THE JAPAN NEWS

 

A significant number of educational corporations are in financial trouble, and more than 20 of them could fold by the end of fiscal 2019 if their situation does not improve, a survey has found.

According to the findings of the Promotion and Mutual Aid Corporation for Private Schools of Japan (PMAC), 112 out of 660 educational corporations operating private universities and junior colleges — or 17 percent — are in financial difficulty. Unless their status changes for the better, 21 could go under by the end of fiscal 2019, the survey found.

As the 18-year-old population will once again decline from 2018 onward, the corporations’ business environment is expected to deteriorate even further.

The Tokyo-based PMAC is a special corporation under the jurisdiction of the Education, Culture, Sports, Science and Technology Ministry that supports the operation of private universities and junior colleges.
Since 2007, and using indicators created by PMAC, each educational corporation has analyzed its finances each year based on data from the past three years.

PMAC itself also assesses the financial standing of educational corporations, but the results had been kept undisclosed due to the possible negative impact on the management of private universities.

In January 2017, The Yomiuri Shimbun requested PMAC disclose the assessment results. Although an initial decision was made to keep them secret, they were ultimately disclosed for the first time in late December after an objection to the decision was approved by the Internal Affairs and Communications Ministry’s examination panel.

According to disclosed documents and other materials, PMAC analyzed the income, expenditures and assets of 660 educational corporations that operated 599 universities and 331 junior colleges across the country as of fiscal 2016. PMAC calculated the risk of the corporations going under based on indicators.

The indicators included 1) a negative figure resulting for two years or more over the last three years when personnel and other expenditures are subtracted from tuition and other revenue; 2) borrowings and other liabilities surpassing assets; and 3) how many years after the survey a shortage of funds was expected to occur.

The results showed that 21 corporations, or 3.2 percent, were in the “red zone,” in which they could collapse by the end of fiscal 2019, while 91, or 13.8 percent, were in the “yellow zone,” in which they could go under in fiscal 2020 or later. There are 175 corporations, or 26.5 percent, that were potentially in the yellow zone, meaning there are signs of financial deterioration. Meanwhile, 373 corporations, or 56.5 percent, were categorized as “sound,” meaning there are no problems with their finances.

The names of the corporations were not disclosed.
Compared with the results of fiscal 2015, the number of corporations categorized as sound dropped by 47, while the number of those potentially in the yellow zone increased by 39.

The land and buildings they possess were not taken into account when analyzing the corporations’ finances. PMAC said the survey results are rough estimates, so being at risk of going under does not necessarily mean a corporation will definitely collapse.

However, it added that corporations operating small and midsize universities in local areas, and those operating small universities in urban areas, are facing particularly severe financial conditions.