Colleges’ finances draw federal scrutiny

According to The Chronicle of Higher Education, which first obtained the analysis, colleges that appear on the list are subject to extra monitoring of their use of federal student-aid funds.
The 65 of the 114 colleges that scored the lowest — including Rochester College and Ohio Valley University — also must post letters of credit with the department to help protect the safety of the loan and grant money that flows through their institutions, the newspaper reported last month.
Leaders of all three Church of Christ-associated colleges on the list stressed that the data related to the 2007-2008 fiscal year.
In interviews with The Christian Chronicle, all three said their financial conditions had improved since then, despite the economic downturn.
“Financially, we’re struggling. But we’ve told people that very honestly,” said Rubel Shelly, president of Rochester College in Rochester Hills, Mich. “We’ve been on that list for several years. What that list means is that your assets to expenses, your income to debt load, is out of whack.”
Rochester College, which serves about 850 students, faces what Shelly called a “double whammy” of a strangling amount of debt and tremors from the Detroit area’s failing economy.
“The whole country is in a recession,” he said. “Michigan is in a depression.”
Rochester College has $21 million in debt, which it refinanced more than a year ago through the Church Development Fund Inc., Shelly said. CDF, based in Irvine, Calif., makes loans to Restoration Movement ministries.
“They’ve committed to be a ministry partner in helping us to do the turnaround,” said Shelly, suggesting that Rochester College has an affordable payment plan and is in better shape than private colleges in debt to traditional banks. “Our situation was far more tenuous 12 months ago than it is now.”
UNNECESSARY ALARM?
At Ohio Valley University in Vienna, W.Va., where officials expected to end the 2008-2009 budget year in the black, senior vice president Dennis Cox voiced concern about the “unnecessary alarm” the education department list might cause.
A two-year college until the 1990s, Ohio Valley merged with Northeastern Christian Junior College when its Villanova, Pa., campus closed because of financial difficulties 16 years ago.
Cox said OVU, which serves about 500 students, has been on the list since the late 1990s. He questioned why the education department “suddenly” decided to publicize it.
“Like a lot of schools, our debt is high,” Cox acknowledged, putting the amount at nearly $18 million.
But he said, “I want people to know that the Lord has chosen to maintain this institution for 49 years going on 50, and our assumption is that he is going to continue to do that.”
Many generous Christians provide financial backing for the letters of credit that OVU must post, Cox said.
He cited recent enrollment gains and success in fund-raising. “We feel like our school is just a couple of fiscal years away from getting off this list,” he said.
THE VALUE OF CHRISTIAN COLLEGES
At York College in York, Neb., President Steve Eckman said $9 million in debt — much of it related to the construction of two new residence halls — caused his college to make the list.
The residence halls give the college more room to house students, but it takes time to increase enrollment to fill the new dormitories, Eckman said. It will take about two years, he said, “before our revenue catches up with the indebtedness of the bond issue.”
York has budgeted for an expected 10 percent enrollment increase this fall, which would raise the number of students to about 435, Eckman said.
Also, York has received about $2 million in large donor gifts and pledges in recent months, said Eckman, who took over as president in January.
“I would anticipate that we’re going to end up on this list this year and next year, and then we’ll be off of it the next year,” he said. “We’re anticipating an audit in the black this year.
“This thing actually makes it look like we’re financially weaker when actually we have more financial
strength than we had two or three years ago,” he added.
While The Chronicle of Higher Education reported that failing the education department’s financial test can be an indicator of a college that is in danger of not surviving, officials with Rochester, Ohio Valley and York all said their institutions are poised to grow and move forward.
But Shelly said the list sends a message to Christians in the wake of the recent closing of Church of Christ-associated Cascade College in Portland, Ore.
“All of us know the value that Christian colleges have added to the evangelistic outreach of Churches of Christ in different parts of the country where they are known,” Shelly said. “We just can’t let any more of them collapse.”