
| May 31, 2024 | Audited statements reported net cash used in operating activities of $31.687 million. [1] | |
| May 31, 2025 | Audited year-end showed $1.399 billion in assets, $392.294 million in liabilities, and $299.327 million in bonds and notes payable. [1] | |
| October 24, 2025 | Independent auditors dated the unmodified audit opinion. [1] | |
| Fall 2025 | USF reported 8,796 students, including 40.9% first-generation students in the plan’s institutional snapshot. [2] | |
| March 9, 2026 | The staff-position audit measured 915.68 unrestricted budgeted staff FTEs. [3] | |
| March 27, 2026 | USF issued its three-year financial plan and FY2027 budget. [2] | |
| FY2027 | The plan budgets $507.3 million in operating revenue, $541.6 million in expenses, and $25 million in base savings. [2] | |
| August 3, 2026 | Moody’s rating action | Moody’s downgraded USF to Baa3 with a stable outlook. [5] |
Public accountability schedule
Completed
- May 31, 2025: Audited financial year-end. [1]
- October 24, 2025: Audit report date. [1]
- March 9, 2026: Staff-position audit data date. [3]
- March 27, 2026: Three-year financial plan date. [2]
- August 3, 2026: Moody’s downgraded USF to Baa3 with a stable outlook. [5]
Ongoing monitoring
- FY2027: Track budget performance, cash, aid, net tuition, enrollment, and savings against plan. [2]
- FY2028 and FY2029: Review developing budgets, additional reductions, enrollment outcomes, borrowing, and academic impact. [2]
Key Takeaways
- USF’s audited statements show financial pressure, not a verified prediction of closure. [1]
- The $47.271 million total from two annual cash-flow figures is not one cumulative operating loss. [1]
- The $50 million to $60 million figure refers to planned base budget reductions across two years. [2]
- The proposed increase from a $25 million to a $50 million credit line is borrowing capacity, not savings. [2]
- Enrollment declined faster than unrestricted budgeted staff FTEs between fall 2017 and fall 2025. [3]
- Financial aid supports access but also affects net tuition and operating sustainability. [1] [2]
- Endowment market value, donor-restricted funds, Board-designated funds, and annual appropriations are different categories. [1]
- School and division restructuring may produce efficiencies, but the educational effects must be measured. [2]
- Enrollment projections must be tested against actual deposits, yield, retention, discount rates, and net tuition. [2]
- Moody’s downgraded USF to Baa3 with a stable outlook on August 3, 2026. [5]
- Borrowed time is useful only if it produces durable operating repair. [2] [4]
Six actions stakeholders can take
- Students: Ask student government and university leaders for a public scorecard showing enrollment, retention, financial aid, advising capacity, course access, and student employment.
- Faculty and staff: Request equity and educational impact statements before major reductions, including effects on workload, class size, advising, accessibility, and student support.
- Alumni: Ask for net tuition and financial-aid performance by cohort, rather than relying only on total aid awarded.
- Donors: Ask whether proposed gifts support durable academic capacity, current access, finite restructuring, or recurring operating costs.
- Trustees: Require monthly cash reporting, downside enrollment triggers, minimum liquidity thresholds, and a clear comparison of borrowing with any Board-designated endowment use.
- Community partners: Request program contribution margins alongside mission outcomes so financial performance is evaluated with student access, completion, workforce preparation, and community benefit.
Frequently Asked Questions
Does the audit show that USF is insolvent?
No. The audit reports substantial assets, net assets, investments, and access to credit. It also reports net cash used in operating activities and debt obligations. Those facts show pressure, not insolvency. [1]
Is the $50 million figure a deficit?
No. The phrase refers to several different figures. USF’s plan describes approximately $50 million to $60 million in planned base budget reductions over two years and a possible increase in credit-line capacity from $25 million to $50 million. [2]
Why does financial aid create financial pressure?
Financial aid expands access but reduces the tuition revenue the university retains. The responsible question is not whether aid is good or bad. It is which aid strategies produce strong enrollment, persistence, completion, and net tuition results. [1] [2]
Can USF use its endowment to solve the problem?
Some endowment funds are donor-restricted, while Board-designated funds are more flexible. Investment liquidity also varies. Any use should be limited, transparent, and compared with borrowing and long-term mission costs. [1]
Are the enrollment projections guaranteed?
No. The plan identifies projected headcount of 8,880 for fall 2026 and 10,362 by fall 2029. Those are generous planning assumptions, not outcomes. [2]
What should the Board monitor first?
The Board should monitor monthly cash, enrollment yield, retention, financial-aid performance, net tuition, debt and covenant status, savings realization, and the educational effects of reductions together. A single metric will not tell the whole story. [1] [2] [4]
What does the Moody’s downgrade mean?
It means Moody’s still considers USF investment grade, but at the lowest investment-grade category, Baa3. The action signals credit pressure and heightened risk, not proof of insolvency. [5]
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Sources
[1] University of San Francisco, “Report of Independent Auditors and Consolidated Financial Statements, May 31, 2025 and 2024,” University of San Francisco, October 24, 2025, https://myusf.usfca.edu/sites/default/files/USF-Audited-Financial-Statements-FY25.pdf, Accessed September 5, 2026.
[2] University of San Francisco, “Three-Year Financial Plan and FY2027 Budget,” University of San Francisco, March 27, 2026, https://myusf.usfca.edu/sites/default/files/users/harrington/Three-Year%20Financial%20Plan%20UBAC.pdf, Accessed September 5, 2026.
[3] University of San Francisco, “Fiscal Year 2026 Staff Position Audit,” University of San Francisco, March 9, 2026, https://myusf.usfca.edu/sites/default/files/users/harrington/FY26%20Staff%20Pos%20Audit%20Report.pdf, Accessed September 5, 2026.
[4] University of San Francisco, “Financing and Debt Management,” University of San Francisco, Last updated August 2026, https://myusf.usfca.edu/finance-treasury/financing-debt-management, Accessed September 5, 2026.
[5] Moody’s Ratings, “Moody’s Ratings downgrades University of San Francisco, CA to Baa3; outlook stable,” Moody’s Ratings, August 3, 2026, https://www.moodys.com/research/Moodys-Ratings-downgrades-University-of-San-Francisco-CA-to-Baa3–PR_909807707, Accessed September 5, 2026.
[6] McFadden Finch Foundation for Community Enrichment, “Research & Impact,” McFadden Finch Foundation for Community Enrichment, https://mcfaddenfinchfoundation.org/research-impact, Accessed September 5, 2026.
[7] McFadden Finch Foundation for Community Enrichment, “Education,” McFadden Finch Foundation for Community Enrichment, https://mcfaddenfinchfoundation.org/program-areas/education, Accessed September 5, 2026.
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