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One Accreditor's Opinion

October 12, 2009

A United States District Court judge argued that accrediting agencies should be “afforded great deference in their interpretation of their substantive rules,” when he recently upheld an agency’s decision to strip a small Presbyterian college of its accreditation as a result of the significant debt the institution has accumulated.

St. Andrews Presbyterian College, an institution of about 800 students in rural North Carolina, sued the Southern Association of Colleges and Schools in late 2007, arguing that the accrediting agency “denied it common law due process” and that the agency “failed to follow its own procedures in removing St. Andrews’ accreditation.”

SACS had placed the college on warning and probation prior to its 2007 decision to remove accreditation, advising St. Andrews’ officials that their institution was not in compliance with certain aspects of the agency’s “Principles of Accreditation.” Namely, the accreditor found that the college did not have “a sound financial base and demonstrated financial stability.” Students can receive federal student aid only if they attend colleges that are accredited, and St. Andrews has managed to maintain eligibility only because of its lawsuit.

“Our board and administration, before I was president, had a business plan of borrowing funds to make capital improvements to expand our campus and to attract more students,” said Paul Baldasare, president of St. Andrews since 2007. “We’re an enrollment-driven institution and make certain decisions about the use of debts. Still, after an evaluation, SACS worried about our debt and our ability to service it.”

For example, one of St. Andrews’ initial reports to SACS showed that, “as the college’s operating expenses exceeded its operating revenue” for multiple years, its “unrestricted net assets had declined from $1,704,068 in 2002 to -$524,325 in 2003, to -$5,035,619 in 2004.”

Throughout the process leading to its loss of accreditation, St. Andrews officials argued that SACS did not provide adequate notice of its compliance requirements, calling them “so vague that they give no notice to the college as to what it must do to bring itself in compliance.” Officials further argued that the institution was not offered any benchmarks to determine compliance, referring to SACS’s standards as a “moving target” determined by the “subjective opinions of varying peer evaluators.”

SACS officials, on the other hand, argued that even though the agency’s requirement that all institutions have a “sound financial base” and a “demonstrated financial stability” are not determined by objective criteria, the agency’s standards are anything but “vague.” They further stated that it would be “unwise to adopt a universal definition for financial stability,” given the “wide variety of institutions” SACS accredits.

United Stated District Court Judge William S. Duffey, Jr., of the Northern District of Georgia, writes in his opinion that accrediting agencies like SACS “are to be afforded great deference” in their rulings and that “these interpretations should be upheld unless ‘clearly erroneous.’ ” He further notes that “the weight of authority” allows SACS to “maintain flexible standards” to evaluate myriad institutions. Dismissing the arguments of St. Andrews, Duffey states that “SACS’ compliance requirements are not impermissibly unspecific” but “provide sufficient notice to member institutions and thus do not violate common law due process standards.”

Elsewhere in his ruling, Duffey backs away from judicial review of SACS’ decisions again by noting that its “interpretation of its requirements for financial stability and a sound financial base is entitled to deference.” He emphasizes a hand-off approach when the court considers accreditation cases.

“The court will not act as a ‘super-accreditation’ body to evaluate whether SACS’ accreditation decision was right or wrong, or whether the court would have ultimately reached a different conclusion,” Duffey writes. “The court necessarily concludes the process was fundamentally fair and that the college was allowed to present sufficiently complete information about its financial condition and operations. That St. Andrews disagrees with SACS’ conclusions and determination does not demonstrate that it was denied due process.”

Since Duffey’s decision, St. Andrews officials have filed intent to appeal the case to the United States Court of Appeals for the Eleventh Circuit, in Atlanta. In the interim, Duffey has temporarily maintained a prior injunction so that St. Andrews can keep its accreditation while prepping for the appeal. St. Andrews officials plan to file for another injunction to maintain its accreditation for the time being, noting that the college “will be irreparably harmed” if, as a result of losing its accreditation, its students are no longer eligible for federal and state financial aid.

Belle Whelan, president of SACS Commission on Colleges, did not respond to a request for comment regarding the St. Andrews case. Generally, accreditors argue that financial standards rules are adopted by the colleges in the region and are needed to protect students from enrolling in institutions that may go under or lack the ability to provide a good education.

Baldasare, however, believes Duffey’s ruling may give accrediting agencies like SACS too much control.

“It’s of great concern to me, in large measure, because accrediting agencies argue that they, like private associations, are not subject to judicial review of what they do,” said Baldasare, who argues that they should be subject to judicial review given their control of access to federal and state financial aid. “They’re the final arbiters, for their members, on what is fair. It’s a philosophical divide. They just do not believe they are subject to judicial review. So, when a judge says he will ‘accord great deference,’ it’s almost like, what can you do?”

Despite SACS’ determination that his institution did not have a sound financial standing, Baldasare insists that this did not have an effect on his college’s ability to deliver a quality education to its students.

“The accrediting agency said that it hadn’t seen a diminution in the quality of what we’re doing, but that they were afraid we were going to at some point in the future,” Baldasare. “If you can’t find specific bright lines for what is financial stability and what is not, then I fear we may run into a situation where there’s a wealth standard in which it doesn’t matter if you have the academic ability to deliver or not but only if you have a certain amount of money.”

Baldasare dismissed the suggestion that St. Andrews was financially crumbling, saying that its recent budgets and debt reduction have shown that it is now very financially responsible.

“The bottom line is that we’ve been operating and offering quality programs for two years under the cloud of this action by SACS,” Baldasare said. “If we were so financially strapped in June 2007, then how could we continue what we’ve been doing ever since? Yes, we’ve lost enrollment as a consequence of this cloud hanging over us, and there’s the whole national economic crisis. But, we’re doing a good job amongst the worst economic times with this incredible liability, and here we are.”

 

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