Small colleges' survival lessons
Financial pressure forces reinvention
BROOKLINE - Nestled among the trees and centuries-old homes here in a posh hilltop neighborhood, Newbury College has long been over- shadowed in a region famous for its high-powered universities. But now, like many small colleges whose futures have grown increasingly uncertain amid economic upheaval, the 900-student school is desperately trying to raise its profile in a quest for survival.
The US Department of Education recently placed Newbury on a watch list of 114 private colleges, including seven others in New England, which failed a fiscal-responsibility test because of insufficient equity, income, and savings in 2008.
Some specialists worry that the financial conditions of such schools - particularly religious and liberal arts colleges with tiny endowments and budgets that depend heavily on tuition revenue - will deteriorate further as the recession lingers, raising the possibility that some could be forced to shut their doors.
“These are going to be a tough few years for a lot of smaller independents across New England and nationally,’’ said Michael Thomas, president of the New England Board of Higher Education. “The indication thus far is that some of these schools are going to have a status change: it may be closure, it may be a merger, or they may sell themselves to a for-profit institution. It reflects the reality of the times we’re in.’’
While none of the presidents of local colleges on the watch list said their schools are on the brink of closure, one school - Daniel Webster College in Nashua - was acquired by a for-profit company in June. The rest, meanwhile, are scrambling to cut costs and come up with entrepreneurial ventures to right themselves.
Among the money-making enterprises: Newbury, known primarily for its hotel and restaurant management school, is considering marketing new non-credit culinary courses to the general public next year. Pine Manor, a women’s college in Chestnut Hill, is renting out dorms and athletic facilities to neighboring colleges.
Hebrew College in Newton and Elms College, a Catholic school in Chicopee, are launching new graduate programs (Hebrew’s will be online, to save on overhead costs). Atlantic Union, a Seventh Day Adventist school in South Lancaster, is trying to recruit more commuter students.
On Newbury’s compact campus of historic red-brick buildings and grounds populated by hawks and wild turkeys, President Hannah McCarthy is in the midst of reinventing her school. It has landed on the federal watch list, published last month in The Chronicle of Higher Education, for at least five years because its annual operating expenses exceeded its income, McCarthy said.
“It’s a heads-up for institutions that you’re missing the mark, and you need to re- examine what you’re doing,’’ said McCarthy, hired in 2006 to shore up the school after heading Daniel Webster.
Newbury has evolved dramatically since 1962, when it opened as a two-year business college on Boston’s Newbury Street. In building up its baccalaureate degree offerings more than a decade ago, the school also expanded its faculty and facilities - costly endeavors for a college that operates on a $24 million annual budget.
The college relies on annual tuition of more than $20,000 for 95 percent of its operating budget. By the end of the 2005-06 school year, it had only about $168,000 in available cash, enough to operate for fewer than four days, according to its financial statements for that year.
The situation has improved, though not enough to escape government scrutiny. The college moved from having a negative net worth in 2006 to about $3 million in net assets, according to its 2007-08 financial statements; it now has $1.9 million in available cash. To cut costs, McCarthy cut administrators. She began fund-raising for a modest $2.2 million endowment, and this week, completed a million-dollar challenge grant one year ahead of schedule.
McCarthy hopes to increase full-time enrollment to 1,200. To accomplish this, the admissions office has been more aggressive in following up with applicants, issuing financial aid awards earlier than usual, and doubling the number of campus open houses.
In addition to culinary courses, Newbury has begun offering online summer courses, and plans to introduce new programs in human services to attract non-traditional students. The college also hopes to create a major in computer-game development.
“I can’t imagine how we would have sustained through this economy if we hadn’t already begun to address this in 2006,’’ McCarthy said in an interview in her office. “I believe we’re absolutely on the right trajectory and have the right people in place to manage through these very, very difficult economic times.’’
The tough times, though, have prompted some college presidents to forge partnerships with neighboring schools to save money and earn more tuition dollars.
Hebrew College, the only rabbinical school in New England, is offering a joint online doctoral program in Jewish educational leadership with Northeastern University; the schools will split the revenue.
“This notion of small colleges engaging large universities and providing niche programs is a very likely outcome of the challenges that we face,’’ said Daniel Lehmann, president of Hebrew. “It’s the wave of the future.’’
Pine Manor, trying to capitalize on its 60-acre campus, is in the midst of securing a long-term contract with New England Art Institute to share not only buildings but also courses and residential programming for students, said Gloria Nemerowicz, president of Pine Manor. Unlike other women’s colleges, such as Elms, that have fallen on troubled times, Pine Manor has no plans to go co-ed, she said.
Elms, which began admitting men a decade ago, is in discussions with the Springfield School District to provide training for teachers in public Montessori schools.
Some financially strapped schools have had to close entire academic programs to make ends meet, at the risk of losing students majoring in the discontinued subjects.
Atlantic Union cut its liberal and fine arts programs and pinned its future on growing programs in health, education, and the ministry. After enrollment dropped from more than 500 in 2006 to 335 two years later, it is expected to slowly rebound to close to 400 by September, said President Norman Wendth, who used to head the school’s now- defunct English Department.
“Rumors of our demise are not infrequent,’’ Wendth said. “There’s no doubt that we’re financially fragile. We were not designed to be a wealthy school, but we’re growing.’’
Despite the optimism voiced by the college presidents, other education observers caution against painting too bright a picture for tuition-dependent private schools without the prestige or savings to guard against unexpected enrollment drops. Without healthy enrollments, schools can’t fix buildings or attract faculty to start new programs, putting them at risk for a downward spiral that’s difficult to break out of, observers say.
“If the recession continues, overall demand will tilt a little more toward cheaper alternatives - community colleges, public universities, and online options offered by for-profit companies,’’ said John Nelson, managing director of Moody’s Investors Service’s higher- education team. “But there’s nothing like facing possible extinction to unify the troops and the faculty and the board to really start trying new things, some of which will be successful.’’
Tracy Jan can be reached at tjan@globe.com. 