This blog reports events and interesting tidbits from Rensselaer, Indiana and the surrounding area.

Tuesday, February 7, 2017

More on the closing

Sorting through a box of old papers yesterday, I found an old Christmas card. It comes from before my time at SJC and I no longer remember where I got it. It shows a scene that no longer exists and is perhaps a good way to start a post on the big changes happening now.
Every nonprofit organization in the US must file a Form 990 with the IRS and these forms are available to the public. Most of them can be found on the Internet. A quick search shows that three are available for Saint Joseph's College, reporting on years 2012, 2013, and 2014. The forms are 50+ pages, but many of those pages have no information. A quick snapshot of the finances can be found on the first page, which has data for the current and previous year.

In 2011 SJC had a surplus of $1,132,563. It was the last good year. The deficits for the next three years were $1,101,705 in 2012, $2,539,238 in 2013, and $2,496,119 in 2014.  We know from other sources that years 2015 and 2016 also had big deficits. 

At the end of 2014 SJC reported assets of more than $134 million and liabilities of almost $35 million, so net assets were just a bit under $100 million. That makes it sound as if the institution was in very good financial shape. However, digging deeper into the form to page 24 we see $84 million of the assets is from the value of land (and presumably most of that is the Waugh lands that SJC cannot sell). The value of buildings and equipment (mostly the campus) is almost $22 million. The buildings are valued at cost less depreciation and that value is probably much more than market value (what it could be sold for).

The College had two informational meetings on Monday, one in the afternoon for faculty and staff and the other in the evening for students. The evening session was webcast on Facebook and lasted three hours. It was my first experience with a live webcast. There was a steady stream of comments with it and they came with such speed that it was hard to read them all. In addition someone produced an 11,000 word summary of the two meetings as a form of minutes.

The main speaker at both events was the board chairman. He stated that the reason for the cessation of activities at the end of the semester is that the College is running out of money. The College has been financing deficits by selling assets and borrowing. It no longer has collateral against which to borrow and it has almost exhausted the financial assets that it can sell. The College has tried to raise more money from donors but could not get amounts needed to fill the gap. He stated that his goal and the goal of much of the Board had been to keep the Saint Joe's experience the same as what he and other alumni had experienced and in that they had had a soft heart. He noted that the so-called discount rate was about 65%. That means that although the listed tuition is $31K (or $32K with fees), the average amount of tuition per student was about $11K. (From the point of view of economics the whole discussion of discount rates obscures what is actually happening in the pricing of college. Maybe I will pick up on the topic in some future post.) In the student meeting, one student objected to his mention of the discount rate, saying that it suggested that he was blaming the students for the problem.

The College will be downsizing in the next few months and how and when it will do this was of great concern to the staff. Some of that downsizing will begin almost immediately but almost everyone will be out of a job in May. There is some money left in endowment that perhaps can be released to pay severance but whether that can be done has to be determined by the Indiana Attorney General. Someone asked why the College did not let the alumni know that it desperately needed money and I thought the answer to that was poor. I would have replied that when an institution announces that it has serious financial problems, lots of bad things can happen. In the case of a college, it becomes very difficult to attract students.

It is no surprise that there are at least 12 schools that will reach out to attract the freshmen, sophomore, and juniors. For them it is an cheap way to add students. If you watch Shark Tank, you often hear about customer acquisition costs--the cost of getting a new customer. There are substantial student acquisition costs, and getting transfer students from SJC will be cheaper than attracting additional freshmen.

In both meetings there was emphasis that SJC would rise again in a new and financially stable form. I do not know if the Board really believes this but many of the faculty do not. It is much more difficult to start a new college than the continue an old one, and if the administration and Board were not able to make the old one work financially, how can they be expected to plan a new one that will? Perhaps they are thinking of going more on-line, but they have no experience with that and the time to do that was fifteen or twenty years ago. When Virginia Intermount went out of business a few years ago, a Chinese group bought the campus. Perhaps the Board is thinking that some kind of arrangement can be reached with a foreign group. 

A question that was never asked is how the College can pay off its external debt. The College seems to have about $30 million in secured mortgages and notes payable to unrelated third parties. Any plans for a new Saint Joseph's College to rise again will need to figure out how the existing debt will be resolved.

Experience is the best teacher. I suspect that the lessons that students will learn from events this semester (and I am not sure what those lessons will be) will endure long after what they learn from books is forgotten.


RoadRunner1117 said...

Can you share a link to the 11000 word summary?

Anonymous said...

Very well written, you need to get this out to the public, so they can understand. Thanks

Anonymous said...

The summary of the faculty and student Q&A's can be found there.

Anonymous said...

The Q & A sessions were useless. Sponseller could answer no real questions. He and Pastoor are great examples for our students of who not to be in life. Real snakes.

Bill Jennings said...

Probably the best synopsis of the recently published financial conditions which have led to the suspension of academic activity @ Saint Joseph's College Saint Joseph's College has provided quality education based upon a mission statement and commitment of the C.PP.S. for the past 125 years. The result of certain forms of mis-management and polyanna leadership is on track to punish the wrong people; namely those teachers, students, staff and alumni who supported that mission and the Judeao-Christian principles upon which its mission is based. There are 200 jobs on the line and a community that depends upon Saint Joseph's very existence . Anger and vitriol is appropriate only to the degree it stimulates positive actions. I see some positive action taking place and look forward to a blueprint which brings us out of this tailspin. Somehow we all contributed to oiur present status either thru complacency or interference. Let's support the positive action plan(s) which surely shall be forthcoming. Prayers don't hurt; let's grab a shovel, paddle and open our hearts and perhaps our wallets to get the job done. Love and Hugs to all things PUMA.

Anonymous said...

Evidence that there are thousands of people who love SJC and want to take positive action to save the College can be found here:

Anonymous said...

Bill J,

I suggest you start an online pledge drive calling upon the board to suspend their suspension to allow time for people to act. Each pledge signer can indicate what he or she can do to help with prayers, open hearts, shovels, and wallets.