Oberlin College finances part of national trend for liberal arts colleges

OBERLIN — Oberlin College planning to lay off 108 employees in its dining services and custodial departments in order to obtain vendor-provided contract services is a symptom of the college's effort to cut costs as it faces deficit spending, the college announced Tuesday. The effort will save the college an estimated $2 million per year, it announced Tuesday. Oberlin College is not the only four-year liberal arts college to take measures to improve its finances. Across the country, the number of college-age youths is shrinking as the population ages. That also means undergraduate enrollment is down, which in turn shrinks the amount colleges receive in tuition payments. Fewer students are expected to graduate high school in the coming years, with a story at EducationNext.com from fall 2018 saying the decline already has taken place in the Midwest and Northeast, where there are more small, private colleges than in other regions of the U.S. The late Harvard Business School professor Clayton Christensen predicted last decade that up to 50 percent of American universities would either close or go bankrupt within 10 years. He and higher education writer Michael Horn explained in a 2013 New York Times article that "a host of struggling colleges and universities — the bottom 25 percent of every tier, we predict — will disappear or merge in the next 10 to 15 years," Horn wrote in an article for Forbes in December 2018. Founded in 1833 and with a long history of social activism including the temperance movement, women's rights and civil rights, Oberlin College is one of the most expensive four-year liberal arts colleges in the United States. In February 2017, Business Insider ranked Oberlin College No. 19 on its list of "the 50 most expensive colleges in America," based on data gleaned from the College Board and the Chronicle of Higher Education and 2016-2017 tuition, fees and room and board prices. Total cost for one year was $66,012 at the time, with $52,002 in tuition and $14,010 for room and board. That was a year after students protested a 3.9 percent tuition increase, driving costs for the 2015-16 school year from slightly more than $48,000 in tuition to more than $50,000 per year, according to Chronicle-Telegram archives. Tuition and fees for the 2019-20 school year at Oberlin College were more than $56,800, according to U.S. News & World Report, which compiles figures on U.S. colleges each year. Room and board was another $16,800 for the approximately 2,800 students enrolled this year. The college has a history of offering significant financial aid, through need-based grants, work study programs and low-interest loans, according to its website. Income from students (tuition and fees, room and board) totaled 66 percent of the college's operating revenue for the fiscal year ending June 30, 2018, according to the college's most recently available financial report. Despite some larger first-year class sizes, enrollment at the college has fallen every year since 2014, when it was 2,961. In 2018, it was 2,785, according to the 2018 financial report. The most recent public update and clearest picture of Oberlin College finances came in June 2019, when President Carmen Twillie Ambar was called to testify in the damages phase of the case of Gibson's Bakery v. Oberlin College. The bakery and its owners sued the college in 2017, alleging the college defamed and libeled them and the business during and in the aftermath of student protests there in November 2016. On the stand in Lorain County Common Pleas Court, Ambar testified that the college's total assets are an estimated $1.4 billion. That includes an endowment that was estimated at $887 million as of June 2019. Ambar and Rebecca Vazquez-Skillings, the college's vice president for finance and administration, testified that two-thirds of the endowment is earmarked for spending only on donors' specific wishes. Enrollment declined over the previous decade and a nearly 3-to-1 ratio of students to employees was called unsustainable under the college's current finances, Ambar testified. Vazquez-Skillings testified the college has been deficit spending "for decades," and pays down $10 million in debt each year from its endowment. It also spends $9 million more each year than it gets from tuition, room and board and other revenue, she testified. Oberlin College said on its website that the cuts announced Tuesday are entirely unrelated to the more than $31.5 million judgment it owes Gibson's Bakery and the Gibson family after losing the court case. Both the college and the Gibsons have appealed elements of the case to the 9th District Court of Appeals in Akron. "This effort is completely independent of the Gibson judgment and is directly connected to the need to support Oberlin's mission and improve the college's operating budget as identified by President Ambar in her first few months on campus," the college stated in a "frequently asked questions" document attached to Tuesday's announcement. "The Gibson's matter is now on appeal and therefore it would not be appropriate to comment further." In fact, Oberlin College laid out some of its plans to cut costs not long after Ambar was named president. A 31-person committee came up with the 42-page "One Oberlin" report after the Academic and Administrative Program Review or AAPR, which was started in 2018, completed in June 2019 and accepted that month by the college's Board of Trustees. Other cost-cutting measures Oberlin College laid out in the FAQ document included a statement that a total of $17.3 million in spending reductions are planned by 2025. In recent years, other jobs on campus were eliminated through buyouts or attrition, administrative salaries and benefits were cut or frozen and unfilled positions eliminated, college officials testified. Those savings amounted to $5.5 million, according to the FAQ document. Another 25 full-time faculty positions and 50 administrative and professional staff positions are scheduled to be eliminated by 2024, the college announced. Academic programs also have been trimmed, such as the Arabic language program that ended last fall due to low enrollment and budget concerns. As Oberlin tries to make its business model and finances sustainable, there is precedent for smaller, private colleges to close. In Ohio alone, Cincinnati Christian University closed in 2019 and Trinity Lutheran Seminary merged with Capital University in Columbus in 2018. Most famously in Ohio, Antioch College in Yellow Springs was open from 1850 until 2008 when it closed amid financial problems. It reopened in 2011 under new management after alumni helped save it, but as of fall 2017 it had only 135 students, down from 2,000 in the late 1960s. Even state colleges are not immune. Miami University in Oxford announced plans Feb. 10 to permanently cut 39 jobs and eliminate 89 unfilled positions, with plans to save $2.4 million in payroll and nearly $5.3 million total, according to a letter sent to the city of Oxford and submitted to the Ohio Department of Job and Family Services. Contact Dave O'Brien at (440) 329-7129 or dobrien@chroniclet.com. Follow him @daveobrienCT on Twitter.