This Week In College Viability (TWICV) for February 12, 2024

It's February 12th, 2024, and it's This Week in College Viability. My name is Gary Stocker. Hey, it's Valentine's Day this week, and I, I want to throw a little love to Cabrini College, and I'll tell you why in a minute, and not so much love to Birmingham Southern College and colleges who believe a snippet of data is a good thing. We'll talk about both as the podcast progresses. We're talking about colleges turning to older students this week to stem the enrollment crisis. Birmingham Southern, again, they're on my list this week. Scott Carlson has an interesting component to an article where he talks about what's really behind the view that higher ed isn't worth it. He's got a perspective that I try and force, and he does, I think, a better job with it than I do. The University of Arizona, all sorts of problems there. Their president takes full responsibility for financial woes. I almost have a tear forming in the corner of my eye. Two colleges are spitting enrollment. Those are just the two that I found. Another story about athletics in the small college marketplace. There's a good component to this story and one I'm going to focus on, on the financial piece. And Cabrini University, they're closing. Those that follow higher education Those that follow my media know that Cabrini is closing their doors this year, but I'll tell you what, they're doing a good job. They are taking care of their students. They're doing this closure process well. It reminds me of McMurry College here in Illinois, in the central America, in central United States. 3 or 4 years ago, they closed on very short notice and really did a good job of not only taking care of their students, but their college as well. And then Rick Seltzer from the Chronicle talks about a double dip enrollment cliff. And I guess that means that higher education has to fall off of potentially two enrollment cliffs. That can't be a good thing, and we'll talk about that. Layoffs and cutbacks— just one this week. The headline reads, facing a $6 million deficit, University of North Carolina Asheville to curtail adjunct faculty and look at entire enterprise, the entire university enterprise. This is from Barbara Durr on February 6th from the Asheville Watchdog. And the essence is the school's 25% decline in enrollment over 5 years has led to a shortfall. And the chancellor says academic offerings will be assessed. That never causes anxiety. Looks like their deficit is projected to be $6 million this fiscal year and $8 million next year. Page 2, colleges turn to older students to stem the enrollment crisis. And this is from Yahoo News. Alejandro O'Connor-Dominich, uh, again from February 6th of last week. And the story reads, colleges and universities across the United States are trying to enroll more adult, non-traditional, greater than 25 years old, I think, students as their traditional aged applicant pool grows smaller. The story continues, facing a decline in enrollment and fearing that the decline could become a cliff as America's population of fresh high school graduates continues to shrink. Schools are offering flexible schedules, financial aid, child care, and specialized advisors in an effort to appeal to adults 25 years and older. Okay, all right, nothing, nothing wrong with reaching out to other markets, nothing at all. And non-traditional age college students is certainly a viable market. But don't tell anybody, but let me give a tip to colleges doing this: Gather close to your speakers. Don't tell anyone else you are working to enroll more non-traditional age students because then everybody is going to do it. Geez. All right. Yeah, it's a valid market. Go get them. But if everybody does it, you're gonna see the same challenges you see with the traditional student market. There will be discounting on tuition. There will be graduation issues. And I guess, you know, maybe even a bigger picture is, is there any way, sign me up for this, is there any way we could get some reporters to actually engage in deep thinking or even semi-deep thinking on these stories? Too many reporters, and I've talked about this before, too many reporters are regurgitating college public relations drivel. And calling it news next, Shapiro, the governor of Pennsylvania, has a budget proposal that seeks funding to increase— to merge state-owned universities and community colleges. Now, Pennsylvania a couple of years ago merged many of their public colleges and universities, and this is from Bill Shackner in the Trib Live on February 6th, and The governor, Josh Shapiro, is working to get funding. He's being innovative, he's trying some new things, he gets credit for trying. And the funding mechanism is addressed thoroughly in the story, and I'll include the link in the show notes. But here's, here is what's not addressed in the story, and I'll read the quote from Bill Schachner's article. The governor's plan— it's Governor Josh Shapiro of Pennsylvania— the governor's plan for higher education includes an outcomes based funding approach. Anybody ask the faculty at these Pennsylvania public colleges if they're okay with outcomes-based funding? The story clearly avoids that topic. Uh, tell you what, I'll do this. I will— I'll give a free copy to the just-released 2024 College Viability App that faculty will protest any link to their protest, any link to their performance. Free copy 2024 Private College Viability App on the assumption that some faculty member somewhere will protest this link to performance. Now, of course, I'm being silly. Of course, I'm being sarcastic. I'm good on the 2024 College Viability App if you can find a college where faculty don't protest. You get the app for free. I'm guessing that faculty in many places, not just in Pennsylvania, will probably create something along the lines of, hey, you can't make our funding based on performance because that's interfering with academic freedom. If they have to actually prove that their students are learning something, It's been my experience that they're not comfortable actually demonstrating they're being successful. Have I ever talked about Birmingham Southern before? Sarcasm alert. Birmingham Southern could get a second chance at a state bailout, at least a second chance. An Alabama bill would install a new loan administrator. Let me read that again. A new loan administrator to replace the state treasurer who denied the college's application for a $30 million loan. Now, this comes from Laura Sputniak in Higher Education Dive. So Birmingham Southern and some politicians in Alabama, they want— they don't like the referee's decision, so they want to hire a new referee. So I'm, I'm all on top of this. I'm all over this. I'm— I think what we need to do in conjunction with this, have a new basketball rule. We're in the middle of basketball season. March Madness starts soon enough. A new basketball rule, yours from those politicians and others at Birmingham Southern College in Birmingham, Alabama. The new basketball rule is you don't like a referee's decision, like the folks at Birmingham Southern, ask for a new referee. I go to a lot of basketball games. Referees are fabulous overall. They make mistakes. They miss things that aren't there. They see things that aren't there. They miss things that are there. It happens. So let's— if you don't like the referee's call, let's ask for a new referee. Now here's, here's the downside. In the average college basketball game, probably at any level, there would probably need to be somewhere in the vicinity of 100 or more referees for every game. That's the approach that some folks in Alabama would take to give— given their predisposition with hiring a new referee because they didn't like the no-loan decision for Birmingham Southern College. You know what, There's a geesh on that. I'm going with a geesh. I'm pondering a double geesh, but no, I'm sticking with a single geesh. And there's some details behind that. So of course, the state treasurer, a young boozer in Alabama, had to respond to this. And he makes some points that are valid. And let me just quickly read them. And this is from alreporter.com. State Treasurer Alabama. State Treasurer Young Boozer. Y-O-U-N-G Boozer. Birmingham Southern College had significant ill-considered borrowing to build facilities from 2004 to 2010. They had a screw-up on millions of dollars in Pell Grant awards. The endowment has gone down from $130 million to something much less than that. Their bonds have been downgraded by Moody's Investor Service. They've had 8 presidents of the college in the last 20 years. They're creating serious, they created serious doubt, Young Boozer suggests, about its future, Birmingham Southern's future, by declaring in December of 2022, a year plus ago, that it would close. And the enrollment has gone down from 1,200, close to 1,300 students, down to a little over 700 in 2023, a decrease of 43%. So I'm going to start a new referee school because I'm sure colleges will now want to do the same thing as those in Alabama. And have a new referee every time they don't like a decision. I probably should have a sarcasm alert on some of these things. Scott Carlson at the Chronicle on Feb 6th also, his story was what's really behind the view that higher education isn't worth it. Now the Reader's Digest summary of this is he makes note of a Wall Street Journal article, but then makes the case and does it well that college has value. So let me just kind of expand on that a little bit. So Carlson wrote February 6th in the Chronicle of Higher Education, Chronicle of Higher Education, a recent example appeared in the Wall Street Journal, which explored in quotes, why Americans have lost faith in the value of college. And it uses a broad brush to paint American higher education as a bloated system suffering from its own blunders. All right. It hits on a theme frequently seen in both mainstream and social media lately, Carlson writes, "College isn't worth it." And he goes on to add, "The reporter Douglas Belkin for The New York Times recaps 60 years of higher education history, drawing on a thread through the demise of vocational education, the digital revolution, intransigent faculty, profligate administrators, employers not being happy with the graduates that come out, and then disengagement of students cheating their way through school." This is from The New York Times. And Doug Belkin. Well, that's fine. We've seen that kind of stuff before. But here's where Scott Carlson reinforces what I think is an important point. And I'll read, I'll read from his, I'll read from his article. But despite its problems, Carlson writes, American higher education has demonstrated its usefulness and is still valued by large swaths of the American public. In a Chronicle survey, he cites, of the public perception of college, nearly 80% Nearly 80% of those who had graduated said college was worth the cost, while about the same share of all respondents would recommend college to a friend or relative. Absolutely, positively. And listeners to my podcast and readers of my posts will easily note that I am always hard on higher education. I've done that for the first 10 minutes. The podcast today. And I've shared the reasons before, and I will continue to do so. That's the role that I play. I believe in what I talk about. But Carlson says it well, college is valuable. College is really valuable. My own College Viability Manifesto starts with, college is good, period. Really good, period. Go if you can, period. It does add a couple caveats. Graduation is better, and you've heard me talk about colleges not graduating even half their students. And I also conclude with, in my manifesto, the first 3 bullets: some colleges will not survive. Some colleges will not survive. They're already closing. Most, many will. Let's go to the desert of Arizona. In a public college, the University of Arizona's president takes full responsibility for financial woes. Does the university trust him to make amends? And this is from a Chronicle weekly briefing from Fernandez Amudio Suarez. This is on February 10th. There's not going to be a hyperlink for this story because it's from an email newsletter, but it does fall in the category of true and unneeded confessions. The story writes, From Fernandez Amudios-Jores, in November, the University of Arizona announced a big unexpected budget deficit. Last week, administrators outlined a financial recovery plan which includes budget restrictions to departments and academic divisions, layoffs and possible cuts, even— whoa— even to athletics. University leaders, the story goes on from the Chronicle, university leaders are trying to regain the confidence of students and employees and alleviate a projected $177 million budget deficit. How did this happen? You weren't— how did this happen? The university says that it lost track of its spending because of inaccurate budget forecasting models and poor communication between the central administration and individual academic units. I'd like to say it happens, but it really shouldn't happen. Robert C. Robbins is Arizona's president, and he said— this is the headline on the story— he said to a university leadership forum, and I quote Robert C. Robbins from Arizona's president, we have some serious financial issues, and I want you to know I take 'Full responsibility, period, end quote.' Okay, if it weren't Robert C. Robbins taking responsibility, I guess maybe me, maybe I should take responsibility for Arizona's financial challenges. And the story concludes with, 'Today, out of 81—' this is an important caveat, I think— 'Today, out of 81 budget units, 61—' 61 out of 81 operating budget units have been operating at a deficit, the university said. And academic units have to submit 3 budget cut plans for a 5% cut, 10%, or 15% cut. There is some concern across the organization for the way this has been handled. What else is new? The United Campus Workers of Arizona called on Robbins and the Chief Financial Officer Elisa Rolney, R-O-L-N-E-Y, to resign. Rolney, the CFO, stepped down in December, but the story reports she remains employed at the university as a senior advisor with a salary— and I'm going to paraphrase here— of over half a million dollars. Man, how do I get that gig? And then Leila Anderson— I'm sorry, Leila Hudson, chair of the faculty and an associate professor told the Chronicle that the university's leadership team suffered from a profound misunderstanding. That's being nice. A profound misunderstanding of how to run a high-profile research university. University leaders have said they will be transparent about cuts and that they will evaluate administrative positions, not just rank-and-file positions. Page 3, spin, spin, spin is the theme. Western Illinois University Spring enrollment is down 500 students. International numbers are still high. This is by WGEM, by Dylan Smith. I presume that's a radio or TV station in Macomb, Illinois, or in Western Illinois somewhere. The story notes that spring enrollment is down about 500 students, and for those keeping track at home, it was about 10,200 in 2014. And not quite 7,000 in the spring of 2024. That ain't a good trend. Assistant Vice President for Student Services and Enrollment Justin Shook, S-C-H-U-C-H, maybe Shook, said the overall decline came as expected. Okay, we're planning on that. After the university saw a drop in the fall as well, and I think I reported on that back in fall of 2023. Trying to spin, that's my words, not his, trying to spin Justin Shook said, he said, the caliber of students that are enrolled are now a primary focus rather than on simply a number. All right, spin, spin, spin. We want to see them cross the stage, Mr. Shook continues. It shouldn't be about numbers. Well, it always is. Our students aren't just a number here. Pause for tears. Our students aren't just a number here. We want to make sure as we welcome students that they are seen and heard and have as much support as humanly possible. Shouk is talking about graduation rates. Should I tell you what their 2020, 2021 4-year and 6-year graduation rates were at Western Illinois University? Over 4 years, they graduated 32% of undergraduates. Over 6 years, they barely graduated half, 51%. So on the good news side, they've got a lot of room for improvement. On the bad news side, spin, spin, spin. And then, and then Western Illinois gives a link to a Western Illinois webpage with enough unorganized, unusable data that would chase all— chase away almost anyone interested in pursuing the financial enrollment challenges at the university. And that's why I created the College Viability App, and the 2024 version is almost out the door any day now. Users can easily and quickly compare the last 8 reported years, not some selective stuff that universities spin. The last 8 reported years of financial and enrollment and outcome data on almost 1,300 private colleges. And when the public version comes out, it's about 1,500 public colleges, both 2- and 4-year, in the country. Spin, spin, spin, part 2. Lyon College spring enrollment shows positive growth, strong retention rate. All right, let's pick those blueberries out of the strawberries. And this is from Batesville, Arkansas, KAIT radio, television, I'm not sure. And in, you know, the Lion and the Western Illinois Lions spelled L-Y-O-N. That's why I'm here. Colleges can spew out this selective data rubbish and I can refute it with actual data trends. For example, at Lion in 2022, their revenue was only 81% of expenses. Their FTE enrollment over the last 8 years is down over 200 students. They only have 488 to start with in fall of 2022. So it was 600-something 8 years ago. Their graduation rate is not much better, is not even as good as Western Illinois's, as good as relative, 39% after 4 years. Just so sad. 45%, not even close to half of Lyon College undergraduate students graduate in 6 years. Why are they even a college? Um, their tuition fee revenue is down about a little over half a million over 8 years. That's not a big number, but it's down over 8 years. That's not good. You know, down over 1 year, not a big deal. And the endowment is a little under $100 million. That's okay. But as I recall, they had a big gift here recently, so I don't know what it was before that. I'd have to look up and see. And then athletics in the small college marketplace. The subheading on this is, "Campus sports are not perfect, but they do more harm than good." And this is from the James G. Martin Center, and Joseph Nippenberg wrote this. And he suggests, and I quote, he suggests that athletic programs might actually serve as a source of ideological and intellectual diversity on otherwise politically homogeneous campuses. So the point is, athletics on campus have value. I like sports. I like athletics. I will cede the point. I will cede the point readily. However, and you had to know there was a however coming, from a financial perspective, college sports teams are subsidized in materially significant part by the tuition revenue from non-athletes and other talented college students. If I'm a college, I'm readily assuming that any incremental revenue from the tuition and fees paid by athletes will drop mostly straight to the bottom line. Here's the reason. Other students, other non-athletes, other non-musicians, other non-artists in those colleges pay the fixed costs associated with labor and operations. For example, a section of History 101— I made that up— a section of History 101 with 20 students already in the class, already enrolled in the History 101 class, has zero incremental cost to add 5 more student athletes. Or tuba players or artists or really sharp computer folks. The first 20 students paid for whatever allocated costs are associated with that class. So yes, there is value in that, but keep in mind there's a cost component. You're adding insurance and coaches' salaries and travel costs, health insurance costs, And when I do the math, from when I've seen the math done other places, be careful. That is not a materially significant way to save money. And then lastly, Cabrini University closing up here this May. With stats— the headline reads, with stats stacked against them, students get help from soon-to-close Cabrini University to enroll elsewhere. And this is from the Philadelphia Inquirer. And Susan Snyder. Good story. How to close a college. McMurry College, as I mentioned in the opening, did a good job with that also. And there's a story where a student referenced in the story, Zachary Donlan, strolled into what was once the admissions office but is now in the school's waning days, the story reads, focused on helping underclassmen find new universities to attend. I know where I'm going, Mr. Donlan declared. The junior accounting major from Pennsylvania has settled on Gwynedd Mercy University. I think I pronounced that right, G-W-Y-N-E-D-D, in Pennsylvania. It's one of 4 universities that Cabrini has designated as an ideal partnership school for its students. Now, when I see this happen, I really right away worry about 2-time closures, because it's happened. A student will close, a college will go, that student will go somewhere else, and that college will close. And so I worry about those kind of students. So I went to the 2024 Private College Viability App and looked up Gwynedd Mercy University. I'm going to be nice. It's kind of doing okay. They're certainly in a lot worse position. They have a 147% revenue over expense ratio. That's good. They've lost 500 students, 500 FTE students in the last 8 years and have questionable graduation rates. But in terms of financial health, I, I think Mr. Donlan should be able to complete his degree at Gwynedd Mercy University. But that's not always the case, and I will follow the colleges that close, um, in the future with similar kinds of studies. And I did know when I went to the College Viability App for 2024 that Gwynedd University is doing a lot of serious discounting, a lot of unfunded institutional grants Their endowment is pretty low at $36 million in 2022. Something to watch, something to watch. So the 2024 Private College Viability App is ready for release. It's going to come out this week sometime, and not just the executive analysis version, but dedicated versions for faculty and staff. There will be 9 comparison reports. For students and families, there are 5 comparison reports. The Executive Analysis version has 32 comparison reports and a lot more functionality than the other two versions. So here's the thought process. Here's the thought process for potential users. The higher education market is a mess. You can agree with me, you can disagree with me, but you can't disagree that there are too many college seats and not enough college students willing to pay for those seats. There have been about one private— there has been about one private college closure per month since about 2016. It's not quite one, but it's close. There is every logical and data-driven reason to believe that this trend will continue. I look at a lot, a lot of college financial and enrollment and outcome data, and I believe the rate of closures will increase. That's a Gary Stocker opinion, take it for what it's worth. I believe also there will be two consolidation periods. We are already in the first one. Colleges are closing. Colleges are cutting back and doing layoffs. We talk about that each week. And I think it'll continue for another year or two. The second period, not really talked about much if at all, will include many colleges that survived this first period that we're in now, this first closure and consolidation period. And they'll start looking for merger partners. That's happening hardly at all right now. It should be, but it's not. And after that second period, say 2 to 5, something like that, more years, the market will have consolidated enough— enough closures, enough mergers— for the supply and demand imbalance that we're looking at here in early 2024 to reach something closer to an economic equilibrium. Go back to Econ 101 class. Purchase the proper version of the College Viability app, or don't. Some will, some won't. There will be colleges and consultants and bondholders and banks and college counselors and many others who do purchase the app to compare the financial health of private and public colleges. Again, like I said before, some will, some won't. I will. I'll use it constantly. I always do and will continue to use it to continue to provide the news and commentary on This Week in College Viability, on the other podcast that I do, Uh-Oh College, and the new one, College Counterpoints, that I do with Joseph Pellerito Jr. This message needs to get out, and here at College Viability, we're taking that as our responsibility to do so. This is Gary Stocker with This Week in College Viability. Let's do this again next week.