This Week In College Viability (TWICV) for April 22, 2024

It's April 22nd, 2024. Hi, it's Gary Stocker back with another news and commentary podcast episode of This Week in College Viability. And where are we headed today? The Higher Learning Commission says we are not a hospice. Stay tuned for details on that. And what happens to faculty, staff, students, and the community when a college closes? This is a question from one of my listeners. And the Boston Globe must be reading and listening to my content. They talk about the right way to close a college. And Webster University's one of the frequent performers on This Week. Webster University auditors have concerns about the university's ability to continue as something called a going concern. I'll have more on that. And finally, adding college football is not the enrollment-boosting panacea that many college presidents have hoped for. These stories and much, much more. But first, as always, layoffs, cutbacks, and closures. No closures this week. Stay tuned for new closures in the coming weeks. There will be some. But the University of St. Thomas in Minnesota is to cut 26 staff positions and leave 30 open, I think, staff positions unfilled. And they make sure to announce that no academic programs or faculty positions were among the announced cuts. And as always, I'll include the link to the story in the show notes. And this is kind of the Iowa Wesleyan model. The enrollment is up at the University of St. Thomas, but the unfunded institutional grants— you and I know those as loans or merit aid, or many just the plain old scholarships— they increased $43 million. That's $43 million, 292% from 2015 to 2022. Don't tell anybody they're giving away the store at the University of St. Thomas just to get folks to enroll, and they're still not making it. And let me add this, you know, I always talk about graduation rates. In 2022, the 4-year graduation rate at St. Thomas, University of St. Thomas in Minnesota, was 34%. The 6-year undergraduate graduation rate was 43%. That's not a college. You can't graduate your students. That's not even a coin toss college. That's more of a tuition collection enterprise. If you can't graduate students, you're not a college. Maybe, maybe the folks at the University of St. Thomas should try graduating at least enough students to be classified as a coin toss college. And trust me, when the admin, when the leadership at St. Thomas comes out later, whenever that is, and announces cuts in programs and faculty, the protests and no-confidence votes will come flying. And if you're a faculty at St. Thomas, if you want to get ahead of the curve, check out the Private College Viability faculty and staff version of the College Viability app. I'll leave a link in the show notes. You can review 9 IPEDS reports about your college and almost 1,300 other private colleges from 2015 to 2022. You can compare St. Thomas to regional or national competitors. Oh, interesting. Page 2: financial consultants tells the folks at the University of Wisconsin-Green Bay to act with urgency. This is from Danielle DeClos at the Green Bay Press Gazette. Now what's interesting about this is that the— I believe the president of the University of Wisconsin-Green Bay In his note says, well, the auditors or the consultants, I guess is better, the consultant says we have to act with urgency, but no, he went on to say we really have to act with urgency. All right, I think that's my, that's my, my Tevye response. On the other hand, and then on the other hand, just a bad response, just a bad response from the leadership at the University of Wisconsin-Green Bay. And then on to the Higher Learning Commission. This is a story by Ben Unglesby at Higher Education Dive. It was on April 18th, and the headline reads, "We are not hospice." That's in quotes. The race to get faster in predicting college shutdowns. And the subheading reads, the Higher Learning Commission is based out of Chicago. They have about 1,000 or so colleges in their purview. The Higher Learning Commission has been studying institutional closures to understand the signs of distress, officials with the accreditor said at its annual conference. That was a week or so ago. So in the category of day late and many dollars short, the Higher Learning Commission has announced they are not a hospice. All right, well, I, I don't know that the metaphor is particularly pleasant, but clearly they have a good wordsmith at the Higher Learning Commission. HLC apparently now sees its role as a college viability judge and jury. And they've had decades to prepare for a reasonably obvious college closure trend, and now all of a sudden they want to be an education mortician of sorts? I just thought I'd stick with their analogy. That's not their role. Their historical role is that of I-doters and T-crossers in an alleged effort to to ensure a quality education for college students. Nothing wrong with the concept, but it really, it should be mentioned here, back to graduation rates, that most colleges in this country do not graduate even 50% of their students in 4 years. Sarcasm alert, if you can't graduate even 50% of your students in 4 years, Nice job, HLC and the other 5 or 6 accrediting agencies. And now they want to predict college closures? Let's bring in Charlie Brown here, and Charlie Brown's quote is, "Good grief." And again, the show notes will include a link to this story. Sam is a listener to the podcast. He dropped me a note and said, "Gerry, what happens to all the folks who are being let go after a college closes?" And it impacts faculty, students, faculty, staff, the community, and lots. And, and there's a good book that talks about that, Requiem for a College. I've mentioned it many times. Jonathan Nichols wrote this book about the 2017 closure of St. Joseph's College in Rensselaer, Indiana, and the book was just out in 2022. If you haven't read it yet and you're involved in higher education and you're concerned in particular about your college's viability or the cutbacks they're making, check out Requiem for a College at Amazon. You're reading your future. John Nichols does a fabulous job, and I'll spare the details this time because I've shared that many times in previous podcasts. So here's my response, and it's legitimate for sure, and it's sad for sure. It's very sad for sure. But faculty and staff, let's look at this and the community. Let's look at this in the context of the bigger economic picture. It has happened in other industries— layoffs and cutbacks, closures, going out of business— and it's just now happening in higher education. These sad events have hit individuals and families and communities throughout the country for decades. And, and if you're faculty, like I just mentioned previously, I have a dedicated version of the app just for faculty and staff, one for private colleges, one for public colleges. You can use it to compare your current colleges or other colleges that you may be considering for a career move. I'll put the link in the show notes as always. Page 3. Thank you, Boston Globe, for reading my stuff. The headline reads, with the college-age population shrinking, some schools won't survive. Duh. But they go on to add there's a right way for them to close. And the subheading reads, it's almost inevitable that some New England colleges will close. Thanks for joining the party. That was my comment, not theirs. But there are ways to minimize disruption. And again, thanks Boston Globe for listening and reading to my stuff. And here's what they said. It's not bad. The projected fall in college enrollment means there are simply too few American students for U.S. colleges to enroll. All right, day late, I understand. Colleges, it continues, colleges should do what they can "to win the game of institutional musical chairs." I've not heard that one before. Institutional musical chairs that will play out over the next few years. They go on, "But some of them are bound to lose." Yes. "As the higher education landscape changes, closure and mergers need not be dirty words." And they conclude with, "As long as they are done well." Now, I'll add that Massachusetts appears to be ahead, and Boston, of course, is in Massachusetts. Massachusetts appears to be ahead of all the other states in preparing for the coming college closures. The Globe's a little bit late on this story, but that's not a big deal. And in 2018, Mount Ida in Massachusetts was the poster child of how not to close a college. They announced closure in April and closed in May of that year. And Massachusetts reacted. It was a year or two or three later, they enacted legislation that lets the state monitor the financial health of private colleges in the state, and they have given a couple of heads-ups of colleges that are in trouble. A few, and not even a handful, of other states are looking at similar legislation. But again, thanks to The Globe for reading my stuff. I'm glad to provide you leads anytime that you want. Let's move on. Webster University, a frequent podcast partner. Webster University's deficit ballooned in fiscal 2023 largest tax filing shows. And this was a story in the St. Louis Business Journal— that's going to be behind a paywall— written by Jacob Kirn, K-I-R-N, on April 16th. And why is it, you might, you might be asking, why do I pick on— why do I regularly bring up colleges like Webster and Birmingham Southern and Northland College and St. Norbert and others? Well, each, in my mind, each apparently go out of their way to earn a mention on this week in college viability. And here's my first concern before we get into the meat of the issues with Webster University. Why is it that the board chair at Webster, his name is Sumit Verma, V-E-R-M-A, not Julian Schuster, the president, he's always the one interacting with the local and regional media? What kind of ego are we dealing with here? He has yet, yet over the course of almost a year, he has yet to answer questions live. He only responds via written statement. I guess the rhetorical question I can ask is what kind of confidence should the Webster University community have in an organization that won't directly answer questions? Now Verma, I'm sorry, that's his first name, yeah, Mr. Verma, yeah, excuse me. Mr. Verma said that great days are ahead for Webster. All right. Management by PR. We are seeing positive trends, he says, here at a time when higher educational institutions across the nation are challenged. All right, say whatever you want, but I have data. And what is a positive trend in Mr. Verman's mind? I normally would go to the data on this. I'm not going to do that this time because I've done it before on Webster. And even if there is a legitimate 1 or 2-year positive blip And I have my doubts. Even if it exists, even if it exists, it's not nearly as important as the awful financial enrollment and graduation rates that Webster University shows from 2015 to 2022. But that's just the wind-up, because I want to introduce a potentially— I think a potentially explosive update on Webster. For regular listeners, you know that I am a data and finance nerd. There's no cure for that. So you won't fall out of your chairs when I tell you I routinely read college financial statements. A few weeks ago, I opened the 2022-2023 Webster University financial statement, and in the course of routine— I do this a few times a week— I always do a control find search for the phrase going concern. I do that because it's an accounting term that says the college may be in trouble, and I'll talk more about that in a minute. And usually, in almost all cases, there's two routine references. One is says the accounting firm has responsibility to address the college as a going concern, and the management has a responsibility to respond. That's almost all that I see. Last time I saw any of the— any reference beyond that was at a college called Quincy University in Illinois. I think it was in 2021, something like that. Normally it's 2. Webster University in the 2022-2023 audited financial statement had 17 references about going concern. 1-7, 17 references. Now let's, let's define our terms. Going concern is accountant speak. For those of us that aren't accountants and want to follow this, going concern is equivalent to staying in business. Accountants assume that any business they audit is going to continue to be a going concern, continue to stay in business. That's their default assumption. Note 24, for those of you that want to go there, I'll tell you how in a second. Note 24 in the 2022-2023 Webster University financial statement is a serious, serious couple of paragraphs on the accountant's perception analysis interpretation that Webster might not be able to continue being a going concern— read that, stay in business. Now, if you want to follow, follow— I use the Federal Audit Clearinghouse. You can Google for that, search for that, and find the financial statement. I've got a YouTube video that shows how to do that as well. Now, the story— the regional media has not reported on this yet. I don't know if they will. It might be too much inside baseball for their readership. That's their decision, of course. And will Webster University close? I, I still doubt it. They've got, you know, a couple thousand enrollment, more than that. But man, the university leadership appears to be doing everything they can to prove me wrong. If this goes down badly, this will be a case study of case studies On how not to run a college. Page 4: Waiting too long can doom a college merger, expert says. And this is from Higher Education Dive. Guys, John, I don't have the author for the reporter on this one. My apologies. Waiting too long can doom a college merger, experts say. The best window for consolidation is usually gone by the time colleges are deeply distressed, panelists at the Higher Learning Commission's conference— I talked about that earlier, said a couple weeks ago. Now the quotes here, most of the story quotes come from Dr. Ricardo Aziz, um, and he has a book coming out later this year about mergers and acquisitions in higher education. He is— if there's one single guru on higher education mergers and acquisitions, it's Ricardo Aziz. And this story is really, again, the link will be in the show notes. This story is not for those many private colleges for whom the closure die is already cast. It's really a story for those looking beyond this current closure period to the next closure period. And I'm speculating, educated speculation on my part, it's about 3 to 5 years out. These colleges really need to think about scaling, scaling, scaling, just like every other industry. That I've talked about before. It's going to hit, it's going to hit higher education. It's going to hit higher education. And for those colleges, especially the private ones, but even the public ones to a certain degree, I encourage you to look out 5 to 10 years. Don't exclusively paint speculative rosy pictures about the impact you might have on new majors and new facilities and new students Those, first of all, those programmatic enrollment changes are problematic at best. Think about every other industry in this country. As I've shared just a moment ago and many times before, all of them I can think of have engaged in significant, significant consolidations over the past many years, many decades. And it's only logical that higher education will ultimately head down that merger and consolidation road. Engage in the outlook, don't engage in the outlook, you do so at your own risk. At least prepare for the possibility. Then an interesting note, and this is the last two stories for today. The incredible shrinking California State University, but it's— and there's a headline about decreasing enrollment stuff, but California State Universities have noticed steadily declining enrollment rates and are implementing measures to address the phenomenon. Okay, who isn't? And this is written by Zach Zavala at the Golden State Express, I think it was last week. And here's the essence of this concern. Both public and private colleges, as they engage in cutbacks and layoffs, and we talk about that every week, are cutting, as part of that process, are cutting back on the number of sections offered on any individual course or class. And so, so many classes, sections if you will, are being decimated by budget cuts that students are reporting. There's a student quoted in this story. I'm not gonna use the name of students ever, maybe first names on occasion. The student reference found it increasingly difficult to find classes in preparation for the current term, and resulting in that it conflicts with her schedule, her work schedule. And so she's gonna have to, I said she, well, She's going to have to take extra time to get one of the major required classes. There was only one, apparently, the class she's choosing from. So here's, here's what's going on. So very few public colleges will close. I've said that before, and I'm sure I'll say it again. Many privates will continue to close. However, many, if not most, both public and private, are cutting back. So instead, for example, of 3 to 5 upper-level accounting courses— I'm making that part up— or finance courses or biology courses, Instead of 3 or 5 upper-level courses, they may be only offering 1 or 2 just to keep their lower— just to lower their labor costs. So as a result, what appears to be happening, one of the many reasons students are having to stay longer and delay the time when they can start earning post-degree income, is they have to wait for sections to open up that fit their schedule, especially if they're not full-time students. Now there's a substantial cost to that, both, you know, a little bit of is the cost of the tuition. Not that it's substantial, but not a big deal. But if you have to wait an additional year or so, I've done some, some basic calculations on this, and it's about $50,000 in combination of increased costs, but more importantly, delaying earning that post-degree income. And that's a substantial opportunity cost because a college isn't offering enough sections for students to finish their degree. We're out of— finally, we're out of the college football season, and Sportico's Daniel Labiette on April 19th wrote, "College football unlikely to boost campus enrollment, per study." And I'll quote his— I'll read a quote from his story. Daniel Labiette: A study published this month in the academic journal Research in Higher Education based on data and analysis at the University of Georgia, concluded that adding a football team has not proven to give a university a leg up in attracting new students and their dollars. He goes on to say football is not a pigskin panacea— nice work with the alliteration— football is not a pigskin panacea for colleges and universities. It adds to the health risks in football for competing in that sport are real and may well increase for these colleges. And interestingly, that he goes on to add, these will create significant moral questions for college leaders if they anticipate starting teams or resuming competition in the face of declining enrollments. And what they're saying here is, our colleges— this is not good— Are colleges not significantly taking into account the health risks of a sport like football for students as they pursue additional students and their tuition revenue? I'm trying to be nice here. I did— this is posted on LinkedIn, I think, and I added a comment in LinkedIn asking if the researcher could do a project on the net revenue, the net revenue impact of adding football and other sports. I've had college presidents tell me that all sports are net revenue losers except for the biggest of big. And so let's look at it this way: when you're looking at the financial piece of netting revenue, fixed costs for classes are paid by non-athletes. Envision English 101, Math 101, Biology 101. It's the students that pay tuition, discounted tuition, pay the fixed costs. If I'm a college financial person, I'm thinking, you know, any tuition paid by athletes drops mostly straight to the net. Straight to the bottom line on the revenue side. But if you add in the costs from a department of football, which they all are, I don't know if they categorize them that way, I really worry that there's a net loss. So even adding a football team, even though this study suggests it doesn't have any long-term impact on enrollment, even adding a football team I think is a net loser on the revenue side. It's just another case of college leaders managing by public relations, you know, something to the effect of, look, I added a football team to save our college, and it's probably not going to be a factor. So let's wrap this up. The stories and commentary this week included one on football we just did, on financial statements, and our accrediting agency that doesn't want to be a college hospice. But I want to close with a story about an AI exercise I did this past weekend. I asked one of the AI tools that I use for a 300-word article on how the FAFSA delays could create a a catastrophic college closure event this fall, in the fall of 2024. My College Counterpoint podcast partner Joseph Pilarito used AI to generate a rebuttal piece. The catastrophic closure piece was scary. I'm not even going to post it. The rebuttal piece that Joseph did was sound, although in my mind a little short-sighted on perspective. And folks, it's one thing for me to do as I do, which is to regularly engage in educated, informed speculation on the future of higher education and college closures. I do it, I will continue to do it. But if you haven't pondered the implications of the FAFSA mess in a large-scale scenario, trust me, it's a valuable exercise. Even if the catastrophic scenarios don't come to pass It is better to have pondered responses in advance than engage in frenetic scrambling as it happens. Let's call it a wrap for the April 22nd podcast episode of This Week in College Viability. My name is Gary Stocker. Hey, let's do it again next Monday.