[Masthead] Fair ~ 55°F  
High: 74°F ~ Low: 53°F
Wednesday, May 4, 2016

Private colleges feel economic woes

Thursday, November 13, 2008

CEDAR RAPIDS - Some leaders at private colleges in Iowa say they are making plans to get through the economic slump without harming the quality of the student experience.

Part of those efforts includes scaling back in some areas and shifting investments.

In eastern Iowa, officials at Luther College in Decorah say they delayed a $10 million campus project, while Coe College in Cedar Rapids froze faculty and staff salaries. Officials with Cornell College in Mount Vernon may delay projects and shift investments.

"I think we are all experiencing a high level of anxiety, given the uncertainty that comes at us from many different directions," Luther President Richard Torgerson said. "We're all in the same boat."

College leaders say they can't rest on the assumption that people will look to academia as a preferable alternative to a slumping job market, as has happened during other economic crises.

According to an August report from The Chronicle of Higher Education, some private colleges without big endowments could be forced out of business if the economy remains bleak for too long.

While other colleges around the country may cut jobs, college presidents in eastern Iowa said that's not on the table for now. To get through tough times, they suggest diversified investing combined with growing enrollments and careful spending.

"We've had several years of enrollment growth and excellent returns on our endowment," Cornell College President Les Garner Jr. said. "That gives you a cushion to fall on, but it doesn't insulate you."

Coe College in Cedar Rapids has to deal with the faltering economy and the aftermath of June flooding that damaged Alliant Energy's downtown plant, which provided steam to more than 200 customers, including Coe. Officials say a portable boiler is providing emergency steam, but they expects costs to be four times the typical annual amount of $300,000.

Coe could be forced to spend millions to build its own plant or help Alliant rebuild.

"It has a major impact on the budget," President James Phifer said.

He said that in addition to freezing salaries, the school has shuffled some investments and officials are watching the budget.

Even though they pay for it, Phifer said Coe's trustees canceled their annual winter meeting in Florida because they thought it would send a wrong signal.

The college officials say the main goal is strengthen enrollment because up to 80 percent of private college budgets typically comes from tuition, with endowment earnings and gifts making up the rest.

That means a balancing act for officials when it comes to setting 2009-10 tuition increases next spring. They must keep costs low enough to attract struggling families while maintaining income to support programs.

At Luther, Torgerson expects the increase will be much lower than in typical years. Luther's tuition rose about 7 percent this year.

Other presidents said it's too early to know how the economy will affect tuition.

Returns on Cornell's $75 million endowment were down 11 percent from July through September, making enrollment all the more important, Garner said.

"A very small gain in enrollment can offset what appears to be a relatively large, percentage-wise, decline in the endowment," he said.



Respond to this story

Posting a comment requires free registration: