Surviving Tough Times

Surviving Tough TimesOverall, historically Black colleges and universities’ compassionate and noble mission of educating and nurturing young African American minds has not changed over the years, but leaders at Black campuses are now increasingly having to temper that with tough business decisions. Streamlining, attracting executive leadership and finding new revenue is the name of the game.
Clark Atlanta University, for example, has already gone the way of many corporations during these tight economic times. In October, the university announced its plan to strengthen the 5,000-student campus. Cost-reduction measures included the elimination of staff and faculty positions as well as the phase-out of five academic programs. More specifically:
          • Since June, 91 staff positions have been eliminated, 27 others have been left unfilled;
          • 21 faculty members have taken advantage of an early retirement program; and
          • In August, 141 non-tenured faculty members were told that their contracts would not be renewed next year, and that 75 of the 141 positions would be eliminated.
In addition, Clark Atlanta is in the process of phasing out its school of library and information science, the department of international affairs and development, the department of allied health professions, the department of engineering, and the systems science Ph.D. program.
Decisions were made to phase out the particular programs based on factors such as declining enrollment, accreditation issues and the need for additional faculty resources, administrators say.
Phasing out these services will begin next fall and end by 2007, giving the 350 students currently enrolled in them a chance to complete their degree requirements and affected faculty a chance to find other jobs, officials say. Terminating these services is expected to save $8 million to $10 million over the next four years. Clark Atlanta will use this money to strengthen other programs such as its business school, says Clark Atlanta’s President Dr. Walter D. Broadnax. The school will also focus on strengthening its biology department, school of education and social work, and department of mass media arts. Overall, the school is trying to reduce expenses by 20 percent.
Named one of the 100 best colleges in the Southeast by the Princeton Review this year, reaction to Clark Atlanta’s bold plan has been mixed, with a few community leaders, alumni and affected faculty expressing anger over the cuts. But Broadnax, who came to the university in 2002, said that some faculty members are privately supportive and that the majority of alumni understand that this is about helping Clark Atlanta stay in business for the duration.
Clark Atlanta also closed Paschal’s Motor Hotel and Restaurant, the historic eatery where the Rev. Martin Luther King Jr. and other leaders met to strategize during the civil rights movement (see Black Issues, Aug. 14, 2003). The decision raised the ire of many in the community who blamed the university for trying to destroy part of Black history.
According to Broadnax, Clark Atlanta was losing $500,000 a year in operating expenses on Paschal’s, while at the same time making $250,000 a year in mortgage payments. The campus had to cut its losses.
He calls closing Paschal’s, laying off employees and phasing out programs difficult business decisions, but necessary ones to make the school stronger and more competitive. “We’re getting rid of programs that cost the university resources but were not bringing back equal benefit to the university.
“The good news is that the university is going to go forward stronger; that by making these tough decisions, we’re improving the quality and the strength of the university,” Broadnax told Black Issues.Necessity, the mother
of invention
According to news reports, 12 historically Black colleges and universities have closed in the last two decades, primarily due to declining enrollments, falling endowments, mismanagement and fierce competition from mainline campuses for talented African American students. Organizations such as the National Association for Equal Opportunity in Higher Education (NAFEO), the United Negro College Fund (UNCF) and the Thurgood Marshall Scholarship Fund (TMSF) are trying to make sure HBCUs survive tough times. Last March, the UNCF contributed $1.4 million in an emergency grant to help Morris Brown College with operational expenses. The grant did not stop the college from losing its accreditation, but it did help the school pay bills.
From joining together to leverage buying power of supplies to taking fund-raising campaigns to the Internet, many Black colleges are finally thinking outside of the box, says Dr. Frederick S. Humphries, president and chief executive officer of NAFEO, which coordinates regional, state and national policy forums to advance the mission of HBCUs. Some schools are taking bold steps, such as licensing intellectual and other property to private businesses to help them become more fiscally sound, Humphries says.
And while many mainstream colleges and universities have always held licensing agreements — charging others to use the likeness of their school logos and mascots — Black campuses have only recently started doing this, Humphries says. So far, North Carolina A&T State University has been the most successful at licensing, and NAFEO wants to encourage other campuses to follow suit.
 “Everything that you read today says philanthropic dollars are down and money that institutions have counted on in the past is not there,” says Humphries, former president of Florida A&M University. “The world is changing, and our colleges have got to become more entrepreneurial.”
Adopting bold and aggressive business plans is something NAFEO will take up for the first time in its history at its annual convention in March, which will be held in Washington. A whole day will be devoted to discussing how to create new revenue streams for Black colleges, Humphries says. NAFEO is already pushing for more cooperative agreements among Black colleges so that they can leverage purchasing power when buying products such as computers and other products, which result in steep discounts and millions of dollars in rebates, he says. Some schools already taking part in the group-purchasing program with Gateway Computers, for example, have already received $15,000 in rebates, according to Humphries.
NAFEO is advocating that colleges become teleconferencing centers, which will provide work to students and leasing revenue for the schools. The organization is also working with a broker that will contract with various businesses to advertise on Black campuses. Schools will get 15 percent of gross sales revenue from the advertisements, Humphries says. In addition, a joint-run program between Wells Fargo Bank and Web portal Black Voices, allows people to make contributions to Black colleges at any Wells Fargo branch (see Black Issues, Oct. 24, 2002). The program is based on a fund-raising initiative created after the terrorist acts of Sept. 11, 2001. Still in its infancy, officials couldn’t give a figure for how much has been donated to the program to date.
Most of the programs are still in experimental stages, Humphries concedes, so there is no estimate on how much revenue will be generated.
“Necessity is the mother of invention,” Humphries says. “We’ve never done any of this before. We’re not getting the money we used to get so that occasions different thoughts. If you want to stay alive, you have to look for new ways of raising money. That’s what we’re doing.”
For example, despite its financial problems, Knoxville College in Tennessee continues to find ways to negotiate alternate means of raising funds. The college, which was founded in 1875 by the Presbyterian Church of North America, has reached a tentative agreement with a national corporation to build a convenience store that would be managed by students from the college, according to a report issued by the Presbyterian Church. Both parties would share in the profits.
While it will take public and private initiatives to help HBCUs survive, the No. 1 priority for all of them is fund raising, says Dwayne Ashley, president of the Thurgood Marshall Scholarship Fund. The association awards money to students who attend public Black colleges and universities as well as provides programmatic and building support to its 45 member institutions.
Millions of dollars in state funding to public colleges and universities are being cut — on average about 15 percent in most states — with Black colleges and universities being hit hardest.
“The day is gone that the state is going to do all of the financing to keep the institutions afloat,” Ashley says. “What has challenged our schools is they don’t have the huge endowments that larger, majority institutions have. When schools go through tough economic times, a situation where there is a downturn in the economy, budgets are tighter, most schools can pull from their endowments to level out their budgets. We don’t have that option.
“More than ever with public HBCUs, the focus on fund raising has become critical to the school’s survival; wherein in past years, our schools were more dependent on state revenues,” he adds. “They didn’t feel they had to fund raise, it wasn’t as much a priority and now it is. Fund raising is the No. 1 priority of every president now. It’s part of their performance evaluation, it is part of their strategic plan, it is the way that they understand that it is the only way they will survive.”
Ashley says many schools also are now engaging in public/private ventures for developing all kinds of small franchises on campuses to create new revenue. And they’re also looking at bond issues and other capital campaigns.
For example, schools are building dorms in which students must pay rent, and they’re actually financed through a private venture. And at the end of the 20- to 30-year lease, the school owns the building.
 “Those are some of the creative kinds of financing that they’re doing to be able to get capital improvements on campuses,” Ashley says.
Lessons from
the boardroom
Clark Atlanta, says Humphries, is an example of a university doing the right thing in light of reductions in government funding to public schools and donations to private schools falling off by as much as 30 percent to 50 percent over the past three years.
College officials are seeking ways to enhance endowments and attract dedicated, qualified faculty and staff, which has been difficult in a sluggish economy where professors are having to forgo pay increases, if not take pay cuts, and at the same time pay larger portions of their health insurance.
The downturn in the economy, however, did lead one corporate manager to lend her talents to her alma mater.
Linda Myler, who graduated from Morris Brown College in 1969, is Morris Brown’s new chief operations manager. A former strategy and compliance manager at Atlanta-based BellSouth Corp., Myler took an early retirement package in September 2002, about the same time mounting turmoil threatened to shut down Morris Brown.
Morris Brown was more than $27 million in debt, reeling from mismanagement, owed the federal government upward of $5 million, and had just gotten its accreditation yanked by the Southern Association of Colleges and Schools (SACS) when Myler signed on as the school’s COO. Her business expertise was needed to help right a sinking ship.
With little more than 60 students enrolled at the school last fall, Myler says Morris Brown is making the hard decisions to remain open. It too has reduced its work force, gotten rid of its once-revered marching band and football team, and has had to cut courses. And, Myler says, the school has gotten tougher on current and former students who still owe tuition and fees.
“We don’t have a lot of time, and we don’t have a lot of resources,” Myler says. “But we’ve still got to make complex decisions, and we have to make them fast or we’ll lose our position in the marketplace,” she says in reference to all Black colleges, not just Morris Brown. “We’ve got to move and adapt quickly to changes in the marketplace. That’s what I bring to Morris Brown.”
There’s a new breed of leadership at Black colleges and universities, says Ashley of the Thurgood Marshall Scholarship Fund. Not only are more HBCUs hiring presidents with academic and business experience, but they are also ensuring that the institutions install creative leadership teams.
“I think what you have is a new crop of presidents who understand that they’ve got to build a great executive leadership team so they don’t just rely upon their own skills. They are building a great team of executives that help them guide the institution,” Ashley says. “They are making sure that there is a No. 2 person in place so that when they are off-campus raising money, which is what they need to be doing, that they’ve got a great team to keep the institution moving in the right direction and sustaining itself.”
 
A new day, for some HBCUs
Clark Atlanta University and Morris Brown College are just two recent examples of HBCUs that are currently experiencing some financial challenges and are doing so in a very public way. Morris Brown, more so than Clark Atlanta, frequently made local and national headlines earlier this year with reports of financial mismanagement, students flocking to other institutions and student and alumni-led campaigns to keep it afloat.
Often times, facing probation or the loss of a school’s accreditation is an early indicator that the school is experiencing financial, academic or management problems.
Grambling State University in Louisiana grabbed its share of the headlines over the years with reports about its financial record-keeping problems — financial records in such disarray that state auditors could not decipher its books. As a result, the SACS placed Grambling on probation in 2001. However, Grambling rebounded by winning back its accreditation at the December meeting of the SACS (see related story, pg. 14).
Alabama’s Talladega College also retained its accreditation with the SACS. Previously, the accrediting body had placed the college on probationary status. According to a press statement released by the college, Talladega President Dr. Henry Ponder presented the college’s case before the Criteria and Reports Committee of the commission, and the commission issued its decision to lift the probationary sanction from the college’s accreditation without rendering any conditions or additional recommendations.
When a school loses its accreditation, it has serious implications for both the institution and the students, including the loss of millions in federal financial aid as well as difficulties transferring credits to other academic institutions.
Some schools are where Grambling used to be. According to a report in the Atlanta Journal-Constitution last year, 15 percent of private HBCUs were on warning or probation status with accreditation agencies.
Mary Holmes College in West Point, Miss., the state’s only private historically Black two-year college, lost its accreditation in December 2002 after an audit discovered deep-seated financial problems, due to low enrollment and money shortages.
St. Augustine’s College in North Carolina received a 12-month warning from the SACS last year, denying the school its 10-year accreditation renewal, instead renewing accreditation for only one year. The college was cited for failure to comply with standardized planning and evaluation in academics and administration as well as education support areas such as the library, student services, finance offices, provost offices and food service. According to the report, the college also did not provide sufficient evidence of its financial stability. Receiving a warning is a lesser sanction than probationary status; however, the SACS did officially place St. Augustine’s on probation in December. “The commission voted to continue their accreditation for good cause and place them on probation for 12 months for failure to comply with” criteria for financial resources, said James T. Rogers, executive director of the association’s Commission of Colleges, according to an Associated Press report. 
And recently, officials from Florida A&M University, the nation’s largest HBCU, were asked to turn over their financial records, which were six weeks late, to Florida’s chief financial officer, because their books are off by $1.8 million (see related story, pg. 27).
Leadership appears to play a significant role in whether these schools can turn their situations around. In the case of Grambling, the leadership of interim president Dr. Neari Warner and University of Louisiana system president Dr. Sally Clausen seemed to make all the difference in finally getting the school back on track.
NAFEO’s Humphries says trustees at Black colleges are making smarter hiring choices. For example, he says, Bennett College hired former Spelman College president Dr. Johnnetta B. Cole out of retirement to become its new president. She was expected to be instrumental in eliminating Bennett’s probation and budget woes, and it appears that she has. Cole joined the college in May 2002 and by May 2003, more than $9.1 million had been raised in major gifts, grants and pledges, with more than $1 million contributed by Bennett alumnae. In addition, the college launched a $50 million “Revitalizing Bennett Campaign,” chaired by former U.S. Sen. Bob Dole (see Black Issues, July 17, 2003).
Cole’s leadership and her staff’s hard work have obviously made a difference. Bennett, on probation for the last two years for fiscal instability, found out it was taken off probation at the SACS December meeting in Nashville where Grambling, St. Augustine’s and others found out about their fate.
In addition to Cole, Ashley ticked off the names of college presidents who are changing the way Black colleges conduct business: Dr. James Renick at North Carolina A&T State University; Dr. Clinton Bristow at Alcorn State University; Dr. Ronald Mason at Jackson State University; Dr. Priscilla Slade at Texas Southern University; Dr. Edison Jackson at Medgar Evers College in New York; and Dr. Marie McDemmond at Norfolk State University are a few examples of college administrators who bring both business and academic expertise.
This new brand of leadership, Ashley says, understands that they have to make tough business decisions to regulate and balance budgets, as well as keep the institution moving for the duration.
“It’s not just about making sure that we survive for the next five or six years,” he says. “It’s about ensuring that the institution is around for the next 50, 60 and 100 years.”



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