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Calvin College Announces Spending Priorities

The board of trustees of Calvin College recently approved priorities for spending over the next five years to meet the demands of an unanticipated debt load. The priorities also address the challenges facing all institutions of higher learning today.

Priorities were set on a foundation of a new five-year strategic plan, “Calvin 2019: Strengthen, Support, Secure,” also adopted by the board. That plan was designed to place the college on firm financial footing for the future while focusing on its core mission. The plan includes restructuring academic programs with low enrollment, selling off nonessential real estate, and raising $25 million to help pay off debt. The college already went through a series of staff cuts last year and revamped its investment policy.

A priorities and planning document, not being released publicly, lays out specifics following more than a year of consultations on every aspect of the college’s operations.

Reducing spending was necessitated to redirect about 10 percent of the annual budget toward debt coming due in 2017. Shortly after college president Michael LeRoy arrived on campus in the summer of 2012, a financial review showed an unanticipated debt of $116 million, with principal and interest payments coming due in 2017 to the tune of $9 million.

The new plan will reduce the faculty from its current 291 to between 270 and 275 and reduce staff from 426 to 405 by 2017. This follows cuts announced last year of 22 faculty and staff positions, or 3 percent of the college’s workforce.

The priorities and planning process took place across the campus from academic divisions to infrastructure departments. Faculty, staff, students, alumni, department heads, and academic deans all had input into the process. LeRoy said that what he appreciated was “at every level, people [asked], ‘How does this benefit students, make a higher quality experience for students?’”

The report identified academic programs that have become unsustainable for various reasons, including too few graduates or too low a student-faculty ratio. At the top of the list for restructuring are fine arts programs such as art history, art education, theater, and music specialties. Some of the programs could become minors or be linked together for arts performance or arts management degrees. In the meantime, a new arts council was formed to build awareness and increase enrollment in those programs.

Also at the top of the list are the foreign language programs. The college is exploring possibilities of distance education with other colleges. A new global studies minor program could increase enrollment.

Another idea being considered is differentiating tuition for higher-cost programs such as nursing that require low student-faculty ratios. Le Roy said no decision on that has been made.

Other strategies to reduce costs include decreasing the number of electives offered, especially those that do not draw many students, moving some of the core courses to interim, and developing larger plenary-type courses for some of the core courses.

While looking at the programs with low enrollment, LeRoy said the college also has to look at programs that don’t have enough resources. “Our business classes are really full, and athletic classes are really full, and intro biology classes. Part of our long-term plan is to try to align student demand and interest with resources we have.”

Outside the academic division, the college will be looking for non-tuition revenue for non-departmental programs such as the Ecosystem Preserve, the Festival of Faith and Writing, Alumni Choir, Oratorio and other community engagement activities.

The college will also look at the feasibility of contracting the operation of the campus bookstore to an outside service provider.

The various initiatives are expected to save nearly $5 million by 2017.

In addition to program restructuring, the college has committed to raise $25 million in fundraising by 2017 to prepay principal on the debt. LeRoy acknowledged that fundraising to pay off debt can be difficult, but he said that the response already has been overwhelmingly positive. “Fundraising was fantastic last year,” he said. “People who are donating are those who have supported Calvin a really long time. They are excited to step up and help. I’m really grateful.”

The college is also selling off properties that were bought as part of a failed investment strategy. LeRoy said proceeds from those sales will be applied to the debt. Already last year the college established a new investment policy with specific targets. Investments have been moved out of the Fuller Foundation into more diverse and, in some cases, less risky investments. Investment advising is no longer in-house. Rather, the college hired Goldman Sachs to do the investing in line with the college’s policy.

LeRoy knows that not everything in the plans will work out. “What I like is that it is comprehensive and covers every part of the college with clear goals and a clear way to measure,” he said. “There will be things that we set out to do that we won’t meet. That is important to know and important to talk about why, and figure out how we can do better. [We can] celebrate where we succeed and stop spending money on things not getting results.”

Related Links:
Calvin College Faces Financial Challenge (October 2012)
Calvin College VP of Finances Steps Down (November 2012)
Calvin College Reveals More Information about Debt (March 2013)
Calvin College Cuts Staff (May 2013)
Calvin College Finances Improving (October 2013)

About the Author

Gayla Postma is news editor for The Banner.

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Comments

Wow!

"the college hired Goldman Sachs to do the investing in line with the college’s policy"

REALLY!?!?

Aren't these the same folks who brought us the mortgage crisis of 2008.

Sounds like a great idea to me.

 

 

Calvin College shouldn't be in the business of "investing," properly defined.  For all the "not one square inch" talk, the "social justice" talk, and the pontifications against the "vast web of structural factors that perpetuates these social injustices" (quote from website of OSJ, agency of the CRCNA, owner of Calvin College),  it is ironic at least that Calvin College is in the business of investing presumably sizeable amounts of extra funds (in a world so filled of poverty), and that it has now decided to do that investing with a company like Goldman Sachs, who I'm sure will do quite well for itself (and its many million dollar+ paid executives) in that hired position.

All in all, how pro-Wall Street of Calvin (and its owner).  And how distant from the college's and its owner's declared fight against those those structural factors that supposedly perpetuate social injustices.  Either the bent of the CRCNA's obsession with social justice is off, or the CRCNA and its Calvin College aren't much concerned about actions at home matching up to their prophetic, supposedly speaking-truth-to-power words.

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