Elmira, Keuka among small New York colleges in financial trouble
Manicured lawns and clean brick facades on the Gothic architecture on Elmira College's compact city campus masks an undercurrent of financial stress at the 165-year-old institution.
To plug the fiscal drain, at least temporarily, administrators in June announced sweeping cuts to programs and staff that will leave the Southern Tier college with fewer offerings to attract a dwindling pool of applicants.
Six academic programs, three sports teams and 20% of staff were axed.
Elmira College isn't alone.
The money woes there highlight larger issues affecting a growing number of small residential private colleges in New York that have only been intensified by the COVID-19 pandemic.
There is greater competition for fewer students; a drastic reduction in foreign full-pay undergraduates; and a greater percentage of those admitted requiring financial aid as economic conditions press family finances is putting pressure on revenues .
While the list price for colleges have been on a continuous rise for more than two decades, outstripping inflation, many are having to discount — through generous financial aid packages — to fill classrooms.
And that is leading to an unsustainable formula: trimming tuition collections in the face of rising costs.
Coronavirus has exacerbated a cash strain occurring at many small residential colleges that dot upstate New York.
Refunding a portion of the Spring 2020 semester room and board costs when quarantines were ordered placed an extra and unexpected burden on institutions that often serve as the economic lifeblood for surrounding communities.
For some, their very survival is in question.
"Right now we have a lot of institutions in a struggle," said Susan Campbell Baldridge, a professor of psychology and former provost at Vermont's Middlebury College, who, with two associates, wrote "College Stress Test," that looks at their fiscal stress.
College administrators said they also fear New York's $14 billion budget deficit could lead to cuts in tuition assistance programs that defray costs for about 40% of in-state students
Pandemic made a bad situation worse
A few of the smaller institutions were already staring into the financial abyss, operating at the edge of viability. The current economic collapse could send a few over the edge.
The Commission of Independent Colleges and Universities in New York estimates the pandemic related costs to universities in refunds, lost revenues and preventative measures taken to reopen are about $1 billion for its more than 100 members institutions.
"This pandemic has caused really, really grave financial changes for our schools," said Mary Beth Labate, CICU president. "Schools can't continue to burn through cash."
In addition to refunds, schools sacrificed the often incremental income from summer classes and rentals for summer sports camps for adolescents and teens.
Before the virus outbreak, Baldridge and her associates expected one in 10 colleges to close or merge over the next decade.
But with the added financial pressures from coronavirus disruptions, she now estimates that as many as 20% of the nation's colleges could close by 2030.
A trade group is estimating a 15% drop in college enrollment for the fall 2020 semester, which could extend into the spring depending on the status of the outbreak and availability of a vaccine.
The outlook was bleak even before the pandemic, now Baldridge said many institutions "have a mountain to climb" to assure survival.
At Elmira College, a statue of its founder Simeon Benjamin, who saw a need for an independent college to be among the first to offer baccalaureate degrees to women, stands proudly near the main entrance.
Mark Twain's study, where he authored some of his legendary works, still attracts visitors to the 80-acre campus. As foresighted each were, neither could have imagined the challenges now facing administrators.
"Elmira College understands the importance of preserving traditions, yet also acknowledges that the college must adjust to changing economic realities, an evolving global workplace, and student expectations about the nature and importance of higher education," Charles Lindsay, the college's president with about 900 undergrads, said when he unveiled the cutback.
He hinted further moves may be in the offing. College officials did not return calls seeking additional comment.
Strategies employed by Elmira College are becoming all too common as institutions try to avoid the same fate as the College of New Rochelle, which ceased operations last August and declared bankruptcy a month later, leaving 1,700 students in the lurch.
Canisius in Buffalo acknowledged a possible $21 million shortfall for the 2020-21 school year when it laid off 25 faculty, 71 staff, initiated salary reductions and trimmed some majors from its menu, including physics, international business, creative and performing arts.
Prestigious Rennselear Polytechnic Institute in Troy decided not to renew the contracts of 200 non-tenured faculty members in the face of declining enrollment and a path forward obscured by a pandemic.
"There are no models," Baldridge said. "Leaders are trying to figure it out anew."
Red ink common among smaller colleges
There's little breathing room left for lower tier institutions.
Many of the financial issues several colleges face actually pre-date the pandemic.
An analysis of IRS filings by the USA TODAY Network in New York showed a distressing financial picture even before there was a mention of coronavirus.
Between 2014 and 2017, the latest year from which tax filings are available, Elmira College, Hartwick College in Oneonta, the College of Saint Rose in Albany and Keuka College south of Penn Yan racked up cumulative budget deficits of $47 million.
Elmira College was the worst among them, realizing successive deficits of $2.3 million in 2014; $4.8 million in 2015; $5.6 million in 2016; and $8 million in 2017.
Hartwick College and Keuka College too recorded four successive years of deficit operations.
By comparison, top tier colleges such as Colgate and Hamilton accumulated surpluses of $130 million and $120 million, respectively, over the same four year period.
Labate said the cash crunch for some is real and serious.
"Schools are facing pretty significant liquidity issues," she said.
Early financial stress:College of New Rochelle files for bankruptcy, campus to be sold at auction
Refunds prove a burden:Can NY's small private colleges survive the financial strain of coronavirus?
Small colleges compete against larger, more wealthy ones
Small residential colleges lack the multi-billion dollar endowments or deep pocketed alums of their larger brethren to keep them afloat during tight times.
Also missing at the more intimate college campuses across New York are economies of scale that help spread out the enormous fixed costs most institutions face.
"The big and wealthy will get bigger and wealthier," Bladridge predicts.
Saint Rose celebrates its 100th anniversary this year, and there are serious questions whether the college will be able to mark many more anniversaries.
Between 2014 and 2017, the college reported red ink in three of four years, accumulating an $8 million deficit.
Now, in face of more daunting financial pressures, the college announced it is facing a $9.6 million shortfall, even after initiating salary cuts, pension plan cutbacks and eliminating the positions of 20 administrators and staff and eliminating or freezing 50 vacant administrator and staff positions.
The upshot: major changes or mergers that could drastically alter the liberal arts mission of several colleges.
Wells College on the east shore of Cayuga Lake mounted an aggressive advertising campaign this summer in attempt to lure new and transfer students to fill out their student body of up to 500.
The college on the precipice, where room board and tuition account for a bulk of the school's $19 million budget.
A summer fundraising campaign raised more than $4 million, and a $4 million zero percent bridge loan from an anonymous foundation gave Wells a brief respite.
"We are not out of the woods yet," said Wells President Jonathan Gibralter in a message to the college community. "This is just the beginning."
Administrators expect to release a strategic plan for the 152-year-old institution that will chart a path forward.
Students will return to the Elmira College campus later this month to find a college where course offerings have thinned.
Labate said another round of government infusions of money may be the only thing to stave off a round of campus closings.
"The federal government has to provide relief," she said, whether in the form of direct cash assistance or increasing student aid, or, ideally, a combination of both.