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“There’s the bullshit, then there’s The Blaze.”
Fall 2007 issue four Antioch college
Critical Decisions
blazenews.org
S
ince June, Antioch College
has been a train heading down a
straight track leading to a single
destination– the suspension of
operations of the 155-year-old college.
During the course of the trip, however,
the alumni of Antioch College have built
in the track ahead the possibility of a new
direction. If the Trustees decide to not
throw the switch to the new track, then
this article will simply join in the final
pages of the history of Antioch College.
Presuming the Trustees throw the switch
and sets us off on a new journey, let us
ask, how can we improve our future jour –
ney, given the experiences of our past?
The last fifteen years encompass enough
events to be a sufficiently broad period of
interest. During this time we have seen
extremes in many notable events:
• Highs and lows in the size of the
entering class;
• Retention highs and lows;
• Two or three years of balanced ac –
crual budgets, along with five years of a
deficit budget;
• The college had enough cash for op-
erations, and five years later was forced
to close its doors.
With a basic understanding of how
each of these issues interacts with the
others, it is unsurprising that each one
of these events at their ‘highpoint’ occur
very closely with the ‘highpoint’ of the
other events listed.
Ultimately the College requires money
to run and the situation we find ourselves
in now, is largely caused by financial
problems. With that in mind, we’ll start
with a brief outline of the major events
and financial decisions over this period:
1996-2000
The Strategic Plan of Antioch College
was developed by extensive consultation
with the community. Rising enrollment
due to measures derived from the Strate –
gic Plan contributed to the College hav –
ing a balanced budget in FY99 and FY00.
However, the margins in these budgets
were still thin.
2000-2001
The Board approved a build-up in ad –
missions to increase enrollment. Mean –
while, skyrocketing fuel prices raised the
expense of running the physical plant of
the College. These two expenses pushed
the College back into a minor deficit.
September 2001
The stock market crashes (after 9/11).
October 2001
Depreciation, a required accounting
expense, is divided up among the Uni –
versity’s internal units, based on the re –
sources the respective campuses used.
This one-time decision shifted a yearly
$1.4 million expense, half of the overall
University deprecation expense, from the
University-wide budget to the College
budget. (This was previously budgeted
as a “University-wide” expense since, ac –
cording to University Budget Reports
from that time period, “the University
is one corporation, and all of the assets
are held by the University.” As revenue
was generated locally at the campuses,
not in the central University, the Univer –
sity used other sources, such as increases
in the value of investments, – including
the endowment- to offset the accounting
expense of depreciation. When these in –
vestments lost value following the stock
market crash, the University had no rev –
enue source to offset the expense of de –
preciation.)
February 2002
As part of University-wide financial
cuts mandated by the Board, intended
to make room in the College budget to
accommodate depreciation and other
revenue, an expense-reduction plan was
developed. As part of this plan, vacant
positions could not be filled, some faculty
were given early retirement, and cuts af –
fected Admissions’ budget and staffing.
It is important to note that this was
a 3-year plan; The College would ‘work
towards’ getting out of deficit budget –
ing, and not have a balanced budget
until 03-04. (We will call this plan the
02SP for short, i.e. the 2002 Stabilization
Plan).
February 2002
The Board received and approved an
Admissions proposal to increase en –
rollment at the College. Only one of
the two parts of the plan was imple –
mented –meeting 100% of student
need. The build up in admissions (in
retrospect possibly the more impor –
tant part of the proposal) was not fully
implemented due to the cuts mandated
by the 02SP .
Fall 2002
In the 2nd fiscal year of planned deficit
budgeting, the University had its 10-year
accreditation review. While the accredi –
tation team did not have any issues with
the academic program of the College,
they were concerned about the financial
state of the University and the shortage
of resources. A 2-year follow-up ‘inspec –
tion’ was planned for 2004.
February 2003
The College’s 150th anniversary
prompted the Board and the President to
create the Renewal Commission.
November 2003
During the Renewal Commission, the
Chancellor of the University decided
that incremental changes at the College
would be insufficient to put the Col –
lege back on stable footing. It is very
likely this decision came with the an –
ticipation of another round of expense
cuts at the College, and kept in mind
the accreditation ‘revisit’ scheduled for
the next year.
January 2004
A decrease in revenue leads to another
expense cutting plan, which is led by
Toni Murdock of the ULC. The loss in
revenue is attributed to the Board ap –
proved admissions plan to meet 100% of
need; the plan actually reduced available
tuition revenue at the College. (We’ll call
it 04SP , i.e. ‘04 Stabilization Plan)
June 2004
The Renewal Commission’s plan, heav –
ily dependent on gifts to sustain the Col –
lege through the ‘rebuilding,’ is approved.
Again there was very little margin to ac –
commodate ‘extraordinary’ events.
June 2005
Entering student class hits low of 60
students.
June 2007
Board announces decision to suspend
operations at the College
October 2007
Alumni Board presents business plan
for sustainable operations at the College.
One definition of Strategic Planning
is, “an organization’s process of defin –
ing its strategy, or direction, and making
decisions on allocating its resources to
pursue this strategy, including its capital
and people.” Using the loose concept of
‘strategic’ decision-making, we can start
to classify some of the decisions as ‘stra –
tegic’ and some of the decisions as ‘non-
strategic,’ (and do so without prejudice).
Obviously, the 1997 Strategic Plan can
be classified as a strategic decision, but
what say of other major decisions?
One of the first things that jumps out
is the 2002 Depreciation decision. This
decision during this particular year was
based in response to a problem caused
by a single event: the stock market crash.
This decision was made without know –
ing the effects on the resources and the
program and was a short-term decision
made on a sudden problem. With regards
to the College program, this can easily be
classified as a non-strategic decision.
What this case also highlights are the
initial problems these decisions are in –
tended to solve. The 2002 depreciation
decision was done to (partially) solve
a one-time, “extra”-ordinary problem,
which meant that this wasn’t a “chronic”
problem.
By contrast, the Strategic Plan had
as a goal resolving two chronic revenue
problems at the College– an enrollment
shortfall, and a small endowment. The
Renewal Commission identified three
perceived chronic problems: a campus
culture, a poorly maintained physical
plant, and a revenue problem based on
enrollment shortfall; however it only ini –
tially attempted to resolve the first two
of these issues, believing that the third
problem would, after 5 years of deficit
spending, be resolved.
Looking at the 2002 stabilization plan
(02SP), we can see that the source of the
problem was a 1-time, external, cause.
Thus this expense reduction plan was not
in response to chronic budgeting prob –
lems at the College, nor at the time was
there projected to be a long-term revenue
shortfall that required such an expense
reduction. Likewise with the 04SP , the
source problem was a Board approved in –
crease in student aid, and the 04SP dealt
with this unexpected shortage in revenue
by again cutting expenses. In fact, most
all the decisions made between 2001 and
2004 all had lasting effects, mostly nega –
tive.
The final period to examine is the time
between the last two major decisions
made– the 2004 Renewal Plan and the
2007 Closure. Using a loose description
of Catastrophe Theory; any major catas –
trophe is a series of smaller failures. Be –
tween 2004 and 2007, it was not a single
event that destabilized College budget –
ing. Rather, it was a confluence of events-
-some predictable, yet unanticipated–
that threatened the stability promised
by the Renewal Plan. The previous years
of expense cuts reduced Admissions re –
sources to recruit for the new plan. In
addition, the top-down, secretive devel –
opment of the curriculum meant that
the College community at large, not just
Admissions, had little knowledge about
the direction of their school. In the 2002
Admissions Plan, one of the Admissions
metrics for Antioch’s success was con –
verting prospective students who visited
campus into applicants. For almost a year
and a half these “prospies” visiting cam –
pus very likely received the same insuf –
ficient amount of information about the
future of the program, as did “prospies”
who didn’t visit the campus. Absent con –
crete information about the future shape
of the College program, new student en –
rollments to the College dropped from
186 in Fall 2003 to 60 in Fall 2005.
There is one decision we haven’t exam –
ined yet: the one that has not been made.
The Board will be deciding to rescind the
suspension of operations and approve
the Alumni Board’s plan. The Alumni
Board’s model has acknowledged the
chronic problems of the small endow –
ment and the alienation of the Alumni.
The Alumni Board’s goal is to get the
College on solid footing with an endow –
ment and improved capital resources by
increasing Alumni and other giving. The
Alumni Board’s model has provisions for
continuing operations during this re –
building. It has been 10 years since the
board has been presented with a plan that
has directly identified the true, chronic
problems, along with a way to resolve
them. •
By Laura Fathauer
S
o, depreciation, what’s that all
about? Well, lets say you buy a car,
or a computer or a $15 million dol-
lar campus; that asset loses value
as you use it over time. That’s the depre –
ciation of your asset. Eventually you will
have to buy new stuff, you know, a new
computer, a new library, a new shower for
the executive suite. So the idea of book –
ing depreciation into your budget as a lia-
bility is that if you would set aside money
every year to the amount that your asset
loses value, the next year you can fix up
your asset or buy new stuff. So basically,
it’s paper money unless you actually have
the funds to cover that. We don’t loose
that money unless we actually have that
money to spend, but we nevertheless have
to show that our assets loose value. So it
puts an expense into our budget, whether
we have it or not.
Up until 2001, Antioch University car –
ried the depreciation for all campuses,
amounting to about $2,9 million. To cover
that cost, the University used gains on the
endowment – that’s how much your stock
etc. increases in value – to offset that pa –
per expense. Although everything that is
Antioch, including this campus, is owned
by the University, the vast majority of the
endowment [about 30 million of a total 32
million] consists of gifts earmarked to the
College. So theoretically, the majority of
the growth should be ours too, since we
are making use of the majority of buildings
that make up the majority of the cost of the
depreciation. This fair and square deal was
in place until 6 years ago. In 2001 as one of
the outcomes of a university run Financial
Stabilization Task Force, the university
mandated all campuses to include depre –
ciation of their assets as an expense in the
campuses budgets. The outcome was that
the College suddenly had to book $1.4
million in their annual expense budget,
with no additional endowment growth to
offset that cost. Over the past 3 years the
endowment has grown an average of 12
percent, but because we only get 5 percent
of that growth, the other 7 percent that is
left over goes straight to the University
books not the College’s budget. 7 percent
of $30 million is 2.4 million. This amount
was taken away from the College and
placed on the University’s revenue line.
Considering this school operates on a $20
million budget a year, with an average cash
deficit of $800.000 to $1.2 million dollar
over the last 6 years, our books could have
looked a lot healthier if we would have
been able to show this full asset growth in
the College’s budget. •
di-prê’shê-ã’shén
By Kim-Jenna Jurriaans
Dow Jones Industrial Average: 1/3/2000 to 1/3/2004
For Dummies
