Faculty and staff at Wells College began to feel uneasy this past spring when rumblings of financial trouble at the college came to a head.
The small, liberal arts college near the banks of Cayuga Lake in Aurora had gone coed in 2005 to raise enrollment, but that decision was not enough to spare the college from the national economic turmoil that has left many businesses and individuals financially unprepared and in some cases, in financial ruin.
The college’s net assets dropped nearly 41 percent and its endowment shrunk by about 48 percent from 2005 to 2009, according to publicly available tax forms.
With the financial losses mounting, rumors of staff layoffs and program elimination this year began swirling around a Facebook page called “Concerned Wells Alumnae.” Faculty worried about salary cuts of up to 13.5 percent that were discussed by college officials. At least 15 employees left the college recently, seeking jobs elsewhere, according to letters sent to faculty from college officials.
In the midst of the uncertainty, one message was clearly stated in a letter to Wells faculty, sent April 22 from Lisa Marsh Ryerson, the college’s president, and Leslie Miller-Bernal, vice president for academic affairs.
“We have too many faculty and too many staff for a college of 550 students,” the letter read.
Cuts would need to be made.
“There are two ways to achieve needed budget savings on both the staff and faculty side – reductions in compensation (salary and benefits) and position eliminations,” the April 22 letter read. “Our plan calls for savings on the staff side to be achieved primarily through position elimination. If faculty positions are not eliminated, that will necessarily mean that faculty will have to experience a much greater reduction in compensation than will be true for staff.”
Cuts came first in the form of a $1.5 million overall budget reduction for the 2010-11 academic year, according to Steve Golding, chief operations officer. Five or six staff positions were cut in the spring to help move toward this budget goal.
More recently, a letter sent to faculty Tuesday from Miller-Bernal announced salary cuts. The salaries of faculty members whose base salary is greater than $84,000 will be slashed by 15 percent. Those who make less than that will receive a 12-percent pay cut, according to the letter.
Miller-Bernal’s letter said no full-time continuing faculty member will earn less than $44,000 next year and that the college hopes to return to 2009-10 salary levels in 2011-12, after a year of reductions.
The breakdown of the $1.5 million to be trimmed from the budget is as follows: $500,000 from staff salaries, $500,000 from faculty salaries and $500,000 from the college’s operating budget, according to Miller-Bernal’s letter.
Ryerson said no faculty members lost work in 2009-10, and that none are expected to lose work in 2010-11, according to a statement she issued last week through Ann Rollo, vice president for communications and college relations.
Rollo said cuts to the administration are included in the $500,000 cut from staff, but that there is no blanket reduction in administrative salaries.
“Administrators and staff ... some took new positions, some took pay cuts and some positions were eliminated,” she said. “A different method of making reductions (was used).”
Golding said Ryerson’s compensation for this academic year will be comparable to her 2008-09 pay, which was $299,142 in base salary, benefits and deferred compensation, according to the college’s tax return. He added that senior staff and administrators have gone three years without a pay raise, and took a number of furlough days last year.
Bringing endowment back
Wells College has been relying heavily on its endowment over the last few years to balance its budget and keep the school running. An endowment is commonly the sum of an institution’s investments. In higher education, it is understood that this money should be saved and invested, rather than spent immediately, so that it increases in worth over many years.
The college’s board of trustees froze spending out of the endowment in 2009 and it remains frozen, Golding said. Marsh Ryerson and Miller-Bernal cautioned faculty in their April 22 letter that the college must become more sustainable.
“We have met with faculty and staff about the structural deficit facing Wells and noted how we can no longer rely on our endowment to cover that deficit,” they said in the letter.
Golding said the college’s endowment has improved over the last year. The endowment was worth $27,652,566 in the fiscal year ending June 2009, according to publicly available tax forms. Golding said, as of June 30, 2010, it is in the $30 million range in terms of market value. This figure is still lagging by 15 percent from where it was before 2008, he said.
“This endowment is still trailing,” he said.
As the endowment dwindled, so did the college’s net assets, from more than $100 million in the fiscal year ending June 2005 to less than $60 million in the fiscal year ending June 2009, according to publicly available tax forms. Golding said the college’s financial trend continues to look grim in its tax form filed for the fiscal year ending in 2009, but added that the form lags by a year.
“You’re looking retrospectively back at the most difficult market institutions have experienced in decades,” Golding said. “You’re looking back in time at a period where we were still being buffeted by the financial market.”
Golding said Wells is still not perfect financially, but that this year presents a much better situation than last year. The college is expecting 198 new students; last year at the same time, only 143 new students were heading to Wells, Golding said.
“We would all say there’s work that needs to be done,” he said. “(But) the college is on the right path.”
Ryerson, in a statement delivered by Rollo, echoed Golding’s opinion that Wells is bouncing back.
“Certainly in the context of organizations working their way through a difficult economy, we are pleased to see Wells achieving a stronger financial picture,” Ryerson said.
Trouble not unique
The Middle States Commission on Higher Education, a higher education accreditation organization that reviews Wells, believes Wells College is not in any more financial trouble than other peer institutions, although Richard Pokrass, director for communications and public relations at Middle States, did not provide a list of schools the organization considers peer institutions.
Middle States accredits about 533 institutions using 14 accreditation standards, of which finance is one, Pokrass said. Institutions must submit a thorough analysis called a “self study” every 10 years. Peer evaluators from similar schools contribute to this study.
Every five years, a periodic review report is submitted by the school to the commission. Documentation and an audited financial statement are sent to Middle States, Pokrass said. A team from Middle States visited Wells in 2009 and the college was re-accredited last year by method of self-study review, according to the Wells College profile on the Middle States website.
The U.S. Department of Education keeps a list of financially distressed institutions – those having trouble with their endowments, for example, Pokrass said. Wells is not on that list and remains accredited.
Most of the institutions suffering financially are the small, private, liberal arts schools, Pokrass said. They receive little or no state or federal aid and have very limited financial resources.
Investments were going well at these institutions before the economic recession.
“Nobody ever expected what happened,” Pokrass said.
Pokrass said layoffs and cuts at institutions like Wells are not alarming in the current economic climate.
“Generally, from what I’ve seen, it’s (layoffs) happening everywhere,” he said.
Allegheny College, another small, liberal arts school, has done well with enrollment and marketing, said Jennifer Winge, dean of enrollment and financial aid. The Meadville, Pa., college has 2,100 students.
This college has always been co-ed, Winge said.
“I don’t think being co-ed has kept us afloat,” she said. “It’s about the culture and community an institution has.”
She said Allegheny is in a fortunate situation now, but that it will need to tighten its belts in the coming years. Success in the areas of fundraising and enrollment is imperative to its future.
Winge said that her college does not rely as much on its endowment as many other small, liberal arts colleges do. The school is tuition driven, which is where Wells wants to be heading.
“We spent our money in a very smart way and invested it in a smart way,” she said, adding that she does not assume Wells did not.
Albion College, with an enrollment of 1,635, is another peer college of Wells. The co-ed college is in Albion, Mich. and has an endowment of $154 million, said Bobby Lee, director of news and sports information.
“We believe we’re still in a sound financial footing,” he said. “We feel we’re in a very good situation with the endowment.”
Lee said the college’s enrollment is down from where it was in the early 2000s, but that is where the institution wants to be with its academic profile: “smaller, stronger and smarter,” Lee said.
That said, Albion College announced a reduction of the equivalent of 15 full-time faculty positions in May. These were achieved through voluntary early retirements, resignations and position elimination, according to a press release. The college also eliminated academic majors in computer science and physical education, and minors in dance, journalism and physical education.
As Wells faculty salaries are cut and staff are laid off, the college is investing in other areas, which, Golding said, can be hard for employees to understand.
He said the college wants to expand experiential learning, which offers students the opportunity to integrate real-life, hands-on experience with their classroom studies, and the new business center, the college’s newest academic addition. The center is the first step in adding a dedicated business major to its offerings, and is expected to incorporate arts administration, nonprofit management, green business and entrepreneurship with general business basics.
“This has been a difficult issue for people to get their hands around,” he said. “How can you cut on one hand and make investments on the other?”
He said in the current economic climate, the college needs to “trim programs not meeting the needs of students while protecting core academic offerings.”
In Miller-Bernal’s recent letter, the one sent to faculty Tuesday, she said academic program closings will be announced this year, but that majors will not be officially eliminated until 2011-12.
Marsh Ryerson and Miller-Bernal, in their April 22 letter, said investing in the new business center will help the college attract students.
“The (business) center is a key part of how we plan to become a larger, more financially sustainable college,” the letter read.
In 2005 it was hoped going co-ed would raise enrollment and make the college more sustainable. Even though the college is struggling five years later, Golding believes the decision to go co-ed in 2005 did help.
“As a single-sex school, they could not compete to attract students,” he said.
Golding cited growing enrollment as evidence that going co-ed was the right decision. There were more than 300 students total in 2005 and 555 this year, he said.
“One would have to conclude it was a good decision for the college,” he said.
Some jumping ship
At least 15 Wells employees have left the college recently, including former dean of students Anne Lundquist, according to letters sent to faculty from college officials. Rollo said any combination of things could cause employees to leave.
“I would say that for most people, when you make a life-changing decision like that, there are multiple reasons,” she said.
Golding said the recent employee “exodus” could have occurred for any reason. He said those who left wanted to pursue further education or other career opportunities. (Several of these former Wells employees were contacted for interviews, but declined to comment on their reasons for leaving or their personal opinions on the financial health of Wells.)
Golding said job stability could be part of why some left, but added that the college is filling positions, and cited Robert Ellis, the new director of the college’s business center, as an example of a recent hire.
“We’re not for want of applicants who want to come be part of the college,” he said.
Golding, who is serving a short-term consulting appointment with Wells, is himself a finalist for the vice president for finance and administration position at Ohio University. In his job interview presentation in late May, which is posted online at http://streaming.cns.ohiou.edu/president/20100527.html, he told OU community members that Wells and other small, liberal arts colleges are in a difficult financial situation.
“Last January, I went off on my own ... with my own little company and I’m, I was working in higher education for a small, liberal arts college in Aurora, New York, which is about one hair’s breadth from having to close its doors and represents, from my perspective, the challenge that small, liberal arts colleges in this country are going to face over the course of the next five to 10 years, given the competitive pressures that are out there,” he said.
Golding last week put his statement in that video into context, saying the college was in this type of serious financial trouble when he first arrived on the Wells scene as an informal financial consultant in August 2009. In January 2010, Golding’s appointment was made more formal with a written agreement. He said during the past year, he has seen the college get back on the right trajectory.
Golding said other small, liberal arts colleges that may seem to be escaping the lethargic economy could have similar trouble ahead.
“I think Wells has some challenges that are not faced by other similar colleges today,” he said. “With that said, a number of other small liberal arts colleges will face some of the same financial challenges Wells is facing (currently) in coming years. ... Wells may be fortunate that it’s dealing with these things now. ... Because we are in the vanguard of this, it’s helped the college community and board come together and understand what needs to be done to be stable in the future.”
Staff writer Kelly Voll can be reached at 282-2239 or firstname.lastname@example.org. Follow her on Twitter at CitizenVoll.
With the weakened stock market and a practice of spending out of its endowment to fund operations, Wells College has seen a substantial decrease in its net assets and endowments:
Wells College net assets
June 2005 $100,703,635
June 2006 $98,597,533
June 2007 $81,293,086
June 2008 $73,448,878
June 2009 $59,709,941
Wells College endowment
June 2005 $53,687,898
June 2006 $56,397,342
June 2007 $47,419,495
June 2008 $34,381,456
June 2009 $27,652,566
Source: IRS Form 990