Kittle: Small colleges have closed in South Dakota, Iowa and Wisconsin. What does that mean for DWU?
Institutions that are struggling sometimes draw on the principal of their institution’s endowment to cover operating costs.
With several small, private colleges — Presentation College in South Dakota , Iowa Wesleyan in Iowa, and Cardinal Stritch University in Wisconsin — announcing their closures in recent months, people frequently ask me why I am optimistic about the future of Dakota Wesleyan University. DWU has several strategic advantages, including steady enrollments, fiscal discipline, strong donor support and success in a variety of student markets (e.g., undergraduate, graduate, and community partnerships). Colleges which are closing, or are in danger of closing, often fall short on a number of these key metrics.
The primary source of revenue for virtually all colleges and universities is tuition, and declining enrollments stem from a variety of factors. One is an unwillingness to close programs that are not generating enrollment and to open new ones that might. The declining number of high school graduates also means that colleges are competing over smaller numbers of students. Questions about the cost and substantive value of a college degree can also hurt enrollment.
One way that institutions seek to succeed in a very competitive market is by discounting their tuition: an advertised “sticker price” versus “actual price” once scholarships are applied. While virtually all schools discount tuition, it can represent a slippery slope, with some offering ever deeper discounts to students simply to fill seats. This is why even struggling colleges can appear healthy enrollment-wise. They may have lots of students on campus, but if most of those students are paying 25 cents on the dollar for tuition, it takes a lot more of them to support the college’s facilities, salaries, programs, etc.
Institutions that are struggling sometimes draw on the principal of their institution’s endowment to cover operating costs. This is akin to a family—in an emergency—drawing on its retirement account to pay for groceries and gasoline. When colleges and universities do this, they usually believe it represents an excusable, one-time action, but it can become habitual quickly. Drawing on an endowment’s principal solves a short-term problem while simultaneously creating long-term problems, because that smaller principal will generate smaller returns in the future and the endowment will shrink.
Another practice in which struggling colleges and universities engage is relying on donor support to cover too much of their operating costs. Finally, many defer maintenance. When struggling with tight budgets, it is tempting to put off repairs and building maintenance. This, again, is a short-term solution that, when relied on for too long can create a day of reckoning when campus infrastructure is such that it doesn’t have the curb appeal for prospective students, or even worse, is no longer able to be used for the work of the college.
Most colleges that are forced to close have been engaging in some combination of these factors for many years. It can be challenging for even the most well-intentioned administrator to pull a college out of this spiral once that pattern has been set.
By way of contrast, a healthy university exhibits several attributes. First, they have a clear mission and a campus culture where everyone contributes to living out the university’s purpose. This is a particularly noteworthy attribute of DWU. We are motivated by clear values — learning, leadership, faith and service — and we believe everyone, staff, faculty and students, contributes meaningfully to realizing those values. This results in a powerful experience for our students, one in which they have practical and applied experiences that prepare them for careers and for participation in their communities where they contribute with both meaning and purpose.
Healthy institutions continually adjust to the student market. They make the hard decisions to stop offering programs that have little or declining demand, while establishing new programs with expanding markets. Dakota Wesleyan boasts a remarkable spirit of innovation and a tradition of adaptation. While we are meaningfully serving undergraduates here in Mitchell, we also have graduate programs, community partnerships, and programs that serve unique niches in the region. Companies call this their “diversified revenue portfolio.” We have this portfolio of programs because we see the opportunity to serve students in those markets.
A third reason that DWU is a healthy institution is due to the extraordinary support we receive from our alumni, friends of the university, and those in Mitchell and the surrounding communities. While it might seem like every university has passionate support, it doesn’t always result in the actions I see weekly at DWU. I see the interconnectedness when I witness Mitchell high school students participating in our performing arts, and when people come out to cheer on our athletic teams. This support matters to our students, directors, and coaches. Healthy universities attract donor support for specific projects (like DWU has done recently for new buildings), and to establish endowments (our current efforts). People support us with actions.
On Thursday, April 27, Dakota Wesleyan University will observe our Founder’s Day, marking 138 years of serving students. To celebrate this occasion, and clearly communicate how bright our future is, we will be officially launching our new strategic plan. That plan, entitled “Wesleyan. On Purpose,” is a playbook for how we will respond to today’s challenges and realize the opportunities that will ensure we are here for generations to come. We aren’t just going to survive; we are going to thrive as a leader in higher education. Our vision is clearly stated: Dakota Wesleyan University aspires to create and sustain a community in which all are challenged and supported to lead lives of meaning and purpose. There are bright days ahead for Dakota Wesleyan University.