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Universities and Challenging Economics

2015 March 12
by Mike

We all know that many universities have been stressed since the economic downturn of 2008. Many face declining enrollment, high debt, deferred maintenance, and inadequate endowments.

But shockwaves went through the university academic world recently when Sweet Briar College announced that it will shut its doors at the end of this academic year. Despite an endowment of around $90 million, they recognized that they were headed the wrong way.

Sweet Briar College

Sweet Briar College

Paul G. Rice, the chairman of the board, said he knew some would question their decision. But he responded: “We have moral and legal obligations to our students and faculties and to our staff and to our alumnae. If you take up this decision too late, you won’t be able to meet those obligations. People will carve up what’s left—and it will not be orderly, nor fair.”

One person commented about the closing of this 700-student college: “As higher education analyst Kenny Rogers once remarked, ‘You gotta know when to hold ’em, know when to fold ’em, know when to walk away, and know when to run.'”

It’s a challenging time to be at the helm of any university; but I’m thinking especially of the challenges of those schools associated with Churches of Christ. Imagine the challenge of maintaining student enrollment and raising funds among a group that is in long, slow decline.

Here are the current (2013) endowments as listed on Wikipedia or on the US News & World Report university website:

Pepperdine – $716 million
Abilene Christian – $331 million
Harding – $105 million
Lipscomb – $62 million
Oklahoma Christian – $59 million
Freed-Hardeman – $43 million
Faulkner – $15 million (2012)
Lubbock Christian – $14 million
York – $10 million
Ohio Valley – $1.4 million
Rochester College – not listed
Southwestern Christian – not listed

Historically, these universities—along with amazing campus ministries at many other schools—have been so important to Churches of Christ. But the challenges facing them are huge! (Keep in mind that these aren’t the only numbers that matter when predicting future viability. E.g., endowment-per-student is probably more important than endowment size itself.)

This is the place in a blog where a solution would be really nice. Of course, this is above my pay grade. But given the challenges facing universities everywhere, it would be good to invest prayer, encouragement, and $$ in their work.

9 Responses leave one →
  1. Alan permalink
    March 12, 2015

    If it is true that endowment per student is a more important vital sign than mere endowment, I thought I might run some numbers, taking the enrollments figures from the same sources you mentioned. I’m assuming these schools mean the same thing by their numbers: fulltime students who are enrolled. If not, maybe I have apples and oranges. But here is what I come up with, rounded to the nearest hundred, endowment per student for some of the schools:

    Pepperdine ($202,400)

    Abilene Christian ($88,800)

    Freed-Hardeman ($31,000)

    Oklahoma Christian ($30,000)

    Harding ($23,700)

    Lipscomb ($21,400)

    Faulkner ($4,200)

    This is a different way of thinking of the health of a school. (I understand you were not saying it is the only way.) I have only seen a focus on enrollment. I wonder how to get a handle on other financial matters you have mentioned in the post like debt and deferred maintenance.

    I also wonder how the lack of saving on the part of Americans is going to impact Christian schools in the future. Won’t it become increasingly attractive to send your children to a community college, at least to take the basics? Plus, as you pointed out, the decline in Churches of Christ is bound to catch up with us at the college level.

  2. March 12, 2015

    Thanks for dropping by, Alan. I’ve become such a sporadic blogger—and that’s being generous!—that I don’t expect much traffic.

    I’d just have to say that I don’t know whether this is apples-and-oranges or not.

    I do know that I’m cheering on these schools, and I’m hopeful. E.g., Lipscomb (a school I haven’t attended or taught for) seems to be on a very positive trajectory. New programs, new majors, retooling, thinking missionally about kingdom living in this new world, etc. Endowment will follow this clear vision, I think. At least I hope.

  3. Ken Cukrowski permalink
    March 12, 2015

    Thank you for your prayer, encouragement, and students. It is a challenging time for our universities.

    I’ll add another factor: the net asset to long-term debt ratio. Even a robust endowment can be threatened by significant long-term debt, if the investments in the future do not pan out.

  4. James Porter permalink
    March 12, 2015

    There are many factors and the problems are formidable. Traditional management of our universities has been to raise tuition, increase tuition discounts, procrastinate balancing the budget, add programs of promise without trimming programs that do not pay their way, continue to add tenured faculty in the face of deficits, increase debt, encroach on the endowment resulting in less distribution being available to the operating expenses, . . . . .

    Balance of operations on a continuing basis is imperative if we are to offset the current downward threat.
    Thank you for bringing greater visibility to this very real challenge.

  5. Frank Bellizzi permalink
    March 12, 2015

    A view from the outside. Over the last 30 years, what good or service in the United States has increased in price more than the cost of a college education? It’s hard to think of one. And why? At least part of it has to be that, anymore, a large number of colleges and universities in the U.S. seem pretty fancy, especially when compared to what college campuses were like at a time when the expense grew at a rate much closer to general inflation. I will never have to make such decisions, but if there’s deferred maintenance to take care of, better to do that than build the new welcome center. Otherwise, college becomes a lot like so many products we see today. Made to sell, not to last.

  6. March 13, 2015

    Mike, I second or third your bringing this to our attention — we who believe in the value of Chistian education. I appreciate each of these men’s opinions as well yours. We need prayers for these schools and their right to be autonomous and yet work together in unity.


  7. WBG permalink
    March 13, 2015

    Too ofter our sole attention is on the enrollment number. That’s the one that gets front page in the Christian Chronicle. But while that is one sign of health, it is not one of the first things I look for.

    Some universities have gotten stronger long term by intentionally getting smaller. Let that soak in.

    If enrollment rises, but the endowment doesn’t go up, then your endowment-to-student ratio has declined. If enrollment goes up, but the average entrance scores were lowered, then you are less competitive. If the enrollment climbs, but you accomplish that by artificially low tuition or by heavy discounting (so that you are running at an operational deficit), you are not stronger.

    We have an almost idolatrous attachment to enrollment increases. We affirm administrators and congratulate their team. What we need to ask is: how is this team guaranteeing the financial future of the institution? Are they running balancing the budget? Are they keeping up with maintenance? Or are those problems left for a future generation to worry about (like the US government).

    Sometimes deciding not to build the new dorm is a great decision. Sometimes opting for a lower enrollment (with less discounting) is a positive move.

    Admittedly, I’m a fiscal conservative. I know these aren’t easy–except from my comfortable position as an armchair QB. But I, like you, care deeply about these wonderful schools. I want them to survive. I don’t mind their athletics, but that’s not my interest. They are places of discipleship, of academic learning from believers, and of life-long friendships.

  8. D. Todd Parrish permalink
    March 23, 2015

    Mark Cuban predicts a tuition bubble burst which will lead many Colleges and Universities to shut their doors:

    “It’s inevitable at some point there will be a cap on student loan guarantees. And when that happens you’re going to see a repeat of what we saw in the housing market: when easy credit for buying or flipping a house disappeared we saw a collapse in the price housing, and we’re going to see that same collapse in the price of student tuition, and that’s going to lead to colleges going out of business.”

    Read more:

    Cuban is a smart fella and savvy businessman who made his billions by predicting the tech bubble and selling his company at the height of the tech frenzy. If his prediction is accurate, it will be interesting to see how this might impact our CoC schools as well as other schools of faith.

  9. May 1, 2015

    I have been associated with Christian Schools for 55 years. Because of the cost of education has risen the schools have made it difficult for the average family to afford to send their children. Most students graduate from school with a very large debt. Our schools could make the financial burden easier by dropping their sports programs. Sports do not bring in any income and the costs are great. Most of the players they attract do not contribute to the spiritual climate of the school. Most of your good students do not come to a Christian school because of their sports. Sports are very helpful to your large universities but this is not true of your Christian schools. Football programs offer five home games at a great cost to the school. The original purpose of the sports offerings was to provide an opportunity for a Christian young man to come to a Christian school rather than a state university, however, because of the need to have a winning team this purpose is no longer true. If our schools are to survive, this issue must be addressed. I know there are some exceptions to some things I have said, but in general I believe my observations are on target. Students will come to school to receive a quality education in a spiritual atmosphere. Providing more scholarships would be helpful in students deciding to attend a Christian school. A change in emphasis would open the doors to more people giving to the school. Quality graduates would be open to giving back to the school.

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