University administration detailed their plans to recover both enrollment and income as the university faces potential financial consequences following a 10% drop in enrollment from the 2022-2023 school year and several years of financial hardship.
While remaining positive about the situation, university President Dave Kaufman and Vice President for Business and Finance Bill Mea were both clear about the challenges the university faces stemming from enrollment issues.
This term, the university has 1,632 undergraduate students, a 10% drop in enrollment from the previous year and a 34.8% drop since 2019. Kaufman said this was his “biggest concern.”
In a “State of the University Address,” given on Sunday to student government, university Provost Jody Fournier said the number of undergraduate students should be closer to 2200-2400.
“We are indeed challenged for the future, and it’s entirely driven by enrollment reductions…” Mea said. “We have plans to try to bring the enrollment levels back up, but, for us as an institution, that’s what drives our finances. About 90% of our revenue comes from our students, so that’s tuition, room and board.”
Student Government President Beverly Kinateder also commented on the drop in enrollment.
“I think it was a harsh blow, I also think it remiss for us not to look comparatively at other universities in the area and when I’ve looked at the stats from similar sized universities, private institutions, in the northeast, so looking at Pennsylvania, New York and Ohio, we’re not doing significantly worse than other universities,” Kinateder said.
To recuperate the enrollment rates, Interim Vice President of Enrollment Stephanie Sanders and Executive Director of Marketing Tenzin Alexander were hired this term. According to Kinateder, these two new hires are “excellent.”
Sanders shared Kinateder’s sentiment that many of the challenges with enrollment are consistent across higher education in general. Sanders believes the issues stretch much further than just drops from COVID-19, they come from a larger attitude toward higher education.
“The environment for higher education is very challenging, you can’t pick up the newspaper or turn on the news these days without hearing something questioning the value of higher education,” Sanders said. “We have to do the very best job we can of helping prospective students and their parents understand first the value of higher education, and, specifically, the value of an education at Capital.”
According to the Institute of Education Sciences 2022 Data Feedback Report, in 2021 the university accepted 2659 of 3585 applicants, a total of 74%, and only 424, a total of 16%, enrolled full-time.
The 16% is the number Sanders is most fixated on, something she plans on raising by focusing on the experience of interested students.
“My focus is on bringing enrollment and recruitment best practices to our admissions and recruitment operations here,” Sanders said. “There are a number of initiatives to grow our pool of interested students, or what we refer to as inquiries, and how we message and follow up with them, making sure that students have great experiences when they come to campus for a tour or a recruitment.”
Sanders is optimistic about the challenge in front of her.
While discussing the hiring of Sanders to the student government, Fournier said, “I have never been so confident in where we’re headed with enrollment.”
If enrollment rates are not fixed, the university may have to consider right-sizing to a smaller university size.
Figuring out what a smaller size might look like is part of the administration’s primary directives, a directive with many factors.
Administration is looking to other institutions around the country to determine what running institutions of various sizes may entail. This includes discerning the number of full-time and part-time faculty required for these various-sized institutions.
“So [we’re] kind of creating like a sliding scale,” Kaufman said. “If we’re going to be… 1200 [full-time undergraduate students] we can slide down to replicate other institutions that are that size. And if we’re successful and grow, we can do the opposite.”
Right-sizing to a smaller university size could have several severe consequences. According to Kaufman, the university would have to determine which programs to offer or not, a process that would be determined by profitability and market demands. If the university were to go down to a population of 1200 full-time undergraduates as Kaufman mentioned as a possibility, several departments would be facing either eradication or drastic changes.
When asked what the proposed right-sizing may look like, Kaufman and Mea gave vague answers.
Kaufman merely acknowledged the challenges that would go into figuring out the possible right-sizing, while Mea simply said, “I don’t know.”
Kinateder declined to comment.
In the 2020-2021 and 2021-2022 fiscal years, the university received $8.73 million each year from the Higher Education Emergency Relief Fund (HEERF).
This funding was to assist pandemic-instated financial troubles, including decreases in enrollment and the subsequent loss of income. HEERF has provided a total of $76.2 billion to higher education institutions in the U.S.
With the additional $8.73 million from HEERF, the university had a net profit of $12.97 million in the 2020-2021 fiscal year. With the same amount of government assistance, the university only made $336,932 the following fiscal year.
“[We] worked well throughout the pandemic and in fact utilized federal funding to get through the pandemic,” Mea said. “We used what was called HEERF funds, which was COVID response funding. And then last year we obtained just about $10 million of employee retention credit funding last year that helped to balance our budget.”
The 2022 fiscal year was the final year of government funding.
“We received it in the past year and that is it. We are not eligible for any more,” Kaufman said. “That really did help lift us over the last two years.”
Both Kaufman and Mea then cited a $2.8 million surplus in the budget from the final year of government assistance.
“We have $142 million in assets, $5 million higher than last year,” Kaufman said. “The financial reserves are… undesignated, so how much we can use to finance deficits and that, [they] improved $3.2 million to $26 million.”
These financial reserves are undesignated so they can be used wherever they may be needed, however they are intended to be left in reserve and only used if absolutely required.
While those numbers may appear positive, in order to stabilize the financial situation after the 10% drop in enrollment and the expiration of federal assistance, the university has had to make several cuts for temporary sustenance while the efforts to recuperate enrollment occur.
Mea and Kaufman cited a 12.4% decrease in spending the university has undergone.
This 12.4% decrease in spending is represented “across the board” according to Mea.
“Anytime we do have to cut expenses, we try not to harm the student experience,” said Mea.
These cuts to “not harm the student experience” were made in several areas, but Mea specifically spoke about cuts to operational and personnel within facilities and cuts to administrative areas including financial aid, the business office and fundraising.
An area that was not mentioned, but was reflected in the university’s IRS-990 forms, is employee benefits. Since 2017, spending on employee benefits has decreased by approximately $1 million. Both Kaufman and Mea stated this was the last place they wanted to cut.
“As we manage the budgets, that will be the first thing to come back. It’s the last thing we take away and it’s the first thing to come back,” Kaufman said. “Yeah, it upsets everybody, but they also understand and hold us accountable.”
Kaufman estimated that employee benefits would return to their previous state in three years or sooner.
This term, the university has not cut entire programs, but Mea said cuts may be a possibility. If a program has little to no students, it may be temporarily removed.
As for funding for specific departments and programs, Kaufman said the share and amount of funding each department may get is in direct correlation with how much money a program or department brings in.
While the spending cuts are meant to assist the temporary situation, the university has 10 new initiatives to build the university back to a sustainable financial position.
These 10 initiatives include developing a new approach to the graduate and law school, introducing new graduate programs, establishing a grants office, a Creative Leadership Institute with the Columbus College of Art and Design (CCAD) that shares services, annual giving programs, increased efforts in growing athletic rosters, marketing improvements, focusing on international enrollment, increasing traditional undergraduate enrollment and completing moves in real estate.
These initiatives were developed in tandem with a Sustainability Assessment Model, which is an ongoing assessment to track the university’s progress. This model looks at a competitive review, a market trend analysis, a profitability analysis of all majors and minors and a value proposition analysis, which ensures any changes made are congruent with the university’s mission statement. The Sustainability Assessment Model is also what the university is using to determine what right-sizing may look like.
Kaufman estimates if every initiative is successful, the university could bring in an additional $10 million per year.
“I don’t anticipate all of it being successful, but if even half of them hit, we’re a whole lot stronger off than if we didn’t invest and pursue them,” Kaufman said.
One initiative Kaufman, Mea and Kinateder were all particularly excited about was the initiative to increase athletic rosters. Kaufman said this alone could bring in between $1-2 million a year.
This initiative is to better match the percentage of student athletes to the rest of the institutions in the Ohio Athletic Conference. Kaufman said almost 30% of the university’s general student population are involved in athletics, whereas other institutions are closer to 40%.
The focus on athletics would also include the introduction of a women’s field hockey team and a bowling team.
When asked which initiatives had the most potential, Mea was optimistic about the focus on athletics but additionally pointed to the marketing initiative as promising.
“I think the other is simply improved marketing. We now have a stronger marketing team,” Mea said. “I’d say a better focus on marketing to populations we perhaps did not do as well at marketing to in the past [will help].”
Mea clarified one of the populations the university would target is the population of Pell-eligible students (3.5 GPA or higher, $60,000 total family income or lower), as the students themselves would not have to pay to attend and instead, the government would assist them.
“Marketing is telling our story, telling why people should come to Capital,” Mea said.
This is a sentiment strongly shared by Sanders, who is actively pursuing stories of university students to help better assist prospective students in understanding what the university has to offer.
With the progress made, and the plans going forward, administration is confident the university is not closing any time soon.
“Yes, we are challenged that we need to turn that around and be able to keep that surplus going, but, you know, I don’t fear that (closing),” Mea said. “I certainly believe we’ll be around in 10 years… The institution has always proven itself capable of figuring out how to continue going on.”
While there are few doubts of the university closing, there have been several questions raised about the possibility of a merger or institutional acquisition.
In Fournier’s address to student government, senior Olivia Roberts asked about the likelihood of a merger, specifically with Columbus State Community College (CSCC) or The Ohio State University (OSU).
Fournier promptly said, “I can definitively say no.”
Even if there is no possibility of a merger with CSCC or OSU, Fournier, Kaufman and Mea were all open regarding several “strategic alliances” and possible acquisitions.
The university has current partnerships, or “strategic alliances,” with CSCC, CCAD and Columbus City Schools (CCS), and had a prior partnership with Otterbein University and Antioch College.
With CSCC, the university offers dual admission, a program 36 students are currently taking advantage of. CSCC can also live in university housing while attending CSCC, a program one student is taking advantage of. Additionally, the university expanded its Main Street scholarship to ease the transfer to the university from CSCC.
The university’s partnership with CCAD is targeted to provide students with more diverse educational opportunities, as the university and CCAD do not overlap much in their curricular offerings. The university will also be looking into combining support resources to reduce spending.
The university previously exited a prior partnership with Otterbein University and Antioch College. In this partnership, Otterbein University transferred management of their graduate program to Antioch College. According to Kaufman, this transfer was the reason for the university’s cease in their role in the partnership as they did not feel comfortable transferring the management of all the graduate programs to Antioch College.
Previously, the university came very close to acquiring the for-profit institution Valley College, which has four locations across Ohio and West Virginia. Valley College was later purchased by Hilbert College, a small Catholic non-profit institution in New York.
“We were really close upon that. That was about a $20 million top line, and they had a profitable bottom line,” Kaufman said.
Kaufman said that while many of Valley College’s programs and their surface level profit margins were very complementary to the university, the university ultimately decided to not go through with the acquisition of Valley College. According to Mea and Kaufman, if the university were to pay Valley College’s employees the same as their current faculty and staff, the acquisition would no longer be profitable.
When asked if there was future potential to further the current partnerships or merge altogether, Mea said, “That’s certainly on the table, I think in higher education in general you will see more partnerships and more mergers.”
Kaufman is passionate about his belief in transparency and the importance of sharing what is going on with university.
“I think we edge to be more transparent which creates maybe more concern than some other institutions have chosen, but I am more comfortable with that,” Kaufman said. “I’d rather be as open as we can.”