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Earlham in the news update..,

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Replies to: Earlham in the news update..,

  • twoinanddonetwoinanddone 23692 replies17 threads Senior Member
    Cutting football is cutting costs.
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  • Mwfan1921Mwfan1921 3049 replies55 threads Senior Member
    Interesting, hope they find a able leader who will bring energy and ideas to campus.

    I wish more of the small colleges/LACs would consider stopping the fielding of football teams, especially those with long histories of losing (e.g., the Maine NESCACs). The investment (football at many of these types of schools typically gets 50%+ of athletic expense budget) is difficult to justify, then when layering in all the new data re: health risks, it seems an easy decision. I know alums at each of these various schools might feel differently though!
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    edited November 2018
    Twoinandone - their budget deficit was $8mm last year (and at similar levels in recent years). They had promised a comprehensive plan to cut costs. While getting rid of the football team does likely reduce costs it doesn't come close to bridging the enormous gap.

    Several year ago when Moody's ratings service dropped their ratings twice to Baa1, left them on outlook negative and ultimately withdrew the rating they cited Earlham need to attract more students in order to remain financially strong. Not sure if eliminating sports teams ultimately helps or hurts their ability to attract students, but over the short term probably a modest savings. You may have a lower alumni donor participation rate without football drawing alumni back to campus.

    Regardless a comprehensive plan has still not been publicly disseminated, recent publications suggest the deficit spending continues and the lack of a permanent leader assuming the role leave many questions unanswered.
    edited November 2018
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    https://www.pal-item.com/story/news/local/2018/07/29/earlham-faces-big-questions-deficit-ahead-new-school-year/828182002/

    Anyone aware of any progress in rolling back their deficits or naming a permanent President?
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  • MidwestmomofboysMidwestmomofboys 4055 replies27 threads Senior Member
    edited January 2019
    Search committee is bringing 4 candidates to campus over the next few weeks, with a decision anticipated by spring and a summer start date. https://earlham.edu/news/article/?id=67374&r=40315

    Board approved $4+ million budget cuts through a process consistent with the school's Quaker values -- building consensus and including faculty and students in the process. http://earlham.edu/news/article/?id=67322&r=40315

    Also, appears that football was suspended for one year, not closed, as they evaluate financial, recruiting, and coaching prospects. http://earlham.edu/news/article/?id=67095&r=40315
    edited January 2019
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    edited January 2019
    Thanks for the update @Modwestmomofboys. I have looked at all the news available and while they highlight the cost cutting via personnel reductions they don't provide broader context into a financial plan that addresses their recurrent budget shortfalls and declining revenue.

    Last year they reported, "Earlham College is expected to face a single-year budget deficit of about $13 million by the end of the 2018-19 fiscal year"

    While the $4mm budget cap will narrow the $13 million operating deficit it won't close it. A $9mm hole is enormous for an institution of this size. Have they managed to raise the income side or will they continue to be dipping into their endowment to support on going operations?

    Previously reported..."Earlham has operated at a budget deficit for the past several years, but the cumulative net loss jumped from about $5.5 million in the 2013 fiscal year to more than $47 million earlier this year."

    While these cost reductions may slow the degradation of their financial situation they don't serve as a long term solution in isolation. Will they operate at a deficit this year and if not how is that possible? Assuming they are still in deficit how much longer can they sustain this trajectory before making more meaningful cuts that will materially impact the student experience? Has income increased or have they continued to feel the need to lower net attendance costs to attract students (I suspect if good news we would hear)?

    Did I miss some news? I dont have the answer but either Earlham does and doesn't want to share it or they don't have a solution. Either scenario is disconcerting.
    edited January 2019
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  • MidwestmomofboysMidwestmomofboys 4055 replies27 threads Senior Member
    The articles suggest to me that the Board is dealing with the financial future and that, with a new President to be selected and starting this summer, the long term plan will be forthcoming. If I were on that Board, I would be reluctant to take irreversible steps in shaping the institution without the participation of the about-to-be-hired President. It sounds like the Board is dealing with the immediate need to reduce the budget and is prepared to work with the new President. It also sounds like the Board and administration have been open with alumni about the current state of affairs.
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    edited January 2019
    "the long term plan will be forthcoming".

    I am anxious to see the long term plan given the complexity of the challenges and the fact that applicants are making decisions in the absence of certainty while deficit spending continues.
    edited January 2019
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  • maffdadmaffdad 83 replies0 threads Junior Member
    In terms of football - there are a number of issues for a school the size of Earlham to sponsor a team. One of them being safety, with a small team size. While the football question has not been settled (one year suspension), I don't think a student should choose Earlham if Football is an essential part of their choice.

    For the financial aspects, a major change is to not invest in growth, and instead to maintain a budget consistent with the number of students that they have. I believe that they have some goals for the long term, including keeping small class sizes and bringing their discount rate a little closer to that of comparable schools. At this point, it is an exceptional educational value for the money that students (and their families) are paying.
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  • Mwfan1921Mwfan1921 3049 replies55 threads Senior Member
    ^^Agreed on the football, @maffdad Many schools are having a difficult time not only paying the premiums, but finding an insurer even willing to underwrite a policy, especially those covering neurological issues. No surprise.

    The NFL and Pop Warner have this issue too.....http://www.espn.com/espn/story/_/id/25776964/insurance-market-football-evaporating-causing-major-threat-nfl-pop-warner-colleges-espn
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  • BBBB 131 replies2 threads Junior Member
    @maffdad. The Princeton Review seems to agree with you. Earlham was on their "best value" list for being one of the top schools in the nation for when evaluating "Return on Investment" for graduates.
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    edited February 2019
    @BB last year Earlham reported " "Earlham College is expected to face a single-year budget deficit of about $13 million by the end of the 2018-19 fiscal year" as part of a recurring and "unsustainable" trend.

    Have you seen any report of what that budget deficit will be for this fiscal year? Seems odd that it isn't disclosed when they are touting the cost savings without financial context.

    Great value indeed but the issue is both short and long term sustainability. The value question strikes directly at this concern. Earlham does not receive in enough revenue (tuition) to compensate for the educational experience they are providing.

    At some point something will need to change. Just wish they could articulate once and for all what those changes will be.
    edited February 2019
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    edited February 2019
    This article from July 2018 raises significant concerns and questions...

    https://www.chronicle.com/article/Questions-Swirl-as-Earlham/243821

    Of particular importance is a letter from Debbie Hull the Chair of the Earlham Board of Trustees. She states the Boards finding that:

    "a reduction of expenses of $8mm is required. This action is intended to improve net cash flow which at present is not sustainable".

    While the school is seeking praise for a $4mm reduction it is far short of the $8mm their own board says is required to be sustainable financially. The article and recommendations from the board suggest the need for other sweeping changes to respond to changing demands for liberal art schools, diminished enrollment, inability to generate student interest without reducing tuition, and the schools location.

    Nothing Earlham has publicly disclosed suggests these questions have been resolved in a meaningful way.

    My purpose in posting this level of detail is so that prospective students can review these unanswered questions and decide independently and knowledgeably if they are comfortable with the likely changes to take place per the Board of Trustees leter and the financial realities the school is facing.

    I won't debate with those that have an emotional tie to the school. I would however defer to those on the schools board whom have both the love of the school and the visibility on the schools finances. This is the group using the term unsustainable. Translation being the educational experience you can sign up for in 2019 will likely not be the one in place when you graduate in 2023.

    Please read the link and the imbedded board letter, they speak for themselves.
    edited February 2019
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  • blue1516blue1516 37 replies13 threads Junior Member
  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    Here is another link announcing the hire of the president. I provide an excerpt below...

    https://www.google.com/amp/s/amp.pal-item.com/amp/2859931002

    "Houtman's hiring comes at a critical time for the school. Earlham has operated at a budget deficit for the past several years, but the cumulative net loss jumped from about $5.5 million in the 2013 fiscal year to more than $47 million earlier this year.

    In December, the college's trustees approved a 12 percent reduction to the current $50 million budget. The cuts will take affect for the 2019-2020 academic year.

    Earlham's enrollment over the past five years has been basically stagnant, but tuition revenues have steadily dropped over that period of time.

    Like most colleges and universities around the country, the cost of higher education at Earlham has continued to rise. Tuition now is about $45,500 per year, not including room, board, a meal plan or other factors.

    About 90 percent of the school's students receive some form of financial aid. To make that happen, Earlham has made extensive use of restricted parts of its $437 million endowment (those parts earmarked for assisting students financially) as well as scholarship programs.

    Overall, the school's average expected revenue per student, based on their tuition contributions, is now about $12,000 per year, down from about $14,200 five years ago."

    I wish her luck in solving this unsustainable situation.

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  • blue1516blue1516 37 replies13 threads Junior Member
    "Overall, the school's average expected revenue per student, based on their tuition contributions, is now about $12,000 per year, down from about $14,200 five years ago."
    How are these numbers calculated? Where would one find similar numbers for other schools?
    Do you think they are in a worse position than some of their peer institutions?
    It seems like quite a dilemma to solve while balancing demands of students, faculty and alumni.
    This issue as well "Football Fallout: Decision to Suspend Program Has Hurt Finances and Enrollment"
    http://earlhamword.com/index.php/football-fallout-decision-to-suspend-program-has-hurt-finances-and-enrollment/
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    edited March 2019
    @blue1516 I would suggest you read the "Do not attend Earlham college" thread from some time back. I outlined the concerns pieced together using newspaper releases and the credit reviews from Moody's and SP.

    The school had and has not released much publicly with the exception of the previous President of the Board of Trustees letter of concern. I quote it previously. It can also be found online.

    The reality is if your operating deficit is going up annually so that you are drawing on your endowment, and your revenue per student is going down you either need to dramatically reduce costs and or attract significantly more students. The school recently spent a $100mm to improve campus infrastructure and attract students but enrollment continues to stay relatively flat (no idea if admissions standards have been maintained). So this year they cut about $5mm from their expenditures which is great but still leaves an $8mm deficit. You can't keep spending money out of an endowment at rates greater then it is being replenished and stay viable long term.

    So what to do... I have anxiously awaited the answer to no avail. Unfortunately most options will have an adverse impact on students or worse if no action is taken.

    Once again anyone know, other than it's a great school mantra?
    edited March 2019
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  • blue1516blue1516 37 replies13 threads Junior Member
    I'm not an alumnus, parent or student. Looked at it for my D.
    Am curious about how to evaluate schools on this data point which is why I asked about the revenue.
    "Overall, the school's average expected revenue per student, based on their tuition contributions, is now about $12,000 per year, down from about $14,200 five years ago."
    Does one google a school name and 'average expected revenue per student' or does Forbes or someone make a list?
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  • Mwfan1921Mwfan1921 3049 replies55 threads Senior Member
    ^^You can get net tuition revenues (usually separated out from other revs) from the school's financial statements and do the math (divide by number of students). You just have to make sure you are looking at net tuition revenues, after financial aid.
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  • Nocreativity1Nocreativity1 1112 replies55 threads Senior Member
    edited May 2019
    Earlham not fully enrolled for class of 2023...

    https://www.nacacnet.org/news--publications/Research/CollegeOpenings/
    edited May 2019
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