Notes from the 7/9 New York Meeting
Board of Trustees Vice Chair Dan Fallon answered questions for three hours last night at last week’s New York meeting, attended by 50 or so Antiochians. Here are some of the highlights from my notes (admittedly, sometimes indecipherable and incomplete, so I apologize for any errors). I report, you decide:
The Board of Trustees will be meeting sometime in late August, probably either the weekend of the 23rd-26th or the weekend before that. The meeting will probably take place at a hotel proximate to a major airport in a central location (i.e., Chicago or Denver) to accommodate travelers from all over. Fallon is pushing for representatives of various constituencies – staff, faculty, alumni, students and the Village – to be included, but “that’s not settled with the Board yet.”
Since Reunion weekend, the trustees had a June 30 conference call on which they resolved to allow faculty to withdraw funds from pension reports without meeting customary age restrictions, heard reports from Alumni Reunion and discussed the late summer meeting. The 8-person executive committee has also had a call.
Based on the recommendations of an external consultant (one R. T. Ingram, president emeritus of the Association of Governing Boards), the Board is looking at implementing a merger of the College and McGregor under a single executive with its own board. Ingram, Fallon said in an email, “has proposed a new structure that would provide for a Board of Trustees for each campus of the university, with primary responsibility, for example, for appointing a campus president and for oversight and fiduciary care of the campus. There would also be a Board of Governors for Antioch University that would appoint a chancellor responsible for shared services among the campuses and for University-wide academic planning. In Yellow Springs, there would be a single institution, whose undergraduate division would be Antioch College, and whose graduate division would be McGregor, under the management of a single president reporting to a board just for that institution. The current chair of the Board of Trustees, Art Zucker, intends to appoint a commission to review this report and to recommend possible implementation actions to the board.” Fallon has been asked to chair this commission and hopes to arrive at a set of recommendations by the October or February board meetings.
The way the financial exigency statement is written, the University cannot legally raise funds to keep the College open – it can only collect funds for Antioch 2012. “However, we are supporting the Alumni Board in their efforts, and they’re going gangbusters,” said Fallon.
The College can solicit donations for urgent 2007-2008 needs and for the Annual Fund. Former alumni development head Risa Grimes said an Annual Fund campaign is in the works for this year and that staff positions will be dependent on the take.
Fallon said he’s pressing for an official estimate of how much it would take to keep the College open, but couldn’t furnish one yet. “I’m trying to get that question answered,” he said, “but the nightmare of the Board is that you get energized and you raise $7 million and it’s not enough.”
By his own (unofficial!) back-of-the-envelope calculations of the College’s short-term needs include: $18 million to cover an operating deficit and “keep the buildings from falling down” over the next 5-6 years; $5 million to cover an existing deficit in restricted accounts uncovered by the CFO; $12 million for a new student center; $6 million to renovate the OK Library; $3-$5 million to make the dorms safe and another $3-$5 million for basic repairs. The total bill for urgently needed capital improvements (listed above) would be “under $30 million.”
Regarding that $5 million boo-boo, Fallon said a new CFO came in recently and “in going through the records, discovered a number of accounts that were not accurately reported,” including a $5 million shortfall in restricted funds – i.e., $5 million was taken out of funds earmarked for specific purposes and presumably used to patch a budgetary hole. Someone, he said, “robbed Peter to pay Paul and forgot to pay Peter back.” This, together with the collapse in enrollments, meant a projected budgetary apocalypse was imminent, and so was a significant factor in the Board’s decision to close the school. Asked how the deficit went unknown for so long, he said that while the College’s finances have been audited every year, it had been a long time since a “deep audit” had been performed.
“Analysts are converging on Yellow Springs” to go over the College’s balance sheet, “and in the next couple of weeks we’ll be able to put those numbers on the table” and offer benchmarks.
Assuming the $18 million operating deficit could be patched over, the College would need 800 students within five years under the rosiest of scenarios, said Fallon, to approach being self-sustaining, and even at that number, would require continued subsidies from the other University campuses.
Those projections placed the College “in the midst of catastrophic bankruptcy by the middle of the 2008-2009 year.”
The new McGregor building is “a disconcerting set of circumstances.” Fallon said the Board agreed to the plan when “the entire Village Council of Yellow Springs walked into our meeting and said ‘We must have this building.’” Others present (not sure of their names) at the New York meeting interjected that McGregor administrators scared the Village Council into pushing for it by threatening to move Antioch McGregor to Dayton. The University agreed to put up $2-$3 million for it, with the rest to be paid for by state and Federal bonds.
A similar bonding arrangement would not be available to the College, because it’s “maxed out,” having missed a couple recent payments and seen its bond rating slide. A “public-private arrangement where a developer comes in” and builds an assisted living facility or something might be a possibility, he said. This option was not well received by many at the New York meeting.
The Board considered the possibilities of liquidating the endowment and/or other campuses. The latter wouldn’t work, Fallon said, because the process would be lengthy and wouldn’t bring in much money (the most valuable asset being the Antioch Seattle buildings, which might bring in $10-$11 million). Fallon said there’s no legal precedent for liquidating an endowment, so this would be an extremely risky strategy taking the University into uncharted waters. In order to do so, the University would have to get the Ohio Attorney General on its side and successfully plead its case before a Federal judge, who would more likely order the funds be used for comparable purposes (i.e., tuition for low income students) at other institutions.
Fallon said he had not read the recent Yellow Springs News article (www.ysnews.com/stories/2007/07/070507_consultants.html) on the consultants hired to examine the College’s seaworthiness (i.e., Gateway and Pigman), but said the Board had directed Toni Murdock to get two external opinions about College finances. Thomas Chema, he said, was brought in because of his experience reviving Hiram College, and Pigman was brought in because of his bankruptcy expertise. Read the bit about Chema’s report saying the University’s preferred solution was suspension, he said: “It seems to me that a conscientious administration would lay out 5-6 options and that could be one of them, and a muckraking reporter could turn that into a story …. I don’t think there’s anything salacious there.” Advised that while the Chema report has been made public, the Pigman report hasn’t, Fallon said he’d push to get it out there.
Fallon reiterated again and again that there is no legal distinction between the College and the University.
The Board will not consider any plan to continue operations “if the College is not sustainable,” he said. “Sustainability” includes the ability to attract students, offer a high quality education and cover operating deficits.
If the College closes, it will retain a skeleton staff funded by the current ($500,000-$1 million) subsidy from the other campuses. An administrator and several faculty could be retained. There would be some activity on campus over the four-year suspension, including a possible lecture series and online or even bricks and mortar courses being taught.
Faculty salaries are “immoral,” he said. So are the subsidies from other campuses, he said, which “take money from struggling working class people and use that to plug a hole.”
Glen Helen would be remanded to the State of Ohio for use as a state park, per the wishes of Hugh Taylor Birch, should the University ever close.
