June 21, 2007

Trustees weighed options for months

By Lauren Heaton

The 24 members of the Antioch University Board of Trustees first knew the situation at Antioch College was dire in October 2006, when the trustees received revised fiscal projections from the University Leadership Council (ULC) communicating that the college was in “extreme financial difficulty,” according to Arthur Zucker, president of the board, in an interview this week.

The ULC, which oversees the university, is composed of the presidents of each of the five university campuses, plus the university chancellor, two vice chancellors and the chief financial officer.

When the trustees convened in November, they charged an ad hoc committee of trustees and ULC members to further study the college’s projected revenue figures and report back to the board at the February meeting, Zucker said. In February, with the same financial projections on the table, the board considered what Zucker said were “broad alternative solutions” to solve the financial issues, including closing the college or merging with Antioch University McGregor.

But with so many options and not enough information about any of them, the board asked University Chancellor Toni Murdock to use an outside consultant to develop several solutions and present them to the board in June with a recommendation. Following financial review by the Gateway Group consultants, a team including Murdock, Antioch College President Steve Lawry and University CFO Tom Faecke recommended that the university declare a state of financial exigency and announce the closing of the college. According to Zucker, the board approved that resolution at its meeting in Seattle on June 9.

As recently as two weeks ago, Bob Krinsky, a college alumnus and former university trustee, drove 600 miles to speak to a potential donor about the merit of the $65 million capital campaign for Antioch College. The announcement of the closing the following week caused him to be “personally embarrassed,” he said, and he wonders why, if university leaders knew eight months ago that a crisis was so imminent, they did not give college supporters time to rally for the cause.

When asked what forced the university to go straight from fund-raising one week to declaring financial exigency for the college the next, University Trustee Barbara Winslow said that “circumstances changed.”

According to Winslow, enrollment figures that failed to live up to the levels anticipated by the Antioch College Renewal Commission were a major factor in the board’s decision.

“We were all aware of the seriousness of the enrollment situation,” she said in an interview last week.

Specifically, the enrollment projections for the incoming class of 2007 were 190, with 51 transfer students. However, actual enrollment turned out to be 110 students.

This made the third year in a row that enrollment fell below projections created by the College Renewal Commission, a group of administrators and faculty mandated by the trustees in 2004 to come up with a plan to increase college enrollment. That plan, called the Renewal Plan, required that Antioch faculty retool their curriculum into an interdisciplinary, learning community model that could be delivered under budget constraints. In the Renewal Plan’s first year, 2005, enrollment was projected to hit 170, plus 46 transfer students, but instead enrollment fell to 60 students, with no transfers and a 50 percent attrition rate. The following year 2006, first year enrollment rose to 118, but that number also fell below the projected number of 170.

In 2004, before the Renewal Plan, the enrollment was 120 new students; in 2003, it was 107, according to college figures.

Though the university board had committed to financing the Renewal Plan for five years and had budgeted for what the Renewal Commission thought was low enrollment for the first few years, enrollment was well below what the tuition-dependent college needed to deliver its educational program, Zucker said. In addition to low enrollment, Zucker cited the college’s “continual depletion of resources within the university system” as the other major reason for the decision to close the college. The university has been subsidizing Antioch College’s $20 million annual budget with $500,000 to $1.2 million a year for seven of the past 10 years, Murdock said to the Yellow Springs Chamber of Commerce last week.

“The longer we waited, the more likely the whole university would have come down,” she said at the meeting, because the university centers are “attached at the hip financially.”

Some advocates for the college have argued that the college’s financial problems were rooted in the university system, since the college used its endowment to finance the establishment of a university system in the 1960s with as many as 34 satellite campuses, facts Antioch University Archivist Scott Sanders cannot corroborate. But Bill Hooper, who was a trustee for 25 years until he left the board in 2001, recalled that the college did use its endowment of perhaps $5 to 7 million as collateral for the university system. Since then, however, he said, the college has received university funds in excess of that amount and has been able to build an endowment of $32 million.

According to the board’s resolution, last year the college was faced with an operating deficit of $1.4 million. And for the year to end this July, the operating deficit has grown to $5.4 million. According to Murdock’s statement to the chamber, if the college had tried to continue operating, it would have been forced to declare bankruptcy 12 to 18 months from now.

Neither Lawry nor Murdock returned phone calls for comment last week.

On the fundraising side of the equation, the five-year college capital campaign that began in 2001 was “moderately successful,” according to Krinsky, in that it had raised over $42 million but had plateaued short of a goal of $65 million that later had to be increased to fund the Renewal Plan. Though the college received an unusually large gift of $10 million for scholarships, the money was applied with the donor’s permission to the school’s operating deficit and is expected to be consumed entirely by the summer of 2008.

The decision to close the college was “heart-rending” for the university trustees, three-fourths of whom are Antioch College alumni who volunteer their time because they believe in Antioch, Zucker said.

“It was a very difficult decision to make, and we are grieving,” he said.

But the trustees felt the college was running out of time to recover, he said, and they had faith in the current financial management team, whose projections he said were very realistic.

Contact: lheaton@ysnews.com