After reading an opinion piece by board of directors members Nancy Keuffel and Elizabeth H.S. Wyatt — in which they argued that the college’s financial problems had been building for decades and that “Sweet Briar’s enrollment has declined, even as we increased our tuition discount to attract students. Simply put, too few students want to attend Sweet Briar. Those who do are not paying anything close to the actual cost of their education,” — he felt compelled to respond with his own analysis:
By Daniel Gottlieb
As of summer of 2014, Sweet Briar College was above average on all measures of institutional financial health.
Despite short-term problems, a businessperson would have been delighted by the opportunities available with Sweet Briar’s history, $164 million in assets, $30 million in liabilities, and $60 million per decade donated by alumnae.
And so the March 3, 2015, announcement that the college was closing made little sense at the time — and even less sense as more has become known.
Leaders have counted on people accepting their numbers and narrative, like those of board members Keuffel and Wyatt in their recent Washington Post opinion piece.
Fortunately, people did not.
What is clear when one digs into the numbers is that the higher-education landscape was promising, not grim, Sweet Briar’s own problems were self-caused and reversible, leadership made no changes to address the problems, and there are still many options moving forward.
It takes longer to counter a story than to tell one, but here are a few quick points to consider about Keuffel and Wyatt’s well-crafted fiction.
Enrollment: There is no evidence that enrollment is declining, either at Sweet Briar or at women’s or liberal arts colleges. This claim is simply false. Numbers people, please check for yourself: The data are publicly available.
Tuition revenue and discount rate: Across women’s and liberal arts colleges, tuition revenue per student has shown no decline, and inflated-adjusted tuition revenue has been increasing for at least 20 years.
The trend toward colleges giving increasing amounts of financial aid is offset by increased tuition prices, part of a game colleges play to convince parents they’re getting a good deal.
However, at Sweet Briar, between 2009 and 2010, tuition revenue per incoming student dropped a stunning 30 percent and then another 15 percent in 2013. These declines resulted from abruptly made and failed strategic recruiting/financial aid decisions aimed at least in part at increasing diversity.
A five-year 40 percent drop in tuition revenue from degree-seeking students is an outlying, sector-defying change that has nothing to do with decreased student interest and everything to do with poor strategy and a lack of appropriate personnel.
Liabilities (bonds and deferred maintenance): Sweet Briar has $26 million in bond debt. Liquid assets might be less than that amount but far greater than the annual payments. Is it unusual that I have a mortgage that far exceeds my savings? There are real (though solvable) bond issues, but the claim that they might have led Sweet Briar to close in the middle of a school year is not credible.
A consultant report listed $29 million in deferred maintenance costs, but the VP of finance is on record as saying that over a decade, only $6.9 million is absolutely essential. Per-square-foot maintenance costs in the report are consistent with those of other colleges.
Endowment Spending: Over the last 20 years, Sweet Briar has spent more out of its relatively large endowment than is considered sustainable by an average of around $3 million/year. When President Jo Ellen Parker took over in 2009, the deficit was declining. She needed to close an 8-10 percent gap between expenses and revenue. She cut staff, faculty, and benefits, but also instituted ideologically driven changes in recruiting and financial aid that dropped total revenue by 15-20 percent, obscuring the fact that Sweet Briar had already found a blueprint for sustainable endowment spending.
Retention and yield: Sweet Briar’s retention rates – the measure of how many freshmen continue on to sophomore year there — are typical for a sector that is not crumbling. The claim that 4-year graduation rates dropped from 70 percent to 54 percent in the span of around 15 years is misleading. Those numbers are 20-year high and low points, respectively. If we look at numbers just one year removed, we see a drop from 61 percent to 57 percent.
Sweet Briar leaders have made misleading through numbers an art form.
Yield, the measure of how many admitted students choose to enroll, is declining across higher education because students are applying to more and more colleges. However, Sweet Briar’s steep two-year drop to 20 percent in 2014 is out of line for both Sweet Briar and national trends. Perhaps enrollment issues should be expected when the most important admissions person quits in early 2013 and is replaced without a job search by an unqualified chief of staff expected to simultaneously do two jobs. This is the full extent of the enhanced admissions and marketing of which the board speaks.
Sweet Briar faced a short-term financial problem because leadership made bad decisions and refused to admit them or change course.
They inexplicably put all their efforts into pursuing a merger as they ignored the running of the institution with which they were entrusted.
Bad leadership and mismanagement are common. What happened at Sweet Briar crossed the line into irresponsibility the moment closure was announced.
Has another college or business in as strong financial shape as Sweet Briar ever chosen to close?