institutionalfinance

Another Seminary Faces Financial (and Accreditation) Woes

The Higher Learning Commission has placed Lutheran School of Theology in Chicago on probation, citing financial troubles that threaten to undermine its educational programs. In a letter last month to the seminary's president, the head of the regional accrediting agency for the country's vast middle said the institution must by March 2019 show that it has reduced its annual deficits, met fund-raising goals and is on track to complete a $100 million capital campaign by 2020.

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U of Illinois System Office Is Shrinking

When its ongoing administrative realignment is complete, the University of Illinois System will have shifted 115 positions and $8.4 million in recurring funds from the central office to the system's three campuses, which are located in Urbana-Champaign, Chicago and Springfield, the system said Friday.

“Our objective is an alignment of administrative functions so that we may collaboratively achieve the strategic goals of each university and the system as a whole,” Tim Killeen, the system's president since 2015, said in a written statement. “The result will be improved efficiency and effectiveness of these essential administrative services.”

Illinois is deep in the throes of a multiyear budget crisis that has hit its public colleges hard.

Killeen's realignment initiative, which began in 2016, is seeking to "eliminate duplication of work, improve service by moving it closer to the users on campuses, manage performance by linking it to users’ satisfaction and enhance collaboration and trust between university and system operations." For example, the system is moving all grant and contract functions to the universities, where those services will be closer to faculty members who receive grants.

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Bethune-Cookman Sues Over Expensive Dormitory Deal

Bethune-Cookman University has filed a lawsuit against Virginia Union University president Hakim Lucas and several other former high-ranking administrators, alleging “illicit and fraudulent” conduct relating to the construction of a controversial and expensive dormitory.

The lawsuit was filed this week in Volusia County in Florida. It alleges a developer made improper payments to Bethune-Cookman officials as the price tag for the project swelled, according to WTVR.com.

Virginia Union University hired Lucas last year as its president. He had been vice president for institutional advancement at Bethune-Cookman, but had been suspended, the lawsuit says.

The suit also named the dorm developer, former Bethune-Cookman president Edison Jackson and former vice president Emmanuel Gonsalves, according to the Richmond-Times Dispatch. A Virginia Union University spokeswoman told the newspaper Lucas denies wrongdoing.

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College endowments rise 12.2 percent in 2017, but experts worry about long-term trends

Rising returns in 2017 weren't enough to keep up 10-year averages, fueling concerns about endowments' long-term spending power -- especially in light of new tax.

California Systems Unveil Joint Procurement

The University of California and California State University are sharing a new procurement system in what leaders are billing as the largest effort of its kind in higher education and an opportunity to significantly reduce costs.

The two public university systems with 33 combined campuses believe a new software platform called California Universities Sourcing, or CalUsource, will allow them to streamline procurement, cut costs, drum up more competitive bids and improve their contract management, according to a Tuesday news release. The two systems have about $10 billion in combined expenditures.

Leaders credit a common procurement technology system at UC with saving hundreds of millions of dollars over the last four years.

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Senate Reaches Deal to End Shutdown

The Senate on Monday passed a stopgap funding measure to end a government shutdown that began when members failed to reach a deal on a new spending agreement Friday.

The bill, passed on a 81 to 18 vote, includes a reauthorization of the Children's Health Insurance Program but came with only a promise to Democrats from Majority Leader Mitch McConnell that he would allow a vote on a fix to the Deferred Action for Childhood Arrivals program.

In September, President Donald Trump said his administration would wind down the program, which allowed 800,000 undocumented immigrants brought to the U.S. as children to work in the country legally and get temporary protection against deportation. Trump said Congress should act to pass legislation extending the program. But despite heavy pressure from immigration groups and progressive organizations, as well as from college leaders and DACA recipients themselves, Congress has yet to act.

Progressive activists -- and several prominent Senate Democrats -- said no funding deal should be agreed to without a DACA solution.

The new funding measure, which the House also passed later Monday night, funds the government through Feb. 8, potentially setting up another showdown over the program.

Pushing for a long-term solution on DACA has been a major focus of college presidents and the higher ed lobby in Washington since last fall. Ted Mitchell, president of the American Council on Education, said in a statement that he was pleased to see Congress poised to reopen the federal government, and he praised the commitment to bring a DACA vote to the floor.

"College and university presidents are extremely concerned about the future of Dreamers, the group of bright and high-achieving young people brought to this country as children," he said. "We reiterate that it is unacceptable for Dreamers to be held hostage to a political face-off and left in limbo as they try to make decisions beyond the next few weeks about their education, jobs, or service in the military. We stand ready to work with all parties to reach a swift and fair resolution to this pressing matter."

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Government shutdown

Mixed Reviews for California's Proposed Budget

The budget proposed Wednesday by Jerry Brown, California's Democratic governor, pleased leaders of the state's community college system while disappointing their counterparts at the California State University and University of California systems.

Brown wants to increase the two-year system's funding by $570 million, or roughly 4 percent. The proposed budget includes $120 million for a new online community college, which will be competency based and issue short-term credentials.

“California community colleges are serving 2.1 million students each year, but we are still not meeting the needs of 2.5 million others who for a variety of reasons cannot attend classes on our campuses,” Eloy Ortiz Oakley, the two-year system's chancellor, said in a written statement. “It’s our responsibility to bring the campus to them, and we can do that through a fully online college.”

Timothy White, Cal State's chancellor, called the proposed budget "both concerning and surprising." The $92 million increase for the state's system of regional comprehensive universities would be equal to 1.4 percent of its operating budget, White said in a written statement. Brown's budget document said the proposal would increase CSU's general fund by 3 percent.

"By nearly any measure, the CSU is fulfilling its mission better than ever before," he said. "Yet the proposed level of funding, as a percent of our operating budget, provides an increase to our operating budget that is half the rate of inflation. Directives and constraints within the proposal further limit our ability to address critical university needs."

UC also would receive a 3 percent increase to its general fund under the proposed budget.

"The University of California is pleased that the governor’s budget announced today provides for a funding increase to our core educational budget. This 3 percent increase, however, is less than we anticipated under the framework we established with the governor," George Kieffer, the system's board chair, and Janet Napolitano, its president, said in a written statement referring to a 2015 budget deal. "That agreement acknowledged the need for ongoing, predictable state funding to maintain UC quality and access while requiring the university to lower its cost structure."

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Job Cuts Coming at Southeast Missouri State

Southeast Missouri State University is eliminating 4 percent of its full-time work force in the midst of a multiyear budget crunch.

The university will cut between 20 and 25 staff members and chop 15 to 20 vacant staff positions, it announced Tuesday. No faculty positions are currently being eliminated, according to officials. But some vacant instructional positions could remain unfilled.

Cuts come as the university grapples with $3.43 million in one-time withholdings for the 2017 fiscal year and faces a $6.6 million budgeted need for 2018. Its state appropriations are dropping by 9 percent in 2018.

The university has previously reorganized divisions, put in place a voluntary retirement program that will net 74 faculty and staff retirements this year, eliminated vacant staff positions, and revamped the university’s benefits program. A four-month hiring delay is also in effect.

“As we navigated our initial budget challenges, we worked very hard to avoid impacting individual members of the university community,” President Carlos Vargas said in a statement. “But as we continue to operate in difficult times, the current realities have required tough decisions.”

Southeast Missouri State enrolls about 10,500 undergraduates and 1,000 graduate students on a head-count basis. Officials say it has about 4,000 more students than it did in 1999 but that its state appropriation is lower than it was that year.

Employees losing their jobs will be told in two rounds of notifications ending this spring. They will have five months’ notice before their last day.

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Report on Colleges' Ability to Handle Reputational Risk

A recent survey of college and university leaders shows they believe the top reputational risks to their institutions over the last three years fall under the categories of campus climate, sexual assault, academic programs and student behavior.

But top reputational risks going forward start with higher education’s business model -- an area including enrollment trends, fiscal management, staffing levels and tuition management. Major areas of reputational risk in the next three years also include sexual assault and campus climate issues.

Bar chart titled Reputational Risk Survey Results. Compares data from the past three years and projected over the next three years in the following areas: campus climate, sexual assault/Title IX, academic programs, student behaviors, business model, athletics, accreditation, leadership behavior and talent retention, cybersecurity, and other.

Those findings are included in research recently released by United Educators, a liability insurance and risk management services firm for schools, colleges and universities. The UE Reputational Risk Survey, administered by the Association of Governing Boards of Colleges and Universities, was sent to board of trustees chairs, presidents, chief financial officers and other senior administrators at 145 institutions in 2017.

It also found that colleges and universities are increasingly utilizing enterprise risk management strategies as a way to prepare for risks and opportunities -- and to respond to them. In 2013, just a third of respondents in a predecessor survey said they had a formal process for risk assessment. In the new survey, 70 percent said they had a formal enterprise risk management process and structure.

Still, only 26 percent of survey respondents think their institutions’ responses to reputational risk are consistently proactive, and 54 percent said they don’t have the ability to withstand a major reputational risk event.

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Authors argue four-year colleges are adaptable

Authors acknowledge challenges for four-year colleges and worry about their future as drivers of opportunity. But they believe colleges are adaptable and will continue to offer students value.

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