A local Virginia newspaper thinks something fishy is going on with an imploding college’s finances.
Sweet Briar College — an all-women’s college in rural Virginia — announced earlier this month that it would close following the current semester, despite seemingly solid financials, with a $US94 million endowment as of 2013.
Sweet Briar administrators cited several enrollment trends that informed its decision to close, including a decline in students interested in single gender education, as well as fewer students interested in rural schools.
According to The Roanoke Times, though, “Something just doesn’t add up here.”
The Times outlines how since the financial recession of 2008, Sweet Briar has operated at a loss most years, dipping into its endowment to cover costs. The endowment dropped precipitously between 2013 and 2014. This “explains why that fund has dropped from $US96.2 million in 2011 to $US84 million today — at a time when the stock market has been inexorably going up,” according to The Times’ editorial board.
“On this point, there can be no dispute: This is not good. This is the fiscal equivalent of a farmer eating his seed corn. It might get you through a lean winter, but it bodes ill for the long-term prospects of the farm,” The Times notes.
However, not all the numbers are bad. After reviewing Sweet Briar’s financial forms, The Times found that over the past two fiscal years, the college’s assets actually grew — from $US160.6 million to $US163.9 million. Additionally, Sweet Briar’s liabilities dropped from $US30.7 million to $US29.5 million.
Here’s what happened when The Times examined Sweet Briar’s financials since the financial recession:
Let’s go back to the fiscal year ending June 2009 (which puts us after the stock market crash of ’08):
Assets that year totaled $US172 million — so that part of the school’s ledger has slipped to $US163.9 million.
But the school’s liabilities have been cut at an even faster rate — from $US50.5 million then to that $US29.5 million now.
So while the overall assets are down some, the school’s asset-to-liability ratio has actually improved.
And back to that endowment: Even though it’s down from 2011, that $US84 million figure is still higher than the $US74.3 million that was in the endowment in 2009.
So we say again: Since 2009, asset-to-liability ratio improved, endowment up. Aren’t these generally good things? Why the panic?
The Times also notes that while dismaying enrollment trends may have seemed irreversible, the Sweet Briar Board of Directors never made any attempt to cut costs or raise funds. Moreso, they write that “some of the board’s explanations for closing now are somewhat dubious.” They explain:
College President James Jones has said: “To save Sweet Briar we would need $US250 million into the permanent endowment tomorrow morning.”
To put that figure in context: Hollins University has an endowment of $US180 million and seems to be doing just fine. Ferrum College has an endowment of only $US50 million and it’s been increasing enrollment — which also seems to run counter to Jones’ other assertion that small colleges in rural areas are having trouble attracting students.
Sweet Briar alumni seem to have taken this number to heart, launching a campaign to raise $US20 million to save their alma mater. So far, they have raised more than $US3 million.
If the college’s financials are actually as dire as the board portrays them, The Times argues, the current members should resign and let the activist alumni attempt to save Sweet Briar from the inside.
We reached out to Sweet Briar and will update this post if we hear back.
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