Living the Nightmare of a College in Trouble - with Gary Stocker and Jeremy LaKosh

Welcome back to a special edition of This Week in College Viability. My name is Gary Stocker, and a special edition indeed today. We're going to talk to a gentleman who is living the nightmare of a college in trouble, and I'll have him share the details with you. My guest today is Jeremy Lakosch, and Jeremy is currently the CEO of a retirement community in Eureka, Illinois. He's a 2005 graduate majoring in history and political science at Eureka College. He's been on the alumni board at the college for 6 years and president of the Eureka College Alumni Board for 2 years. And as you might imagine, Mr. LaCasse is active in his community. Jeremy, thanks for making time to join us today.

Gary, thanks so much for having me on.

Let's get right to the questions. Give us a scenario. Tell us about the situation at Eureka College.

Well, there's a couple of things going on at Eureka College right now. One is they're facing the effects of the macro environment that you have covered quite a bit in your research and in your podcasts. They're dealing with the various issues regarding discounting in higher education, lower enrollments. So there are the pandemic and coming out of the pandemic, there are some difficult macro situations that the college is dealing with, but there are also some situations that are unique to Eureka College that they're dealing with right now. Their retention rate has plummeted. It is one of the lowest in the state of Illinois. Their graduation rate has plummeted. And so we're seeing these very poor outcomes coming from the college that are concerning to alumni. And in addition to that, the financial situation has eroded considerably. And so now there are a lot of people questioning how viable Eureka College is. So that's kind of the gist of the situation. Alumni are very active in trying to figure out what's going on. And unfortunately, we are not in a position right now where we're able to have constructive conversation with the board or administration.

Interesting. And as you know, and as our listeners would know as well, I have these kind of conversations with lots of folks. And even outside of those conversations, many colleges say they are unique. Unique programs, unique location, unique history, and Eureka certainly has that. What is unique just about the college itself at Eureka College?

There is so much history on the campus of Eureka College, it's unbelievable. Obviously, the big north star when you're marketing Eureka College is that Ronald Reagan, President Reagan, is an alumnus of the institution. He graduated in 1932. But there's so many other things. If you walk on to the very edge of campus south of Pritchard Theater. There's a house there called the Binkley House. It was donated to the college 60 years ago. There was a gentleman by the name, I believe, was Jacob Binkley that lived there, and he helped the college figure out the exact spot that Abraham Lincoln stood when he spoke there in 1856. And there was a rock that actually marked that spot. Mr. Binkley was a child when this happened, when the speech happened, happened. And he was in his 80s or 90s. So he was one of the last living people to see it when he helped the college point that out. And so when you stand where that rock is and you face the campus, there's a ton of history right within your eyes. You have the chapel to the right, which is where Ronald Reagan gave his first political address. And you have Pritchard Theater to the left, which housed German prisoners of war during World War II. Who would march up Main Street to go to the canning factory. So you don't have— I mean, you could barely set foot on the campus and you're already immersed into the history of that place. Lincoln spoke there. Reagan went there and spoke there several times later on. It's just chock-full of history and is a really special place to its 7,600 living alumni.

And you and other alumni from Eureka College have reached out to me over the last year or so, and you've come together to try and ensure that Eureka College survives. Can you give us an overview of what that alumni group is doing, Jeremy?

Yeah, so the alumni group is full of a different hodgepodge of people with different professional backgrounds who have had formal involvement with Eureka College at some point during their alumni their time as alums. So not only are they alums of the campus, they have served in other capacities. I was the president of the alumni board for 2 years and a member for 6 years. I was an alumni representative to the board of trustees and various committees for 6 years. One member was a former staff member, another is a former member of the board of trustees. So there's a variety of people with a variety of different roles with Eureka College as alumni. They've been trying, we have been trying to engage the college for, in some cases, 6 years to have a constructive conversation about what's going on there. We're seeing things that are problematic that are causing a lot of stress amongst the alumni constituency. We're not getting a lot of information or communication. And so we're attempting to try to have a constructive dialogue. Now that hasn't happened. So in December of 2023, Somebody started a Facebook group that allowed public input. Anybody can come in, see what's there, can input anything. And that group within a couple of weeks grew to over 1,300 people and today is now over 1,500. And so we're having the conversation right now on social media in a public forum in a group called Eureka College Alumni Update. And we're gonna continue to occupy that public space until we can come up with some constructive solution.

So you and I have talked, of course, before the podcast today, and the College Viability app that I put together is going to compare Eureka College and almost 1,300 other private colleges in the United States over the last 8 years. And I have my opinions, but let's get to the heart of this matter. Realistically, Jeremy, from your perspective, can Eureka College survive, period?

So from a probability standpoint, Gary, I think where things are at right now, there's a 95% 5% chance that the college does not survive where it is currently at. The fiscal year 2023 financials came out and it, it looked awful. The cash flow from operations, so that's cash flow generated from day-to-day operations, went from $500,000 to a negative $1.75 million. So the college burned $1.75 million in cash last fiscal year. Just in day-to-day operations. That does not include the investments that they need to make in the physical plant, in the assets of the college. They need to do at least $1 million a year there. And last year they only did $183,000 because they were strained of liquidity. They're borrowing from the endowment in order to keep operations going. They've almost entirely maxed out their line of credit. So they're running out of liquidity quickly. And so this is, This is a situation that has, and it wasn't this way when we started this group 6 months ago, it wasn't urgent, but since this new audit has come out, it is urgent. And so I will say realistically it can't happen, but as long as the lights are on, we're going to fight to try to keep the college open.

Now, you mentioned to me before we started recording the podcast today that the administration at New York College, leadership, and I presume the board, Jeremy, are suggesting, and I'm paraphrasing here, that all is good. And just from your perspective as being really active in that Eureka College alumni group, what in your opinion can Eureka College leadership do to turn this around if they can at all? And if so, what do they have to do?

Yeah, I think first off they've got to get their head around the problem. I don't know why they're saying what they're saying, you know, without knowing why, you don't know whether or not they actually have their head around the problem. In a February 1st town hall meeting, the president of the college told the students that the college is not going to close and that in fact it is in the best financial shape it's ever been in. And the president was quoted that in the April 12th edition of the Eureka College Pegasus. That's the student newspaper. So now it's in print out there that that that's been said. And additionally, the provost of the college has said that the retention figures that I am providing into the group showing that the college is underperforming are, uh, disingenuous figures because I'm not using the correct peer groups when comparing Eureka College to others. And my question is, what kind of peer group is she looking at? We're talking about a college that occupies a space where the average retention rate, private, not-for-profit, is 79%. Eureka College has at or under 63% for 6 consecutive years. There's no group out there in the private not-for-profit space that you can find that has a retention rate that low that you could argue is doing well. And so again, this departure from reality is kind of mystifying. Are they saying it as a marketing gimmick? They don't want people to know there's a problem? Or do they truly believe what they're saying, which is really terrifying? Because then to answer your question, I don't know what can be done because they're under an entirely different thought process than what they need to be. The other thing I'll mention, Gary, in terms of a near-term opportunity for Eureka College, a January 8th letter came out from the board of trustees that said that the college has secured $7 million in grant money since July of 2021. From July of 2021 to June of 2023, this is in the audit, the college has only collected $2.2 million of that grant money, $2.2 million, and less than $200,000 of that was in last fiscal year. So by my calculation, there's about $4.8 million of grant money sitting there that the college just needs to execute in order to receive. So that I think is the low-hanging fruit immediately. Execute on what you need to do to get that grant money in And hopefully that will provide enough liquidity to buy you more time to do additional reforms that are needed to turn it around. But let's be really clear about this, Gary. These are the same people that have been in these leadership positions for 7 years. They took us from a good point to where we're at now in 7 years. How in the world are they going to turn us around in an even more challenging macro environment in the next 2 years? So we have to face the reality and face the facts of what's going on here.

The next question I already know the answer to, but I'm going to ask it anyway because I do that stuff. How cooperative has the executive team and board leadership been with your alumni group?

So the situation there right now, it's, it's not good. It's not getting any better. There is a very negative perception of alumni amongst executive leadership. Don't really know what the board thinks of the alumni. We're not really hearing a whole lot. So we're oil and water right now in terms of trying to come together to forge a path forward united towards a solution. And, you know, if there's one recommendation I would throw out there to kind of break this tie, if you would, is I think the Board of Trustees should come— should go out and hire an independent consultant experienced in higher education to come in and do a climate study of Eureka College. And what a climate study is, is it's an actual look at the operations of the college through the eyes of the stakeholders and constituents and have an independent third party do it. Don't involve this alumni group, don't involve the executive leadership. Third party comes in and they break the tie. I think that would probably be the most eye-opening experience for all parties involved, quite frankly.

And when I have these conversations with others in similar situations, Jeremy, we have to look at the end in mind. And what happens? What happens if finances and demographic changes that we're just now starting to see make Eureka College not viable? What happens to the community? What happens to the employees? What happens to the students? From your perspective?

So Eureka is a town of 5,000 people, and Eureka College occupies a huge swath of land on what I would call the southeast corner of the city. There's about $50 million in assets on that swath of land, and that includes dormitories, the cafeteria, the library, the academic buildings. And approximately 8 single-family homes. All of that going dormant and closing would be devastating to the Eureka community. Property values around Eureka College would become impaired. Clearly, you run the risk of individuals or entities with not the best of intentions acquiring the property. We've seen a lot of situations where distressed not-for-profits are selling out to Section 8 developers, and that creates all new problems for the community. So there's a lot of risks involved there. And being a member of the Eureka community, it kind of doubles up my fight. I'm an alum of the institution and I'm a member of this community, and I know that the economic fallout could, could be devastating. And so Yeah, it's something that's on everybody's mind around here, you know, in terms of what do we do as a community if this place fails? Because I got to mention this, Gary, there are 19 members on the board of trustees. None of them live or work in the county that we're in. They're all from far away. So if the college folds up, they'll just leave and, you know, go back to their professional lives and not have to worry about the mess that the good people of Eureka who have nothing to do with this are going to get dumped on their laps.

Goodness gracious. You told me that previously and I had forgotten all about that. That's a tragic situation among other things. All right. Final question. And almost certainly this podcast is going to get in front of the Eureka community for sure. And it's reasonable to assume in front of some portion of the leadership and the board. And if you could send one big message to the executive team at Eureka College and the board leadership, Jeremy, what would that one message be?

That one message would be, if you're not going to listen to us, start listening to some of the experts in higher education. There are a lot of qualified people in higher education that you could talk to and bring in to look at this situation and provide an unbiased but highly qualified opinion. And there'll be some people, I think, that would be willing to do it at no cost. We have found a number of experts in higher ed in our group, you being one of them, Gary, who have come in and shined a light on different things we need to be looking at. The board needs to go out and find those people on their own and then listen to them. If they're not gonna listen to us, that's fine. Listen to those people because time is, time's a-wastin' right now and there's not a lot of it left. And it's gonna require a lot of people to roll up their sleeves if we're gonna turn this thing around.

Jeremy, with great conviction and passion and excellent details, you've done a fabulous job of portraying the really sad situation at Eureka College. Jeremy LaConche, who is alumni of Eureka College in central part of Illinois, has been my guest today. He has shared with us about living the nightmare of a college in trouble. Jeremy, again, thanks for making time. I appreciate it.

Thank you so much, Gary. Thank you for allowing me to share our story with your listeners.

Our pleasure, and we will continue our conversation And for this week in College Viability, this has been a special episode with Jeremy LaCosche speaking about the scenario and situation at Eureka College in central Illinois. My name is Gary Stocker. We'll do this again next week.