On the Brink of Bankruptcy

Down a lot of students and a couple million dollars, a progressive California college considers its options.
November 29, 2007

Facing a 41 percent downturn in enrollment after a tumultuous summer, New College of California is considering filing for Chapter 11 bankruptcy and, as of this spring, suspending programs and instituting moratoriums on admissions -- although the college’s spokesman stressed that a recent visit from the accrediting agency went well, and that New College is not going out of business.

Questions about final decisions on the spring semester at New College -- where things fell apart after the Western Association of Schools and Colleges placed it on probation in July -- are still in the air. Will the college file for Chapter 11, which would allow it to continue to operate, as a strategy to gain needed space from financial creditors during a massive reorganization? Will it admit any new students at all in the spring, or admit students only to certain programs? To what extent will faculty face layoffs or cutbacks in duties?

Answers are expected within weeks. New College should be hiring a new president as of December 1, its spokesman, Adam Cornford, said. (Cornford is also a veteran faculty member who co-coordinates a bachelor's degree program in humanities.) An interim leader has been in place since President Martin Hamilton stepped down this summer following a WASC special investigation not only into the college’s fiscal instability and shoddy record keeping, but also allegations that Hamilton had intervened to change the grades of an international student he (wrongly) believed to be a potential million dollar donor.

The progressive California college, founded in 1971 and “committed to education in support of a just, sacred, and sustainable world,” is in trouble on several fronts. In addition to suffering a dramatic drop in enrollment this fall to fewer than 500 students, New College has not been able to access much of its students’ federal aid. Facing heightened monitoring from the U.S. Department of Education, registrar office staff and trained faculty volunteers must clean up each student record individually before they can submit them to the government for financial aid purposes. So far, they’ve sent a batch of 70 files in, and another 140 are almost ready to go. “We’re going through every single transcript for people who are still students in the college and reviewing them and cleaning them all up, and it’s taking a long time,” said Cornford. “There was inconsistency in course numbering from one registrar to the next, and cases of incorrect data registry.”

Working under the assumption that they don’t get any more cash from the Education Department, New College needs a minimum of an extra $1 million in the bank to meet the department’s reserve fund requirement, and between $1 million and $2 million to cover operating expenditures and liabilities.

One option on the table is to cease new enrollments entirely for the spring to give the college extra time to reorganize for the fall, Cornford said. However, the more likely alternative is that certain programs will stop accepting new students this spring while others will not (a review of programs is currently under way). Given the drop in enrollment, the student-faculty ratio is hugely distorted now, Cornford said. New College has about 60 core faculty members and about 70 adjuncts, and faculty are working on a plan to minimize layoffs, Cornford said, with the goal that many will voluntarily scale back from full- to three quarters-time, for instance.

At the same time, Cornford – and several faculty members contacted – expressed optimism about a recent accreditation visit and enthusiasm for the progress that has been made in such a short time. WASC is expected to make a decision on the college's accreditation in February.

“The housecleaning that’s going on is phenomenal, but also has revealed to us the depth of the problems that the previous administration allowed to accumulate,” Cornford said. “The amazing thing is that people have hung in."

"It's truly amazing that in a school where there was a paycheck that was two weeks late, and many of the students have not received financial aid, everyone kept coming to classes and doing their work. It is remarkable the degree to which we've been able to hold this place together under the conditions."

“I feel that New College has definitely moved in the right direction," said Melissa Patterson, a core faculty member and instructor in New College’s consciousness, healing and ecology concentration. "There has been a tremendous shift in the foundation of the college, in how it’s run. My main concerns right now are the financial pieces that are being affected, from the low enrollment as well as from the Department of Education actions that are happening.”

“What I can say is from my perspective, there are some very good efforts to try to put the college back on track but it’s a real uphill battle,” added Richard Heinberg, a core faculty member in the culture, ecology and sustainable community program. “The immediate problem is that all of the very, very rapid changes at the school that have been necessitated by the WASC report and so on have dramatically reduced enrollment and have resulted in some bad publicity for the college, which reduces the likelihood of future enrollment.”

“In many respects, I think the changes that are happening right now are very good -- the greater involvement of faculty, the leaving of the previous administration and their temporary replacement with a plan for permanent replacement, and so on. All of those are very good things. But meanwhile we’ve gotta have students.”

Reached on his cell phone Wednesday, one former student leader who formed an “Interim Independent Student Council” amid the turmoil this summer could not be found on campus, but instead at work in technology support at Google. On a leave of absence because of the uncertain climate at New College, he expects to withdraw from his master’s program. “At this point I’m not confident that I’ll get the support I need to finish my thesis,” said Jeremy Zimmer.

“And I’m on a different career path now.”


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