War of Words Over Dana

The accreditor of Dana College wants the world to know that it didn't revoke recognition of the college or order its closure. At the same time, the accreditor is standing by a decision that critics say is tantamount to ordering such a closure. And in an unusual move, the accreditor on Friday issued a public defense of its decision.

July 12, 2010

The accreditor of Dana College wants the world to know that it didn't revoke recognition of the college or order its closure. At the same time, the accreditor is standing by a decision that critics say is tantamount to ordering such a closure. And in an unusual move, the accreditor on Friday issued a public defense of its decision.

The debate over a small liberal arts college in Nebraska may be significant for many people who don't have any particular connection to Dana. The decision in question denied a request by Dana to continue its accreditation after a planned purchase by a for-profit entity. The Higher Learning Commission of the North Central Association of Colleges and Schools, the accreditor, applied relatively new rules governing changes in ownership -- rules that require a new owner to be committed and able to maintain the college's original mission. (A new owner can also start from scratch and apply as a new institution, but that process is longer and more rigorous, and so less attractive to those trying to assume ownership of a college.)

While accreditors make unpopular decisions with some regularity, frustrating some of the colleges they regulate, the Dana decision has focused attention on the Higher Learning Commission. Educators who view the purchase of nonprofit colleges by for-profit entities with skepticism -- saying that businesses are engaged in "accreditation shopping" -- praised HLC. But in Nebraska, a barrage of news reports have portrayed HLC as destroying a college, given that immediately after the accreditor's decision, the college announced that the proposed sale was being called off and that the college would close.

A television station (incorrectly reporting that HLC had barred the change in ownership, which actually isn't something it controls) ran a story about students "forced to pack up and move on." Newspaper headlines such as "Students Feel Blindsided" focused on the negative impact on students. Letters to the editor largely were consistent with the view of the investors that HLC was unfair in its analysis. For "the Higher Learning Commission to deny accreditation without fully understanding the circumstances of Dana College’s change in ownership is a shame and an embarrassment," read one in The Omaha World-Herald.

Amid all this discussion, politicians called on HLC to change its mind -- especially since the investors made clear that they would not buy the college without its continued accreditation assured and Dana officials said that they could not continue to operate without a sale.

All of this led HLC to issue a statement late last week defending its handling of the case and trying to clarify points it believes have been misconstrued. Among the points made by the acceditor:

  • The college was warned that transfer of accreditation wasn't a sure thing. While Dana officials and the investors clearly thought that approval would be forthcoming, the HLC statement says that it warned everyone involved that this might not be the case, and went so far as to require a "teach-out plan" -- a plan for helping students finish their educations when a college shuts down. The college filed such a plan.
  • The college and the investors both have options they haven't taken. The HLC statement notes that the accreditor didn't revoke accreditation or deny the right to sell the college. The college would be within its legal rights to sell to the investors and to have them apply for new recognition and HLC considers Dana today to be accredited.
  • The proposal to take over accreditation failed to meet key, specific requirement for approval. Rather than focus on an "extension of the [current] mission" as required, the plan would have added "educational programs that would bring in new populations of students and change the residential liberal arts nature of this institution"; had governance plans that gave inappropriate authority to investors (as opposed to the college's board); lacked enough money to assure success; and put forward a leadership team that lacked experience in leading residential liberal arts colleges.

The investors who were trying to buy Dana continue, however, to dispute the HLC analysis. Raj Kaji, president of the Dana Education Corporation, has stressed in a series of interviews that the plan of the investors was to build up Dana as a liberal arts college, not to add numerous master's and online programs. Kaji has suggested that he believes HLC fears such a shift, and is assuming such a shift will take place, but is being "unfair and unjust" in basing its decisions on an assumption of the investors' plans rather than the plans they submitted.

Those plans, he said, did not request any authority to offer programs not already offered at Dana. And he said that the only reference the investors made to possible future online or master's programs came in a supplemental report on future possible plans, requested by HLC, and that even in this report, those were references only to long-term possibilities. He further noted that those expansions would have been subject to future HLC approval, so the college couldn't have just started them, had the transfer of accreditation been approved.

Given that Kaji has suggested HLC had no reason to suspect that the investors wanted anything but to continue Dana as a residential liberal arts college, and has suggested reporting on this issue, Inside Higher Ed asked him to provide the petition filed for a transfer of accreditation. He responded by saying that the names of investors are in the documents and that he has pledged to keep those names confidential. Inside Higher Ed said it would be happy to review the entire petition without the names of investors. But Kaji said on Saturday that he still could not provide the petition, and said that was because of references to the current leadership of Dana, and that Dana has not agreed to the release of the document.

On some of the other specific issues cited by HLC, Kaji said its governance standards amounted to unfair treatment of for-profit entities. He said that in the governance plan, the Dana Education Corporation would act as the board of the college, and that it in turn would be owned by another for-profit entity, existing solely for the purpose of owning the corporation. Those investors would have had the right to veto any decisions by the board to hire or fire a president, and would also have been able to approve the annual budget of the college. Kaji said it was unfair for HLC to reject this setup, given that many for-profit colleges report to corporate boards and that many public colleges operate with their budgets approved by state legislatures.

Further, he said it was unfair for HLC to suggest that the proposed new ownership of Dana lacked familiarity with liberal arts education. He said that several of the current Dana administrators had agreed to stay on, as had faculty members, so the college would have had substantial continuity and would have been led by many people with experience in residential liberal arts education.

He said it was true that the new leaders of the corporation didn't have direct experience with liberal arts colleges, but noted that C. Ronald Kimberling would have been provost and chief academic officer. While Kimberling has worked in senior positions in a variety of for-profit colleges in the last decade, Kaji said he had broadly relevant experience, given that he worked at the University of Southern California and in the Reagan administration's Education Department.

While HLC and the investors continue to debate the fairness of what happened, the issues may be moot for Dana and its students. The investors do not plan, Kaji said, to submit another application, and efforts to get the accreditor to change its mind on the last proposal "have ceased."


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