New Jersey invests in higher education to create opportunity, strengthen the workforce, and support the state economy. Each year, our colleges and universities receive an estimated $3 billion in state funding alongside the significant financial commitment students and families make. Together, these investments help our public colleges and universities generate an estimated $23 billion or more in economic impact, delivering strong returns for New Jersey residents, employers and communities each year.
To protect these investments, the Office of the Secretary of Higher Education (OSHE) annually evaluates the financial health of colleges and universities in New Jersey through the Financial Assessment and Risk Monitoring (FARM) program. The information collected helps the state work with institutions and policymakers to identify risks early, support long-term financial resilience, and safeguard the value of a New Jersey college education.
The 28 public institutions of higher education offering academic degrees in New Jersey must participate in the annual fiscal reporting process in accordance with P.L. 2023, Chapter 115 .
Under the law, OSHE is also authorized to conduct comprehensive audits of a public college's finance and governance operations every five years, create standards and training for chief financial officers, and appoint a State Monitor under certain circumstances.
Focus on high-level academic and scientific research, graduate and doctoral programs, and expansive undergraduate degree offerings.
Focus on offering broad and extensive courses and providing accessible education.
Focus on providing two-year degrees, industry recognized certifications, and affordable education.
The independent and proprietary institutions offering academic degrees in New Jersey are monitored in accordance with P.L. 2021, c. 27. Under this law, these institutions are required to submit contingency and teach-out plans if they are determined to be at risk for imminent closure.
Focus on academic programs rooted in the liberal arts and professional studies, with a commitment to accessible, student-centered education.
Focus often on career-oriented, flexible programs designed for specific industry-aligned training needs.
As part of the fiscal monitoring program, colleges and universities submit financial information to OSHE through an annual spring survey. Since the collection occurs in the middle of the fiscal year is not yet finished, the data provided is from the last completed fiscal year, along with the two full fiscal years before it.
Higher education across the nation is facing several pressures, especially due to changing enrollment and structural deficits where expenses outpace revenue. When institutions are faced with closing, it can cost millions. Early detection of what makes New Jersey public colleges vulnerable allows the State to work with institutions while costs are still manageable and provide support proactively. This is the purpose of the FARM program.
To identify areas of financial instability, OSHE evaluates risk across 12 key risk metrics.
Learn more about each metric.
Risks that arise from governance structures that need improvement, internal controls that aren't strong enough, processes that could be more effective, or business models that aren't well-designed.
Evaluates the financial stability of an institution based on the composite score over the past three years. This metric is a composite financial index (CFI) measure which combines several core financial ratios (primary reserve, net operating revenues, return on net assets, viability) to provide a holistic view of an institution’s financial health.
Assesses the change in cash and cash equivalents over three years, indicating liquidity and cash flow management.
Measures the change in operating expenses over three years, reflecting the institution’s ability to manage costs.
Compares financial reserves to total debt, indicating the institution’s financial buffer.
Risks that an institution cannot control directly but can still influence or manage through proactive measures.
Evaluates the change in operating revenue over three years, indicating growth or decline in financial resources.
Analyzes the change in student enrollment over three years, indicating the institution’s ability to attract and retain students.
Measures the percentage of total revenue derived from tuition over three years, indicating dependency on tuition income.
Measures the change in investments over three years, indicating the maintenance of investment funds.
Risks that could lead to challenges or penalties if agreements, standards, laws, or regulations aren't fully followed.
Evaluates the outcome of audit findings, indicating the institution’s compliance and control effectiveness.
Assesses how and if debt covenants have been met over the past three fiscal years, indicating financial health and adherence to borrowing terms.
Measures the institution’s creditworthiness based on credit ratings, indicating financial stability and risk.
Assesses the ratio of debt service to annual operating expenses, indicating the institution’s debt burden.
Each of these risk metrics are then assessed as either least, minimal, moderate, or greatest. The four risk levels reflect conditions in a single reporting year and serve to signal which institutions should be prioritized for engagement. They are not cumulative ratings or permanent designations of an institution
Approaches to measure the probability and severity of these internal, external, and compliance risks were informed by institutional data along with resources developed by the National Association of College and University Business Officers (NACUBO).
Based on the risk assessment, OSHE works with institutions to provide appropriate levels of support and engagement to mitigate risk.
Least Risk
Some exposure to risk indicators. Risk metrics remain within expected ranges and demonstrate capacity to absorb normal operational volatility.
Minimal Risk
Increased exposure to risk indicators. Emerging concerns are present in risk metrics but remain manageable through routine monitoring and corrective action by the institution.
Moderate Risk
High exposure to risk indicators. Multiple risk metrics suggesting elevated vulnerability. Additional monitoring and structured response planning are warranted.
Greatest Risk
Evident exposure to risk indicators. Significant deterioration or critical thresholds identified. Immediate attention and formal mitigation efforts may be required.
Per statute (P.L. 2023, c.115), if the Secretary of Higher Education determines that conditions within a public institution of higher education may significantly or negatively impact its operations then they may appoint a State Monitor to oversee the fiscal management and expenditures of that public institution. Notably, a greatest risk assessment is not a direct trigger for, nor may it warrant, the appointment of a State Monitor. The authority to appoint a State Monitor does not apply to independent and proprietary institutions of higher education, which are monitored under a separate statute (P.L. 2021, c.27).
The New Jersey higher education landscape is unique. It is shaped by geographic density, economic diversity and institutional independence. Our institutions operate within one of the nation's most densely populated and economically interconnected regions, while also competing for students across state lines. Demographic shifts, workforce needs, affordability pressures and changing student preferences affect each public college and university differently depending on their mission, location and the students they serve.
Our public institutions show key strengths.
Operational Turnaround
Several institutions show meaningful improvement through disciplined financial management, strategic planning, and organizational change, illustrating that elevated risk is not a permanent condition.
Formal Collaboration
Recent partnerships, affiliations, and consolidation efforts demonstrate that institutions can pursue proactive solutions before financial distress reaches crisis levels.
Enrollment Stabilization
Recent enrollment gains show that recovery is possible when institutional strategy, market demand, and student support efforts align. Continued monitoring will determine whether these improvements represent sustained trends.
Official Site of The State of New Jersey