This Week In College Viability (TWICV) for December 26, 2023

It is the last This Week in College Viability podcast for 2023, and it's December 26th. Hi, Gary Stocker. First off on today's podcast, many thanks to the increasing number of folks listening to and downloading this podcast. I am grateful. I'm trying to make a difference. I think that I am, but I'm grateful for your listening to my podcast and considering the perspective and content that I share. And today we're going to talk about public flagships, some that are both booming and some that are not. Got a bunch of stuff on more small college struggles, and that's going to be a weekly event, I think. Michigan State, the big public university in Michigan, the Board of Trustees pledged to not interfere with the new president. Yes, and Santa comes down all of our chimneys in one night. A story on college facilities. We haven't talked about that much. There's some risks there. Pets on campus at Ferris State, interesting story. And then we're going to wrap it up with young workers, a story about young workers still benefit from a college degree. And that's true, and I'm going to talk about that in some detail. But first, why have I started? Why do I do this podcast? And I have 50-some of these out in the last year, and there is no joy. Chronicling a crashing industry. Yet there remain millions, millions of students in colleges, and there always will be millions. But it's those colleges whose last dollar is circling the proverbial financial drain that I believe are hurting this nation and way too many of its students. Higher education will continue with a smaller number of colleges. I'll say that again: higher education will continue with a smaller number of colleges and a smaller number of degrees and majors. It's going to happen. The market says so. The economics say so. My role is to lovingly point out the business and economic dilemma that higher education faces. Do I do it with sarcasm and ridicule? Guilty. Guilty as charged. I believe, I really believe, that my counter perspective is having an impact on the market. Students and parents are becoming more aware of the risks of choosing financially challenged colleges. I'm right that there will be a massive consolidation. It's inevitable. I just, I just don't know what that time frame will be. So on to today's stories and commentary. The cutbacks and layoffs section. No new announcements over Christmas weekend. I was wondering if some enterprising PR person might post their college's cutbacks and layoffs. In a slow news day or no news day just to get out of the way, but none did. But interestingly, last week Inside Higher Education had a summary of just the most recent, kind of like I do each week. Colleges are 11, and it's Bacone and Manhattan College, Methodist University, Christian Brothers U, Warren Wilson College, Fresno Pacific, and others. The cutbacks, the layoffs have happened. They'll continue to happen into the new year. At what point does the market consolidate? I don't know. It will. It's inevitable. Page 1: Most public flagships are booming. Why are a handful flailing? And this is by Lee Gardner at the Chronicle for Higher Education. And again, as always, the links to these stories will be in the show notes. But the real story in Gardner's article is a reinforcement that perception Perception of a college is reality, and that the academics matter, but only a sum. It's the market perception, and Gardner argues, along with the location, that is shaping the college market for the main public colleges in this country, for the flagship colleges in this country. And it's clear from the article that amenities and location contribute significantly to perception. Eli Capiloutum, who is a president at the University of Kentucky, shares— this quote is shared in the article— as people have told me, President Capiloutum shares, as people have told me, if you invest in where my child is going to live and learn, it says a lot about your priorities. Now, that's fine, it's true, but many colleges, way, way too many colleges, don't have the resources to readily meet payroll, to keep the lights on, let alone spruce up the dorms, add new dorms, and add new staff. So there's another interesting point that comes out of this. You know, the perception piece has always been there. But Nancy Tessier, a principal at the Art and Science Group, I think it's a consulting group, I recall the conversation with an enrollment management big shot at a public flagship university. And his quote to her was, we got our class, to our big flagship, but we killed our regional publics in doing it. Now, I can only speculate that they discounted their public college tuition at the flagship to entice students from a regional public in a state to the main public here in Missouri. Truman State, Northwest Missouri State, Missouri State, Southeast Missouri State— again, I'm making up the scenario— the University of Missouri incented financially many students who might have gone to those regionals to go to the University of Missouri. Nothing wrong with that. That's America. That's how things work. But Robert Kelton at the University of Tennessee also kind of reinforces this. He says full flagships, full enrollment flagships, also sometimes lead to more anemic enrollments at regional public universities. He goes on, the big question underlying all this is how much will states let their flagships grow? Now think about that for a second. Kelton asks how much while states let their flagships grow. I, I gotta defer that for a topic for another day. Matter of fact, I'm gonna put that on my list. That's an interesting perception. Page 2, Manhattan College. The headline reads, as Manhattan College restructures, tenured faculty jobs hang in the balance. We've seen stories like this over the last year, even before that. And this is by Megan Zamheiss at the Chronicle also. And there were 34 faculty positions, tenured positions included, as part of this layoff. And again, the link will be in the show notes. But the issue I wanna talk about here is tenure. I spend a lot of time pondering tenure. I've never had it, so I can't speak from personal experience about its impact on academic freedom. I do believe there's connection. I can't even say tenure is bad. I also can't say tenure is unequivocally good. However, it's clear from the many stories in the media, like the one here at Manhattan College, that the universal tenure model, where tenure is untouchable everywhere, is probably not, probably not going to survive, especially at places like Manhattan College with serious financial challenges. Now, one of the issues that comes up at places like Manhattan is the topic of financial exigency, and that's effectively where a college says, we're not gonna make it. Again, gross generalization. And the public perception is when a college declares financial exigency is we're not sending our children there. And it's a reasonable reaction. And so colleges are hesitant to publicly declare a financial exigency. Here's a catch-22. Almost all agreements with faculty, tenured faculty, includes some sort of reference that to lay off faculty, tenured faculty, lay off tenured faculty requires a public declaration of financial exigency. And for obvious reasons, colleges are hesitant to do that, so they're kind of working the back door. I want to add a sidebar to this. Chuck Ambrose was on the podcast a couple weeks ago, and his book is out just this month entitled Colleges on the Brink. And he makes the case that declaring financial exigency is not necessarily bad, and his book really steps colleges through how to survive that declaration across all the spectrums in a college. But he admits, and I think he admitted in our interview, that the public perception of financial exigency is not good, and that in and of itself is a problem. Columbia College in Chicago: Adjunct faculty strike leaves students in limbo. This is by Anna Savchenko in mid-December, and this is from WBEZ NPR in Chicago. And the essence of this story is the adjuncts at Columbia College in Chicago went on strike, and, and the college did not do a particularly good job of covering for them. There are some stories in this, some articles, some parts in this article that reference that students went 4 weeks with no instructors And then the college on short notice says, "Hey, we have an instructor show up or suffer the consequences." And the students reported that some of these adjuncts, hired adjuncts, were not so good. And you can read the story on your own. The college did offer students a $500 credit for the trauma of this past semester. And as I recall, the strike has still not ended. But here's the bottom line. This won't end well. If we look to the data for Columbia College, and we're not gonna do that today, it's available in the College Viability app. This won't end well. It's probably time for somebody to start looking for that last light switch to turn off at Columbia College in Chicago. Another small school story. This is Notre Dame College. This is from Marco Pria in the Cleveland Scene. He said, "I am reezed with small schools struggling." 'Notre Dame College's Future Is In Flux.' And he starts his story, Mark Caprillo starts his story with this quote: 'The nationwide university enrollment crisis continues, and another local college is eyeing its future amid dwindling numbers.' The nationwide university enrollment crisis continues. Need I say more? Now, another employee in this story who still works at Notre Dame College offered a curt response in, in in response to one of Marc O'Pry's questions about what's going on. And the employee said, "We just don't know. That's all I can pretty much tell you. We just don't know." Well, you do know. We do know. The data is out there. So like always, to whoever that was at Notre Dame College and the colleges elsewhere, we do know the situation. That's part of the challenge. I can tell you which colleges are at risk. I can tell you which colleges are not at risk. One-on-one. I'm not going to do it in public. So let's go to the data for Notre Dame College in Ohio. Again, the data is always from 2014 to 2021, although when we get the 2022 data, we'll change that to reference another, a different 8-year span. In that 8-year span from 2014 to 2021, Notre Dame College's FT enrollment was down 550+ students, or from 1,700 to about 1,200. Their admissions yield was down 6 points. Again, downward trend is what we're looking for there. Their tuition fee revenue is down more than $9 million. So from 2014 to 2021, their tuition fee revenue was down $9 million plus. Their endowment in 2014 was a pathetic $7 million and change. In 2021, although up a few million, was still a pathetic— not quite so pathetic, but still pathetic $10 million and change. And if you've heard me do these podcasts before or read some of the blogs, the threshold, the minimum threshold that I use is $50 million, $50 million as a bare minimum threshold for a college's endowment. But folks, that's not even the real bad news. Let me read you the 4-year and 6-year graduation rates in 2021. For Notre Dame College, the 4-year graduation rate was 20%. The 6-year graduation rate was 38%. Let's be nice, it's the holiday season, let's use just the 6-year rate. It's a higher number, although pathetically so. For every 100 students that started in at Notre Dame College 6 years earlier, only 38 graduated from Notre Dame College. The qualifier is I know some students are graduating in 7 or 8 years. Some transferred elsewhere and are graduating. I understand that. But it's the comparison that matters. 38 out of 100. Why is no one but me citing miserable 4 and 6 year graduation rates like we see at Notre Dame College and way, way, way too many colleges across this country? Colleges are paid to graduate students, not to hold courses. Not to incent enrollment, but to graduate students. And they're not getting it done in way too many cases. Look at the graduation rates. If it's not 50% or more at 4 years, we call that a coin toss college. Really, really, really be careful. So call it tomorrow, call it next week, call it next month or next year. Notre Dame College needs someone to turn that final light switch off because it's going to be necessary sometime soon. And the only question doesn't even apply to Notre Dame College. The only question is which colleges, which colleges will be next. And we have to have a giggle. It's not Fourth of July, but still a giggle for the April Fool's Day. It's not April Fool's Day. So the Michigan State University Board pledges— the Michigan State University Board of Trustees pledges to not interfere in the new president's administration. You heard me joke about this in the intro. Now, of course, Michigan State is a case study in how not to run a board of trustees. But what was interesting, there was a picture that accompanied this article, and it's by Alex Walters in the State News of Michigan, I presume. It was a picture of 6 or 8 trustees, and it was a morose group. And you could, in my mind, you could see the plotting in their eyes. I don't know what that plotting is going to be, but you could see it in their eyes. So if you're a Michigan State Spartan, good luck. But how many other places is this happening? This Michigan State, Michigan now, a little bit along the same lines. How many other places is this happening? Anecdotally, I hear and read that this is a common malady. Board of trustees just, they're not looking at the fiduciary piece enough. They're not looking at the operating piece enough. It's a mess. How to fix that is a topic, a lot of topics for another day. Page 3, the state of facilities. Now, we've not talked about this before. So Gordian, G-O-R-D-I-A-N, is a business intelligence solutions company, and they had an article posted on their own website that I saw, I think, through my Google Alerts, that talks about how little funding is dedicated toward maintaining buildings. I'm paraphrasing, that's not how they called— that they described it. They said the scale of deferred capital renewal— call that maintenance— at schools has reached a level that cannot be tolerated, a 36% shortfall. And the gap, they say at Gordian, is simply not possible to fund given new financial realities. And they go on to argue that the 13-year pattern of underinvestment is not just limited to space and buildings and that kind of stuff. It reflects the common impression that operational issues can always be extended a little further. People can work a little harder. The system, the air conditioning, the heating can run a little bit longer. The duct tape can be used once more. But with operating costs now funded— Gordian says— with operating costs now funded at only 80% of what it should be with inflation, everything else The Band-Aids and duct tape, the creativity in work processes is not enough. These services have strained the ability of departments throughout higher education to get work done in a fashion that cares for the property as well as the programs, the college programs. Gordian concludes the proverbial straw is close to breaking the camel's back. I think I've talked about this before. The most well-intentioned decisions to keep budgeting like we've always been budgeting— this is from Gordian— will have significant consequences, including putting the campus at risk for future operational or building failures. Significant consequences. Let me read that again. Significant consequences, including putting the campus at risk for future operational or building failures. Now, this is a nice way, a nice corporate way of saying— this is me— there are legitimate concerns for the safety of students, faculty, staff, and the community in these under-supported, on these under-supported maintenance issues. Things are going to break because they're not being maintained. Now, here's what you're going to hear from college leaders when confronted with this sobering analysis. We spare no expense in protecting the health and safety of our students. Okay, they have to say that, and they almost certainly, almost certainly have no evil intentions. They certainly don't have evil intentions. But where do the funds go first? Do they go to payroll or a leaky roof? If there are limited funds, do we meet payroll or we fix the leaky roof? If there are limited funds, we pay the electricity bill to keep the lights on, or do we fix a clunky, occasionally working heating and air conditioning system? I really, really, really worry that there is a catastrophe in waiting out there. I don't even want to speculate on what that catastrophe might look like that will be associated with the lack of maintenance or deferred maintenance. But if or when it happens, students and their families will take a much, much harder look at college safety. I don't think they do now. And that, that may be the real straw that breaks the financial back of many, many more colleges. And on to Ideastream Public Media. Connor Morris wrote this story on December 20th. What does the future hold for Northeast Ohio's small private colleges? Now, we've talked about some of these in previous weeks. And I just want to end the story on this one is Lake Erie College, Baldwin-Wallace, and Notre Dame that we just talked about. And Lake Erie in the story is quoting that they are using gifts, fundraising, endowments to keep the lights on. That's a business decision that you can make. It's not a good business decision because all businesses need net positive cash from operations. Colleges need net positive cash from tuition fees for the most part. Think about a coffee shop. Would you— do you know of any coffee shops that run on donations? There's a tip jar, but that's not the same thing. They run on the net cash generated from what it costs them to produce coffee and all the associated products that go with it and the revenues they charge the prices they charge to connect that. Envision a scenario where Lake Erie raises gifts, endowments to keep the lights on. That's got to be a tough decision. Dear Mr. Alumni, Mrs. Alumni, can you give me $100,000 so I can pay the electricity bill? Not, not a particularly impressive approach. And I'll go back to something that Lake Erie College President Jennifer Shuler said. She asked a good question, and the question is, what kind of course offerings, services, and amenities should Lake Erie College be providing to attract and retain students? I've said this before, and let me say it again: there are no programmatic fixes. Jennifer Shuler and all the other college presidents, be careful. There are no programmatic fixes in almost every case that will generate materially significant net cash for an organization, for college. This, as I have said many times before, is supply and demand. Too many college seats and not enough college students willing to pay for those seats. And the economic scenario is waiting for an equilibrium when there are fewer seats, more likely, because the demand for those college seats appears to be something that's not going to happen. Anytime soon. And I continue, just like these three colleges, I continue to see evidence of a college enrollment and revenue business epidemic. These stories are dominating the higher education newscape, and it will continue. Let's go to Iowa and a story about Loras College and a new fundraising program they have called Enduring Values, Vibrant Vision. This campaign was launched in early October of this year, and we'll talk about a story that Tyler Jett, who's a reporter for the Des Moines Register, wrote in early this summer sometime. And it helped me realize and reinforce that the IPEDS data that I use for the College Viability App and the comparisons I share with you— but Jett reported at Loras College Administrators had borrowed 40% of the school's $50+ million endowment. So it's about $20 million they borrowed against the endowment to fund operations and capital spending as of February of 2023. That action, JET reports, prompted its auditors to write that substantial doubt, substantial doubt about the ability for Loras College to continue as a going concern. Could exist. Now, going concern is accountant speak for not going to make it. And one of the first things I do when I'm looking at financial statements for colleges, I do a control find on the words or the phrase going concern. And so it's always in there twice for every financial statement. That's just part of the auditor's qualifying statements. But when they talk about a college being— they have, they have legitimate issues with it continuing to be a going concern, that's a big deal. That's the independent auditor saying, hey, this one's not going to make it. So let's go back to Loras College, and they're in 2021 endowment— end of year endowment was about $43 million, and they want to raise 3 times that, almost 3 times that, $120 million. Over the entire— I don't know how long they've been around, decades if not centuries— Loras College has $43 million below our threshold of 50, and they want to raise $120 million. Delusion is a terrible, terrible disease. This is just good money after bad. And just a sidebar, I noticed that they listed the folks on the campaign steering committee, and not one of them has graduated from Loras College in this century. And it was 6 dudes and a girl, and their graduate alumni years were 1960, 1991, 1969, 1981, 85, 76, and 72. Draw your own conclusions. Page 4: Ferris State to allow students to live with parents— or parents, putting the mom and dad like that— Ferris State University to allow students to live with pets on campus. Now, I read this whole story. I expected it to be an enrollment gimmick, and it really didn't read that way. It sincerely appears that Ferris State University I believe that's in Michigan, um, has found some value in testing out, piloting, I think it's on one floor of a dorm, students to have pets on campus. And they are evaluating the process, are going to look at the dorm rooms or the dorm floor after the, the, the college year ends, just to check for damages and that kind of stuff. So Ferris State in this case looks like they're trying to do a decent thing. However, you and I both know what's going to happen. There will be some enrollment folks across the country who add "pets are welcome" on their billboards for coming to our college. So just be prepared for that. And finally, the story from Anthony Carnavale. And Mr. Carnavale— I don't know if he's a doctor, and I assume he is— Dr. Carnavale is a director and research professor at the Georgetown University Center on Education and the Workforce. It's an independent nonprofit Research and Policy Institute at Georgetown. Okay, independent, we'll give them that. Don't believe the doubters, young workers still benefit from a college degree. Now it's a good piece. Anthony Carnevale's story is a good piece, and it goes through all the reasons why there's value in a college degree. It's the fact that Mr. Carnevale felt the need to write this story is a further indication of how far the value of college has fallen in the media and in the marketplace that he has to jump out and say, hey, it's good. Now, there's absolutely zero question about the value of a college education. It is worth it. My own College Viability Manifesto— you can search on that, it's going to be the first link that comes up— reinforces that belief. But it's, it's not the value for the students that concerns me. It's the comparative lack of value provided to them by financially weak colleges. So I'm going to wrap up my 2023 podcast restating the College Viability Manifesto. Number 1, college is good, really good. Go if you can. Number 2, graduation is better. Number 3 in the College Viability Manifesto: some colleges will not survive, many will. Number 4: only consider colleges in comparatively good financial health. Number 5: your FAFSA— the new one that's just coming out here any day now— your FAFSA tells colleges about your finances. The College Viability app shows you theirs. Number 6, enrollment trends matter. Graduation rates matter even more. And number 7, popularity indicators are important. Number 8, closing colleges will cost you a lot of money. And number 9, support higher education in the United States. It makes a real difference in lives. How many students are enrolled in colleges and they're not getting the maximum benefit through no fault of their own, but because the college they attend can't pay their faculty competitive wages? There are morale issues behind their public-facing walls. They have decades-old pieces of science equipment or are many versions behind in computer operating systems and software versions. It's there. So let's get together again in the new year. It is reasonable to expect, uh, 2024 to be a really, really traumatic year for many students and many colleges. I will continue with This Week in College Viability in my self-proclaimed role as a fiduciary looking out for the best interest for our students and parents faculty, staff, and college communities across these United States. 2024 is nearly upon us. My name is Gary Stocker, and this is the College Viability Weekend, This Week in College Viability.