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Fisk Discloses Major New Problems

Fisk University, beset with financial troubles before the nation’s economy began a free fall last year, has joined a growing list of prominent historically Black colleges and universities (HBCUs) signaling tougher times at hand.

In a “Family Letter,” dated Feb. 20, Fisk President Hazel O’Leary told the Fisk community the school has lost 11 percent of its enrollment since last August due to students being unable to meet their college costs. Meanwhile, donations “are behind last year’s giving rate by more than 40 percent,” O’Leary said.

To address the school’s need to “bring our expenses in line with our reduced revenues,” O’Leary said the school’s board of trustees had approved a 15 percent cut in the school’s budget for the 2008-09 fiscal year ending June 30.

“Our mission to cultivate bright young people of high intellect and character cannot be underestimated in an adverse economic climate,” O’Leary said. Echoing an argument made this time a year ago, O’Leary said ending the fiscal year without a deficit was crucial to the school’s accreditation being reaffirmed. Fisk is due for a formal review later this year by the Southern Association of Colleges and Schools (SACS). The process began last year.

O’Leary’s letter did not translate her percentages into specifics. Several calls to various Fisk officials for clarifications were not returned. However, some estimates, based on its published data, put its student revenue loss in excess of $150,000 and donor revenue down by several million dollars. While O’Leary’s statement made no reference to the school’s endowment, which was estimated between $6 million and $8 million at various times during 2008, most endowments are down in value by 20 percent to 40 percent because of the stock market crash. Fisk long ago mortgaged nearly all of its real estate assets to stay in business.

O’Leary said “all areas” of the university have taken steps to cut expenditures, including a freeze in hiring and entering new service and professional contracts, except essential ones, a freeze on nonessential travel, elimination of reassignment of adjunct faculty to merge class sections, cuts in purchases for supplies and operations and cost sharing for critical services.

While Fisk appears to have the highest percentage of students to withdraw this year, it is not alone in feeling enrollment losses or in taking actions to stem the loss of revenue from tuition, investment income and donations.

Earlier this month, Spelman College reported a 3 percent drop in its 2,150 student body. To offset the income losses, Spelman was eliminating temporary workers, closing the school for a week after graduation in May, eliminating 12 vacant positions and 23 existing ones, and consolidating or ending several other programs.

Anticipating tougher months ahead, Spelman said it was cutting its operating budget for the next school year by $4.8 million. Neighboring Morehouse College, meanwhile, said it took cost-cutting steps during the winter break by eliminating one-third of the adjunct professor contracts at the college.

“Our schools are going to have to more strategically manage our resources and do more with less,” said Dr. Wesley McClure, president of Lane College and secretary of the board of the United Negro College Fund. “We will have less income in the next three to five years,” said McClure. “We are going to have to make some major decisions,” he said of his organization of more than 40 colleges and universities.

At Lane, McClure said he has instituted a number of cost-cutting measures aimed at cutting at least $1 million from the school’s $28 million annual operating budget by 2010.

Lane, which has not seen a drop in enrollment but is feeling softness in other sources of income, is going after a series of seemingly small items that add up, said McClure. Copying is being reduced, supply purchases are being cut, buildings such as the school gym are being closed on time at night so lights can be shut off, crews are being organized to disconnect computers at night to save energy, the school is moving toward purchasing smaller cars and ordering more car pooling. Food portions in the all-you-can-eat cafeteria are be reduced in size so uneaten food won’t be tossed. Layoffs are a last resort, he said.

“We don’t want to layoff faculty and staff,” said McClure. “We are a major source of employment in our smaller communities,” he said of many HBCUs that are based in small and rural areas of the South.

McClure said the impact of declining enrollments at HBCUs is not likely to spread evenly, as one might expect. Smaller schools that take in more low-income students are not likely to see student withdrawals as high as schools that historically cater to more middle- and high-income blacks, he said.

As a rule, students from low-income homes are able to access more grants and financial aid. Thus, they have to raise less on their own to close the gap between financial aid and a school’s charges for tuition, room and board and fees, McClure explained.

In contrast, students from households earning $80,000 or more are more likely to be forced to withdraw, McClure said. These students did not qualify for as much student aid as lower income students. Now, they are suddenly faced with less of their own money to pay for school because their parents’ income has shrank or disappeared through a combination of falling home values, stock market losses, pay cuts, outright job losses or a combination of these.

“You’re talking about parents who had high incomes and couldn’t get financial aid but their income has been affected by the downturn in the economy,” said McClure.

Fisk University Budget Reduction 2009

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