This Week In College Viability (TWICV) for June 2. 2025
Gary D Stocker (00:00.814)
It is this week in college viability news and commentary for June 2nd, 2025. Hi, everybody. Gary Stocker back again behind the blue Yeti microphone. Let me start off this week's podcast with an observation. Education news reporters have a hard, really hard job. Last week, St. Louis hosted the 2025
Education Writers Association Conference. And I had the chance to sit in on a few sessions and they focused on data and of course on higher ed finances. And these reporters, they typically cover both K-12 and higher education. Ladies and gentlemen, boys and girls, the set of topics and the potential stories these reporters need to cover is ridiculously long. The ability to master those many topics
has to be a constant challenge for them. Let me step in and help. For those reporters looking for an easy to use data source, an easy to use, easy to compare data source on the financial health of colleges, reach out to me at gary at college viability. That's one word, gary at college viability.com. I'll send you a courtesy free link to the 2025 college viability.
app layoffs and cutbacks this week. are a few. Peninsula College closing its Fort Worden campus. This is the Peninsula Daily News. I believe that's in Washington state on May 31st. Peninsula College has projected a 2.2 million budget dollar deficit for the 25-26 fiscal year. It cites Peninsula College, cites financial challenges affecting institutions across the state. Yeah, yeah, yeah. We're just as just like everybody else.
such as a loss of funding, budgeting errors, blah, blah, blah. In its response, it says, in order to stabilize their budget and the college long-term, the decision was made to close the Port Townsend, T-O-W-N-S-E-N-D campus, where they say in-person enrollment has declined to less than half of what it was in previous years. And again, like I've said before, when did you first notice this? I'm guessing it just wasn't yesterday.
Gary D Stocker (02:26.19)
And of course, the Peninsula College president, Suzy Ame, said this should be in in in the section on college dribble. This decision was not made lightly, but it is one I believe will ultimately allow us to serve more students in Jefferson County. Ivy Tech Community College in Indiana will be laying off 202 employees.
What does that mean for the Indianapolis campus? This is from Noe Padilla or Padilla and John Webb in the Indianapolis Star on May 30th. This announcement was made by Ivy Tech's President Sue Elsperman on May 30th in her letter. Elsperman notes that the Indiana government's decision to cut 5 % of the school allocated fund on top of the 5 % cut from the state budget agency
would equate to a loss of something like $54 million over the next two years. Ivy Tech has been consumed by financial issues since 2024 when it revealed that financial mismanagement had led to a budget deficit. Last year, the university had some summer furloughs for employees, phased out some academic programs, and even put up a few properties for sale. And the story concludes.
including the president's house and the university's equestrian center. There's an issue. The new president of Powell, Dr. Powell, the president again on May 1st, and he said he's working on a short-term plan for financial recovery to present to the university's board of trustees. The plan includes a process for repaying the school's vendors, good for them, and endowment fund.
and an evaluation of the current academic offerings and tuition costs. Again, I say, why wasn't this done before the new president? And that Dr. Powell, I presume, would like to work on a four-year plan focused on making that recovery sustainable and realistic. And the only data points I have for Ivy Tech in Indiana, enrollment, full-time equivalent enrollment is down about 5,000 students from 23,000.
Gary D Stocker (04:44.64)
in 2016 to 18,000 in 2023. St. Michael's College, Vermont, multiple St. Michael's College employees laid off. This was from Vermont WCAX, CBS on May 30th. And about a dozen employees laid off. That would have been last Friday at St. Michael's College. And again, they jump on the bandwagon just as worse off as everybody else. In a statement, the school official said,
Like many institutions, we're responding to long-term shifts in enrollment, rising costs, and broader questions about the value of a college degree. While these decisions are never easy, they continue, we are making strategic, strategic mission-driven changes to streamline programs and operations, and we're actively implementing.
new strategies to grow revenue. Good luck with that. And how many times have I said how many times? You can't grow net new materially significant revenue in a down market.
unless you buy a college, unless you merge with a college. You just can't add stuff and expect to generate materially significant new net revenue. And anybody that says otherwise just doesn't understand the business of higher education, doesn't understand the economics. And the category of not necessarily cuts, but the University of Southern Indiana president says, tuition increase inevitable after state budget cuts.
This was from Michelle Kaufman in Inside Indiana Business on May 30th. The University of Southern Indiana's new president says they may need to raise tuition after the state cut some of its funding in the recently passed budget. How many times have I said new president or interim president in recent weeks and months? Got to be a lot of times. That's just a subtle but obvious
Gary D Stocker (07:00.128)
indicator of what stress higher education is under. New presidents, interim presidents, all over the place. The story goes on to write by Ms. Kaufman, earlier this month the Indiana Commission for Higher Education recommended that that tuition and mandatory fees, get this, be held flat at all seven of the state's public colleges and universities.
The news release said that out of all state entities, our higher education, there's a name attached as a brawn, but I don't see it referenced. This person says, Mr. and Ms. out of all state entities, our higher education institutions are in the best financial position to weather these cuts. What world is this person living in? And one of his goals, the new president at
at University of Southern Indiana says one of his goals is to increase enrollment to around 12,000 students from the current level of about 10,000. All right, well, you know what I'm going to say because I just said it, so I'm not going to say it this time. You can't grow out of financial troubles in this market. And I guess the other thing, there's two stories in Indiana colleges.
These political leaders in Indiana appear to be hell bent. Hell bent on helping colleges close. Man, they're setting some tight specs. College dribble this week from a college laying off employees. College dribble. While these decisions are never easy, we are making strategic. Do people even know what a strategic decision is?
Anyway, we're making strategic mission driven changes to streamline programs and operations and we're actively implementing new strategies to grow revenue on and on and on. Page two, interesting story out of Notre Dame College in Ohio. And you recall they closed back in 2024. They are being sued by the Bank of America for about 20 million dollars and they're being accused Notre Dame College of Ohio, not the big one in Indiana.
Gary D Stocker (09:20.568)
but Notre Dame College of Ohio is accused of improper use of endowment funds by the Ohio Attender Attorney General, Dave Yost. Now the college, Notre Dame College, again the small one in Ohio, not the big one in Indiana, which is Notre Dame University, is facing two separate complaints over millions in unpaid loans and alleged donor fund violations. Let me give you the details. This story comes from WKYC TV Channel 3.
and Dave Di Natale is the reporter on May 28th. The complaint filed, Mr. Di Natale wrote, the complaint filed by Yost on May 22nd accuses the college, Dame College, and 17 former trustees and officers of using 2.1 million in restricted endowment funds, means they're dedicated for a purpose, know, the John Smith Scholarship for journalism, whatever.
They were accused of using $2.1 million in restricted endowment funds to pay off debts, kind of keep the lights on, including payments to do to the Bank of America. And they did this reallocation of restricted funds without obtaining approval from the Attorney General's office. You can see why they're upset in Ohio. According to the complaint, Notre Dame College owed Bank of America $16.
million dollars in 2023. Here's the interesting details. During a meeting of the Notre Dame College's Board of Trustees in October of 2023, the Attorney General's office reports that then Notre Dame President J. Michael Presimone made a motion to reclassify 1.2 million dollars from the restricted endowment and move those funds at 1.2 million to a financial account
for use outside of the donor restrictions. So if somebody had given a million dollars to the college for the Joe Smith College of Journalism scholarships, they took that one million, this is an example, not for real, they took that one million to keep the lights on. Right? It goes on. The motion was not, the motion to reallocate those restricted funds was not seconded. One week later, the board's executive committee
Gary D Stocker (11:47.214)
were reportedly told that the endowment funds were being used to meet financial obligations outside of the donor restrictions. The provost at the time, John Smitkana, advised the committee, the board committee, that 2.8 million would need to be returned, hell, I don't know, would need to be returned to the restricted endowment funds. And here...
Here is why this is a really big deal. This is from a closed college. The use of restricted endowment funds for their unintended purposes, keep the lights on, meet payroll. That's not an intended purpose of almost all restricted endowment funds. It's happening all over the country for colleges that are still open. It's happening all over the country for colleges that are still open. Sometimes,
with Attorney General approval, for sure. And I gotta believe, based on what I read and see, I gotta believe sometimes these restricted endowment funds are being moved in the dark of night, like we see alleged at Notre Dame College. These funds are being moved in the proverbial dark of night without any formal approval. And I'm gonna stick with this story. The suit noted that the relationship between Notre Dame College
And the Bank of America goes back about 17 years, 2008, when the Ohio Higher Education Facility Commission issued 20 million in bonds to the college for some costs for financing certain educational facilities. And the Bank of America entered into a purchase agreement with the commission and became the sole owner of bonds. Okay, it happens. VOA bought the bonds for $20 million. In April, by April of 2017,
This would have been about nine years later. The college was in default under the bond documents, sometimes called covenants. Since that time, and for approximately seven years, the story goes on, while under no obligation to do so, this is the bank they're talking about, while under no obligation to do so, the Bank of America continued to work with Notre Dame College by entering into various amendments to the bond documents.
Gary D Stocker (14:07.054)
and waiving certain defaults the complaint noted. Onward with the story, amid the college's announcement of its closure in 2024, Notre Dame College and Bank of America entered into a post-default liquidation and funding agreement. That agreement required the sale of the college, the physical plant, to be completed by October 31, 2024, year. To date,
No sale has taken place. Bank of America also notes that Notre Dame College failed to maintain acceptable debt service coverage. It's an inside baseball kind of term. Acceptable debt service coverage ratios for three fiscal quarters in 2023 and also failed to pay amounts due in something called an interest rate swap transaction. The lawsuit calls for a money judgment against Notre Dame College of at least 20.
five million dollars and again yeah it happens at noter dame the the reporting on this kudos to the good folks good folks at wkyc channel three and dave ninatale nicely done story great on the details great on the writing it's happening other places it's happening other places as i record this podcast it's happening other places where colleges in desperate need for funds to keep the lights on
for desperate need to meet payroll are moving funds, sometimes with permission, but it's only with permission, I'm not sure it's still a good practice, are moving funds from restricted to unrestricted, not good. Page three, story from James Baumgartner, May 28th in the Rhode Island PBS, Public Broadcasting System, I guess it was still around. College enrollment is declining. How is Johnson and Wales University preparing
for the demographic cliff. this story, like all stories, I have clips in the show notes from Mr. Baumgartner. Johnson and Wales University has lost more than 50 % of its college enrollment since 2011. And a looming demographic cliff is expected to reduce that number even further, prompting Johnson and Wales officials to consider how to best prepare for the financial consequences of lower student enrollment. So, Meredith Twombly,
Gary D Stocker (16:34.208)
is the Vice President of Enrollment Management at Johnson and Wales University. And she talks in this story about how the college is preparing for what's been dubbed the demographic cliff. Some are calling it a slope. It's not gonna be a real fall off the cliff as much of a downward trend. So what's Johnson and Wales gonna do? So the reporter, Mr. Baumgartner, asked, recently, or stated, you recently announced 91 state and facts, excuse me, 91 staff and faculty layoffs.
to help close a $34 million operating deficit. Do you see more layoffs on the horizon? Here's Ms. Twombly's response. I do not think there are, we're gonna call that qualified. Going into the next 50 years, she continues, where nationally there will be fewer students expected to be going to college. We have to budget conservatively. Great advice. Not many colleges are doing it, but it's great advice. Up until very recently, even into the pandemic,
Colleges, by and large, tended to budget with a bias toward assumed growth. I'm going to put Meredith Twombly on my Christmas card list. She knows what's going on. Colleges tended to budget with a bias toward assumed growth. And she goes on to say, and I've highlighted this in my notes, and that's just impossible. We cannot do that anymore. And of course, she's talking about an assumed bias toward growth. I've talked about that already twice in this podcast.
and I'll leave it alone. And Ms. Twalmy, again, nicely stated, this is a quote from somebody inside a college, inside Johnson and Wales University. It reinforces what I have been saying for years when I've said in this podcast already a couple of times, you can't grow out of financial challenges and higher education, just can't happen in this market. Page four.
is the rap. And so what if I told you you're looking at a college and I said, hey, this college is not a consideration worthy college right now? You hey, Gary, I'm looking at John Smith University. What do you think? What if I told you this college is not a consideration worthy college right now? Now here's the background behind that. I continually struggle with how to describe a college
Gary D Stocker (18:58.434)
with financial challenges. I never have and never will say a college will close. John Smith College will close. Just not going to say it. It's not fair. It's not realistic to be able to predict that. However, I have certainly pointed out many times, as those regular listeners will note, I have certainly pointed out many cases of college financial failures and just outright silliness in some cases. And I have encouraged, with some regularity, to find someone at a college in financial stress, find someone to turn out the lights, guilty.
as charge, it's my subtle way of saying, guys, let the faculty, let the staff, let the world know it's not going to make it, it's not going to happen. And on the college financial health show with Matt Hendricks and Gary Stocker, we will use sustainable for colleges that have a sustainable financial path and unsustainable. And we qualify that unsustainable characterization with colleges that have a long runway, more than five years and a short runway of less than five years, depending on endowments and investments and those kinds of things.
So what I have is with a renewed focus on college financial health and viability products and services for students and their families. I'm going to start using some common analogies to make the point that families research almost every other product or service they purchase, cars, houses, computers, kids, clothes, food, and that the same should be done for their college choices. And for example, I had somebody suggest over the weekend, we get our houses inspected before we buy them.
Make sure the water works, make sure that the roof doesn't leak, all those kind of things. The same logic could and should apply to buying a college or essentially making that college decision. We already inspect the college for majors and tuition costs and much, much more. It's also time to look at those colleges' financial health.
And as regular listeners know, at College Viability, we do that with simple to use data tools and comparisons. And it's kind of like the Kelly Blue Book that kicks the tires on cars. We kind of kick the tires on college finances. It's kind of like a college consumer reports or saying, hey, here's some things to be concerned about. And I've said this before, the College Viability app is kind of like the reverse FAFSA. The reverse FAFSA, we all know we've submitted data to
Gary D Stocker (21:17.326)
about our finances, our personal finances to colleges, the college viability kind of is the reverse FAFSA. It submits information to you, automated though it may be, it submits information to you on the finances of a college. And if you haven't already, get this podcast link to friends and families and neighbors, especially those in the midst of their college search. Don't let them choose a college. Don't let them choose a college that will come back.
on majors and faculty and staff and safety and might even close. There are hundreds, of financially strong colleges. They're out there. I can tell you which ones they are. Follow us on the Financial Health Show. Follow my media. Follow my podcast. Look at the app. Use that data about financially strong colleges and financially weak colleges to make sure if you're in the college selection market, buying a college.
Make sure you choose the financially strong, not the financially weak. Hey, everybody. Thanks as always for listening to the podcast. Always grateful. I'll be back on June 9th with another podcast episode of This Week in College Viability. I'm Gary Stocker. Always a pleasure. We'll be back soon.