Published July 5, 2007 in the Yellow Springs News
By Diane Chiddester
A contributing factor in the Antioch University Board of Trustees decision to suspend operations of Antioch College was the distribution, at the trustees’ June 9 board meeting, of a report from the Gateway Consultants Group, an independent consulting group.
The report reviewed three options for addressing the college’s fiscal emergency, and ultimately chose the third option, which was to close the college and reopen at a later date. According to some persons present who requested anonymity, the report, which they had not seen before the meeting, carried considerable weight.
Although the Gateway Group was identified in the board’s June 9 resolution as a “respected higher education and business consultants,” its principle consultant, Thomas Chema, had never before been asked to determine whether a college should close. And in a recent interview Chema said that for the report he was paid $3,000 plus expenses, a very small fee in the world of consultants.
“I have not done this sort of study before,” he said.
While his consulting group has been in existence since 1994, it has only in the last year performed “due diligence” work for entities such as businesses and colleges that are in financial distress, identifying financial concerns and strategies for turnaround, Chema said. He declined to say how many colleges he has counted among his clients.
Asked this week about Chema’s relative inexperience as a higher education consultant, Antioch University Vice Chancellor Mary Lou LaPierre stated he was chosen because he is president of Hiram University, which several years ago faced a similar financial crisis to that of Antioch. Chema has been credited with successfully turning around that college, she said.
Before taking the helm of Hiram College in 2004, Chema, a graduate of Harvard Law School, had worked as the executive director of the Gateway Economic Development Corporation of Greater Cleveland, chairman of the Ohio Building Authority, and chairman of the Public Utilities Commission of Ohio, among other positions.
“He’s a very sophisticated business person,” LaPierre said.
According to Chema, he and an associate, Lisa Thibodeux, were the principle contributors to the Antioch University report, to which Stan Hales, past president of Wooster College, also contributed. Chema visited the college for a day in March, during which he spoke with college employees in admissions, took a tour of physical facilities and reviewed financial information, according to Chema, who said he worked on the report for about a month.
In the seven-page report, the consultants first identify Antioch College’s “situational overview,” including the college’s drop in enrollment over the past few years, the need for additional funds of $6 million for 2006/7 and 2007/8 to balance the budget, and the other university centers’ subsidy of the college for $920,000 in 2006/7.
This section of the report states that the university’s current cash flow analysis shows the system “running negative” by May 2009 due to significant losses at the college.
The report also includes a “macro higher education context” which states that demographers forecast 2010 as the date of the peak number of 18-year-olds, after which those numbers begin to decline. It also states that the number of 18-year-olds in Ohio heading for college is below the national average.
“Consequently, the local cohort of students, as well as the expected national pool, in the relatively near future, presents a significant challenge to growth for any small liberal arts college,” the report states.
In the report’s situational evaluation, the Gateway Group states that the college currently accepts about 85 percent of its applicants, “leaving little room for expanding student numbers through changes in selectivity.”
The report also identifies the college’s two-year old Renewal Plan as “not sufficient to stimulate substantial prospective student growth in the short term. There is clearly only a limited number of students who are interested in the Antioch context and the Antioch program.”
The school’s deteriorating physical plant also contributes to its challenge in attracting new students, the report states.
Three options
The Gateway report presents three options, beginning with attempting to turn the college around. Increased enrollment would have to happen quickly, the report states, but it would take at least “two years of consistency and excellence in the admissions program before results are likely to be seen.”
The second option, discussed in a single paragraph, is that of combining Antioch College with Antioch University McGregor.
“While the merger might provide additional savings in the cost structure which would buy time, this option also assumes substantial increase in philanthropy to carry the college until the enrollment changes resulted in substantially greater tuition revenue. We are as skeptical about the success of this strategy as with just continuing an incremental approach toward improvement,” the report states.
The third option, that of suspending the college’s operations for several years, is identified as “the one preferred at this time by the university’s management team.”
That option, addressed in two paragraphs, states that during the suspension period, the university would have the opportunity to “develop new entrepreneurial approaches to providing an Antioch College experience,” including the development of a “new urban village on the Antioch College site.”
The suspension would also give university officials time to “identify the program that a reinvented college needs to present to perspective students in order to be relevant to them,” and the period would allow for a “cleansing of the ghosts that have plagued Antioch’s recruitment efforts since the 1970s.”
The consultants did not know at the beginning of the consulting process that the university officials’ preferred option was closing the college, but became aware of that preference sometime during the process, Chema said. Asked if he would have made a different recommendation had the university expressed a different preference, Chema said, “I don’t know if we would have or not. We would have given them the same data.”
The university administrators were charged with finding an outside consultant after the trustees’ February meeting, when the extent of the college’s financial crisis became clear, according to LaPierre.
The administrators worked with bankruptcy attorney Jack Pigman of the Columbus firm of Porter, Wright, Orris and Arthur to examine university and college finances, LaPierre said, and that firm contacted the Gateway Group to “broaden the study out,” and provide a national and situational context.
The Pigman report is not available to the public due to “confidentiality and nondisclosure” between attorney and client, LaPierre said, adding that she had not seen a copy of the report personally.
Antioch University Chancellor Toni Murdock was not available to talk to the press this week, and all questions were channelled through LaPierre. Antioch Board of Trustees President Art Zucker was on vacation and did not return phone calls.
It has become necessary for the university to funnel press contacts through a single spokesperson due to the volume of press contacts in the past several weeks, according to LaPierre.
“I had no idea that this would be the national story that it is,” she said. “I miscalculated it, totally.”
