Private colleges deal with financial reality

Vermont's private colleges are a diverse lot in terms of their size, academic focus and degree of financial security. But from biggest to smallest and from richest to poorest, all now share concerns over how the September 11 attacks and their aftermath may affect enrollments, endowments, annual fundraising

Nest eggs, in the form of endowments, vary widely in their dimensions - from Middlebury College's whopping $674 million (down about 10 percent during the past year) to Burlington College's meager $150,000 (up from the 10 shares of Ben & Jerry's stock that constituted the school's total endowment a decade ago).

A similar spread prevails in the colleges' ability to raise money from alumni and other private donors. St Michael's, for example, has set a $6 million goal for this year, while the state's other Catholic college - St Joseph's in Rutland - hopes to raise $175,000.

Enrollment totals range from 80 at Sterling College in the Northeast Kingdom, to about 2,000 fulltime undergraduates at St Michael's and Middlebury. In addition, some Vermont schools have hardly any foreign undergraduates, but students arriving on visas account for a substantial portion of total enrollment at Bennington College and Norwich University, as well as at St Michael's and Middlebury.

Tuition costs for private colleges in Vermont are more closely bunched mostly at the high end of the spectrum. In fact, several of the state's 13 private colleges charge rates in excess of the national average of $17,123 for tuition alone.

In common with colleges and universities throughout the United States, almost every private school in Vermont has seen its endowment shrink significantly in tandem with the slump on Wall Street. That means interest income is down and financial anxiety is up.

Officials at almost every higher education institution in the state also admit feeling edgy in regard to their annual fundraising drives. They worry about failing short of targets due to the combination of a national recession and the possible diversion of charitable dollars to relief efforts related to the September 11 calamities.

As a result, many schools in Vermont will struggle to keep tuition hikes for next year to about the level of cost-of-living increases. Success in that effort would run counter to a national trend. On average, higher-education tuition costs in the United States rose at almost twice the 2.8 percent inflation rate in the year through September 2001.

The great hope, especially among Vermont's smaller colleges, is that enrollment will increase substantially for the 2002-03 academic year. And early indicators at a number of schools are pointing in that direction.

In a report assessing the post-September 11 outlook for higher education in the US, Moody's Investor Services poses the possibility of enrollment gains for colleges in rural areas, which, it says, may be perceived as safer than big-city campuses.

Fear of flying may work in Vermont's favor as well. As an outgrowth of the altered national psyche, students "are less likely to matriculate at colleges beyond a day's driving distance," Moody's suggests. Some 30 million Americans live within a reasonable day's drive of Vermont.

In addition, enrollment may actually benefit from the onset of recession. Historically, student bodies expand as the economy contracts, mainly because a higher proportion of young adults seek to burnish their academic credentials at times when the job market looks uninviting.

But a full-blown recession will also further pinch endowments and likely lead to a drop in giving by smaller donors. A' severe and prolonged downturn could prove disastrous to a few Vermont colleges. The demise of Burlington's Trinity College has made all of them more conscious of mortality.

One of the state's private schools that can afford it least has been among the hardest hit by the bear market. Sterling College in Craftsbury Common experienced a 17 percent decline in the value of its portfolio, now valued at about 750,000, according to Sterling President Jed Williamson.

"Certainly we're nervous," Williamson concedes. But he notes that the endowment has begun to grow again and that the college was able to raise $1.5 million for campus renovations.

At the other end of the spectrum, Middlebury notes that the 10 percent drop in the value of its endowment for the year ending September 30 compares favorably to the 27 percent plunge in the Standard & Poor's index for the same period.

"We have good managers, who in aggregate have done a fantastic job in this horrible investing environment when compared to the broad market," says Middlebury spokesman Phil Benoit.

Marlboro College is the exception to the rule of shrinking endowments. Its set-aside stood at $1.2 million five years ago; today it totals $15 million, thanks largely to a single gift of $12 million.

A few private colleges in Vermont, meanwhile, acknowledge uncertainty in regard to the outcome of this year's fund drive.

While cautioning that trend lines cannot be clearly drawn until early next year, smaller schools such as Green Mountain College say they have already scaled back their expectations for fund raising in the 2001-02 academic year. Other colleges have not yet lowered their goals but have found that results are failing short of levels reached by the same time last year.

Mixed signals are being sent by still others, with Champlain College development director Shelley Richardson saying, "We have noticed that people are taking some more time to make decisions on giving, but we are right on track."

Losses in some areas, however, may be offset by windfalls in others.

On one hand, Southern Vermont College's fund-raising campaign, targeted at $270,000, is lagging behind last year's pace, according to President Barbara Servis. On the other hand, the Bennington-based institution was recently given a radio station.

Bob Howe, owner of K&H Products in North Bennington, gave the college the gift of WBTN (1370 AM).

"It's a vote of confidence in us," says Servis, whose institution has been striving to overcome problems cited in an accreditors' report last year.

St Michael's College President Marc vanderHeyden expresses optimism that his institution's annual goal will be reached.

"The tragedies of September 11 rekindled in many people the need to give," he says.

VanderHeyden further suggests that a new yearning for purposefulness may benefit schools like his.

"People don't give to St Michael's for tax advantages," he says. "They give because they believe in the mission of the institution. A value-based education has appeal, particularly under today's circumstances."

The College of St Joseph, meanwhile, reports an 8 percent increase in fund-raising, compared to the same point last year.

"We're pleased that people who gave to disaster relief seem to be maintaining their contributions to their favorite charities," says St Joseph's development director Joann Riley.

Marlboro College was among several private schools around the country that postponed the launch of its annual drive following the destruction of the World Trade Center.

"Like many fund raisers, we were very concerned about what might happen following September 11," says Marlboro development head Julie Richardson. "But we've had a fantastic response." Donations are running 50 percent ahead of last year's pace, Richardson reports.

The terrorist attacks may have had the effect of making some contributors more willing to give to an institution like Marlboro, she suggests. Along with at least a few schools in other states, the small southern Vermont college decided to make a direct but sensitive reference to the catastrophes in its funding appeals. Richardson reports that many donors have responded favorably, saying they want to help Marlboro because it produces the sort of leaders who will try to prevent any repetition of September 11.

Colleges can also market Vermont in their pitches to parents. The state's relative remoteness may be seen as an asset by nervous families in metropolitan parts of the United States.

Ten percent more applications have been received by Green Mountain College so far this year than last, according to President Tom Benson.

"People aren't saying we're applying because it's safer in Vermont, but that does appear to be a factor," he says. "In small Vermont towns like Poultney (home to GMC) everybody knows everybody. There are no strangers in these idyllic places."

But any enrollment gains stemming from September 11 may prove shortlived, Benson adds.

"I see it as a transitory fear phenomenon. And I hope that's what it is, too, because I like cities as well as the country," Benson noted in a telephone interview from Manhattan.

A rise in enrollment trend for colleges situated in rural areas would reverse a trend of recent years. According to The Chronicle of Higher Education, institutions in thinly populated sections of the country have seen their enrollment shrink in recent years as students opt for schools in urban areas with more cultural attractions.

Among the few Vermont colleges with substantial numbers of international students, the events of September 11 have resulted in no immediate exodus to home countries.

Stability in foreign enrollment is particularly important to Middlebury, where fully 10 percent of the 2100 students come from outside the United States. Because admission decisions have not yet been made, the college cannot predict whether fewer foreign students will enroll next year, says Middlebury spokesman Phil Benoit.

Champlain College may be able to retain its current proportion of foreign students, says spokeswoman Kris Surette. Among its 1,500 fulltime enrollees, 70 are citizens of other countries.

"Our international recruiter is presently in Europe, and he reports that interest in the US remains the same," Surette says.

At St Michael's, however, it's already certain that the campus will have less of an international flavor next summer. The college has been notified that two high schools in Japan that normally send 40 students to St Mike's summer session will be sending none in 2002, reports SMC President vanderHeyden.

"Families are worried about their children coming to the United States due to the anthrax attacks and the terrorism of September 11," vanderHeyden says.

At the same time, some American parents seem just as unwilling to have their children study abroad. St Michael's will have to find space on campus this coming semester for 50 more students than anticipated. That's the number who have reversed their earlier intention of attending a school outside the United States in the spring 2002 semester.

Financial uncertainties have so far not dissuaded any of Vermont's private colleges from proceeding with construction projects underway or scheduled to begin soon.

St Michael's, for instance, is building a new dormitory, while Marlboro is doubling the size of its library and constructing a lecture hall as part of what college officials describe as a "resurrection" of a campus created out of two former dairy farms. Middlebury's chockful coffers, enriched further by a recent $200 million capital campaign, are making possible the construction of a $40 million library as well as three new residence balls and extensive renovations to several buildings.

Champlain plans to erect a 59-bed residence on Main Street in Burlington along with a Center for Global Business and Technology as well as a Student Life Complex.

Even as they develop their campuses to attract students, Vermont's private colleges do not compete much with one another, notes Green Mountain College President Benson.

"The range of institutions is so diverse, serving such different needs and types of students, that we actually don't benefit at one another's expense," he says.

The challenge in the new era, Benson suggests, is to "identify a distinctive mission and then to market the daylights out of it."