Mid tier universities may be in more trouble than I realized

The university campus in Syracuse, N.Y. TED SHAFFREY/AP

The Wall Street Journal had an interesting article on Syracuse University ("Why Syracuse Can’t Attract the Students It Needs to Pay the Bills"). 

In general, colleges these days are facing the demographic cliff of fewer students.  

That's especially affected small private colleges with high tuitions.  This has been a particular issue in New England, which the Boston Globe has covered in depth, to the point that they've just started a weekly newsletter on the topic.  This is the first edition, "These Mass. colleges’ finances are full of red flags."  From the article:

More than two dozen colleges in New England have closed since 2015, and almost all of them enrolled new students shortly before announcing their closures. Parents and faculty members from shuttered campuses have told me about the supposed reassurances they received from school administrators before the end came.

Colleges are required to post annual financial statements online, so one might think that it would be easy enough to identify a school in trouble. I am here to tell you that it is not so easy.

A college’s net assets may increase from one year to the next, but that does not necessarily mean all is well. On the other hand, a one-time operating deficit is not necessarily a crisis. Prospective students and their families do not have the time and the know-how to pore over institutional finances during the already complicated and stressful process of applying to college.

And that can have disproportionately negative impact on cities ("Small college economic issues threaten their ability to function as a community asset"), like the closure of in Albany, or Birmingham-Southern College in Birmingham, Alabama, or the University of the Arts in Philadelphia.

This blog entry started a few years ago, wrt the closure or merger of arts-related colleges ("Revisiting entries: Should community culture master plans include elements on higher education arts programs?,").  But the point should be extended to master planning more generally, to be aware of the economic health of institutions in your community, with a plan to act if circumstances become negative.

While most cities require colleges to do and update master plans, usually on a ten year cycle, that's more about building, not reaping more economic value from them, which aligns with my point that DC in particular doesn't do a very good job leveraging the economic development potential of universities.  

-- "Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC" (2016)
-- "HBCUs and the city: Relocating Cheyney University to Philadelphia" (2021)
-- "The other George Miller idea: creating multi-college innovation centers in (cities) Philadelphia | Creating public library-college education centers as revitalization initiatives" (2021)
-- "Freeman Hrabowski and 'urban universities" (2021)
-- "Universities as elements of urban/downtown revitalization: the Portland State story and more" (2014)
-- "President of Washington State University dies: fostered development of the "University District" adjacent to Downtown Spokane" (2015)

-- "John Fry, president of Drexel University, and universities and cities" (2022) -- since his tenure conditions for DU have deteriorated, now he's the president of Temple University, which has its own problems

-- "Morgan State University should move their architecture and planning school to Downtown/Station North Arts District" (2014)

But those aren't the only schools at risk.  In Michigan, the three top tier universities, Michigan, Michigan State, and the urban Wayne State University in Detroit continue to maintain or add enrollments ("UM Ann Arbor remains largest university in state as competition to get in intensifies." Detroit News), while the other state schools are losing enrollment ("Michigan college enrollment rate slips, despite $1B in state scholarships," Bridge Michigan), and smaller colleges are closing.

• It's accentuated by the anti-immigrant focus by the Trump Administration, which has resulted in a 10% across the board reduction in international student enrollment with disproportionate impact on some schools more than others
• Foreign students mostly pay full tuition, so the economic impact is greater than the number of students.
• Northern colleges are losing students to southern colleges
• Limits on the total amount of money that can be lent in federal student loan programs

The new dorms at Michigan look like they could be from the 1930s, another period of large growth for the university and the construction of multiple dormitories.  Architect: Robert A.M. Stern and Associates (RAMSA).

Meanwhile the Ivies and the premier public universities do well, grabbing more students.  Many like the University of Michigan, are opening new dorms ("Take a look inside University of Michigan’s new Wolverine Village," Detroit Free Press).

Urban design initiative.  In 2017 I mentioned an interesting initiative by Syracuse University in the context of the Purple Line series, about how they were investing in making better urban design and other connections between the campus and the core city.  Apparently, it hasn't been enough.

From the 2017 entry:

The Syracuse Connective Corridor is a wide-scale approach on improving the connections between the campus of Syracuse University and the city, while simultaneously emphasizing sub-districts within the city center ("Is Syracuse's Connective Corridor work transforming downtown?" and "Syracuse's Connective Corridor: 2 miles long, $47 million better," Syracuse Post-Standard; "The Connective Corridor – a message from our Publisher," Syracuse New Times).

Although there is some criticism that the project is shaped more to benefit the university, which is the primary funder.

The description of the Connective Corridor in promotional materials sums up the elements that comprise a "Signature Street" or sustainable mobility district:

The Connective Corridor is a collaboration between Syracuse University, the City of Syracuse and Onondaga County to connect University Hill with downtown Syracuse. The project includes new streetscapes to make the city more pedestrian and bike-friendly, a free public transportation system with smart bus technology, a network of green infrastructure, public art, wayfinding systems, façade improvements and innovative illumination projects that highlight Syracuse’s beautiful historic buildings and public spaces. The Corridor also connects the city’s vibrant arts and cultural district, as well as downtown dining and the great local food scene. Take the bus, walk or ride your bike...

Part of the Connective Corridor.  The Sheraton Hotel next to campus became a student residence hall. Debra Millet/Alamy

What the WSJ says about Syracuse.  Besides the problems of declining college aged students and the fall off of international student enrollment,  

• It's not an Ivy League school and they can't market themselves like they are
• It's got a lot of debt from their construction program, which besides replacing older buildings less well equipped for today's needs, built more besides, and the enrollment and research funding hasn't kept up (West Virginia University overbuilt too, leading to major problems ("West Virginia University makes wide-ranging cuts to academic programs and faculty," AP)
• The past history of having good football and basketball teams is old news.  As the teams flail, the  marketing value of (un)successful sports teams has diminished 
• Winter weather is not a draw
• Decline in federal research funding due to the Trump Administration's hatred of knowledge
• That its urban peers--NYU, Boston University, Northeastern University--are doing better and have double the number of students paying full tuition
• They have cut low enrollment academic programs
• Still have many highly rated programs
• the safety rating of bonds issued by the university is okay but declining
• Need to improve recruitment, post-admissions communications, and financial aid offers to increase enrollment yield, to get more students who've been admitted to actually enroll

From the article:

Syracuse’s competitors can concentrate their financial-aid budgets on a smaller percentage of students, while Syracuse has to spread its allotment over a broader pool. That means that for students who get some sort of financial aid, Syracuse costs thousands more than its competitors.

Moderately selective private colleges are caught in the middle. They aren’t elite enough to dictate the market, and they attract a student-body that is still concerned about the price tag, said Robert Kelchen, a professor at the University of Tennessee, Knoxville, who specializes in education finances.

“The stream of students willing to pay something closer to full price is drying up,” Kelchen said. “Even if they’re not terribly concerned about how much it costs, they know that they can shop around and get a better deal.”

Boston Globe indicators.  The paper published an article, "Worried your college could close? Higher ed watchers say to look for these warning signs," listing the factors that students and parents (and communities) should look out for in assessing the financial stability of a college.

1. Low enrollment.  Small endowment.
2. Financial reports don't make sense for an institution that claims to be stable.
3. The college has a plan but no long term strategy.
4. The campus looks empty or shabby.
5. Cuts are continuous.
6. Making decisions and creating initiatives out of desperation.
7. Land is for sale
8. Financial aid awards are especially generous
9. Recruitment is over-eager.

Cities need to pay attention and monitor the health of higher education institutions.  To reiterate the point above, yes, cultural master plans should include an element on higher education programs in the arts.  But city economic planning should monitor the economic health of higher education institutions more closely as well.

Land redevelopment/How to revivify institutional campuses?  This is especially important because colleges tend to have a large contiguous piece of land that is best suited for institutional use, but it's much harder to find appropriate users, and redevelopment is likely necessary.  And just as hard because it requires zoning changes, community input, etc.

-- Town–Gown Collaboration in Land Use and Development, Lincoln Land Institute

Marygrove University in Detroit dissolved, but the Kresge Foundation stepped in to assist in transitioning from a college campus to a community nonprofit campus ("Interesting community initiative in Detroit: Marygrove Conservancy," "Big Plan on Campus: At a Shuttered Detroit College, a Community Development Experiment Takes Root," Lincoln Land Institute).  Most communities won't have that as an option.

In Albany, New York, the county created the Pine Hills Land Authority to buy and redevelop the College of Saint Rose campus.  But at 23 acres, it isn't a hugely difficult problem, and many of the campus blocks are integrated into the city.

The Birmingham-Southern College campus was purchased by the federal government and is now an training center for the US Coast Guard.

In Massachusetts, Hampshire College is dissolving and private equity gave the school a loan to finish its last semester and work towards dissolution ("A Boston-based LLC is lending Hampshire College $29.5m to finish the fall semester — and plan for what comes next," Boston Globe).  PE probably then gets the campus.  The campus is about 1.3 square miles.

Cy pres.  Cy pres is a legal doctrine where the State AG has a say in how assets are distributed, and the nonprofit uses preserved when a nonprofit institution closes ("When governments sell land always put in clawback provisions").  

This has been a particular issue with the dissolution of the University of the Arts in Philadelphia ("University of the Arts’ $77 million endowment remains mired in court proceedings two years after the school closed," Philadelphia Inquirer) and also in Philadelphia, how Drexel University has taken over troubled cultural institutions but now finds it doesn't have enough money to improve facilities and or maintain these programs ("Closing a 200-year-old institution will wound both the city and science," Philadelphia Inquirer).