Archive for Sunday, November 30, 2003

State’s private colleges fight to survive financially

November 30, 2003

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— In the span of a few short sentences, Paul Formo can sum up the optimism and realism that's endemic of those championing the small private colleges that dot the central Kansas landscape.

Perched in a cushy leather chair -- the kind you tend to find in a college president's office -- Formo can relate both the promise and peril facing Bethany College, the 123-year-old institution he's charged with leading, and others like it.

In one breath, Bethany's president can talk about the difficulties: constrained budgets with little margin for error, shortfalls eating into the college's endowment, the difficulty in promoting private education, and getting parents and students to avoid "sticker shock" at the nearly $19,000 list price for tuition and room and board.

Formo, however, is just as quick to tout the benefits and successes of Bethany.

From its small class sizes, overall financial resilience and personal, friendly atmosphere to a wide disbursement of financial aid and its ability to develop "whole people, not just minds," Formo said Bethany was an asset to students looking for an alternative to public universities.

Adapting to change

What's true of Bethany -- both its problems and promise -- is generally true of its small college peers throughout Kansas, which sprang up a century ago from the state's various Christian denominations, usually with just a handful of students and a single building for classes.

Today, eight private Christian colleges operate within a 50-mile radius of McPherson and have long had full-fledged campuses and degree programs.

They range in size from under 400 students at McPherson College to about 600 at Kansas Wesleyan University in Salina.

Although they are affiliated with particular denominations, most campuses have become a plurality of denominations and draw up to a third of their enrollment from out of state, according to surveys of area college enrollments.

Although each college has what Sterling College Vice President for Enrollment Services Dennis Dutton calls its own "unique personality," all are facing the challenge of adapting to changing times and surviving in a tough financial environment.

That environment includes reduced giving, tough competition with state and community colleges and the perception that private schools are just too expensive for most students.

Stability

not assured

Administrators from five colleges The Hutchinson News surveyed -- Bethany in Lindsborg, Bethel College in North Newton, Tabor College in Hillsboro, McPherson College and Sterling College -- said that their institutions were on relatively stable financial ground and thus were not in danger of closing their doors, as St. Mary of the Plains in Dodge City did in 1992.

But that doesn't mean the fiscal stability of central Kansas' small colleges is assured.

Considering that many institutions receive up to three-fourths of their budget from student tuition, fees and room-and-board, and another 20 to 25 percent from annual alumni and donor gifts, it's clear that the direction of a college's financial health can change year to year.

Endowments, which can protect against fluctuations in college finances, vary widely across central Kansas.

McPherson College President Ronald Hovis said his college had an endowment of $24 million, of which it used $9 million to secure capital for a variety of improvement projects over the past few years. The college has $7 million in bonds outstanding.

Vigilance required

With such a thin margin for error, colleges, whether they have a $20 million endowment or a $2 million endowment, must avoid a situation where one bad year can start a cycle of misfortune, administrators said.

That's the kind of vigilance Formo said Bethany was trying to adhere to. Earlier this year, Bethany announced a $1.4 million shortfall from last year because of the need for unexpected repairs to the college library, a lower-than-anticipated enrollment and a decline in gifts to the university in a tough economy.

Bethany had to make up the difference using its income-producing endowment fund, meaning it has now borrowed $5 million off its $20 million endowment during the past two decades.

"We're always right on the edge," Formo said. "When we've gotten in trouble in the past, we've turned to the endowment. Our board has said we're not going to do that anymore."

Bethany College isn't alone.

Sterling College administrator Don Reed, vice president for advancement, said his institution borrowed $1.5 million off its $5 million endowment to help complete the renovation of Cooper Hall, to make up for funding that fell through.

The private college's pursuit of survival has an impact far beyond the campus, because central Kansas private colleges are vital to the economies of the small communities housing them.

Dutton said Sterling College employs 120 people, ranking it as one of the community's largest employers, while Bethany's roll of 177 employees in Lindsborg, a town of 3,200, makes the college "by far" the largest employer in that city.

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