Colleges in Dire Financial Straits

[polly_mer]

And Becker itself, though described as "one of the 25 oldest institutions in the United States," has actually existed in its current form only since 1974.  It was a merger of two tiny institutions, one founded in the late 1700s.  It goes to show how every institution is different.  In this case two "super dinky" schools were able to merge to form a viable entity that has lasted four decades.  Whereas polly's SD evidently had no handy neighbors to merge with.

SD had a handy neighbor and that handy neighbor now has the handful of SD's programs that weren't doomed.  One program in particular just moved three miles down the road as students, faculty, and equipment.  The only position lost was SD department chair as that person became regular faculty and the person who had been leading a start-up effort in that area became chair of a full department.  Several other departments at the nearest neighbor and elsewhere in the region acquired SD TT/T faculty as visiting faculty as the expedient way to deal with the SD transfer students.  The SD humanities faculty generally were just out of a job in the region, but the major faculty tended to find a job in the region by the start of the next year.

In the 70s when SD was doing really well and the near neighbor was not, SD declined a merger.  As SD struggled, every new president suggested a merger and the neighbor declined.  The latest president declined and did great things with the neighbor in the past eight years.  In the past ten years, SD picked up many students and faculty as programs closed in the region.  SD got a whole softball team at one point by being Johnny on the spot with transfer scholarships.  Thus, while the situation has been dire for twenty years for many super dinkies, the slow trickle of closings has benefited the institutions one ring farther out in circuling the drain.

The athletic mission for players to be most of the student body only works with many teams to have sufficient slots.  Just the one big new team like football does fill up fast and then the recruiting is done for years.

[polly_mer]

You really would think that realizing your "model" is classifying major public university campuses as "doomed" would make you question your model. . .

Some would appropriately question the models accuracy. But others would recognize its potential to get clicks. And that may be more important.

It definitely got clicks while missing nearly all the Super-Dinky-like institutions that will merge, close, or do a complete transformation in the next ten years.  There's a white paper from 2016(?) that  I can't find that in the five minutes before I go to work that had much more reasonable projections based on size, resources, name-brand recognition, and demographic shifts compared to current student body demographics.

[kaysixteen]

Mergers are very common in prep school land, as witnessed by the numerous such schools with hyphenated names, some of which several hyphens (I know of one with three).  But these often were motivated by consolidations of one boys' and one girls' school, something very much less likely to occur today, or by having a school absorb a specialized school that was struggling, in order to maintain said specialty program.   In American higher ed, otoh, it is not my sense that real mergers take place nearly so often, and many potential ones that we hear of either do not go through, or the 'merger' really is just an asset grab, with little even-handedness associated with the merger.  Or am I missing something?   In any case, most mergers make large numbers of faculty redundant.   And what usually happens to unused campuses of dead schools?   What happened to Super Dinky's campus?

[lightning]

I have some math from Super Dinky that directly answers Lightning's question.  I don't know about Baker or the lacrosse team. 

I do know that Super Dinky could have survived for many more years if they had gone all in on beefing up their successful athletics programs instead of being half-assed about that effort, half-assed about reviving a liberal arts program, and half-assed about moving into new majors that would draw students.

Super Dinky had a pretty good niche market in people who just wanted to play sports and would play sports every season.  These students were not picking college based on major.  Indeed, most of these students probably shouldn't have been in college anywhere because they were not about learning.  Interestingly, the coaches were about preparing for life after college and therefore students were steered towards majors with which they could get jobs after they return to their small towns (basic business that claimed to be sport management, psychology that focused on social work and the court system, criminal justice, and a coaching minor).

SD had a total annual budget between $10M and $15M every year.  The endowment is about the same size, so the main sources of funding were tuition, fees, room and board, rental facilities, and state grants for capital projects.

The head football coach made $35k + benefits.  His assistant coaches made $5k + room and board valued at $10k.  Students were mostly required to live on campus unless they were still living with family.  Thus, each full-pay student was $20k tuition/fees + $10k room and board.

The football team then is:
$70k head coach
$150k 10 assistant coaches

total salary cost: $220k

$4.5 M in player income if all 150 players are full pay and living on campus.

Because of the costs with football, three-sport thing, and a few people being good enough students they received merit scholarships, the take for football alone is more like $2M.  However, $2M on a $15M budget means we all love the football coach and his assistants who recruit from all over the country, not just the 2h drive radius.  This particular coach was also an incredible mentor to his guys and we were incredibly lucky to have him.

Men's basketball is similarly:

$70k (total) for the head coach
$45k for the assistant coaches

total: $115k in salary expenses

$1.5M for 50 players that is more like $750k after expenses and reallocation.  Again, the coaching team recruits from all over the country, not just the local region.

All told with 70% of the students being athletes and the coaches recruiting nationally instead of just within the two hour drive in a dying region,

600 students * 0.7 athlete/student * ($20k tuition and fees + $10k room and board) = $12.6M

Even with a discount rate of 40% on tuition, the fact that some of the student athletes were from the region, and expenses in running the programs, SD was much better off by having athletics than not.  The alumni donated to athletics at high rates, much higher than any other identifiable program and with far fewer restrictions on what athletics could do with the donations.

With pretty good athletic facilities for the region, we made a lot of money renting the facilities for K-12 tournaments, summer camps, and similar endeavors.  A good million dollars a year came from renting the facilities and then doing concessions during rentals.

For perspective on salaries in other parts of the institution, the admissions counselors earned $25k + benefits (about $50k total per individual).  Having the assistant coaches recruiting like crazy on only $15k outlay and doing so much more successfully meant we at the administrative level often discussed whether we should just cut the admissions counselors and pay the assistant coaches a little bit more. 

We also often had assistant coaches making extra money through adjuncting and tutoring center activities.  The student retention rates went up substantially when the students saw the coaches engaged in the formal education side.  All the head coaches taught credit-bearing classes as adjuncts.  Unlike the stories from the DI schools about athletes getting special treatment to be let out of academic endeavors, one contact with a head coach about a student falling behind and that student was in my office asking to help make a plan to do better.

Thus, starting a football team from scratch is probably a terrible idea to save the tiny school.  However, adding a few more teams that need minimal equipment in sports where the national demand exists and isn't being met (e.g., women's wrestling, lacrosse) may be a good investment for $70k for the coach, $1m in equipment that is mostly paid through fundraising, and a new set of students at $30k each.

This is great. Thank you. One question, though. How much "facilities and administration" was factored into the cost of athletics? Any at all?

[polly_mer]

Sure, cost of facilities and administration matter.  However, at the participatory level, the facilities are mediocre.  They aren't multimillions of dollars to run annually; the underfunded public high school across town has similar facilities.  There was a flood in the past decade and parts of the athletic complex were just closed off because the donations weren't sufficient to do the repairs.  The indoor swimming pool was just abandoned.  The various locker rooms were very nice because the relevant alumni donated materials and many volunteers spent several weekends doing the work to recover from the flood.  The rentals to k-12 tournaments and camps made money acoounting for maintenance expenses.

The direct administration was an athletic director at $80k (salary + benefits), an administrative assistant who was shared with three other departments, and a Title IX coordinator who was also a coach and TT faculty.  The athletic director frequently drove the microbus to competitions as a way to save money.

Facilities for the entire college transitioned to an outside contract during my time at SD and the first facilities director was incredible about finding ways to be more efficient by just closing off things too expensive to maintain.  He also ended up as assistant coach to two sports for minimal extra money.

Uniforms and equipment were often paid for by donations.  Annual general giving to the college was hard in large part because most alumni felt connected to their teams, not the faculty or the academic side of the college.  Getting money for a new scoreboard, new microbus, or even a new sport was much easier than raising money for new academic programs, scholarships, or capital campaigns.

Alumni showed up for athletic award ceremonies, even with no offspring or other award winners, in such numbers that we had to use the full gym with multiple basket courts.  We held the academic awards in a room that seats about 100 because few parents would even attend since it meant arriving Thursday night for the Saturday graduation ceremony.

The facts remain that very few of the athletes would have been at SD if they hadn't been nationally recruited.  SD had students from nearly every state, had an impressively high Pell grant rate for a private college, and had checkbox diversity demographics much more reflective of the nation than the greater than 90% white county.  Having access to a different pool of prospective students saved SD in the early 2000s. 

One big factor that killed SD at the end was the new president who made poor decisions that made athletics much less pleasant day-to-day in an effort to transition to a liberal arts residential campus intellectual experience.  The administrative overhead and new facilities investments for the transition efforts were a net loss in terms of attracting new students.

[polly_mer]

We have discussed MacMurray College in Illinois closing.  Detroit Free Press has a pretty good article outlining why these tiny struggling colleges that have been circling the drain for decades will finally close in the next ten years.  Being small doesn't mean death as Illinois College indicates, but finding a coherent mission that appeals to students is necessary.

https://www.freep.com/in-depth/news/education/2021/02/12/illinois-college-macmurray-college-liberal-arts/6122046002/

[polly_mer]

And what usually happens to unused campuses of dead schools?   What happened to Super Dinky's campus?

Campuses are usually sold for the land if nothing else.

Super Dinky's athletic facilities were sold as a block to someone who plans to rent them for tournaments, camps, and recreational leagues.  Other parts of the campus are valuable for the land with mature trees close to downtown.  I expect most of the buildings to be torn down with something new built.  Several buildings had already been condemned with the city requiring annual paperwork and a fine on why those condemned buildings were still empty instead of renovated or demolished.

[polly_mer]

But these often were motivated by consolidations of one boys' and one girls' school, something very much less likely to occur today

One reason that that New England and the Midwest have so many tiny struggling colleges is those colleges started as single gender and then both went coed.  The article I just linked mentioned that MacMurray College and Illinois College started that way and that's why there were two colleges in a city of 20k.

The tiny colleges that didn't merge as part of the coed wave in the sixties could still merge, but, yeah, gen ed faculty will lose their jobs due to redundancies.

[Hibush]

We have discussed MacMurray College in Illinois closing.  Detroit Free Press has a pretty good article outlining why these tiny struggling colleges that have been circling the drain for decades will finally close in the next ten years.  Being small doesn't mean death as Illinois College indicates, but finding a coherent mission that appeals to students is necessary.

https://www.freep.com/in-depth/news/education/2021/02/12/illinois-college-macmurray-college-liberal-arts/6122046002/

The article reveals a truth that is too often ignored or hidden: the business model of private colleges depends on wealthy students. Some proportion of each class must end up in a position to each donate millions or tens of millions, to feel good enough about their experience to do so, and to have a tradition of such donations.

Students were blue-collar, more so than at Illinois College on the other side of town. Students at MacMurray studied teaching, nursing, sports management. Students at Illinois College tended to be studying business, premed and prelaw.

The split in occupations played out in donations to the schools after graduation, with many MacMurray alumni having great careers, but not necessarily the kind that left millions of dollars in income available to be donated back. That's reflected in each college's endowment — funds schools create for long-term financial protection.

The story describes how the MacMurray administration was so busy handling year-to-year crises that thinking on that level never entered their planning. Illinois College did, and they are doing fine despite many superficial similarities. The future donors don't need to get exotic-for-Illinois careers. It could be a car dealer in Springfield, a contractor in Edwardsville, or a brokerage branch VP in suburban Chicago.

As a prospective professor, student or donor, how does one check whether a school understands this critical part of their business plan?

[Ruralguy]

You really have to ask people at the school about the alumni base, particularly at the Development Office.
In absence of that, discuss this with individuals and see what they know about recent donations, who gave them, and what they were studying at the school when they were there. This may be difficult since many alums only give large gifts when they hit 70 or so and there won't be very many around the college who know much about their time there. Try to get a sense of what recent grads went on to do and if they have kept up connection to the college.  It is true that this sort of thinking can help a college through difficult times.

Given what was said in the article though, I wonder how much of this is original SES of the students and not some sort of "Valued added" SES based on major of the students.

[polly_mer]

Given what was said in the article though, I wonder how much of this is original SES of the students and not some sort of "Valued added" SES based on major of the students.

A fair amount is always due to current SES.  The alumni network is made up of graduates.  The successful regional business network is usually very different from the went-back-to-hometown-and-got-the-same-job-from-family-friends-and-neighbors network.  As I've recently written, the networking aspects of college are important to people who are already solidly middle-class and are aspiring to more.  The people who are hoping that a college degree will make them middle-class participants often aren't savvy investors in education, which means smoke and mirrors can work for a while.  After all, an expensive private school must be better than the cheap regional comprehensive, right?


https://www.payscale.com/college-roi and similiar sites can be fun reads because it's clear that networking can be a driver for success.  A solid major that is hard to otherwise learn is another good driver for success.  Sorting the table by negative 20 year return on investment means one doesn't have to scroll very far before the pattern of undistinguished places with low graduation rates (aka small alumni base) becomes clear.

One thing that hurts tiny schools is having a total alumni base for fundraising that is smaller than two or three years of new graduates at larger places.  SD had 7k total living alumni (state flagship graduated about 8k new bachelor alumni every year) and $1k at SD was a large enough gift to be on the annual big donor list.  In the years after we left SD, we made the named donor list every year for the couple hundred dollars that Mr. Mer sent to his erstwhile colleagues in the advancement office.

[Hibush]

Given what was said in the article though, I wonder how much of this is original SES of the students and not some sort of "Valued added" SES based on major of the students.

While high SES students have better prospects going in, the "system" seems designed to give more added value for those starting with high SES and less for those starting lower. If, as a faculty member and part of the system, one would like to see that turn out differently, there are approaches to advising and teaching that could help.

[polly_mer]

An attempt at value-added rankings https://www.brookings.edu/research/beyond-college-rankings-a-value-added-approach-to-assessing-two-and-four-year-schools/

An attempt to quantify a social mobility index https://socialmobilityindex.org

A different look at higher ed institutions by social mobility https://www.nytimes.com/interactive/projects/college-mobility/

[Ruralguy]

The data for my school on the first one you list is laughably wrong. Must be some sort of database
query issue, but it's way way wrong.

[polly_mer]

The data for my school on the first one you list is laughably wrong. Must be some sort of database
query issue, but it's way way wrong.

Interesting because when I look at your school, the values seem in-line with other websites that report for institutions.

Perhaps your institution has a reporting issue (IPEDS is a huge pain for reporting) or is interesting with the fine distinctions on the not-quite-identical questions for different reports (don't get me started on the annoyance of all the reporting requirements).