Antioch idea of 'financial exigency' invites questions

By Diane Chiddister

The term “financial exigency” has played a critical role in the recent struggles of Antioch College. Because the Antioch University Board of Trustees declared that the college was in a state of financial exigency last June, the board was legally able to break the contracts of tenured faculty and suspend operations.

And when the trustees and the college alumni board agreed to keep the college open, the agreement stipulated that while the suspension of the college was lifted, the college was still under financial exigency. Because the college is still in financial exigency, trustee leaders and administrators have said, the college must postpone recruiting new students until an undetermined time, and all faculty jobs are still in jeopardy.

But the Antioch University interpretation of financial exigency is highly unusual and perhaps unprecedented in the world of higher education, according to two employees who specialize in the issue at the American Association of University Professors (AAUP). The AAUP is the advocacy organization for professors, and the organization which developed the standard for financial exigency in higher education.

“I’m not aware of any institution that says we’re in a dire financial straits and we want to pull ourselves out of those straits but we’re not going to recruit new students,” AAUP Department of Academic Freedom, Tenure and Governance Director Jonathan Knight said in an interview last week. “You need to recruit students to pull yourself out of those straits. We’ve never come across a situation like that.”

The AAUP has also never encountered an institution that stated it will let go of all faculty due to financial exigency, according to Anita Levy of the AAUP, who is in contact with Antioch faculty over the situation. In the past, exigency has led institutions to terminate some faculty, or perhaps a whole department, but not the whole college, as the university said in June it would do.

“We don’t know of any institution that has terminated all faculty,” she said.
The AAUP also questions why the university says it is still in a state of financial exigency when it already received $2 million from alumni with the promise of $16 million more in donations, as was made in October by the alumni board, Levy said.

Many Antioch College faculty members believe the university did not lift financial exigency in order to maintain control over faculty, according to faculty member Anne Bohlen.

And Antioch University Trustee Paula Treichler believes that the way the university interprets financial exigency serves to undermine efforts to help the college move ahead to attract more students and achieve financial stability.
“It sounds like financial exigency is a big scary thing, but in fact it has little operational force,” she said in an interview last week.

University response
In an interview last week, Antioch University Board Finance Committee Co-chair Larry Stone stated that financial exigency will be lifted when “we can see far enough ahead to guarantee the financial solvency of the college.” He could not say specifically how far ahead that would be, but stated that the college should be able to forecast a balanced budget for three to four years.

Stone and Board Chair Art Zucker said they could not be specific about the criteria the college needs to meet to achieve the lifting of financial exigency.
However, Stone said, the more the alumni board raises for the college, the faster financial exigency will be lifted. He said he could not name a specific amount that the alumni need to raise.

According to Antioch University Chief Financial Officer Tom Faecke in an interview last week, the college cannot lift the state of financial exigency until the alumni board delivers on the promised $18 million in donations.

“We have to wait and see if it arrives,” he said.

Antioch University Chancellor Toni Murdock was not available for comment.
According to the Nov. 2 agreement reached by the trustees and the alumni board, the university chancellor, the board of trustees and the college advisory body or board of trustees will jointly decide when to lift the state of exigency.

University leaders have stated that the college’s continued financial exigency is a significant reason why the college cannot yet recruit new students, since they believe the Ohio Board of Regents, which certifies the college’s ability to grant degrees, will not approve extending the college’s ability to grant degrees past 2008 if it is still in a state of exigency. (Last week Antioch announced it will admit transfer students.)

However, the OBR does not prohibit institutions in financial exigency from granting degrees, according to OBR Director of Media Relations Mike Chaney this week, pointing to the local examples of Wilberforce University and Central State University as colleges that continued functioning normally while in financial exigency.

Wilberforce experience
When Wilberforce University announced that it had declared financial exigency in 2003, the Ohio Board of Regents and the accrediting organization North Central Association did not discourage the college from recruiting new students, according to Wilberforce Vice President for Institutional Advancement Marshall Mitchell this week. Quite the contrary, those organizations encouraged the college to become more aggressive in its student recruiting, he said.

“When so much revenue comes from enrollment, that’s the last place you want to cut,” Mitchell said.

After the college discovered its financial crisis in 2003, college leaders, faculty and students “locked ourselves into a conference room all summer and white-boarded the entire university,” he said.

At that group’s suggestion, the university cut some programs and some administrative positions, and embarked on a more focused, aggressive student recruiting campaign, he said, adding that the college did not let go of any tenured faculty due to union contracts.

The new strategies paid off; this fall, Wilberforce saw a 44 percent increase in its new student enrollment, and the school is getting closer to achieving a balanced budget and ending financial exigency, Mitchell said.

Antioch hasn’t called
According to Chaney, Antioch College currently is technically authorized to grant degrees through 2013, although because the university last notified the OBR that it would suspend operations in 2008, the OBR would most likely need to review the college’s situation if Antioch communicates that that plan has changed. The OBR would look for evidence that the college could provide a quality education, he said, including that it could afford to pay its faculty. However, since Antioch University is a private institution, the OBR’s involvement is minimal, according to Chaney.

“Generally, it’s a fairly easy process,” he said.

Chaney said that no Antioch University or Antioch College officials have contacted the OBR since they communicated their decision to suspend operations last summer.

What is financial exigency?
Financial exigency is not bankruptcy, according to Knight of the AAUP. Financial exigency is an “imminent financial crisis that threatens the survival of the institution as a whole,” according to the AAUP Web site. Also, the situation must be so severe that “it cannot be alleviated by less drastic means than termination of faculty appointments. The exigency must be genuine and so must the need to release tenured faculty members or other faculty members before the end of their specified terms.”

The AAUP developed the standards for financial exigency in higher education in the 1930s in response to financial problems universities faced caused by the Great Depression, according to Jonathan Knight of the AAUP. The declaration of financial exigency gives institutions the ability to break contracts of tenured faculty in a severe financial crisis.

The AAUP also states that an institution should involve its faculty in any decision regarding financial exigency, and that faculty should have primary responsibility for determining which faculty jobs are terminated. Faculty whose jobs are terminated are entitled to a hearing before a faculty committee, the Web site says.

After the Antioch University board announced that the college operations would be suspended next year and all faculty terminated, the AAUP wrote a letter expressing its concerns about the lack of clarity about the financial situation and the lack of faculty involvement in the decision to declare exigency. When the AAUP received no answer to that letter, it wrote a second one, which has been responded to, according to Levy, who said the response cannot be made public. Currently, the AAUP is “monitoring” the Antioch situation to see what happens with faculty, she said.

Just as the AAUP has not identified specific numbers to determine exigency, it has not determined what specific financial status would lead to its lifting. However, according to Levy, situations that lead to the lifting of exigency include a restructuring of programs, increasing student enrollment or increased fund-raising activity and donations.

“Every situation is different,” she said.

The AAUP has launched investigations into 28 institutions which reported exigency in the past and found that out of that number, four had “bona fide” exigency situations and the rest had financial problems that could have been resolved by less drastic ways, according to the AAUP Web site.

Contact: dchiddister@ysnews.com