TWICV for July 22 2024

Welcome back to the July 22nd podcast episode of This Week in College Viability. Hi, it's Gary Stocker. Right before I started to get ready to record this week's podcast, I read a LinkedIn post from a vice president of enrollment at a private college. And here's what he had to say, and I'm just going to summarize across a whole range of prior year-to-date comparisons of FAFSA data at his college. The numbers are down. And this, this is consistent with what I have been saying the last couple of weeks, what I'm hearing from college leaders, what I'm reading throughout the media. It's going to be an ugly fall. Let's get into the details. This week, of course, we have layoffs and cutbacks, no closures this week. Interesting. And something new, FAFSA check-ins. Folks, it's going to be somewhere in the vicinity of 10 to 11% decrease in enrollment this fall. Not everywhere, not everywhere, but it will be in colleges that can't afford to lose anything like that number of students. We have a story on Hannibal-LaGrange University. It's in Missouri. It has a dizzy spinning story that I will dissect with data, another management by PR approach. And colleges are just like Kohl's, the retail outlet where they have discount coupons. Cash coupons, Kohl's coupons, something like that. I'll make the connection between that and colleges. And I'm going to provide some guidance to the good folks at the University of Memphis. They seem confused about how to balance selectivity and enrollment, and I'm just here to help. And then finally, among the stories in this week's episode of News and Commentary, don't tick off your nursing faculty. I'll say that again. Don't tick off your nursing faculty. The president at Dickinson State University in North Carolina did, and I'll share with you what he is doing now if you can't guess. Layoffs and cutbacks, closures, and FAFSA updates. The American Academy of the Arts in Chicago announces its closure. So we do have a closure, and here's what the higher education art market is telling us. If you can't make a living doing art stuff, whatever that might be, why study the topic? And for those of you with post-college math issues, we are now well past 41,000 college students impacted by recent college closures. And American Academy of the Arts is one of at least a handful of art colleges that have recently announced their closure. Bethel University, I don't have a state, I think it's Ohio, announces several job cuts and program closures, but, but they gave no clue, no clue as to how many or how much. And this is just another delusional college. I don't know what their president and provost recycle rate has been. I'm guessing it's been high. We might want to check that out. And then breaking news, American University— this was last week— American University enrollment is below their enrollment target for the fall semester. This was a story by Penelope Jennings in the Eagle Online in Washington, D.C. And the incoming freshman class at American University is projected to be down 380-some-odd students below the target. And the enrollment shortfall creates— it's not just the enrollment shortfall, but the news story reports in the Eagle Online that it's a new $23 million revenue deficiency after the previous $25 million gap was addressed earlier this year through spending adjustments. Now, Now the math just does not work for some of these proposed cutbacks. I did the math on my own. I'm not going to spend your time doing it, but doing a napkin calculation, the numbers looking at only addressed about 30% of the total expenditures. How'd they get to the $23 plus $25, $48 million? I have no idea. Neither do I, they, I don't think, because no one is talking. And then new, I'm just starting to track. States reporting 2024 FAFSA debacle data. And we had information stories last week from Ohio and Nebraska, and that's all I'm going to share, just the states that are reporting. If it's different news, I will make sure to point that out. But this has always been— I've pointed this out in previous summers— this is the no news is bad news time of year. If colleges are going to hit their enrollment numbers, they are shouting it from the rooftops. A lot. If they are not going to hit those numbers, they go silent.

The best they might release is that their application numbers are up, which means absolutely nothing.

So if your college is not sharing enrollment news in news releases, press releases, we can have some fun with this. You can call and ask them why, or you can just be concerned that the numbers are bad. Because that's almost certainly the case. Page 2, Hannibal-LaGrange University, and this is in Eastern Missouri, a couple hours north of St. Louis. Hannibal-LaGrange University sees student growth, financial progress.

Okay.

And this is from Daniel Betters. And it was a special story to the Hannibal Courier-Post. And this was early last week. And of course, this is College Viability. This is This Week in College Viability. Let's go to the data. At Hannibal-LaGrange University in Hannibal, Missouri, the 4-year graduation rate is at 26%.

That's 2-6%.

For every 100 students who started at Hannibal-LaGrange, only 26 of every 100 graduate. So to start off with, by my definition, If you can't graduate at least, at least 40%, and that's a ridiculously low number. If you can't graduate at least 40% and Hannibal-LaGrange University cannot, I make the case they're not really a college. If you cannot graduate more than 40%, you're not a college. You are simply a tuition collection enterprise that maybe graduates a few students as well. It's just sad, sad commentary. So to the data, let's continue again from the National Center for Education Statistics and its IPEDS database, the data the colleges themselves submit. From 2015 to 2022, the last reported data, at Hannibal-LaGrange, FTE enrollment is down more than 500 students, almost 60%. Their tuition fee, the collected tuition fee revenue, is down $3 million. Down almost 40%. Retention is around 60%. So for every, for every 100 students that start a year, only 60 of them come back the next. Interesting, their total revenue expense balance is different. Uh, their ratio, and this is from the 2024 Private College Viability App, the executive analysis version, is 102.4, which means for every dollar in expenses, the good folks at Hannibal-LaGrange generate $2.40 in revenue. Their data, so I'm going to go with it. I'll give them the benefit of the doubt.

The rest of the data doesn't seem to match up with that, but nonetheless, that's how that's reported.

Their 2022 endowment was at $10 million, and that's really not much more than endowment couch money. They have been able to raise their average net price over the last 8 years a little over $2,100. Okay.

Better than not being able to rise it, but that's just $300 per year. Again, couch money is the analogy that I draw.

There are $8 million in long-term debt. And at the end of their fiscal year, I think that was June 30th, 2023, they had $160,000 in cash. I didn't do this for this college, but one of the things I do is look at days on cash, days of cash on hand at the end of the year. And $160,000, if I did the math, because I've done this before in others, it's going to just be a few days. At the end of a fiscal year, Panabola Grange University has enough cash to pay their bills for a few days. Now it's a low time of cash, I understand, for colleges, but if you only have a few days of cash at any point in time, that's something to be concerned about. So their president is a gentleman by the name of Mr. Robert Matz. I don't know if he's a PhD or not. Robert Matz. And he says they are in the black, and indeed they are. In 2023, they're in the black to the tune of $128,000. That includes $560,000 in release, in release of restricted assets, which is perfectly legitimate.

They include a lot of dollars of depreciation, legitimate, still not real dollars also.

And they want their enrollment for the fall of 2024 to be over 500 students. All right. Well, depending on how you count it, they didn't specify. The total enrollment in 2022 was 494.

The full-time equivalent, the one I use all the time because it's a standardized measure, was 398.

So they either need 6 or 102 to get to that number.

I'm assuming they were going with total enrollment, but I don't know that for a fact.

But let's go back to 2015, the last 8 years.

Total enrollment was 1,100, almost 1,200 students.

The FTE enrollment was almost 1,000 students. It was 966. Spin, spin, spin, spin, spin, selective use of data, which is fine. Everybody does that. But that's why I'm here to point out exactly what this spin looks like and how unrealistic it is. And finally, the good folks at Hannibal-LaGrange University in their press release/story says the university estimates its final enrollment this fall will increase by at least 10%. And its incoming freshman class up by 15 to 20%. I guess I'll say hogwash.

This, this is in direct conflict with what I've already talked about in the podcast and with what I'm hearing and reading across the higher education world.

Many colleges are reporting a prior year-to-date deposit Prior year-to-date deposits down in the vicinity of 10%. It almost certainly applies to a small private college in a non-urban area like Hannibal-LaGrange. And even the reporter, a real reporter, would have known that and asked, asked the leadership at Hannibal-LaGrange University about their prior year-to-date deposits. And reporter would not just regurgitate to colleges' management by PR drivel. And a frequent flyer on This Week in College Viability, the University of the Arts. Uh, the local union, it is the United Academics of Philadelphia, which represents unionized faculty and staff at the University of the Arts, said effectively that UArts did not negotiate. All right. And there are more details behind the story. Of course, I'll have the link in the show notes. And this is very similar to stories I've seen recently from Goddard, University of Goddard College and Wells College. And so let's, let's get the blatant plug out of the way. Faculty and staff, whether your college is closed or you're concerned it might or has serious financial difficulties, get the faculty and staff version, either the public college version or the private college version. The 2024 College Viability App, it's $300. And I've just in the last month or so made that an enterprise-wide license. So provost, associate provost, assistant to the associate provost, the associate provost assistant to the assistant associate provost, whoever you are, spend $300, get the enterprise-wide license so you can know what you're talking about, not just for your college, but compare your college across 9 or 10, depending on the version, different reports from the IPEDS data that colleges themselves— Jeff Selingo, one of the top writers and thinkers in higher education, had a LinkedIn post last week and he referenced colleges' business model kind of to the way that Kohl's, the department store, the retail outlet, does discounting. And of course, Kohl's Cash, we talked about at the top of the podcast. You get so much for walking in the door and buying something.

I don't know exactly how it works, but I made the point, I think, in response, I'm pretty sure that Kohl's is not just a discounting business.

Colleges discount just like Kohl's does. And that's what Jeff's lingo was trying to point out. Kohl's is a cash flow business and it works for them.

And here's why their discount a day or many discounts a day model keeps the cash coming in on a daily basis, cash in, cash out.

They survive.

This doesn't work for colleges though, even though they're clearly trying to do that because most, most of the cash from colleges only comes in twice per year. Now that's a gross generalization, but it's accurate. Only comes in twice per year, September-ish, October-ish, and January kind of timeframe. Colleges though have cash going out all year long.

When, when they run out of cash, They can't, they can't wait until the store opens the next day because more cash is going to be coming in, because it doesn't come in in the quantities needed.

And I even had someone post on LinkedIn that said as long as the cash was there at the end of the year, the business model was okay. Well, that's not true. That's not even close to being correct. Bills come in all the time. You know, I experienced that in our personal life, in our personal finances.

And I'm betting that most vendors for these colleges would like to be paid much sooner than the end of a fiscal year.

If a college runs out of cash, say in November, that's a serious issue.

That's a really serious issue.

They can't pay their bills for obvious reasons.

And colleges close.

We're seeing that almost weekly. Colleges close when they run out of cash. And a person by the name of Janet Seif. Talked about something that I've referenced before on previous podcasts. Ms. Seif referenced the high price, high tuition price, high discount model is attractive to parents and their pride endorphins.

I like that term.

Their pride endorphins kick in. So mom and dad are able to say, my son got a $20,000 presidential scholarship to a college. And as we've shared before, it's not a, there's no cash transferring from one fund to another.

The college is giving a discount just like Kohl's saying, you don't have to pay $100 for the shirt.

You only have to pay $80 for the shirt. The same thing. There's no cash transferring.

The college is just like Kohl's accepting cash at a lower amount. And the market is running its course. You know, discounting will continue.

Colleges have to, to get students in the door. Discounting will tend to just, will continue just out of market necessity. Layoffs and cutbacks will continue.

Closures will continue. Cash, or lack thereof, as always, will rule.

Page 3, Wisconsin wants to find a way around its public college closure mess. Now they used to have, I think, 11 regional and 13 2-year branches. That number has been whittled down. So the good folks in Wisconsin put together a study committee— always effective. I should have given you a sarcasm alert there.

Put together a study committee to determine whether more closures and consolidations are necessary. And in the story, this is from Jessica Blake in Inside Higher Education, she reports that Wisconsin is one of at least a dozen states throughout the Midwest and Northeast challenged by an oversaturated market. Okay.

That's a pretty generous number.

And she writes, unless other states follow Wisconsin's lead and start figuring out the best path forward, more public colleges will likely close. Well, I've said often, I'll say it again.

The politics of public college closures are ugly and messy in a variety of ways. And yes, a small number have already closed and a smaller number will close. I don't know that it will be as significant, even close to as significant as we're seeing and we'll continue to see with publics in general. Skyler College.

We had this on the podcast a couple weeks ago.

They had a buyer for their property for $3.4 million.

Well, apparently that's fallen apart.

And even when they got the contract or the offer for $3.4 million, folks said that wasn't enough. I had said on a podcast, I thought it was pretty close to being enough. Because I looked at their financial statement and that was a little bit less than their PP&E property, property, plant, equipment value.

But they had, you know, a couple hundred thousand dollars worth of computers and tables and chairs and file cabinets and that kind of stuff.

But here's what caught my attention in this story. This is from the Vermont Digger, the VT Digger by Juan Vega de Soto on July 17th. He writes that these schools, this is Goddard Colleges. Interim Chief Financial Officer Kenneth Mecker said, invited— Mr. Mecker invited interested parties to once present a new bid. Now listen for this, a new bid for Goddard's campus, okay, name and trademarks. So what's happening here in my mind is Goddard College is selling everything everything but its Title IV license, of course, where you get government funds. I don't believe they can do that. I could be wrong. I wonder, because there are some shadow organizations out there actually stealing the name of closed colleges and trying to pass them off as, as real colleges. It's scams for the most part. I wonder if Goddard College is just making it easier for some of these scam colleges to show up online using Goddard's name because they're selling all this kind of stuff. I could be wrong, but it's certainly something to think about.

Compensation.

Let's go to St. Rose. They're not on our frequent flyer list, but they've been here many times. Compensation for top brass increased as St. Rose College faced closure. And this is in the Times Union. Kathleen Moore was a staff writer on July 17th. And the salacious part is the administrators got more money. As the college was watching its last dollar circle the financial drain. But here is the most important part. I'm going to read from Kathleen Moore's story at the Times Union. Now that the college is closed, the board of trustees must deal with the college's debt. The college owed $48, almost $49 million in a bond that was used for capital expenses. Okay, that happens all the time. But the tax filing said the college also had over $15 million, $15.6 million in other liabilities.

I think, and I'm going to offer this as evidence of what I've been talking about previously, colleges are closing because they have violated what are called bond covenants or bond rules. And typically it's debt service coverage ratios, but there can be other violations. And these colleges don't have the cash when they violate these rules, violate these bond covenants. And then bondholders threatened to call the bonds due immediately. So in the case of, uh, and so in the case of St. Rose, they didn't have this something in the vicinity of $60+ million to pay back the bonds or loans. And I still think when we look back, I still believe when we look back on the history of these college closures, and it will be We'll find out after the fact it has been these colleges' inability to make payments on bonds or have violated bond covenants that ultimately and finally led to closures. All right. So time for tutorial. And we're going to do that for the good folks at the University of Memphis. The headline from ABC 24 in Memphis reads, why University of Memphis leaders believe undergraduate enrollment is declining at the school.

And they use the typical stuff.

Demographics, cultural shift, um, bafsidabaka, all those kind of things. But the University of Memphis says it wants to be more selective. So of course I go to the data and their percent admitted from 2015 to 2022, the last reported data, ran between 40 and 95%. That's all over the board. They couldn't decide if they wanted to be more selective or less selective. And at 95%, I don't know how many years that was, I have to go back and look. At 95%, that makes it a borderline heartbeat admissions college. Have heartbeat, we'll admit. Uh, to the folks at the University of Memphis, if you want to grow your enrollment because it's declining, becoming more selective in admissions, while a noble gesture and a noble plan, it's really difficult to do that in the face of declining enrollment. In particular this year, and maybe next, in the face of the FAFSA debacle. Again, we're going to put this in the category of management by public relations. I'm even, I'm even throwing a G-shit out. So there's another story as we start to wind down this episode of This Week in College Viability podcast. Inside Higher Education, A Plan to Save Small Colleges is the headline. And the subheadline reads, small colleges could join forces through a supporting organization model. Okay. The author is Michael Alexander, and he's the president emeritus of La Salle University. He has been this past year a president in residence at Harvard Graduate School of Education. And I presume Dr. Alexander, it doesn't say that, but I presume so. Dr. Alexander suggests that colleges, private colleges, I think, bring 3 to 4 together colleges together to consolidate. Okay. Not profound, but kind of in the general direction I have headed. And his, his, his story was elementary, I guess is the best way to categorize it. I'm not sure he's aware of what the whole market is doing. There's already one, at least one college, one university that has set up the corporate structure to do exactly what Dr. Alexander was talking about. Lindenwood University. In a suburb of St. Louis, formed a Lindenwood System holding company in 2023. And colleges that join their system— there's been one so far— colleges that join the system, they keep their identity. If they have sports, they keep the sports, mascots, colors, boards, all that kind of stuff. The boards do, though, report to a system board. And so there is some loss of control, but it meets to the outline of the plan that Dr. Alexander shares. Now, Lindenwood, in my mind, Lindenwood University will be one of the colleges to watch as the FAFSA debacle unfolds this fall and next spring. I think many, I believe many financially challenged colleges will come knocking on their door and say, hey, please marry me, please let me in, I want to play. Whatever words that they use. They want to be part of the system. If you're a college watching your last dollars circle the financial drain, it's almost certainly too late. However, if you are in your mind going to survive the upcoming tsunami of college closures this fall and next spring, reach out to Lindenwood University. Yesterday, preferably, drop me a note at gary@collegeviability.com. That's one word, gary@collegeviability.com. And I can make some introductions. There is one part of Dr. Alexander's proposal that I believe is too conservative. He suggests that 3 to 5 colleges come together in this consolidation. And I've contended for a long time that that's not big enough to get the needed scale on costs and revenue diversity and viable academic offerings. I have said for quite a few years that the needed scale comes from 10 or even more colleges consolidating non-academic and academic operations. And here's, here's a simple example. Colleges now send one rep to a local or regional high school to talk about, come to my college, my college is good. Imagine the efficiencies if that same person could represent 10 or more, 10 or more different colleges with different majors and tuition rates, locations, amenities, and all the other things that are part of a college. Now, don't tell me it's too difficult. Of course, of course, bringing any number of colleges together will be exceedingly difficult. It'll be really difficult. So let me, let me suggest an old sales adage. And I sold diagnostic medical laboratory equipment for 10 years. This is where I picked this up. The old sales adage reads, some will buy, some won't buy. So what happens next? Universities like Lindenwood University, and I assume others now and probably start, or probably starting in 2025, and probably beyond that, will find ways to make this large-scale merger consolidation work. So to college leaders who listen to this, and there are many of you, participate— don't participate in these consolidations. The industry and its markets are marching on. Feel free, feel free to continue to cozy up in your parochial little college kingdom. You can be a won't participate until you aren't a college. Think about that one. Page 4, Inside Higher Education, and Josh Moody had a story on July 17th about latest Chief Business Officer survey shows optimism despite headwinds. And this is an annual story that comes out from IHE. Sometimes it's president, sometimes it's business officers, as I recall. And this is, this is kind of a delusional, I am good and you are not story. College leaders, in this case, business officers think their college is fine, but everybody else is in trouble. And there's much, much, much more to the story. And of course I'll have the link on the show notes for this, but it's just another example where colleges just don't get it. And speaking of not getting it, Megan Zahnheis had a story on July 15th in the Chronicle of Higher Education about a college president. I had this on the podcast last week, whose actions precipitated the resignation of all 7 nursing faculty members. So Ms. Zahnheis' story reads, after sparking a mass resignation of nursing professors, The college president resigned too. And here's a story from Ms. Anne Heise's article. Stephen Easton, the former president at Dickinson State University in North Dakota. Stephen Easton's departure was precipitated when he wrote to the North Dakota Board of Nursing last week that he was posting job listings to fill the vacancies and working with other institutions, colleges in the state's higher education system to forge partnerships. 'Not so fast,' the board, the North Dakota Board of Nursing, wrote back. Easton's letter, they said, provides evidence of non-compliance with the standards. This is from the North Dakota Board of Nursing, which requires a nursing program administrator to oversee the hiring process. Makes sense. The previous, as Paul Harvey would say, the rest of the story, the previous administrator, the nursing administrator, nursing program administrator, was one of the 7 faculty members who resigned. You didn't think that one through, did you, Mr. Easton? Finally, coming soon, HLC, interesting story last week, has a link out there for application and guidance on offering reduced credit bachelor's program. So it looks like they're looking for ideas and colleges submitting proposals to get a grad— to get a bachelor's degree for less than the typical 120 credits. We're going to keep an eye on this because it's a good thing. I think it's good news in terms of the higher education industry trying to, albeit way, way too late, acknowledge that the market is changing and they need to change with it. So let's wrap this episode up. We saw POTUS, President of the United States, bail on his reelection bid yesterday. Now, I don't do blue-red politics anytime, anyplace, anywhere. It's just not, just not going to do it. But anyone who, who read the many news reports clearly saw that President Biden was under intense pressure from countless sources to abandon his campaign. Now, I know that the This Week in College Viability podcast doesn't even enter into the same universe or even galaxy of pressure that Mr. Biden was under. But in its own small way, this week is doing the same thing we see happening in our nation's capital. I'm working to provide an alternative source of news and commentary on colleges, their leadership, and sometimes their faculty. This industry, higher education, is still mostly a head-in-the-sand industry in way too many locations. And a different perspective than one I think I offer on this podcast and other media that I do. It's largely based on the data that colleges themselves share with the government. This different perspective has been needed for a long time. And I will do it again next Monday and the Monday after that and the Monday after that and the many, many Mondays that follow. Thanks again for making time to listen. This is Gary Stalker. With College Viability. I'll be back again on July 29th with the next episode of This Week in College Viability. Thanks.