This Week In College Viability (TWICV) for April 29, 2024

Hey, it's April 29th, 2024, time for another podcast episode of This Week in College Viability. Hi, my name is Gary Stocker, and what are the big headlines for our news and commentary today? Well, Northland College is on our every week list, it seems like, and they just can't find anyone to turn off the light switch. We'll talk about that. And then a really good student-written article about Drake University's financial challenges. Really, really good article. University of Dubuque named a new president, and Spaulding College, I believe, is searching for new presidents. As I do on occasion, we're going to look at the data for both, and it's not good. John Marcus at Hecker had one of his stories picked up by the Washington Post this last, last week. And the headline is, colleges are now closing at a pace of one a week.

What happens to the students?

And he goes into great detail on that. I wanna talk about that for a minute. Amy Morona at The Signal Cleveland continues to rise up my list of good higher education reporters. This week we'll talk about her story on Cleveland State. Dan Bauman from The Chronicle writes about colleges digging into their endowment more than ever. I'm going to focus on Webster University and something Dan writes about called going concern. And then private colleges will face stiff competition from public institutions, Moody's predicts. Duh, that's probably already happening. Layoffs, cutbacks, and closures— no closure announcements this week. There are many colleges hanging on by their proverbial threads. Northern officials sound a hopeful note after transformative donations. Now, the financially struggling college in northern Wisconsin said it received several gifts last week, I guess, that have changed the scope of the situation. This is from Ben Unglesby at Higher Education Dive.

We've talked about Northern before.

Come on, folks, leadership, board members, at Northland, for the sake of your community, please ask someone to turn the lights off. You know, a few extra bake sales is what it sounds like is going on up there. A few extra bake sales are not going to generate the cash you need for both debt reduction and operations.

And folks, my perspective, you're just hurting your community.

Let's go to the University of Connecticut on cutbacks and layoffs this week.

They have really good basketball programs, but it appears the faculty are just like any other college. The wine factor is— W-H-I-N-E— the wine factor quickly comes to the front. This is from John Haslund. It was an April 23rd story in the campus publication called The Daily Campus. So let's, let's go to the data, and there's a little bit of mixed case for supporting both the faculty and for supporting the college here. And let me just kind of share the data.

So first of all, at UConn, the 4- and 6-year graduation rates are really, really good, really good.

74% at 4 years, 83% at 6 years, just phenomenally good, especially compared with most other public and private colleges in the country. Their FTE enrollment, their full-time equivalent student enrollment, is flat over the last 8 reported years. That's from 2015 to 2022 in this year's College Liability App. It's up a few hundred students, you know, not a lot but a little bit. The graduation— the graduate student enrollment is down about 200. I'm going to talk about that in a minute. The tuition and fees is up $127 million from 2015 to 2022. However, it's only up $7 million from 2020 to 2022. Something is going on. Expenses, however—

write this one down—

expenses are up $400 million since 2020. This is on tuition and fee revenue, up at best $120, $130 million in that same time period. And the state appropriations are up $172 million in the same reported period. These folks have lots of cash, and yet the faculty, as you'll see in a minute, just can't handle any reference to cuts.

And the retention— one last good factor—

the retention at UConn is 90%. Really good, really good. So the whine factor, the whine factor.

English department head Claire Costley-Kingo had some comments on public comments.

And she was urging the university to consider the effects of a 15% cutback on the mental and physical health of faculty and students. "When I arrived, it was an exciting time," Kingo said. "The university was growing. We were able to hire and we were able to bring in more students, but faculty hiring has not kept up." I assume she has data to back that up with the increase in student enrollment.

Keep in mind, over the last 8 years, that enrollment has been up only a couple hundred students. And if you take away the decreases in the graduate enrollment, it's been flat for the last 8 years.

She goes on to say, we are now— we are facing a moment now where we are expected to take in larger numbers of students with fewer faculty and fewer numbers. Boy, I wish they would go to the data on occasion. And she concludes with, I have not seen such poor well-being, such poor health among professors as in the last 2 years. Well, all right, we'll grant her whatever observations that she has.

I'm guessing the faculty at UConn, like the faculty at most places, is growing older. And I know as I grow older, I have poorer well-being and poorer health, although modestly so.

She makes no effort to attach the health changes that she subjectively perceives as associated with anything the college has done. And then there's a Mr. Fred, probably a Dr. Fred Biggs in the English department. He says academics, I'm quoting, academics aren't supposed to change, emphasizing, he was emphasizing the educational strides taken by the English department. That would be interesting to see. Since he arrived at UConn 30 years ago, that would have been 19— 20— 20— 1992, give or take. But new ideas, he goes on, says, don't inherently drive progress. I don't even know what that means. Don't even know what that means. UConn is making changes overwhelmingly opposed by the faculty. It should be nice if he could provide some data. And then Mary Beth Allen, continuing the whine factor, is in the Department of Literature, Cultures, and Languages. A trend there, liberal arts stuff, looks like. Yeah, liberal arts stuff across the board. Nothing wrong with that, but that's the pattern that we're seeing here. She urged the university to mobilize and fight for the permanent funding we all need to survive. And I shared the increase in expenses, something approaching a half billion dollars over the last 8 years. She goes on to add, Dr. Allen, I presume, People who are currently working at UConn will lose their jobs. Certainly that's possible. This is what we are talking about when you call for a 15% cut in academic units over 5 years. Divide 15% by 5, that's 3% per year. You've heard me say couch money before, I'm going to use it again.

That's couch money in the context of a multi-billion dollar budget. I think it's multi-billion dollar budget that UConn has. I have to check on that. I thought about including other apocalyptic predictions from other UConn faculty members, but it was the same theme. Don't cut, UConn will diminish. All made without any substantiation at all. One faculty member predicted that graduate enrollment will decrease. Well, I presume these are real college faculty and this isn't artificial stuff. They'd gone to the data like I do. They would see it's already down 200 students from the last 8 reported years. I have some guidance. Maybe the faculty should spend less time pretending to be leaders and more time creating content that students will actually pay for. This one is easily a single geesh, and I'm pondering going double geesh on this page 2. Drake's Budget: How Did We Get There? That's the title in the Times-Delphic, D-E-L-P-H-I-C, the student publication at Drake University. And this is an April 23rd story written by Mackenzie Swenson. And I'm not going to go in details on the story, I'll leave the link like I always do. But this is why college is important. This is why financially healthy colleges are important. Miss Swenson does a phenomenal job of methodically stepping through Drake's difficult but not untenable situation. Her quotes from Drake leaders add to the validity of her story and to Drake's future. And I did reach out to Miss Swenson to offer her a courtesy link to the 2024 Private College Viability App.

I hope she takes me up on it. It can help make her an even more astute reporter. And as I shared before, if you're a reporter and you want to be able to compare thousands of public and private colleges, drop me a note, make sure the domain name references some media organization, and I'll share the app with you. Next headline is from the Chronicle of Higher Education, Adrian Liu, on April 24th, and the headline reads, this under-the-radar pay model puts a dollar amount on class size. Right, so it's a minor story in the overall scheme of things, but it was worthy a couple minutes, a minute or so, in the podcast today. And so the essence of it is this is a pay-per-student model.

In theory and in practice, reasonable, logical.

And so of 367 colleges— and this is from the Chronicle story and Adrian Liu— that answered questions about how adjunct faculty pay is affected by student enrollment, 58% when classes, classes were canceled when the enrollment falls below a given number. 58% cancel classes when enrollment falls below a given number. 19%, 1-9%, pay a lower amount to the faculty, the adjunct faculty, when enrollment falls below a certain number. It's a predetermined amount. So I'm guessing they asked the faculty member, will you take this 70% of the full fee to teach this class? I'm guessing the faculty have the right to say yes or no. That's what I have at the university where I teach as adjunct. 17% of the colleges, of these 367 colleges, the pay does not change with the number of students enrolled. I'm guessing those are the colleges on my soon-to-be-closed colleges list. And then some small percent, 6%, the pay is calculated incrementally based on the number of students enrolled. So one student gets a certain amount, two students a certain amount, and all the way out. The reason I bring this up is with, with the market in such turmoil, I think we'll see these numbers change. I think you'll see that last one, that 6%, go up because Page 3.

LinkedIn had a couple stories from AGB, and that's the, the company that recruits college leaders from across the country. And they had stories about the University of Dubuque naming a new president, and small Spalding College, I believe, was searching for new presidents. All right, they do that all the time. And sometimes when I have time, I go out and look at the data for both. And for both the persons chosen at the University of Dubuque and whoever is ultimately chosen at Spaulding, good luck. The names aren't important. Good luck to those individuals. You'll need that and more. So to the data that we go. The 2024 Private College Viability App, the executive analysis version. The data is from 2015 to '22. Both the University of Dubuque and Spaulding have miserable, miserable 4-year graduation rates. They both hover around 30%, and that's not a college. You graduate 3 out of 10 students, that's a, that's a tuition collection enterprise. That's, that's a new model I'm pondering here. If you can't graduate more than 3 out of 10, you're not a college, you're just collecting tuition. Both had increased core expenses. Both in the face of decreasing full-time enrollment. The enrollment at— the enrollment at the University of Dubuque was down 19% and at Spaulding down 33%, again, over the last 8 years. Interestingly, the unfunded institutional grants— Spaulding was down $1 million, so they're trying to control that discounting. But the University of Dubuque, the U-Dub, their unfunded institutional grants, merit aid discounts, whatever you wanna call it, Over the last 8 reported years was up 182%, from $2.5 million in 2015 to $6.9 million in 2022. I've talked about before, you can't give away the store and hope to be able to grow out financial challenges. Tuition and fees, Spaulding was down $4 million and change, the UW was up about, about $700,000, so flat. Over the last 8 reported years. Spaulding has become a Heartbeat admissions model. Their percent admitted went from 50% to 98% have Heartbeat will admit. UW is only up 8 points to 85%, not quite a Heartbeat admissions model, getting close. And then one of the ratios in the 2022 version of the app is revenue to expenses. So Spaulding, for every dollar in expenses in 2022, they had 92 cents in revenue. Oops, it was worse at UW, University of Dubuque. For every dollar in expenses, they had 86 cents in revenue. Good luck, ladies and gentlemen, whoever they choose for those positions. One quick sidebar note, the endowment— the University of Dubuque probably will save itself because their endowment is about— is above $200 million, so they've got some, some flexibility there. Spaulding Spalding is in deep trouble with, with not much more than couch money and endowment in 2022 about $22 million and change. On to John Marcus. And John writes for Heckinger, and he had a piece last week that was entitled Colleges Are Now Closing at a Pace of One Per Week.

What Happens to the Students?

And the subheading is Most Never Finish Their Degrees. And alumni wonder about the value of degrees they've earned. Again, John Markus at Hechinger on April 26th. Now let me give you a spoiler and self-promotion alert. I was quoted a few times in this article, uh, in association with, with what Mr. Markus is writing. And John Markus did such a good job that his Hechinger Report article was syndicated in the April 29th edition of the Washington Post. Congratulations to John Markus on that. And folks, I'll share yet again, the tipping point to public awareness of the impact of financially unhealthy colleges is getting really close. In just a few days since this story was posted online, and the Washington Post picked that up as well, I've seen an uptick in purchases of the 2024 Private College Viability App for students and families and email lists that I use have seen substantial growth also. So if you think, you know, draw an analogy here. If you think that a small number of loud protesters like we're seeing now, a small number of loud protesters on a college campus is a big deal, what will happen? What will happen if public perception about public and private colleges becomes even more negative? Negative than it is now. And, you know, and a reminder, we've talked about the College Viability Manifesto before. College is good is the first item. Go if you can is the second. And I see many writers and editorials expound on the value of a college degree, and they're absolutely correct. There are millions of students on American campuses each year There are millions of students on American college campuses each year that will continue to gain from their college experience. The issue is that on the margins— think back to Economics 101 and marginal analysis— more potential college students are making the personal decision that the gain is not worth the investment in time and resources. And how long will that market perception last? I, I have no idea, but it, it will almost certainly last long enough to send many, many mostly small private colleges into closure and probably continuing significant cutbacks and layoffs at publics.

And here's a rhetorical question.

I don't have an answer for this. Here's a rhetorical question, rhetorical thought question for you. How many colleges, how many colleges have become more tuition collection enterprises than education and career preparation destinations? Think about the graduation rates. Think about the tuition. Get back to me on that. Amy Morona writes for the Signal Cleveland, and again, I mentioned earlier, she writes some really good stuff, and I'm increasingly impressed with Ms. Morona. And her headline last week, April 22nd, reads, we are at a point of reckoning inside Cleveland State's latest meeting about its financial future. And the subheading reads, as buyout plans for Cleveland State's faculty and staff move forward, The university president talks about the hard road ahead. Cleveland State University President Laura Bloomberg said she remains very bullish. This is Amy Moroney's story. President Laura Bloomberg says she remains very bullish on the future. Of higher education. The predictions of the demise of higher education have never come true, and they are not coming true this time, she said. What a spin! Nobody, and Amy Morone included, is not talking about the demise of higher education.

That's not going to happen.

I don't, I don't ever say that's going to happen. This is a bait-and-switch comment, trying to attach an industry's future with that of a single college entity. Cleveland State University. This is just, as I've said before, this is management by PR. And, and President Bloomberg goes on to have in this, in this release, I think it was, there's a slide in the virtual presentation— was even face-to-face— that lists the following items that will strengthen— President Bloomberg says will strengthen the quality of the Cleveland State University experience. That list includes Centralize advising, maximize employer partnerships, future-proof curriculum— tell me what that is— deepen transfer program partnerships, and modernize technology infrastructure. Now, in each of those 5, no issues with throwing those out even though it's clearly management by PR, but there is a cost there in all of those, each of those, in staffing in program development, and then even the lead time to hope for materially significant new revenue. It's, it, it's not going to happen. Maybe one of them. But I, I do have a solution here, and the— again, the concepts aren't bad: centralized advising, partnerships, whatever future-proof curriculum is, and the other two Here's some, here's some guidance. Nobody will take it, but I'm going to throw it out anyway. Do all the above that I mentioned at scale across all Ohio publics. Tighten the courses to minimize the number of sections that only have a handful of students, and add to this technology stuff you referenced up there a method where if there's a section in a course, advanced economics or advanced accounting that shall never have 5 or 6 students in the section using technology from across all Ohio Publics get 25 or 30 in a section. Get some value, get some scale associated with that. Of course, as those words come out of my mouth, the faculty will engage in yet more whining. That's too many students. And by the way, In 2022, Cleveland State University graduated 31% of its undergraduate students in 4 years. Tuition collection enterprise.

Let me offer a definition of that.

So when I talk about in the future, that's not a college, that's a tuition collection enterprise. Here's the definition I'm going to go with: any 4-year graduation rate less than 40% gets that tag. And I'm, I'm being generous. We already have the coin toss college at 50%. We don't pay for the courses, we pay for the piece of paper that says I graduated, I completed all these requirements. And at Cleveland State, out of every 100 students that start there, 31, 31 get that piece of paper. Page 4. Amid financial headwinds, some colleges are digging deeper into their endowments. Will more follow? Is a question mark. And this is from Dan Bauman in the April 22nd edition of Chronicle. It was online. And this is, you know, Dan Bauman's—

this is an excellent article.

It reviews the financial status of a handful of private colleges.

But I, I could do more on this.

I think I'm gonna do a blog on this as well. But I'm going to focus on the hocus-pocus college that is Webster University, and I have covered their financial and public relations missteps for quite a few months. And in Dan Bauman's piece in the Chronicle, he talks about some colleges the Chronicle analyzed, looking at their financial statements, and he noticed a handful where there was substantial doubt— again, in audited financial statements, there was substantial doubt about the ability of these colleges to continue as a going concern, to stay in business. Now, there's some technical nuances, I will grant those, I will stipulate those, that's fine.

Those are for discussions for another day.

Webster was one of those, and I've talked about the Webster scenario in other blogs and podcast episodes. And as Bauman writes, Webster's 2022-2023 audited financial statements includes Note 24 that expresses that auditors have concern that Webster may not be able to continue as a going concern. Now, of course, Webster had the chance to respond to this, and they gave it a shot. What they have done— and this is from their interim PR person, I thought that was interesting, that was an interim PR person— and Webster, I don't know they've ever responded verbally here in the last year or so. It's always in a written response, never verbally. What Webster has effectively moved chairs on the proverbial Titanic. And what they've done is they've taken restricted funds, gone to those donors— we talked about this a month or two ago— gone to those donors and say, hey, would you let us make those unrestricted funds? And they needed those to meet the specifications of a bond, one or two bonds that they had. So the PR person suggests that the move of those endowment funds from restricted to unrestricted negates the auditor's concerns about the college continuing as a going concern. I know there's some inside baseball stuff going on here. Bear with me, stay with me. While technically correct, this is still a classic chairs on the Titanic move. It appears from their carefully worded press releases that, that Webster expects growth in enrollment this fall. Now I'm going to jump out and say that's silly.

I have spoken already with, with college leaders in the region who are looking at deposits year-to-date compared to this time in 2023 that are down a couple hundred students, 200 to 400 students give or take. Fewer students enrolling in large part because of the FAFSA mess. And it's quite reasonable that Webster isn't even thinking about that or ensuring that Because it's quite reasonable that Webster will see similar decreases. I can only guess it'll be similar kind of numbers, 200, 300, something like that. And what Titanic chairs will the college have left if their cash from enrollment is down something like 200 students? I've shared before, a year ago this time, Webster was never going to be in danger of closing, and they're doing everything, everything they can to prove me wrong. And again, keep in mind, a going concern is a fiscal year focus, and it's not necessarily a precursor to closure, but it certainly, it certainly is not an endorsement of a college's financial planning and its market position. And what's even more disconcerting is that some of the colleges, many of the colleges that have closed, and I go back and look at their audited financial statements And their auditors made no reference about them continuing as a going concern or stay in business.

Let's move on.

Private colleges, private regional colleges will face stiff competition from the public institutions.

Duh.

This is a Moody prediction. And, and the reason I bring this out, and I've shared this with others, I'm not sure I talked about it on a podcast And the story is from Laura Spitalniak in Higher Education Dive on April 26th. It's possible as we sit here in late April 2024, that that move from privates to publics is already underway and we won't start to see the impact of that or the numbers associated with that until this fall sometime. Pure speculation, educated speculation on my part. But if I'm a family and I'm looking at a college, a public college versus a private college, and I have any, any understanding of what's going on in the market, I, I sense— again, stock or observation only—

that it's easy to say, you know what, let's go public, it's safer. Publics aren't going to close. They're going to cut back programs, cut back faculty, but they're not going to close. And then I'm starting to see more information, more stories about this FAFSA fiasco, not just impacting new college students but impacting current ones. And I'll leave two separate links in, in the show notes. Uh, and again, it's quite likely that by this time next year the FAFSA issue will be resolved. It'll be smooth. You know, software is fixable even though this has been screwed up every way, every which way possible. But I, I— the immediate shock, and this is from an article from Ayelet Sheffery from Business Insider, The immediate enrollment shock will likely come this fall, Ms. Sheffrey writes, and both students and colleges, both students and colleges will feel the impact. And all right, I thought I might be on to something last week when I did an AI query about what a catastrophic college closure scenario this fall might look like. And a friend of mine, I think I talked about this, either online or in the blog. A friend used AI, another AI tool, to generate a rebuttal, and it was a good rebuttal. And I'm not going to go into details here because I'm looking at a short clock. Here's my guidance to college leaders about this potential for a catastrophic college closure scenario this fall: have someone or somebodies on your team start thinking about how your college will respond if something like 1 to 2 dozen or more colleges close later this fall? Yeah, it's not likely, but it's, it's, it's certainly, certainly within the realm of possibility. Start thinking about it now. If it doesn't happen, no harm, no foul. If it does happen, you've at least started to think about it and maybe even plan for it. Let's wrap this up. I was on a Zoom with some big-time college thinkers recently, and one of them asked, why is it that people still want to be college presidents? Good question. Is it the compensation? Is it the prestige? Is it the buyouts? Is it resume building? And the list was long. And, you know, I went over the data for the University of Dubuque and Spaulding University earlier in the podcast, and And the challenges that the eventual presidents of these and many, many, many other colleges and universities will face, it's staggering. It's staggering on the financial side, it's staggering on the operational side, and many will fail. Many will fail. Many of these college presidents will not survive, and many others will jump out of their college airplane jump out with those negotiated golden parachutes. This is an industry in trouble, I'm telling you. And one really has to wonder if the age-old model of college leaders coming mostly from the ranks of academic careers should change. We'll talk more about that in future podcasts. And I, I try to serve you as kind of your college financial quality control advocate. And I know I poke fun at college leaders and I poke fun at the faculty, and I think it's a role— I believe it's a role that is needed and valuable. I work to do it fairly, and I work to do it with some sort of entertainment value. I don't do it lightly, and I don't negate for one second the traumas that many, many, many will face faculty, staff, students, families, communities. In the coming months and years, I look forward to continuing that role. For This Week in College Viability for April 29th, 2024, I'm Gary Stocker. Let's do it again on the first Monday of May.

Thanks.