This Week In College Viability (TWICV) for November 25, 2024

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It's this week in College Viability News and Commentary for Monday, November 25th, 2024. Hi, everybody, it's Gary Stocker back again behind the College Viability Microphone. There is much higher education news this 2024 Thanksgiving week. And to the headlines we go, there are some layoffs and cutbacks this week. There are two stories that suggest, two different stories that suggest college leaders

may be moving more aggressively in their relationships with faculty. We'll talk about that in some depth. Anderson University, I believe in Indiana, their Fitch rating head South, we'll talk about some of the details behind that. There is more ugly spin, I guess, on a college with just an unsustainable financial pattern. I'm gonna talk about those. Spin is fine, but I'm gonna actually present the facts. And St. Augustine University sells off the farm to stay afloat. These and more stories.

in the coming minutes. Why not some cutbacks? And the headline from Mana Obradovich in the St. Louis Post-Dispatch on November 21st reads, as Fontbonn University winds down, and they announced their closure last spring, they'll close in May of 2025, as Fontbonn University winds down as students leave to finish their studies, Fontbonn had 874 students in the fall of 2023. They're down to about 340 this year.

And most of the students have either graduated or opted to move to one of the other colleges that were offered as part of the teach-up. And it's kind of a sad story because of course, quote some students who are staying until the end for their own reasons, and that's fine. And my compliments to those who stuck with it at Fontbonne and to those who found another college home somewhere else. As we well know, these stories will continue in the coming months and years.

Drexel University lays off 60 employees in the face of structural imbalance. Well, maybe structural imbalance in operating budget. And it's about 1.4 % of Drexel's workforce. Drexel said this was a difficult decision and not made lightly. Of course, they say that the story was Corey Sharber on November 19th at WHYY. I guess that's YY, PBS radio.

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Here's a quote, and I'm not going to read the whole thing because you've heard it before. The key drivers of Drexel's operating budget imbalance largely reflect the challenges impacting much of higher education right now and on and on it goes. And really all they're trying to say is, gosh, it's not our fault. And of course, indeed, it is their fault.

More than 100 full-time and 100 part-time employees to be let off at Bard College, Simon's Rock closure, at Simon's Rock. And this is going to be a significant, this is going to be a significant layoff for the region. The story comes from Shaw Israel Isaacson on November 21st. And here's what really caught my attention on this story. From Ms. or Mr. Isaacson,

Of course, the college currently has 281 students, that's 281. And the college currently employs 140, that's 140, full-time staff members. Let's do the math together. That's almost exactly two students per faculty and staff member. Gosh, wonder why, sarcasm alert, excuse me. I wonder why they're having financial issues with that kind of ratio.

And then finally in cutbacks and layoffs section, St. Augustine University on the brink of fiscal collapse, enters a $30 million credit agreement. And this is written by J. Brian Charles, the Chronicle for Higher Education. And essentially they have leveraged their physical plant to get some money from an investor to stay alive. And it's not going to work.

and their details of the story. And of course, I'll have the story link in the show notes. Page two, Sean Sala is a writer at the Washington Times. And he reaches out to me regularly with some questions about higher education stories. And he used some of my comments in his story last week on Boston University's response to one of the colleges on the schools at BU. The graduate students voted in favor of a union, all right, they're entitled. And then secondly, and I'll tie the two together,

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this past week, Marquette University faculty scheduled a no confidence vote, I think that's actually today, for their current interim leadership. I say that because their president, Michael Bell, who had done a really good job at Marquette, Michael Bell died unexpectedly this past June. Not stopping the faculty, their board promptly, the board at Marquette, here's the response, the board at Marquette promptly removed the interim label.

from former Provost Ayun and named him the 20th, 25th president at the university. Now, while two incidents doth not a pattern make, it is reasonable speculation to suggest this could be, this could be the leading edge of college leadership and their boards, reminding the faculty in no uncertain terms, in no uncertain actions, who is really in charge

at the end of the day. This is a Washington Times story. I'll have that link, of course. And a couple of questions I wanted to kind of ask and answer from Mr. Soleil at the Washington Times. And these are my response to his questions. He asked, Gary, do you agree that the new graduate workers union contract is to blame for the cutbacks at Boston University? And I said, I don't know that there's blame at all here.

Both sides made business decisions. The graduate students unionized the college to change the way they finance those business decisions. And effectively what happened at BU was the college says, right, and it was the Humanities College. I don't remember the exact name of it. The Humanities College has to now fund their own costs. Well, they didn't have the revenue to do that, especially with new cost structure because of the contract with the graduate students. And so the university says, hey, if you can't afford it, you can't admit any more students. That's my paraphrase.

I may have some of the details wrong, but that's the essence of what's going on. And so Sean went on to say, Gary, how exactly could the new contract be forcing Boston University to not take more PhD students in these disciplines? And it's really not a question, I don't think, of viability. It's just a tactical decision. It's a tactical decision by Boston University to let a business unit, okay, the College of Arts and Sciences, that's the name, internally manage their finances.

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Was it done as a reprisal for the union vote? Well, you're to have ask BU leaders on that. And then finally, could unionization have this effect on such programs at other campuses? And this was really the best question I thought that Sean had for me. And here I'm going to read word for word my response. That gushing sound you hear, cold water being poured on the unionization efforts across college campuses.

throughout the United States. BU leaders are probably getting quiet admiration from their peers across the country for their response to the union vote. So sure, make your business decisions. They have consequences. Many times they're unintended consequences. And I think the graduate students and other PhD candidates and potential PhD students at BU and probably other colleges are recognizing those consequences.

as well. Tennessee State University Public College, historically black college and university. And this is a story by Rosetta Miller Perry on November 21st in the Tennessee Tribune. And the former president of Tennessee State University, again I'll have the link in the story, issued a long, really long statement to the Tennessee Tribune refuting what college leaders and state politicians were saying

about the causes of the financial trauma at Tennessee State University. Now again, I'm going to emphasize the fact that it was a long statement, she's entitled. It was not an interview, not quite willing, not quite comfortable enough in arguments, I guess, not to actually take an interview. I found that interesting. And I read it, I read it a couple of times because it was a statement, it was well written and it did a really decent job of refuting from the former president's perspective. But

As Tevye used to say, a fiddler on the roof. It really wasn't much more than a bunch of on the other hands. So where is this headed at Tennessee State University? Another headline at a News Channel 5, Emily West and Chris Davis on the 21st. Without financial intervention, Tennessee State will have a $46 million deficit this year. So the state says that they owe. Tennessee State 500 million. The federal government says 2.1 billion.

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and they're owed this, the land grant college or some guidelines behind that. The college leaders are now screaming for the state or the feds or both to show them the money. okay, wrong with that in theory, but let's look at where this is headed. It's headed to the courts, almost certainly. And what happens while this is being litigated by Tennessee State University?

Enrollment continues to dwindle. and staff leave. I understand the financial aid and finance departments at TSU were already described as needing desperate help. Cash deficits mount. And the current pathetic graduation rate, I think it's around 20%, drops even lower. So let me throw out a scenario here.

There are over 6,000 students at Tennessee State. The story doesn't describe whether they're full-time or full-time equivalent. It's an important detail, but the of the scenario is to hold. Best case scenario is 6,000 students and QuickMass shows there's about 97,000 FTE full-time equivalent students, and I standardized measure. 97,000 full-time equivalent FTE students in all 10 Tennessee four-year public colleges.

of the 10, 8 of the 10 had decreased FTE enrollment in 2015 and 2022.

8 of the 10 had decreased enrollment in those eight years. Those eight colleges lost about 8,000 students in that same time period. So where am I headed with this? And I understand that TSU is historically Black college university. I know they have a fabulous band. of fact, I was looking forward to them playing at a football game this fall, and they weren't able to make it because of financial reasons. But the state of...

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Tennessee only has one college, and that's the Big Land Grant, UT Knoxville, that graduates more than half its students. The other nine don't graduate even half their students in four years. Gosh, have I talked about that before? The lowest ranked four-year graduation rates at public colleges in Tennessee, Tennessee State University, at 21%, 21 out of every 100 students who started.

at Tennessee State University in 2018, graduated in 2022. Draw your own conclusions on quality, on the ability to graduate students. It's just not there. And again, we continue to see a focus on input in the form of enrollment, an enrollment focus instead of a graduation focus, instead of a graduation focus. And I wonder how many press releases Tennessee State University and other

state colleges in Tennessee. When how many they send out each May announcing they graduate something like get two out of every 10 students that enrolled there they don't. The solution, State current Tennessee State universities are matched to the same majors at one of the other nine state universities. And maybe that results financial challenges any others might have. And maybe some more of these students actually graduate.

from a Tennessee State College and certainly, certainly more politics to come into play. Page four, Fitch University, I'm sorry, Fitch University. Fitch, the rating service, revises Anderson University, Indiana's outlook to negative. This is on Tuesday, November 19th, from Fitch Ratings. And here's why. They're concerned that Anderson is continuing to use non-recurring items, such as selling stuff, my words, not theirs.

and extraordinary endowment draws, and Matt Hendricks and I talk about this all the time, using both of those to cover budget gaps for the fiscal years 2023, 2024, and expected shortfall in 2025. And Fitch's most significant concern, although those first ones are significant, was that Anderson will miss its debt service coverage ratio of 1.1 for fiscal 2024, requiring a consultant report.

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I'm sure that will be important. That puts Anderson at risk of a possible default. The bond holders for whatever those bonds are don't issue a waiver because they're not maintaining, Anderson University is not maintaining the debt service requirement ratio as part of the loan they took for this. And remember, give Anderson credit that at least how Fitch rating them, only a small percentage. Only a small percentage of colleges pay for a bond rating service like Fitch.

Excuse me.

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And listeners, if you want listeners can get a similar analysis like Fitz does every Tuesday on the College Financial Health Show with Matt Hendricks and with me.

Accreditor confirms Hannibal Lagrange University turnaround.

removes university from probation. This is November 19th. From the Missouri Baptist Center pathway. All right, it's a news outlet associated with the Baptist church. That's fine. And this is the epitome. This is the epitome of a morsels to meals story. I posted on LinkedIn about this last week. That morsel to meals story, I heard that analogy from my friend, Colbert earlier this year.

And here is a quote used in different media reports. And as you'll see below, I'll beg to differ with the assessment in these news reports and from the accrediting agency, the Higher Learning Commission. Here's the quote. Hannibal the Grange university leaders see this decision, this accreditation reaffirmation. They see this decision as marking a new era of strength, stability and growth for the institution. And they believe this positive development underscores

Hannibal O'Grange's commitment to ensuring a strong future for its students and faculty as well as for the minor, excuse me, as well as for the wider community. The HLC assessment team noted.

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Annabella Green's university's diligent work towards financial health, improved enrollment strategies, responsible endowment management. I'm stopping, I'm stopping right there. And of course, colleges have cheerleaders in local media and professional organizations. Their spin is expected, but I beg to differ to the data as we always do, to the data we go since.

2018 the FAFSA submissions.

almost 700 students to Hannibal the great university. Fall first-time undergrads down a hundred.

FTE full-time equivalent students down almost 400. In 2022, Hannibal Lagrange University did a 13.6 % draw on their endowment. Typical one is around 4%, 5%. Hannibal Lagrange is already low endowment, around 10 million in 2022. It's now down even more, providing less opportunity for growth.

And since 2016, the college's endowment is down 3%. You know what the national median is in that same time period? Up, up 45%. And just another important detail that nobody covers except here and Matt Hendricks and I on our show. Since 2017, Hannibal Lagrange's depreciation, cap-action depreciation has been below the minimum investment of.

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1.0 that's inside baseball, inside higher education. Let me tell you what it means. They're not spending hardly anything on campus infrastructure. It's almost certain that the campus, the campus infrastructure at Hannibal LaGrange University is being allowed to deteriorate. And do they graduate a lot of students to overcome all of this? Absolutely not. From 2015 to 2022.

The four-year graduation rate was only slightly better than Tennessee State. It averaged 26%. Why does someone else have to point this out? Accrediting agencies like HLC continue to accept financially unhealthy colleges for accreditation only on those colleges where that they will do better. HL Hannah Bullock range may have crossed the eyes

and doubted its tease, but there is no demonstrable proof in the data that it has recovered. To the contrary, there is every bit of evidence to suggest a very short runway to even survive. So what kind of mutual back-scratching is going on here? When the reviewers for these agencies submit the reports on the college, does anyone at HLC read them with a critical eye?

who, I've asked this before, who's protecting the students and their families who are paying to attend these financially weak colleges. Certainly, it certainly is not the accrediting agencies. And again, thanks to Matt Hendricks at Prospective Data Science for a lot of the data I used in this story. And how about a wrap? A wrap after a tough story, but that's why we're here. Colleges can spend data any way they want. We're here.

to at least offer a perspective based on real data and not just palm palms and cheerleaders and folks with a vested interest saying, hey, we're doing just fine because we dotted our I's and crossed our T's. But I do want to wrap this podcast with my best wishes for the Thanksgiving holiday for you and your family and your friends. Higher education is indeed something to be thankful for. I talk about that regularly.

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in my college viability manifesto. College is a good thing, do it if you can. It is of course one thing to be thankful for another few weeks or months of survival at too many colleges that we're going to see and will continue to see. It is much more satisfying to be grateful for colleges whose long-term financial health and viability is assured.

I'll be back next Monday with another episode of This Week in College Viability. It's Gary Stocker with College Viability. Best of the holiday to you and yours. We'll see you again and we'll talk next week.