Small private colleges are shrinking and struggling

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college

Three prominent small, private universities in West Texas have announced cutbacks in people and programs in the past year, symptoms of a once exclusive education sector that some experts believe is on a road to failure.

Since January, Hardin-Simmons University and Abilene Christian University, both in Abilene, and Howard Payne University in Brownwood have announced layoffs, buyouts and the elimination of once-highly touted curriculums. All have enrollments of about 5,200 or less.

Hardin-Simmons announced in October that some tenured faculty have been offered buyouts, but did not say how many of the school’s 134 full-time faculty members are affected.

At Howard Payne, 10 professors are being terminated; theirs and two other faculty jobs are being eliminated. The school will also stop offering 10 majors and reconfigure seven others.

And at Abilene Christian, both faculty and staff members were let go earlier this year in hopes of cutting spending by up to $8 million. The school did not release details, but a person familiar with the situation, who asked not to be named, said the cuts have affected as many as 65 faculty and 100 staffers.

Some university finance experts say those cutbacks are indicators of problems endangering small colleges around the country.

“You can argue that there has been an overinvestment in college,” said Richard Vedder, an emeritus professor of economics at Ohio University. He noted that Texas, with its robust economy and generally younger population, is generally considered to be cushioned against national downturns.

“But Texas also has a huge number of small private colleges, some of them religiously affiliated, and those are the kinds that are struggling nationally,” he said. “Total enrollment in the U.S. is lower than it was six years ago, which is unprecedented except in war time.”

The changes come as some university finance experts say smaller institutions are in danger of shutting down on a wide scale. Moody’s Investor Service predicted in 2015 that up to 15 schools a year would close by 2017, but the annual average of five has stayed firm.

Among business officers at private, nonprofit colleges, 44 percent report that they are confident their colleges will be financially stable over the next decade, down from 52 percent a year ago, according to a survey by Inside Higher Education and Gallup.

The cause of the distress is a combination of a reduced college-age population and a realization that — in an age when inventing a career via technology is much easier than it was just 10 years ago — a college degree is not as necessary as once thought.

But Vedder said private colleges’ own failings are also part of the problem, including mismanagement at the executive level, poorly chosen course offerings and the time-tested favorite, overspending.

Creighton University in Nebraska, Castleton University in Vermont and St. Catherine University in Minnesota are among the small, mostly private colleges around the U.S. that have scaled back in the past year.

Still others, like Davenport University in Michigan, spend freely in some categories and endure, despite layoffs and enrollment dips of up to 33 percent.

In Texas, Hardin-Simmons was once a tough school to get into, accepting only about 25 percent of applicants. Now that rate is 80 percent, and the college is handing out more scholarship money to keep enrollment up and donors interested.

Records show that the three Texas schools that have cut back this year rely almost entirely on student tuition for their revenue, a model that is increasingly unstable.

“The current cost structure of colleges and universities cannot support an era of declining numbers of students because too many institutions are more dependent than ever on enrollment for[the] bulk of their revenue,” a report from EY-Parthenon Education, a Boston-based higher education consultancy, said.

“You have to be able to justify those tuition dollars,” said Kristina Mitchell, policy director of undergraduate studies in the Department of Political Science at Texas Tech University.

Larger endowments and financial stability enable big schools to offer a variety of marketable skills along with networking and a slew of other collegiate benefits, she said.

“The smaller schools now are struggling to present themselves as a place that will help kids get a job,” Mitchell said. That translates to shrinking enrollments and tuition revenue.

In its announcement, Hardin-Simmons President Eric Bruntmyer said the state has reduced the school’s equalization grants by more than $1.2 million annually compared to 2007 levels. The grants help private colleges compete with state universities on tuition rates.

However, grant figures suggest the reduction has been somewhat less than that. In 2007, the university received $2.7 million in equalization grant money. This fiscal year, the school will receive $1.9 million — a loss of closer to $800,000, averaging $70,782 a year in the past 11 years.

Bruntmyer declined to comment for this story.

“We’re grateful that the legislature has for decades provided this state-funded financial aid,” said Ray Martinez, president of the Independent Colleges and Universities of Texas, an association of 42 private higher-education schools.

Because private schools don’t have to publish their trustee meeting agendas or minutes, many of the layoffs and staff reductions are done covertly, with barely an announcement. Some schools manage to get through these moves, which can be a donor deterrent, with no public notice at all.

When Abilene Christian University reduced its workforce a year ago, a small press release in a local newspaper included no numbers or strategy for the longer term, nor an explanation of what led to the school to economic hard times.

There was no indication, for instance, of whether the school would reduce its generous pay scale and perks, including first class air travel for officials and annual bonuses to everyone from $18,500 for the athletic director to $79,917 for school president Philip Schubert.

Schubert did not respond to an interview request.

Steve Miller can be reached at [email protected].

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