Tuesday, April 21, 2015

Vanity Rephrased, Part Two: Ave Maria's Big Splash and a Prayer for Relief

Ave Maria in 2015:  It's About Money

Ave Maria Law has fallen a long ways in the decade since its subsidized first class graduated.

Where once it may have been a small law school with a viable mission, a better version of Liberty or Regent perhaps, its Class of 2013 graduated 159 people (double from its first class), it has a sub-40% LST employment score, and the full-freight cost of attendance is over $60,000 a year.  In the Fall of 2014, Ave Maria enrolled 112 poor souls with a median LSAT score of 143 and a median GPA of 3.06.  Many of them should abandon all hope, as they will be likely tithing to loan servicers until the Second Coming [of bankruptcy reform].

With those numbers, there is little room for debate: Ave Maria Law is a diabolical shithole with little chance of salvation.

This is what passes for Ave Maria's "good news" these days:
Ave Maria School of Law on Thursday will officially announce that it will purchase the North Naples campus and launch a $3.2 million capital campaign, thanks to an anonymous $1 million gift.
The law school will also celebrate ... being ranked No. 1 in the state of Florida with 83 percent of graduates passing the February bar exam on the first try, far exceeding the statewide average passing rate of 64.3 percent.
They are literally celebrating ten (10) people passing the bar out of twelve (12) takers.  They should also place a plaque on campus somewhere, as long as the town elders allow such small-scale displays of vanity.  One has to wonder if they celebrated last summer, when only 43 of their 76 bar examinees passed the Florida bar, the lowest number in a state full of derelict toilets, secular or otherwise.

With such an abyssal annual bar passage rate (60.2% average over the last two attempts), most law schools would cower in shame.  But not Ave Maria.   No, in its full vanity, Ave Maria celebrates a land transfer between quasi-related entities and a good deal of their graduates failing the bar multiple times.

But there are, of course, other benefits to buying one's own plot of earth:
With the purchase of the campus, a significant savings in rental expense will be realized, thus freeing up funds for scholarships, new academic initiatives, campus infrastructure improvements and faculty development. The campus purchase also provides for naming opportunities on campus.
Let's actually look at Ave Maria's finances for a minute and see if this checks out.

According to its 2013 tax return posted publicly, Ave Maria (which gives out "juris doctorate" degrees, apparently, whatever those are) had a debt ratio of 170%, with assets of around $3.4 million and liabilities around $5.8 million.  That's kind of debt-heavy as it is, particularly for a non-profit having to use steep discounts to sell its existing inventory.  When one looks at Schedule L, page 28 if you use Guidestar, one learns that Tom Monaghan appears to be the school's principal lender at the time, with $4.8 million due on a loan for "general operating expenses."

Both the school's revenue and functional expenses are around $16M.  Very little of that $16M appears to have come from grants, donations, or contributions from the school's specific foundation.  On the expense side, over $5.8 million was paid out in salary and wages alone.  They report $1.5 million in annual occupancy expenses, some of which would be paid out anyway, since "occupancy" does not equal "rent" in IRS lingo.

So despite having net assets of -$2.4 million and apparently barely breaking even due to the operating expenses listed on their 2013 form 990, Ave Maria has now purchased of a massive tract of land.  They claim this will free up cash for lots of new endeavors.

The question is:  how?!

Collier County, Florida is swell enough that they have made their real estate records public and freely available online.  Reviewing the records, one finds the following:
  • A "mortgage and security agreement" (instr. no.  5108897) granted by Ave Maria Law on 4/15/15 to First Florida Integrity Bank for $7.5 million.  Notably, the mortgage makes reference to "final payment" due under the note on April 15, 2018.
  • A "second mortgage and security agreement" (instr. no. 5108900) granted by Ave Maria Law on 4/15/15 to "Mary's Law Angels, LLC" to secure an indebtedness of $5.6 million.  A search of Florida's corporate records shows that Mary's Law Angels, LLC, was incorporated in January and happens to have the same address as Ave Maria School of Law, with Ave Maria Law's president serving as the manager.  (If you already have a 501(c)(3) foundation to support the school, why create this LLC?)
  • A warranty deed (instr. no. 5108895) whose stamp identifies the consideration for this purchase as $13 million
Although we lack the notes and other key documents, by purchasing their campus, Ave Maria has taken on what appears to be around $13.1 million in new debt, exchanging annual rent expenses to friendly entities (they're independently-run, but really, was Ave Maria University ever going to evict Ave Maria Law?) for unidentified mortgage payments, including mortgage payments to an unrelated bank (you know, the things that actually may foreclose you) for a note that appears to be due in three (3) years.  And I would also bet that mortgage note is personally guaranteed by the man or men upstairs, and I don't mean the Lord.

If all that's true, it would mean that - at least for the next three years - Ave Maria's real occupancy costs would increase dramatically over what is shown on the 2013 return before dropping.  At the absolute minimum, they appear to have taken on a lot of new debt that would not appear to increase "funds for scholarships, new academic initiatives, campus infrastructure improvements and faculty development," at least while the debt is being serviced.

Because interest in law school is flat-lined on a good day, I'm highly skeptical there's any real cost savings at work here.  What did appears to happen, however, is that Tom Monaghan's overall vanity project, Ave Maria University, just got a $13 million cash boost (selling an asset in less-than-free market conditions), a seemingly-related for-profit LLC just became a second mortgagee and creditor to the law school, Monaghan himself may still be an individual creditor to the law school, and the school's main source of past revenue has been tuition receipts.

So who's actually paying for that building?  Students, and maybe donors who can't find a better charity than a shit-stained law school that already burned its benefactors once by relocating on the whims of a billionaire.

They can talk about capital contributions and campaigns, but the school is fifteen years old.  There are no dying wealthy alums pining to dump their estates into Ave Maria's endowment account.  The oldest alums are likely peeved the school moved to Florida.  Monaghan may be able to find new Catholic blood to buy into the law school part of his project, but if those contributions actually existed, one would think they would have tapped those years ago.

Knowing what we know about law school in general and Ave Maria's finances in particular, it is difficult to see Ave Maria Law as a viable long-term project absent some serious propping-up by its founder and other rich folks who take up his mantle.  In fact, there's a chance that this sale was a play in eventually winding down the law school.  After all, unlike many non-profit universities, the law school is a separate entity from the university itself.

As a commenter to Part One noted, the Department of Education uses a Financial Responsibility Composite Score to judge an institution's financial health using three ratios.  It is but one measure that the DOE uses, and schools are allowed to show alternative means of financial health.  Yet, the scores may be instructive in this case.  Scores range from -1.0 to 3.0.  From 1.5 to 3.0 is financially healthy.  On the August 2014 release, Cooley had a 2.9.  Albany and Charleston had 3s.  Ave Maria Law had a -0.5, one of the worst 100 institutions in America, more surrounded by proprietary cosmetology schools than colleges of law.

Of course, it's possible the financial picture is bright, they've slashed expenses from 2013, that donors will line up, and/or that the purchase of land really will free up new money thanks to God-fearing accountants.

None of that changes the fact that the school is a blood-curdling, near open-admissions compost heap that makes Stetson and Nova Southeastern look like Georgetown.


A Prayer for Relief

Dear Lord, please close this school down.

I do not, in any way, doubt Mr. Monaghan's religious beliefs or his sincere desire to produce orthodox Catholic attorneys.  And frankly, if he wants to be moral dictator over an arch-conservative town in southwestern Florida, so be it, so long as he doesn't enslave anyone.

But, taking his intentions at face value, the best thing Mr. Monaghan can do for everyone involved is to close this school down.

If he or others genuinely want to aid the cause of conservative Catholicism in the legal sphere, he can set up his foundation to give scholarships to students from super-Catholic schools like St. Thomas More or Franciscan to study at reputable law schools.

In this day and age, having those kids come to Ave Maria and study is likely doing more harm than good.  A "real" Catholic going to even a second-tier school like the University of Florida or Florida State has an exponentially better chance of aiding the Catholic cause in his or her legal career than any student that graduates from Ave Maria Law.

Even with a full-ride scholarship, an Ave Maria graduate will incur at least $60,000 in principal in living expenses.  With only 1.3% of graduates working in large firms and 18.2% working in solo shops or small firms, that debt will be considerable even for the best candidates under very good scenarios.

For someone with a 50% scholarship, real costs are likely to be more around $150,000.

If Ave Maria lures devout Catholics to study law there instead of at "better" options - including not studying law at all - it is playing an active part in disproportionately placing its target product in troublesome debt.

How can conservative Catholics best serve the Lord when they are deeply indebted and un- or underemployed?  When the best case scenario for 95% of them is paying down debt working in family law, immigration, etc.?  When they attend a law school who's brand places them at a disadvantage in a swamped legal market?

Ave Maria University will never be elite.  For Ave Maria Law, it's a longshot to ever be mediocre again.  Absent the school being truly beneficent and letting students attend for free including living costs, the school is a net negative, both for Catholicism and for the legal academy.

Please, Lord, close this school down!



  1. This is excellent work Truth Center. It seems clear that Ave Maria is in dire financial shape. Here’s hoping and praying that this smoldering trash heap gets shut down sooner rather than later. One other thing to keep in mind: the dismal 43/76 Florida bar passage rate for Ave Maria grads last summer came from a class with a median LSAT score of 150 when they enrolled in the Fall of 2011. What will those bar passage rates look like when the most recent entering class (143 median) sits for the bar? You can fully expect an all-out assault on the “unfair” and “discriminatory” bar exam by the law school cartel when the chickens from their open-admissions policies come home to roost.

  2. Proverbs 16:18 - Pride goeth before destruction, and an haughty spirit before a fall.

    Ecclesiastes 1:2 - "Meaningless! Meaningless!" says the Teacher. "Utterly meaningless! Everything is meaningless."

    But hey, y'know, whatevs. There are law students to be pumped-and-dumped, and names to be put on buildings, and other vanity items to be indulged in.

  3. Closing down the Ann Arbor law school was incredibly foolish and arrogant on Monaghan's part. They have zero chance of replicating in Florida the modest success they achieved in Michigan. Any conservative catholic legal scholar who trusted Monaghan has already been burned, and there simply aren't enough of those people left to staff an adequate law school, let alone the beacon of excellence Monaghan has in mind.

    1. Location, location, location. Choosing a rural area in a hyper-glutted state was a terrible decision.

    2. Do you mean Ann Arbor or Collier County, Fla?

    3. Ave Maria Law is a sketchy, shady place where you will not succeed unless the administration, in particular Timothy Tracey, who is unfortunately a Dean, and Kevin Ceiply also an unfit "Dean and President of the school," like you and you are a devout Catholic. At this "school," administration will judge you if you aren't a Catholic and will discriminate against you -and most importantly, against your grades for not being of their liking. There is a lot of cheating going on during exams and administration knows it and still allows it because they are thirsty for money, so they let people they like to get away with it. Ave Maria School of Law survives out of first year students. Everyone who goes there and sees how shady that school operates will transfer at their most immediate opportunity (their first year class starts with about 150 students and only about 13 students graduate each year because everyone else leaves and those who stay and the most mediocre ones who cannot get accepted anywhere else). Ave Maria Law is after your money in a desperate, sad way, don't go there. Find a better school.

    4. Ave Maria is the worst school you will ever go too. DON't DO IT TO YOURSELF. The administration is unfit to run a school,they are ass backward and confused. They do not practice Catholicism in the correct manner, they just put it in their name just to get people to attend. Their housing element is what attracts people to their school because other law schools don't provide housing, but even that's a scam. They make your lease end on the 31st of July, but will only let your loan cover until the last of day of classes which is in May. They have this idiot in charge of housing, and he has no idea how to explain himself, and contradict everything that comes out of his mouth.They are money hungry school who will charge for anything they possibly can and will never be straight forward with you about anything. Law school is hard enough to have the stress of being afraid of not being good enough on your back. They lie about being number one because they are not number 1 at shit, they are the bottom of everything, and whenever you tell someone what school you went too. No one will know about Ave or they will have something negative to say about it. Spare yourself of the money you probably don't have and will end up owing attending this shitty school.

  4. 9:13, you hit the bullseye. The Ann Arbor operation had some success recruiting several conservative, but fairly respected high profile academics to teach there. These folks came from places where speaking out against university policy was tolerated, and even accepted as part of normal discourse and the give-and-take of ideas. When Monaghan announced that he was going to pack up the school and move to the swamp, the profs who spoke out against this ill-fated move found themselves locked out of their offices, and summarily fired in a manner more befitting an assistant store manager who couldn't reconcile the amount of pepperoni used against the total number of pizzas sold.

    Monaghan wants conformity to his edicts and punishes those who do not obey. This makes Ave Maria more like a Catholic version of Liberty or Bob Jones U than a center of excellence to which he allegedly aspires.

    I have mentioned in other places that Ave Maria is Monaghan's vanity project; nothing more. There are hundreds of good Catholic colleges and universities, some of them financially struggling, upon which he could've bestowed his largess. Of course, he wouldn't get to run those places like a private fiefdom, which is all it was about anyway.

  5. What's the need for law schools with a religious axe to grind? There are Catholic ones (quite a few), mainline Protestant ones, fundamentalist Protestant ones, Jewish ones… Why can't they leave god out of it and get about the business of teaching law? Is religious segmentation just a way to create a niche market?

    1. I think it does create a niche market. There is probably not a problem in principle with a faith-based law school, and I think it could be strongly argued that they instill a strong sense of ethics, morals, and mission.

      Of course, that is not to say that a "secular" law school couldn't do the exact same thing. The issue is further compounded that the "faith-based" schools seems to give about the same damn about graduate outcomes as their "secular" counterparts (which is to say, none), so long as the gravy keeps flowing.

      If you hold yourself out as "above it all," then they should also "render unto themselves with sober judgment" and close. If you are harming lives, stop. Funny, the religious schools seem content with looking the other way, so they are no better nor deserving than any other hypocrite.

    2. Religious law schools. Serving God and Mammon (Matthew vi.24).

    3. "Render unto Caesar that which is Caesar's, render unto God that which is God's."

      "Christian law school" is an oxymoron.

  6. "[R]anked No. 1 in the state of Florida with 83 percent of graduates passing the February bar exam on the first try, far exceeding the statewide average passing rate of 64.3 percent."

    I'd be bragging too if this were the first exam in the preceding FOUR that my in$titution hadn't been DEAD LAST in the state--including out-of-staters who didn't spend 3 years being force-fed materials to boost passage rates. Add onto that terrible statistic some interspersed 0% passage rates within the last 4 years--during this time they were dead last 7 of 8 administrations.

    But seriously, is this some sort of joke? Is Ave Maria so stupid that they think their future knucle-dragging matriculants aren't able to either (1) find, (2) read, or (3) comprehend archived 509s?

    If I were in their position I would talk a lot more about ministry and a lot less about bar exam numbers. After all, this place appears to be in violation of ABA Interpretation 301-6(A) regarding minimum bar passage requirements.


    I feel as though this cesspool is trying to insult our collective intelligence. Optimism is one thing; this sort of salesmanship is pure bullshit. Do the idiots in the administration wonder why they have and/or will be sued for deceptive recruiting? This could be Exhibit A of such a suit.

    1. They should arrange for their top student to take the bar exam in some obscure state so that they can go to the top of the list, with 100% of their students (all one of them) passing.

    2. You're cruel - but I am surprised that this didn't happen already.


  7. The author had a very good point - what the Olin Foundation did, to boost the 'law and economics' movement, was to give full law school scholarships to econ Ph.d.'s (as well has hosting seminars for judges in the tropics, during January and February, which oddly doesn't count as bribery). Those people excelled, and brought the Chicago School into law.

    For $300K/student, Monaghan could give a full ride to elite grads from elite Catholic schools to any law school to which they could earn admission. He could have the grads vetted so that they would likely be faithful, and to keep their faith (as Monaghan defines it).

    The extra $50K would cover attendance at conferences, workshops and various networking events, so that the grads would graduate knowing a lot more about the outside legal world (regular firm work, government work, lobbying, academia, etc.).

    For $10 million/year, he could fund 30 students/year. After 10 years, he'd have put out 300 students. All elite, all grads of elite schools, all vetted, all especially well prepped to succeed.

    That would be a tremendous network, especially considering that this program would have plugged them into existing right-wing Catholic legal networks.