Christian colleges respond to financial firestorms
Then came the global financial meltdown, and the effort became an impossibility for the branch campus of Oklahoma Christian University.
Last fall, Cascade President Bill Goad announced that the small Christian college with 280 students and $4 million in debt would shut down at the end of the spring 2009 semester.
On top of all the long-term challenges small private colleges face — from student recruitment to institutional borrowing to having to perpetually make the case for increased costs over state universities — the financial crisis was the last straw for this Oregon school located in one of the most unchurched cities in America.
“Colleges like Cascade just don’t have the slack to survive those kinds of impacts,” Goad said.
Faced with a near perfect storm of continuing economic turmoil, small private college and university presidents are moving proactively to protect the financial stability of their institutions and ensure that they remain affordable options in the higher education marketplace.
In some cases, these steps range from laying off personnel to delaying construction plans, minimizing tuition hikes and increasing financial aid.
It may be that students can expect to get more aid next fall rather than less.
“The last thing colleges and universities are going to cut this year is financial aid,” said Kathy Kruz, an enrollment consultant to colleges. “Most of them recognize that their discount rates are going to go up, but they’d rather have a discounted person in the seat than no one in the seat,” said Kruze in a New York Times article on higher education.
School officials say it’s a risky tradeoff. If colleges invest more dollars in financial aid, they need to end up with enough of an enrollment gain to offset the additional expense. But if they don’t, they may see their enrollment decline.
In a survey of four Christian colleges in different regions of country, the Christian Chronicle found that high on the minds of Christian college officials this spring is the potential fallout from the severe financial times, and they are closely monitoring the impact on students, parents and their institutions. Asked what these schools are doing to cope with recent economic trends, here are their replies:
Pepperdine University, Malibu, Calif — Undergraduates: 3,000
In what may be the largest layoff in the university’s 72-year history, some 50 full- and part-time staff members positions are being eliminated, according to Jerry Derloshon, director of Public Relations.
The athletic program will do away with the men’s track program at the end of this academic year. The women’s swimming and diving program will conclude after the 2009-2010 school year.
Pepperdine President Andrew Benton said the layoffs and program cancellations were necessary to reduce expenses, achieve efficiency and plan for future economic uncertainties.
The layoffs represent 2-3 percent of the total Pepperdine work force, Derloshon said.
Following the late February announcement that the Pepperdine women’s swimming and diving program would be discontinued, enough outside assistance was offered over the weekend that the university will allow the program to compete for one final season, according to John Watson, director of athletics.
The cuts were made after reviewing each of Pepperdine’s athletic programs, taking into account conference membership, level of competition and financial impact to the institution. “This is what had to be done,” Watson said.
Harding University, Searcy, Ark. — Undergraduates: 4,188
Like other colleges and universities, Harding University has seen national economic conditions take their toll on their endowment, which would normally go into the operating budget. Losses in endowment — money invested in stocks and bonds — will amount to $400,000 this year.
Despite a 9 percent endowment loss, Harding has no plans to lay off any staff or faculty at this 84-year-old school, according to David Crouch, director of Public Relations.
President David Burks announced the only hires will be those necessary for new programs such as the pharmacy, engineering and communication sciences and disorders department or to replace retirees.
While a firm decision on faculty raises or a tuition hike for next year won’t be announced until May, the school has already postponed a $4 million renovation of a residence hall scheduled for this summer.
The rise in the minimum wage will have a significant impact on college budgets this fall. Harding projects this will add approximately $200,000 to next year’s budget for student labor.
But the administration has no plan to cut back on the number of students they employ. “Students need to be able to find jobs on campus to help pay for their educational expenses,” Burks said.
Rochester College, Rochester Hills, Mich. — Undergraduates: 985
Located in the state hardest hit by the current financial crisis, this small Christian College — once known as Michigan Christian College — is budgeting conservatively and making every effort to improve the school’s efficiency, according to President Rubel Shelly.
According to the U.S. Bureau of Labor Statistics, Michigan leads the country with an unemployment rate of 10.6. That means Michigan families looking at higher education for their children are being impacted directly or indirectly by the economic fallout of plant closings, job losses and foreclosures, college officials said.
“In the best of times and under normal circumstances, small Christian colleges live a hand-to-mouth existence, but the current economic climate can’t be called normal,” Shelly told the Christian Chronicle.
To meet current challenges, several actions have been taken. Ten percent of the staff and support personnel have been laid off.
Earlier in the year officials projected the need to cut budgets further and the possible implications for faculty positions. Twelve faculty members volunteered to go to part-time employment with no benefits.
“That was a particularly gracious and Christian act,” Shelly said. “You don’t find that model in the business world.”
Tuition for next fall will increase by 5 percent, a modest increase considering the double-digit hikes of recent years, Shelly said. Hiring has essentially been frozen for nine months as has professional travel for faculty. No raises for anyone are planned.
In a surprising move, the college lowered the cost of room and board by 20 percent in order to increase the number of on-campus residential students and fill empty rooms.
The college has been successfully redoubling their recruiting efforts. Officials say the number of paid applications in February is the largest they have had in the past six years.
Rochester College’s presidential search committee is actively working on the appointment of a new president to replace Shelly, who assumed the position of interim president last May with the understanding that it was temporary. He will return to the faculty when the new president is named.
Lipscomb University, Nashville, Tenn. — Undergraduates: 2,291
With an $89 million budget for the school, Lipscomb President Randall Lowry is “very optimistic” about the university’s future. “We are managing the recession, but we are planning for recovery,” he said.
The 117-year-old school experienced a record enrollment this year. While many small colleges are experiencing severe budget cuts, no budget cuts or layoffs are planned at Lipscomb. Budget managers are being asked to be “good stewards” and not exceed last year’s budget in their planning for the 2009-2101 school year.
Twenty-five new full-time faculty were hired during the 2008-2009 year. Two new master’s degrees will begin next year, and enhancements are being plan to existing programs, Lowry said.
Raises for the faculty and staff as well as specific tuition hike percentages will not be released until later this spring, said Kim Chaudoin, director of comunication and creative services.
Lipscomb has announced $1.3 million in financial aid will be available for their students, 95% of whom receive some kind of institutional aid.
Times are hard across America now, and, certainly, among institutions of higher learning as they are facing a financial landscape they have never seen before.
Enrollment figures this fall are critical. “Until the fall, we are flying blind,” reported one official. Colleges won’t know what their real enrollment numbers are until two weeks after classes begin and enrollment figures hold steady.
Like so many others, Christian colleges have been hit hard by the freeze of the credit market and the collapse of the stock market. “While the losses to endowment have been significant, they have not been disabling,” Benton wrote in his 2008 annual report.
In a recent letter to parents, Lowry expressed an optimistic outlook common among Christian college presidents who believe their schools will weather the fury of the current storm.
“College is a time when values are formed for life … when young people make lifelong decisions about their faith … when a spouse is chosen …. We believe that a small college where faculty and administrators share a vital faith commitment and offer education in a supportive environment offers the best opportunity for young people.”