The Road to Financial Exigency

Research: Kim-Jenna Jurriaans & Brian Springer

“Based on projections of enrollment, if we would have gone beyond the next year, there weren’t going to be more resources to cover expenses.” So says Antioch University CFO Thomas Faecke, in response to the question what his personal reason was to support the suspension of operations at Antioch college in 2008. “There was a fear that the university would become insolvent and that was primarily because of the deficit of the college,” he adds. Presented with this scenario, on June 9th, the vast majority of the members of the University Board of Trustees voted to suspend operations at the 155-year-old college.

“I think in the early 90s, it wouldn’t have occurred to anyone to close the college and keep the university open,” says Ann Filemyr, a former journalism professor, interim Dean of faculty and serving vice president at the college until 2005. “At that time, the college was clearly considered as the center of Antioch University.”

Like many affiliated with Antioch College, Filemyr, now Dean of Academics at the American Institute of Indian Arts in Santa Fe, was stunned when earlier this summer she heard about the vote to close the institution she had worked at for 15 years. “I think it’s incredibly short sighted.” she says. “Antioch’s reputation nationally is totally built on Antioch College. I talked to people here in the education world and for all they know, Antioch is closing. I think the university will suffer. I think the short term gain of closing the college does not serve the long term reputation of Antioch University.”

Filemyr was on campus in a period when the college for the first time in years had two balanced budgets in a row, 1998 and 1999, both in the accrued and cash budget, and witnessed steady enrolment growth between 1996 and 2002. “I think we did some good work in that period and as an institution we had a lot of energy,” recalls Filemyr.

Yet, five years later the alumni of An tioch College are fighting to safe their school from being closed by its board. “They got a really bad record deal,” says Barbara Stewart, CFO for Springfield Metropolitan Housing and last late 2001. “I’m just comparing it to old Motown Records contracts. The artist made nothing. Well, Antioch College is the artist and I think that the funds that come in should help support this college and the plant that goes along with it.”

Stewart, herself a proud graduate of the masters program at Antioch McGregor, points to a number of administrative measures and a general shift in board culture in regard to the college as major contributors to the current crisis.

One of these measures was the choice in 2001 to start booking depreciation –the decrease of the value of your assets as they get used up over time– at the various units, instead of maintaining it as a liability in the University’s budget. According to accounting guidelines FSBA 93, “depreciation needs to be booked generally,” says Virginia Dowse, Director of finance and budget for Antioch University, “it doesn’t say that you need to book it at the campus in particular, no.” As all major assets and buildings of the university are located at the college campus –an asset legally belonging to the university and collateral for its bonds– the college has to account for an additional average of $ 1.48 million in paper expense in its budget, annually. Glenn Watts, CFO for the University at that time was not available for comment on the decision, as he is currently out of the country.

“It keeps us in permanent deficit to charge it here,” says former president Bob Devine, “and in a permanent deficit, we have no power in the university because we are always the bastard step child that doesn’t have two pennies to rub together, that’s always borrowing from their rich uncles, or their children, actually.”

Mandated budget cuts followed the decision in 2002.

“The faculty got nervous,” recounts Ann Filemyr, associate Dean of faculty at the time. “A sociology professor left; one after another left. Students were losing their mentors. Departments were disappearing. That all happened over the last five years. Many of them left after depreciation. There was a feeling of instability and lack of support on university level. Why are we not valued any more?”

Stewart points to former University Chancellor and College President Al Guskin’s departure as a trigger for a shift in the attitude of the University board towards the college. “When he retired and they split that job function, they created a chancellor and a president. When that changed, it seemed like everything else changed. Everybody said they wanted to see the college succeed, but their actions didn’t support that.”

On his departure form the joined president’s and chancellor’s office in the mid 90s, former branch campuses like the McGregor School, which was originally created to produce revenue for the college, aspired to carve out larger presence in their regional association and the higher education world, explains Stewart.

Financially it was a turning point, she says, as it inflated the administrative costs at the other campuses, “which has created other pressures that people don’t want to talk about now.” Culturally, the shift she noticed in her encounters with the Antioch University board during her tenure at the college from 1992 to 2002, was one away from the needs of the college.

“I think there somehow came in some kind of a corporate mentality that we need to run this like a business,” she says. “Which, of course, everybody understood. But you also have to run it like an educational institution, because that’s what it is. That’s the specific model that you’re trying to follow, and to try and force other models onto a residential college campus: it doesn’t work.”

“It’s not the same on a year to year basis as undergrad liberal arts residential education, where donative resources comprise 50 percent of what the revenue picture is, most of the time,” states Devine, who after his tour of duty as college president rejoined the faculty in the Media arts department.

Stewart highlights differences between the nonresidential campuses and the College. “I felt like every time I went to a meeting I had to justify what our budget was, because we had a residential campus that had a cafeteria, a big library; you know, all the kinds of things that you have to have for a residential campus.. rather than one building or two. The kind of expenses that the other campuses have, I think could be easily supported by their tuition.”

The 5-1 ratio between commuter and residential campuses within the university made the college the odd one out, a number of recent and older administrators say, and stifled the colleges representatives in discussions with the board.

“Bob and I used to talk about this and it was almost like we were just the bad kids who couldn’t control their budget when we had so many built-in fixed costs, even when we reduced expenses,” remembers Stewart.

“I think it is connected to the rise of conservative politics in this country,” thinks former Dean of Faculty Ann Filemyr. “Liberals are considered children that need to grow up. Progressives are considered to be over idealistic youth that never grow up. You should turn that around, and say, ‘the college is your mother have a little respect!’ I think in this time the rise of certain people within Antioch as an organization is tied to this rise in the country.”

In a phone interview on Sunday, University trustee Bruce Bedford responds to the question whether a tuition-revenue based model worked well for the College: “I think it’s the only option that exist,” he says. Bedford, former head of the Board’s finance committee, joined the University Board ten years ago, after serving as member of the board of visitors for what was then called The McGregor School. He went on to say, “I don’t see anyone looking to give a huge amount of assets to build a very large endowment like some other liberal arts schools have. So, I think it has to be tuition-driven.”

Bedford does not see it as a responsibility for the Trustees to actively solicit funds for the college, but underlines the board’s responsibility to facilitate growth and to encourage [the college] to do the personnel and the fundraising. “They have responsibility to contribute and to invest time and effort,” he adds.

Devine sees a larger responsibility than that. “Active soliciting? You bet ya. And if Bruce doesn’t think so, than he hasn’t spent much time on a nonprofit board.” “When we ramped up the capital campaign [02],” he continues, “that was one of the tensions, between the finance committee people and the campaign committee. Fundraisers on the campaign committee who were training each other in solicitation were met with resistance. “The people on the finance committee said, we don’t do that. Everybody that is a fundraiser said’ oh yes.’ A non-profit board gives, gets or gets off,” Devine underlines, “but I think people are much more familiar with a corporate board model.”

“On the University board there is a historic divide between development and finance,” say sources within the university that requested no to be named. “The university never staffed development at the college. If you not staff development, you’re not going to get money. […] In addition, there was something that emerged that if the trustees didn’t agree on something, there was something wrong, and I think the college paid the price for it. Most of the Trustees are decent, but the decent trustees were drinking cool aid.”

No money in a period of a highly competitive financial aid market in which colleges used their endowments heavily to fund aid, for Antioch, unfortunately, meant it had to discount its tuition to astronomical degrees.

Stewart, who left in 2001 in the advent of mandated cuts that took out a whole administrative layer at the College, agreed to a meeting that included looking at the college’s budgets from the last 15 years. Holy cow!” Stewart leans closer to the page that shows the tuition discounts for the year 200304. The numbers equal about 50 percent of the tuition that year, creating a net tuition revenue drop of $700.000 in comparison to the year before. “Holy cow! That must be the effects of the Noel Levits advice [educational consultants]”

“They were pushing us to be more aggressive with financial aid,” recalls Devine. We resisted. I resisted. And the folks I was working with, Hassan Nejad, and Scott Warren resisted as well, saying that would push us over the edge.

Because we have no endowment. Our endowment yields something like $250.000 per year. If you’re trying to get 200 students to come here, how are you going to give them aid?”

Back at Metro Housing in Springfield, Stewart looks at the last ten budgets up until this year. “So this ’01-02 budget was probably the last budget i worked on, right here. Which was interesting because we kept hearing from the rumor mill and whatever that Bob and I didn’t know how to keep expenses under control and we didn’t know how to forecast revenues and we didn’t know how to do anything and it was our fault that we were having these deficits and then, look here..” she points to declining numbers on a spread sheet after the year 2002. “I never did anything that bad! It just kept getting worse after we left. I mean, it’s almost like it’s an intentional slide.”