Emerging Solutions

August 18, 2011

George O. Wood, chief executive officer of the Assemblies of God, a Pentecostal Christian denomination, talks often about the Feeding of the 5,000, a biblical story in which Jesus feeds 5,000 people with only five loaves of bread and two fish.

In that vein, Wood's denomination is putting faith in the idea that, even with limited resources, it can nourish the minds of its students. This month, the General Council of the Assemblies of God voted to consolidate three higher education institutions in Springfield, Mo.: Evangel University, Central Bible College, and the Assemblies of God Theological Seminary.

While the proposed merger is far from a done deal -- the institutions must await accreditation approval from the Higher Learning Commission of the North Central Association of Colleges and Schools -- it is an example of colleges embracing a much-talked-about potential solution to some of the issues facing higher education institutions generally and religious institutions in particular.

While many in religious higher education see the Assemblies of God consolidation as a unique situation, the institutions are not unique in their problems. While some Christian colleges and universities are thriving, institutions affiliated with certain denominations are not. They face low enrollments and sometimes minimal support from churches, and they are finding it hard to remain on firm financial footing. Those problems have been compounded by the recent economic downturn and the high administrative costs associated with infrastructure, information technology, and regulatory compliance.

Mergers, including some at Assemblies of God institutions, have been proposed frequently over the years as a way to combat these problems. Yet for various reasons many proposals have fallen apart before the final consolidation. “There are far more failed mergers than successful ones,” said Daniel Aleshire, executive director of the Association of Theological Schools. If the Springfield institutions follow through on the plan, their experience could help inform other institutions looking for creative solutions.

“We live in a changing world, and institutions that do not flex and change get into trouble. Churches that don’t change and flex get into trouble,” Wood said in a video presentation outlining the consolidation. “A new consolidated university in Springfield is better positioned to take advantage of changes that are taking place both in the church and in the secular world.”

Joseph Castleberry, president of Northwest University, an Assemblies of God institution in Washington state, said he sees the potential for mergers all across the country similar to the one happening in Springfield. "Those kinds of mergers, or takeovers, where larger institutions absorb church-based Bible institutes, could certainly be part of the future," he said. "I think if you've got a good program that's struggling, that would be accredited if it's part of a larger institution, those kinds of mergers make sense."

A History of Mergers

Financial problems have forced several religious institutions to close their doors in the past few years, and driven several others to consider mergers as a potential solution. Lambuth University, a university in western Tennessee affiliated with the United Methodist Church, shut down in June after years of financial struggle that culminated with the Southern Association of Colleges and Schools' decision to revoke the university's accreditation.

Dana College, a Lutheran institution in Nebraska, was forced to close when the Higher Learning Commission of the North Central Association of Colleges and Schools denied the college's request for continued accreditation after a change of control that would have put it in the hands of a group of investors. The college had considered merging with nearby Midland Lutheran College several times.

Earlier this year Bethany University, an Assemblies of God institution in California, announced that it would be closing its doors after a deal to be purchased fell through. Bethany approached two other Assemblies of God institutions on the West Coast for possible merger, said Jim Braddy, superintendent of the Northern California and Nevada district of the Assemblies of God. But those universities were reluctant to take on the debt associated with the university.

Planning documents and administrators from the Assemblies of God institutions said that while there are educational gains to be made through consolidation, the three institutions in Springfield were also facing significant financial difficulties. "I don't think these problems are specific to Assemblies of God institutions," Braddy said. "I think these are issues that all of private higher education is dealing with."

It is because of these financial difficulties and the number of institutions close to closing that the idea of mergers has gained momentum, particularly at institutions with a history of serving a particular student population, such as historically black colleges and universities and religious institutions. Observers say such institutions might be better suited for mergers than most. They tend to have similar philosophies, attract similar students, and have similar academic programs. Many are located close to one another and often fall under the same leadership. Some already have partnerships or are in regular communication with one another.

Gary Luhr, executive director of the Association of Presbyterian Colleges and Universities, said most of the institutions he represents are in sound financial health and haven't considered mergers. But there are exceptions. St. Andrews Presbyterian in North Carolina, which was struggling to retain its accreditation from the Southern Association of Colleges and Schools, recently announced a merger with Webber International University in Georgia. "St. Andrews was in danger of losing its accreditation, had been involved in a long legal battle with SACS (during which it managed to keep the doors open and retained access to student aid) and saw merger with an accredited institution as its best option for staying in business," Luhr said in an e-mail.

Richard Ekman, president of the Council of Independent Colleges, an organization that represents about 600 small and midsize private universities, said he sees an increase in collaboration between colleges and universities in the near future, particularly among small colleges. "When you're a very small institution, size is a big motivator," he said. "It's hard to make the numbers come out right."

While some institutions will merge, Ekman said, many others will focus on ways to reduce costs through collaboration, such as using technology to share some administrative costs. He said circumstances are going to determine how each institution follows through on ways to cut costs. For example, a merger won't generate nearly as much savings if institutions are to remain far apart.

The Springfield institutions have some characteristics that previous merger talks lacked. The institutions are close together. Evangel University and the theological seminary are adjacent, and Central Bible College is only about four miles away. They are all owned by the General Council, which appoints the institutions’ boards. (Other Assemblies of God institutions are owned and managed at the regional level.)

The institutions also serve similar yet distinct populations. Evangel is a multiple-department institution with more than 100 academic programs at both graduate and undergraduate levels. Central Bible College is an undergraduate institution that focuses solely on training missionaries and ministers. The seminary only has graduate programs in religion.

Because of these factors, Assemblies of God has proposed merging the three Springfield institutions in the past, as far back as the 1970s and most recently in 2005.

The talks gained traction this time because of the institutions' financial problems. All three have seen their liabilities grow much more quickly than their revenues, and all three have significant debt loads. At the Bible college, assets increased 1 percent between 2008 and 2010, while liabilities increased 46 percent. Combined revenue for the three institutions increased 29.8 percent between 2008 and 2010, while expenses rose 43.7 percent. The institutions, particularly the seminary, were receiving support from the General Council. "If not for the generous grant from the General Council, the seminary would be in deep trouble," Wood said.

Central Bible College's problem has been attracting students. Its enrollment, about 250 full-time students, is only about a third of the college's residential capacity. “Bible schools all across America have been fighting a trend in the culture where students are increasingly electing multi-major institutions,” Wood said.

Castleberry, of Northwest, said running a large Bible college don't make sense in the current economy. Students are choosing to attend small unaccredited Bible training institutes at a low price, or, if they are willing to pay a high price for the training, then they want the university brand attached to their credential.

Other Assemblies of God institutions said their problems are not as deep as the Springfield institutions'. Nate Ruch, vice president for university relations and enrollment at North Central University, an Assemblies of God institution in Minneapolis, said that his institution saw a dip in enrollment associated with the recession, but that it has recovered from that and doesn't have the debt load the Springfield institutions have. He said that North Central has had an easier time attracting students because it has a regional focus, whereas the Springfield institutions are supposed to focus their efforts nationally. Assemblies of God institutions are also "statement of faith" institutions, requiring students to sign pledges of shared belief. While these statements don't limit the campus to members of the Assemblies of God, they tend to limit the student population.

A New University

The plan for the consolidation is to create one university that meets the mission of incorporating undergraduate education, religious instruction, and graduate and professional programs, including theology programs. Operations will be centralized on Evangel University's campus, and planning documents call for the eventual elimination of the Central Bible College campus.

While the majority of the General Council voted to approve the merger, there was some opposition to the plan. Alumni of the Bible college have been the most adamant in their objection, saying that the college has value as a single-focus institution, and that that value will be diluted in a university. Given the strong support for the college's tradition, Castleberry said that if there were any financially viable way to keep the college open, the leadership likely would have done so.

Administrators said there are several benefits to the merger. The combined university, complete with graduate programs, will serve as a central institution for the denomination and better train the next generation of leadership, Wood said.

Seminary administrators have been vocal proponents of the merger. Byron Klaus, president of the seminary, said the consolidation provides the opportunity for joint programs that might be more attractive to a wider array of students and strengthen the educational experience at the seminary. The consolidation also will likely lead to economies of scale in areas such as information technology, helping all three institutions’ bottom lines. "We see the least amount of impact, and the greatest advantage,” Klaus said. “Our board has been enthusiastic from the get-go. The seminary is very pleased with the outcome, and we anticipate this being a great help to us.”

For those same reasons proposed mergers have been common at seminaries, which often have a tough time generating revenues due to their typically low tuition and sometimes limited financial support from religious organizations. At the same time, they must deal with many of the same regulatory and administrative costs that larger institutions face, often with only a handful of students. Klaus said that of the 250 seminaries accredited by the association of theological schools, one-third are in some sort of discussion about consolidation or restructuring their governance.

Aleshire, of the Association of Theological Schools, said that in the past few years there have been several theological schools that have joined with larger institutions. The Mennonite Brethren Biblical Seminary, for example, merged with Fresno Pacific University last year. Seminaries have also entered into partnership agreements with nearby institutions, such as the agreement between Texas Christian University and Brite Divinity School, a separate institution near the university. The agreement allows the seminary to retain its independence but gain some of the benefits of a merger. "Small schools used to be able to run like mom and pop institutions," Aleshire said.

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