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Vision 2020 Sustainability Overview

Q: What is changing at the College?

A: To create a sustainable business model, the Board has approved several actions and initiatives that include short- and long-term expansion and realignment of our programs and services, differential pricing for housing and meal plans, cost containment and deficit reduction. This is the final phase of Vision 2020, the plan for promoting growth under President Jim Reynolds, who was inaugurated in 2013. Key components of the plan are affordability, new programs, enhanced facilities and creating a sustainable business model.

Q: What is the situation that generated the need for these actions and initiatives?

A: There are several reasons:

  • Changes in the higher education market have placed significant pressures on the operational structure of Wilmington College as well as many other colleges and universities in the region and nationally. It is well documented that the landscape of higher education is changing. Current trends include:
    • Declining market of high school graduates seeking traditional colleges (Mid-West is one of the highest affected markets)
    • Popularity of Community College as a “value alternative” – 2+2 and 3+1 models
    • National view of value of higher education is shifting – Affordability is now one of the top concerns
  • WC revenues declined, in part, due to the loss of the WC Prison Program and the reduction in external branch enrollment due to for-profit competition in the Cincinnati market place.
  • WC cannot continue its current annual operational deficit (nearly $3 MM) on the main campus, caused by these changes in the higher education landscape, and remain viable. Our rainy-day funds are exhausted.

Q: How did the College decide what actions to take?

A: The College recruited a group of individuals comprised of Board of Trustee members and upper level management to analyze the current situation and develop strategies to roll out this final phase of Vision 2020 and address our current operational structure limitations. The purview of this group was to create new programing to either strengthen or create new revenue streams capable of driving growth at WC, as well as develop a cost containment strategy to help reduce the deficit.

Q: Who made these decisions?

A: The decisions were suggested by management of the College and ratified by the Board of Trustees.

Q: What was the Board’s role in making these decisions?

A: The Board had an oversight role in this process. They served as outside experts in their fields providing sound guidance and advice when requested and ultimately had final review and approval of the suggested changes.

Q: I’ve heard there was a special Working Group that met in secret to come up with this plan. Who was in the Working Group and why were they so secretive?

A: Given the sensitive nature of the discussions, it was important to keep the meetings confidential so the work was limited to Board of Trustees and senior management.

Q: How were these decisions made? Were these decisions based on any research and analysis?

A: These decisions were made by reviewing extensive internal data as well as data from peer institutions, articles from experts in the field about the changing higher education landscape and the expertise of the Working Group members.

Q: Is the situation at Wilmington College unique in the field of higher education?

A: No. In fact recent information shows that nearly 1/3 of all small colleges have operational structure limitations and operated with a deficit last year as reported in this article “Three Worrisome Trends in U.S. Higher Education” by The Washington Post.

With Ohio experiencing a 5-7% decline in the number of graduating high school students, many Ohio higher education institutions are struggling to keep enrollment numbers and thereby tuition at healthy and financially viable levels. Many of these institutions are experiencing declines in their entering classes while WC is continuing to maintain solid entering classes.

Q: How much is our annual operational deficit caused by our structural limitations?

A: The deficit is $2.9 MM in 2017/18, and nearly $2 MM/year for each of the past 5 years.

Q: When did we acquire this deficit?

A: The main branch of the College has been operating with an operational structural deficit for 20+ years. For many years, this deficit was masked by the positive revenue streams from the Cincinnati branch programs and the Prison Program. Essentially the Main Campus of the College has been running a deficit while other programs have been masking this deficit for the last two decades.

Q: The College just built two new buildings. Is the deficit a direct result of “overbuilding” or of fiscal mismanagement?

A: The deficit is a direct result of having a larger operation than needed for the current higher education demands. While operation and debt payments on the new facilities play a role in the operating expenses of the College, a substantial portion of this cost was underwritten by donations from Alumni and friends. Additionally, the new facilities have helped reposition the College in its market place and enabled WC to compete more effectively, driving enrollment growth evidenced by the increase in Ag, Science, AT and Sports Management majors.

Q: Why can’t the budget be balanced through revenue growth?

A: Part of the sustainability phase of the Vision 2020 plan does include revenue growth from several new initiatives. However, WC is a tuition dependent College. 90% of our budget comes from tuition. To balance a $2.9 MM deficit solely with additional enrollment would require the College to enroll an additional 200 students a year against a shrinking and vastly more competitive market.

Q: Why doesn’t the College just draw from the endowment to solve this financial situation?

A: The Board of Trustees has approved an additional one-time endowment draw of $481k to offset the cost of severance pay and of the initial investment in revenue driving programs with the ultimate goal of growing enrollment. Reducing our endowment is not a mechanism for permanent solutions.

Q: Why didn’t the College take more of an endowment draw?

A: Taking a one-time endowment draw helps alleviate a deficit gap in that fiscal year, but does not solve the fundamental problem that the College is consuming more cash than it is generating due to the operational structure limitations of the College. It is similar to pulling money from your own personal retirement account -— while it can help you bridge the gap, it doesn’t solve the fact that your living expenses exceed your income.

Q: Was any consideration given to selling the College farms to help solve our financial problems?

A: All possibilities were explored. Selling farm holdings is problematic as they are currently being used as collateral on several of the College’s loans. In addition, our farm properties are a living endowment fund for the College and the property that is cash rented generates a sizable income flow towards the operating expense of the College. Leadership is actively researching additional revenue opportunities the farms might offer including agricultural easements and funding for bat habitat protection.

Q: Why don’t we just close the Cincinnati Branch to save money?

A: It’s important to understand that the Branch has a separate stand-alone budget from the Wilmington College main campus budget, that covers its own operational costs for such expenses as faculty and adjuncts, staff, rent, utilities, office supplies, etc. Branch costs to the main campus are primarily indirect costs and eliminating the branch operations would not remove a correspondingly large expense item. Closing the entire branch campus and operations would immediately increase the costs to the College to cover the remainder of the branch lease and remove the possibility of a contributing revenue stream to the College. Through restructuring, the branch operation has been essentially break even over the past two years.

Q: Is the College going to close?

A: No. However, the current negative cash flow situation is not sustainable. If the College simply maintains its current income and spending levels it will run out of unrestricted cash which would force the College to take steps that impact our solid financial base including reducing our endowment and/or capital assets.

Q: Is there any danger of the College closing in the next 5 – 10 years?

A: While the current negative cash flow situation is not sustainable, the College has developed a plan that gets the financial balance sheet back to a balanced budget in four years. The new revenue driving initiatives, coupled with cost containment actions, will help mitigate the cash flow issues going forward. While the future is difficult to predict, the plan that is being put into place has been carefully vetted. We believe its effect on reducing the deficit will create a sustainable operating model and place Wilmington College on the path to a stronger future.

Q: What is the long-term future of the College?

A: There are many reasons to be highly optimistic about our future: new revenue generating programs are coming online; we have a strong reputation in the critical employment markets of Ag, AT and Sciences; WC has strong corporate partnerships that help drive enrollment; we have stabilized enrollment with a three year growth trend in freshman admits which is contrary to lower enrollments at many of our peer institutions; we have vastly improved our facilities and we have a solid level of assets and endowment.

Q: Is the local Quaker community being asked to help solve this situation?

A: The College is asking all community members, Alumni and friends to play a part in the solution. The problem is real and complex and to rectify it will take involvement from many different stakeholders.

Q: What can WC employees do going forward to help solve this situation and prevent our deficit from growing?

A: There are several things you can do. Become an advocate for the College by communicating positively with potential students and Alumni donors. Be a change agent on the campus and look for ways to be more productive and/or create opportunities to drive enrollment or revenue. Be fiscally responsible in your activities.