June 28, 2007

By Lauren Heaton

The recent decision the Antioch University Board of Trustees made to close Antioch College next year has raised questions concerning the college’s relationship to the six-campus nexus that is Antioch University. As the flagship school whose budget is nearly twice as large as each of the other university schools and whose campus is the only residential campus, the college supports and is supported by the system it belongs to. But the structure of semi-autonomous campuses that was established in the late 1980s has given some members of the college faculty and community concern last week as they grappled with the news of the closing.

In particular, questions have been raised about how the loan for Antioch University McGregor’s new building on the northwest edge of Yellow Springs affected the university’s borrowing capacity. Some have also asked how the college could be broke with a $32 million endowment, and others have wondered if dues from each campus to the central administration and employee compensation within the university system are equitable.

Peter pays Paul: a snapshot
The budget for the entire university shows a multi-spoke organism whose branch campuses pay each other and the central administration to maintain a system of semi-independent campuses all united under a central leadership. According to the university’s 2005-06 budget, the university had a combined budget of $73.5 million and recorded a net gain of $2.2 million last year due to the fact that the endowment (largely the college’s) had a good year.

In 2005-06 the college had a $19 million budget. While the college doesn’t pay the central administration as the other campuses do, and it also received $740,000 in subsidies from the other campuses, it still ended with a net deficit of $1.4 million in a year when enrollment fell from 461 to 364 students.

The college budget includes the library, which serves the whole university, and it is the only residential campus that spends approximately $3 million annually for the maintenance of the facilities the other campuses aren’t burdened with so heavily. The $700,000 budget for Glen Helen falls under the college, but it is 95 percent self-funded.

According to the 2005-06 budget, McGregor had an annual budget of $7 million and paid $700,000 to the central administration with a balanced budget. McGregor has 18 fulltime faculty members to teach 750 full time equivalent students with the help of over 150 adjunct faculty members, who are “professionals in the field,” according to McGregor President Barbara Gellman-Danley. The school also retains 60 staff members, 16 of whom are unionized. With three administrative deans, soon to be cut to two, and no vice-president, Gellman-Danley said she is keen on saving money and running a tight ship.

“Our staff is about half that of the other campuses because we believe in running a good business model,” she said in an interview on Monday.

According to the 2005-06 budget, Antioch New England and Antioch Seattle each had balanced $14 million budgets and each paid $1 million to the central administration, while Antioch Southern California (Santa Barbara and Los Angeles campuses) had a $16 million budget and paid $1.3 million to the university with a first-time deficit of $800,000.

Balancing the system
Establishing stability for the whole system has not always been easy, and for three of the last five years, the university has filed a loss of just under $1 million, according to financial information from GuideStar’s database for nonprofit businesses. Still, the entire university budget has grown by an average of $5 million each year since 2000, and the leading administrators of the university have maintained a salary and benefits scale commensurate with strong performance.

According to the university’s 2005 tax return, College President Steven Lawry was the highest paid administrator, receiving what would have been a salary of $192,000 for the full year with $22,000 in benefits had he worked a full year. Murdock’s salary was $185,000 that year with a benefits package of $289,000, including a one-year paid sabbatical which is awarded after seven years (she has been with Antioch for 11 years) and can be taken at the point she decides to step down, she said. Gellman-Danley, who has been with the university for eight years, had a similar arrangement with a salary of $164,000 and a benefits package of $223,000, including the year sabbatical pay.

By comparison, in 2005 the highest paid faculty member within the university was Alan Guskin, a distinguished professor of the university’s PhD program in Leadership and Change and also a former college president, who in 2005 was salaried at $105,000. Gina Paget, who served as the director of several graduate programs in her 11 years at McGregor and retired in July 2006 as the director of McGregor’s Individualized Liberal and Professional Studies program, was paid a little over $60,000 a year.

At the college, one associate professor made $48,000 plus benefits last year, and one full professor made $50,000 plus benefits.

Murdock said on Monday that when she became chancellor last year she instituted the “blue book commission,” a task force with representation from each campus, charged with analyzing academic policies, employee contracts and performance evaluations for each of the schools. The commission was to address equity issues across the campuses, but it is not yet ready to present a report to the university, she said.

Funding the McGregor building
While the college has had financial difficulty, McGregor in 2005 began plans to build a new $15 million facility at the northwest edge of Yellow Springs. Some have wondered how a new building for McGregor was financed while the campus just across the street was crumbling.

To fund the building the university secured $11,800,000 in municipal bonds through the Ohio Higher Education Facilities Commission in March 2006. However, the bonds were issued based on McGregor’s past financial performance, and are not tied to college resources or its ability to borrow.

“There is no lien on College real estate as a result of this bond issue,” wrote attorney William R. Groves of the firm Martin, Browne, Hull and Harper of Springfield, a lawyer for the university.

According to Cleveland attorney Barry Keefe, who is counsel for the OHEFC, bundled with McGregor’s bond package is approximately $2 million in refinanced bonds for improvements to the college campus facilities that were originally secured in 1997 and 2000. Improvements included renovations to Spalt Hall, President’s and West dorms and the powerplant, as well as construction of the townhouse dorms completed in 1988 and systems upgrades such as air conditioning and new computer lab equipment for nearly half of the buildings on the college campus.

The OHEFC bonds are tax-exempt bonds that are financed through National City Bank, which is backing the university’s ability to pay back the loans based on McGregor’s revenue, Keefe said. McGregor’s new facility is sufficient by itself to serve as collateral for the loan, he said.

“But no bank lends on the basis of taking a building, they want to ensure monthly payments based on the revenue of the borrower,” he said. “The university will have no problem making its payments back to the bank, and it should be in better shape now because it’s not being drained by the college anymore.”

While the university’s credit was of concern because of the subsidies the other campuses have funneled toward the college to balance the college’s budget, University Chancellor Toni Murdock said Monday, the college’s ability to meet its payroll was of more immediate concern.

Endowment mostly restricted
Regardless of what the other campuses are doing, some college adocates have asked why the university could not supplement the college budget with endowment funds to get the college through the budget-breaking five-year transition mandated by the board with the Renewal Plan in 2004.

According to Tom Faecke, the university’s chief financial officer, though about 98 percent of the endowment belongs to the college, as opposed to the university, 61 percent of it is restricted for scholarships and 14 percent is restricted for other uses such as the library and Glen Helen. The annual gains on those restricted funds are also restricted to use in those particular areas, he said.

Of the annual gains made on the remaining 25 percent unrestricted funds, the university has a policy to budget just 5 percent for the college, while reinvesting the rest back into the endowment. According to Murdock, most universities consider it “good accounting” to budget just 5 percent and reinvest the rest.

In order to liquidate the principle endowment and use it for purposes other than what it was donated for, the university would need approval from the state, Murdock said.

“And I’m not sure how fruitful it would be to spend that principle,” she said. “If you look at the endowment, $30 million is not enough to get us through the next two to three years, and it would reduce the amount of money that is generated.”

Contact: lheaton@ysnews.com