Trying to Survive

Mills is across the country from Sweet Briar, but is closer in circumstance. It struggles with declining enrollment, a growing discount rate and faculty-administrator tensions. How endangered is the college?

May 12, 2015
Mills College

Mills College has struggled with enrollment declines, persistent budget deficits and faculty unrest. Despite a nine-figure endowment and year-after-year budget reductions, the Oakland, Calif., women's college is just one step away from a junk bond rating by Moody’s.

In the same month faculty considered a vote of no confidence in the college’s president, another women’s college on the other side of the country announced it was shutting its doors -- officials at Virginia's Sweet Briar College, citing declining enrollment, lowering yield rates and rapidly inflating tuition discounts, said they would rather close the rural college’s doors this summer than drag the process out and spend down its sizable endowment of $85 million.

Three thousand miles away, Sweet Briar’s impending closure hovered over Mills like an ominous rain cloud, and not the kind the California college was waiting for. Some faculty members wondered, would Mills eventually suffer the same fate?

“Sweet Briar is looming over us.” said Juliana Spahr, an English professor at Mills. “People are finally waking up.”

Mills' President Alecia DeCoudreaux announced on April 30 that she will not renew her five-year contract when it expires in a year, despite urging from Mills trustees to stay.

DeCoudreaux (at right) said the potential vote of no confidence -- something she realizes has been discussed “on more than one occasion” throughout her tenure -- had nothing to do with her departure. She listed her husband, who works outside of California, and her aging 90-year-old mother as reasons for stepping down. 

“The job of a college president is a 24-7 job, and that’s under the best of circumstances,” she said, adding that given Mills’s persistent financial difficulties, “it’s an even more consuming job.”

DeCoudreaux believes she’s put Mills on “a path toward financial stability,” but Mills’s trouble enrolling and retaining undergraduates, as well as keeping its top leadership team in place, continues to create difficulties for the college.

“We are not Sweet Briar,” the departing president said. “Our circumstances are very different than circumstances at Sweet Briar.”

In many ways that’s true. Sweet Briar’s rural location worked against it. The Virginia college was also all undergraduate, whereas Mills has around 600 students in a graduate program that, unlike its undergraduate program, is coed.

Yet some similarities are undeniable. Enrollment is a struggle, and the small women’s college is having to buy students with a discount rate that covers more than half the cost of tuition. Initiatives meant to help the college, like a quick-track application strategy or an accreditation for its business school, have had a bumpy road.

Leading Mills during such a nexus of difficulty has been a challenge, DeCoudreaux said.

“If I had a crystal ball and knew everything when I was coming in, I might use that crystal ball very differently,” she said. “No one ever really knows everything until you roll up your sleeves.”

‘Negative’ Outlook

Last November Moody’s characterized the college’s outlook as negative and reduced its rating to one rung above a junk bond.

The downgrade reflects “continued deficit operations, which will be increasingly difficult to balance given the college’s fundamentally challenged student market with volatile enrollment, stagnant net tuition per student and weak matriculation of incoming students,” the Moody’s report said.

The downgrade was demoralizing for a campus that’s spent the past four years making cuts and experimenting with new enrollment strategies in an effort to reverse its financial troubles.

“Those issues came to the forefront early on in my tenure here at Mills. We’ve been dealing with them for my entire time here,” DeCoudreaux said. “There’s no one jumping for joy at a downgrade by Moody’s.”

She continued: “It takes a little time to turn things around.”

The college last year charged nearly $43,000 in tuition, an increase of 18 percent over five years.

As tuition has grown, so has the discount rate, which is projected to be 51 percent next year. A year-after-year increase reflects trouble enrolling students, and specifically difficulty enrolling wealthy students who can pay full freight. Eighty-seven percent of families with a student at Mills earn less than $70,000, according to minutes from a faculty document (California families who earn less than $80,000 are eligible for free tuition within the University of California System, adding further competitive pressure).

Undergraduate enrollment at Mills is expected to dip next year. Officials expect 900 full- and part-time students to enroll in the fall, fewer than the 922 students enrolled this year or the 997 students the year before. The number of full-time-equivalent students, a benchmark widely used by colleges to gauge enrollment, is expected to be around 850 in the fall. (Projected 2015 enrollment figures have been updated based on new information from Mills.)

Yield too is suffering. The college enrolled just 13 percent of admitted applicants this year, and has failed to enroll at least 20 percent of admitted applicants for the past five years.

Coupled with the issue of yield is an increasing number of students dropping out of Mills or transferring to other institutions. Only 71 percent of those who enrolled as first-year students in 2013 returned the next year -- a rate that is low for a residential liberal arts college.

“It’s definitely been a stressful year from a numbers perspective,” said Brian O'Rourke, Mills's vice president for enrollment management, a position that was created three years ago as a response to persistent enrollment issues.

O’Rourke’s office has experimented with a number of strategies to attract students. One strategy - an abridged application targeted to students using the Common Application who fit the Mills’s student profile - brought overall applications up by around 1,000, but many of those applicants weren’t serious about Mills or didn’t know it was a women’s college when they applied.

The college has scrapped that approach and is now trying to promote Mills to applicants by giving them a lot of information up front and encouraging campus visits.

Graduate enrollment has hovered in the high 500s and low 600s over the past five years, helping stabilize the college’s overall enrollment, which this year was 1,548 full-time students, and minimize enrollment deficits. Twenty-two percent of Mills's graduate students are male.

Mills is far from alone in its struggles. Small, private liberal arts colleges across the country are challenged by many of the issues that faced Sweet Briar.

“The weak are getting weaker, and we’re seeing that in some very poignant examples like Sweet Briar,” said Karen Kedem, a senior analyst at Moody’s. “As enrollment becomes more difficult to predict, deficits erode any financial cushion that they had.”

According to Moody's annual tuition survey, published in November, 45 percent of private colleges it rated reported declining enrollments. In the 2014 academic year, the average tuition discount at a private college was 46.3 percent, up from 38 percent a decade earlier. That year Mills's discount was 49.4 percent.

Meanwhile the college’s endowment -- from which Mills has been spending -- has bounced between $157 million and $189 million, its current level, in the past five years. Before the recession, the endowment was valued at $223 million.

Ninety-six percent of the endowment is restricted for donor-specified use, greatly limiting Mills's financial flexibility.

In an effort to stop spending down so much of the endowment, Mills’s administration is considering reducing its annual spend rate from 6 percent to 5 percent, a move they say will preserve the institution's resources. Many faculty members, however, contend that Mills is too weak financially to subsist on less money from the endowment.

The declining endowment has had a domino effect of sorts, leading to a decrease in income -- which has in the past covered as much as 20 percent of the college's operating budget -- and reducing the number of scholarships Mills can offer prospective students, thus reducing enrollment, which further cuts revenue, in terms of both tuition dollars and auxiliary costs like room and board fees.

Between 2012 and 2014, Mills averaged a 9 percent operating deficit. Undergraduate enrollment shortfalls this year and next year “will pressure net tuition revenue growth” in coming years, according to the Moody’s report, which also states that analysts “do not expect fully balanced operations for the next several years.”

There no existing plans to open Mills’s undergraduate program to men. In the 1980s and early 1990s, Mills considered opening its campus to both genders in an effort to increase revenue, but students protested the move and the college scrapped it and has not seriously considered it, at least publicly, since.

Last year Mills became the first single-sex college to accept transgender students. Several more prominent women's colleges soon followed.

Strategies a Struggle

For faculty at Mills, more stress rises to the surface each year as budget concerns continue.

“Is it better to try to get out [now], or should we wait for the pity hire when it actually goes down?” Spahr said. “There are probably some faculty that aren’t having that conversation, but I’m having it every week.”

Shortly after DeCoudreaux came into office in 2011, she started program cuts and layoffs in an effort to close the growing budget gap. In 2011, for example, she cut 15 staff positions -- which included 6 layoffs -- in a move to save $1 million in recurring costs. Staff saw weeklong furloughs and faculty members' salaries were reduced. In 2012 Mills cut the track team, one of seven varsity sports at the college.

Initially there was an end in sight to the reductions: three semesters. Yet as they continued longer than promised, faculty members grew more rankled.

“We sort of tightened our belts and said ‘OK, three semesters….’ At the end of the third semester, [it was announced that] austerity methods would continue into the foreseeable future,” said Stephen Ratcliffe, a member of the English faculty who sits on Mills’s faculty executive committee.

Ratcliffe credits DeCoudreaux with bringing the budget issues to light. Previously, he said, faculty members weren’t told about the college’s financial hardships. “The community was kept in the dark,” he said.

Spahr agreed. “The faculty feels better educated than it ever has about the challenges of what it means to stay a women’s college at this time,” she said. “How do we engage with this weird thing that is Mills, that’s kind of great and kind of changing and also kind of at risk?”

Despite DeCoudreaux’s efforts, the hole in Mills's budget remained. It was $5.5 million in 2014. That year administrators continued reductions, cutting more positions and enforcing a policy of canceling classes with fewer than 10 students.

Meanwhile, DeCoudreaux's leadership team has been in constant flux. Since she arrived in Oakland, there has been turnover in nearly all the top administrative positions, including the provost -- there have been three in four years -- the vice president for finance, the vice president for advancement and the vice president of student affairs.

A few leadership appointments have angered some faculty members, who wanted more say in DeCoudreaux’s choices and wanted her to consider candidates from the college.

“There’s been a question of shared governance. Decisions are being made by the administration that have not involved the participation of faculty,” Ratcliffe said. “She didn’t have the experience in the academy, and I think many people feel that she had this corporate, top-down leadership style, where she was the boss and she should make decisions on her own.”

DeCoudreaux, a graduate and former board member of Wellesley College, a women's college, hadn't worked in higher education before becoming Mills's leader. She was previously the vice president and general counsel of Eli Lilly and Company’s U.S. office. She spent the bulk of her career as a lawyer for the pharmaceutical company. In March she was appointed to the Board of Directors for the CVS Health Corporation.

In 2014 she earned $474,000 (she reduced her salary by 3 percent early in her tenure as a part of budget cuts).

Under DeCoudreaux, Mills developed a strategic plan that included not only cuts but efforts to increase retention, update its curriculum to fit with a 21st-century landscape and create more flexible ways of earning a degree. DeCoudreaux tried to build new revenue streams, such as a proposed program that teaches English as a second language.

A goal still in the works is accreditation for Mills’s graduate business program. Administrators say the accreditation will attract more students to the program, but faculty say the accreditation process is costly and contend there’s no evidence it will be effective in increasing enrollment and that the area is already rife with business programs. There were 77 students enrolled in Mills's M.B.A. program last fall.

Over the course of her tenure, mistrust between DeCoudreaux and Mills faculty worsened. After Moody’s downgraded Mills, some faculty questioned whether administrators intentionally talked the college down to raters.

“President DeCoudreaux commented that she’s sorry we’re in a position today that we have people thinking administration would consciously attempt to have the rating of this college downgraded,” minutes from a February faculty meeting read. “The president also commented she is taking it personally there are thoughts she would intentionally downgrade the rating of the school… as though her integrity is being questioned.”

The next month, during a faculty meeting, there was a straw poll to see how many faculty members had lost confidence in DeCoudreaux’s leadership. Out of 60-some faculty present, about a dozen still had confidence, according to Spahr.

Then in April the faculty executive committee brought their complaints to the Mills Board of Trustees, which has 34 voting members. Faculty, unaware of DeCoudreaux’s decision to leave Mills, asked trustees to “undertake a comprehensive assessment of presidential leadership” and consider more faculty participation in the college’s financial affairs.

The board, in a response, said it would create a task force to look into shared governance at Mills. It said it would review the president’s leadership, but implored faculty not to go forward with a no-confidence vote.

“The board is now well aware of the serious breakdown in trust,” board chair Kathleen Burke wrote. “An official vote will deepen the rift and impair the bridge-building necessary to secure Mills’s future, as well as send a damaging message.”


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