Colleges in Dire Financial Straits

[secundem_artem]

Tulane (enrollment 14,000) is buying a giant hospital that has stood vacant since it was damaged by hurricane Katrina 18 years ago. They will invest $135 million in fixing it up. Desperation move or wise investment in the future?

I wish them luck but historically, teaching hospitals that serve high need, low resource communities are a hole in the ocean to pour money into.  Maybe if their medical faculty can attract a bazillion dollars a year in research grants it could pay off, but I suspect this will end in tears.

[spork]

Tulane (enrollment 14,000) is buying a giant hospital that has stood vacant since it was damaged by hurricane Katrina 18 years ago. They will invest $135 million in fixing it up. Desperation move or wise investment in the future?

I wish them luck but historically, teaching hospitals that serve high need, low resource communities are a hole in the ocean to pour money into.  Maybe if their medical faculty can attract a bazillion dollars a year in research grants it could pay off, but I suspect this will end in tears.

I suspect HCA is somehow involved in the purchase and that both it and Tulane expect the deal to generate profits.

[Wahoo Redux]

The mixed-use building will also house apartments and retail space, as well as the Tulane Innovation Institute, a center designed to turn university-funded research into products faster. Beyond its investment in Charity, Tulane will spend another $465 million expanding its presence in the surrounding downtown biomedical corridor, with the hope of revitalizing the area as a hub of bioscience research.

At a time of public questioning about the contributions colleges make to their communities, Tulane's latest investment demonstrates how deeply the fates of higher-education institutions and the cities they inhabit are intertwined. When urban campuses swallow city blocks and residents are displaced, the projects often breed resentment. Tulane's plans, though, have been welcomed because the hospital and its immediate surroundings have been abandoned in a section of downtown that's become an eyesore and a constant reminder of Katrina.

Back in the days of Polly_Mere, she would consistently opine that universities should become 'part of the community' to stave off extinction.  She was never clear what she meant, but it certainly seems like this is what Tulane is trying to do.  Hope it works.

[Anselm]

The mixed-use building will also house apartments and retail space, as well as the Tulane Innovation Institute, a center designed to turn university-funded research into products faster. Beyond its investment in Charity, Tulane will spend another $465 million expanding its presence in the surrounding downtown biomedical corridor, with the hope of revitalizing the area as a hub of bioscience research.

At a time of public questioning about the contributions colleges make to their communities, Tulane's latest investment demonstrates how deeply the fates of higher-education institutions and the cities they inhabit are intertwined. When urban campuses swallow city blocks and residents are displaced, the projects often breed resentment. Tulane's plans, though, have been welcomed because the hospital and its immediate surroundings have been abandoned in a section of downtown that's become an eyesore and a constant reminder of Katrina.

Back in the days of Polly_Mere, she would consistently opine that universities should become 'part of the community' to stave off extinction.  She was never clear what she meant, but it certainly seems like this is what Tulane is trying to do.  Hope it works.

Maybe unrelated, maybe I am reaching too far with this, but my alma mater began talking about the "college bubble" whereby students lived in their own separate world with little interaction with the local community.  This was back in 2007 when I worked there for one year.  I thought this to be strange since I was too busy as a student to have any community interactions aside from trips to local businesses.   Also, isn't this the case with every school?  Students hang out with other students and do normal student activities.

[Ruralguy]

Its pretty typical, though  with regional colleges, more of the population may be from the college town or very near by.

[mythbuster]

During the Katrina rebuild, I know that Tulane made a HUGE effort to involve their students in rebuilding the community. To the point that it dictated some of their admissions criteria. If this is part of that, I wish them luck. I rather think it's a small part community building and a larger part of an easy and cheap(er) way to expand the physical footprint. Tulane already has a medical school/med research facilities, so they should not be looking for lots more research indirect from this.

[mythbuster]

I just checked the map. Charity hospital is in-between the LSU med center and the Tulane Med center. My money is now squarely on land grab/ outbidding LSU.

[spork]

I just checked the map. Charity hospital is in-between the LSU med center and the Tulane Med center. My money is now squarely on land grab/ outbidding LSU.

Hence my comment about HCA.

[kaysixteen]

Ok, but seeing as many of these colleges are one of the main, if not the only real, economic engine in the communities in which they are located, communities which would take it one the chin if Super Dinky Jr went belly-up, wouldn't this present a real challenge for local politicians to seek to publicize these schools?

[Wahoo Redux]

IHE: Slimming Down to Stay Afloat

Projecting an enrollment nosedive, West Virginia University is preparing for a lean future. Some call it an act of surrender, while others say it's a prudent choice to be replicated elsewhere.

[Hibush]

I just checked the map. Charity hospital is in-between the LSU med center and the Tulane Med center. My money is now squarely on land grab/ outbidding LSU.

Hence my comment about HCA.

Looking deeper, it does appear that this is not related to undergrad education but medical education and delivery. They hope to increase Tulane's clinical and research income, not tuition dollars. So the financial and enterprise elements are really different from PUIs. Like HCA being involved.

Is New Orleans a reasonable place to make this bet? Like many small towns in the Northeast, New Orleans has lost a lot of population. Depopulation is an underlying stressor. That element might be the same.

[apl68]

Ok, but seeing as many of these colleges are one of the main, if not the only real, economic engine in the communities in which they are located, communities which would take it one the chin if Super Dinky Jr went belly-up, wouldn't this present a real challenge for local politicians to seek to publicize these schools?

I can see some state representatives wanting to try something like this with failing private colleges in their districts.  However, a legislature's first priority would be to save endangered public colleges, and as was noted above many states now have quite a bit of excess state college capacity.  If they're having trouble saving the institutions that the state already owns, they're probably not going to have much attention to spare for their region's failing private schools. 

What you're suggesting isn't unprecedented.  There are state colleges that started out as private foundations.  Henderson State University in Arkansas started as a private Methodist school that was acquired by the state.  But that happened in a day when circumstances and possibilities were very different than what we see in this age of widespread demographic decline.  Maybe in some cases a state university system can find some assets to cherry-pick and salvage from local failing private colleges.

[jimbogumbo]

Ok, but seeing as many of these colleges are one of the main, if not the only real, economic engine in the communities in which they are located, communities which would take it one the chin if Super Dinky Jr went belly-up, wouldn't this present a real challenge for local politicians to seek to publicize these schools?

Don't have a link, but there was a recent WaPo article about how a number of small private colleges in rural areas are being propped up by the Department of Agriculture.

[dismalist]

Ok, but seeing as many of these colleges are one of the main, if not the only real, economic engine in the communities in which they are located, communities which would take it one the chin if Super Dinky Jr went belly-up, wouldn't this present a real challenge for local politicians to seek to publicize these schools?

Don't have a link, but there was a recent WaPo article about how a number of small private colleges in rural areas are being propped up by the Department of Agriculture.

Always be friends with the Department of Agriculture! We got the love, and they got the cash.

Here's the substance

The USDA has been loaning tens of millions of dollars to rural colleges and universities, some of which couldn't get financing from conventional lenders or whose budgets are so precarious that the Education Department has placed them under additional financial scrutiny.

This support, through a program set up to promote rural economic development and from the federal agency that works the most with rural places, underscores how important local universities and colleges are to those communities — and the vulnerability of a growing number of them.

from here https://givingcompass.org/article/department-of-agriculture-loans-rural-colleges-millions

Here's an older IHE article that provides more detail on the program

https://www.insidehighered.com/news/2019/01/02/under-radar-usda-lending-provides-big-boost-financially-pressed-colleges

The article uses Iowa Wesleyan as an example. That is probably unfortunate.

Note these are loans. The day of reckoning is merely being postponed, unless of course you get a political coalition of the educational establishment with farming organizations [which worked for food stamps, which I like].

Get the woke onto the farms, sorta like Mao! :-)

[Hibush]

Ok, but seeing as many of these colleges are one of the main, if not the only real, economic engine in the communities in which they are located, communities which would take it one the chin if Super Dinky Jr went belly-up, wouldn't this present a real challenge for local politicians to seek to publicize these schools?

... a recent WaPo article about how a number of small private colleges in rural areas are being propped up by the Department of Agriculture.

The USDA has been loaning tens of millions of dollars to rural colleges and universities, some of which couldn't get financing from conventional lenders or whose budgets are so precarious that the Education Department has placed them under additional financial scrutiny.

This support, through a program set up to promote rural economic development and from the federal agency that works the most with rural places, underscores how important local universities and colleges are to those communities — and the vulnerability of a growing number of them.

This program is run by the rural-development part of USDA, so the express purpose is to maintain rural life. Depopulation of rural areas has been ongoing since soon after the USDAs founding during the Civil War, so that department has been charged with keeping rural life economically viable. That is getting a lot harder these days when farming requires so few people. Especially farms in the style of Iowa's, where two people can reasonably farm eight or ten square miles. How do you maintain community with that population density?

I see the propping up of non-viable rural colleges in the context of corn subsidies, especially for Iowa. A lot of USDA programs are built or co-opted to subsidize that sliver of agriculture. (Ethanol for fuel is one of the most blatant.) In corn country, they want colleges, hospitals and other critical parts of society, but don't have the population to make them economically viable. They often don't have a landscape or other features to draw people to move there. So society is called upon to keep this structure going. I think it is ok for rural area to depopulate, just as it is for remote mining towns after the mine closes. Super expensive to maintain for purely sentimenal reasons.

There is quite a bit of discussion in the national political parties about reducing the influence of the Iowa caucuses at the start of the primary season. That position has given the state disproportionate polititcal clout. E.g. the three-term USDA Secretary is the former governor of Iowa. Will there be fewer subsidies to prop up corn producers and associated rural infrastructure? Will South Carolina and Nevada's rural needs take precedence? Do those states value colleges in the depopulating counties?