Well for most families wanting to return won’t even be a consideration until the cost of attendance is determined and if they can free up any money for financial aid. No one knows what has been deferred on infrastructure and maintenance and they need to determine how many profs they need for 200 or so students so which majors will even be available to study plus the SSB crowd has to deliver the promised cash. Almost feels like they should keep it closed for a year until a plan can be put it place instead of trying to resume operations in two months and or try to do non-residential for juniors who have their heart set on sweet briar senior years.
They have already committed to honor any fin aid.
And “middle of nowhere” is really a gross exaggeration. They are 15 minutes from metro area of over 250,000 that has plenty to do. Not walking distance but most there have cars.
http://www.bestplaces.net/docs/studies/bestplaces05_list.aspx
Barrons, got it. You are the higher ed genius and the rest of us are dopes and dupes.
To me this entire episode reeks of “throw good money after bad”- while the sudden closing was a shock to students, staff, parents, and faculty, the board seemed to have a good feel for how many resources would be required to conduct an orderly wind-down and make sure the college honored its long term financial obligations while doing its best to make sure the students each found an appropriate home.
Now? Spend the working capital on still MORE tuition discounting aka financial aid in an effort to keep the marginal students (the ones without better options). More discounting and marketing to rustle up new Freshman. Continue to spend on maintenance, fixing broken sidewalks, yet another year’s worth of insurance contracts for staff, clock still ticking on salaries so accruing more payroll tax liability. Seems like June/July/August are going to be very expensive months for a college which has no actual revenue (i.e. tuition) coming in yet but a whole lot of optimistic aspirations. Gotta keep the air conditioning on in the library so the books don’t rot. Gotta sign contracts now for a year’s worth of landscaping.
Seems like a lot of dollars flying out the window without a viable enrollment plan (and saying that it’s easy to convince 500 people to do something ignores the fact that you’re asking 500 people to BUY something- and to make a four year commitment for said purchase without a long term plan.
I wouldn’t buy a two year cell phone contract from a company that might not be in business in 18 months, let alone commit to a four year tuition payment plan for my D.
Wouldn’t seniors be most likely to return, while juniors who have managed to transfer to other schools be the least likely to return due to the difficulty of transferring next year (as a senior)? Sophomores and frosh might only show up if the net price is low enough, since the expectation is that they will likely be forced to transfer next year. Of course, attracting the latter with deeply discounted net prices won’t help the future financial viability of the school.
The SBC alums are willing to invest $12 million to buy the opportunity to pursue a turnaround. Good for them; I wish them good luck.
They have the next year with the new management to figure out what to do now that the dog has caught the car. Then a year or two of implementation after that to see if the turnaround is working.
If it does work, the closure will turn out to be the strong medicine needed to save the school. Pulling the plug early means that there was enough left so that a turnaround could still be attempted with the new funds and management.
More often, management keeps things going on status quo until it is too late. Death by a thousand cuts.
blossom–and you know which cell phone cos will actually be around in 2 years?? Tell that to 1000s of Sprint employees, ATT etc etc, You probably even had a Blackberry at some point.
You might be right but it’s not your money at risk and the previous leadership was clearly incompetent. They dealt SBC a major setback but it’s not dead yet. I agree major changes need to be made–tenure, academic focus etc–even going coed need to be on the table.
That is my thought ucb…I can’t imagine they would secure any juniors (unless they were “shut out” of the colleges that offered to take them in). If SBC opened with just seniors next year they could close up all buildings, etc. non-essential to the operations, and secure professors only for the represented majors giving them a year to put a plan in place. I can’t imagine they would attract any sophomores right now and clearly no freshman. They can’t discount tuition like they have been because clearly that is a losing proposition so the only “guarantee”, if they were even dim enough to make that kind of guarantee, would be to potential seniors. I’m sure that even though the board has been called in question there must be tons of data around and a year should be enough time to put a manageable plan in place especially if they conserve every penny of cash they can between now and next summer by mothballing as much of the campus as possible for year even though according to the WSJ they have 28 million in deferred maintenance.
http://www.wsj.com/articles/SB11670627175020993366304581065950780898880
I know enough to know which cell phone company will get sold to a financially viable company which will honor or improve upon my current contract.
When I ship my kid off to Wellesley or Bryn Mawr, if the worst happens and the school closes, I can bank that an equally good institution will take my kid and confer a degree assuming my kid has done her part and fulfilled all requirements. And in fact- with the plan that the previous leadership came up with (the ones you claim are clearly incompetent), that would have happened. Kids taken care of.
What wouldn’t have been taken care of are the needs of other stakeholders- staff and faculty,local residents, etc. Which is a shame- but not a reason to claim that the board was incompetent. They fulfilled their obligation to the students by easing them into new colleges, and were going to fulfill their obligations to the creditors with the resources left in the endowment.
Now all bets are off. $12 million will buy some time, but I am skeptical that it will buy a strong and financially viable college which will be granting degrees to the incoming Freshman (if there are any) four years hence.
But you’re the guru. And if you say that $12 million is going to do it- let it be so.
“The SBC alums are willing to invest $12 million to buy the opportunity to pursue a turnaround.”
Do we know that yet? Are those pledges or dollars in the bank?
The settlement agreement requires donation payments to SBC (not pledges) of $2.5 million which was just made. Then another $6 million required in 30 days. Then another $3.5 million in 60 days.
The VA AG loosens up the restrictions on the endowment funds if and only if those payments are actually made.
The annual operating shortfall was $2 million. So the incremental $12 million maintains or improves the position of the other stakeholders over the next few years.
The alums are buying the right to throw the Hail Mary pass. I say power to them for putting their money where their mouth is.
I still think the odds are against. But since the alums are funding the near term shortfalls out of their own pockets, they also have bought the right to tell the nay-sayers to shut the front door.
When talking about transfers, keep in mind that many colleges require a student to complete a minimum number of credits at their institution before they can receive a diploma from that institution. It can make it very hard to transfer for a student’s senior year at a different college. I believe this year some colleges were willing to make many exceptions for SBC students because: 1) it was such a hardship for the students, and 2) many of those other colleges had not filled their class, and needed the extra students.
The point blossom is that the future is very hard to predict. Companies that were household names are now gone or shells of their former selves–Sears,AT&T, Kodak, HP, or had to be rescued–GM etc.
I don’t know at what point you would throw in the towel, barrons, if this were your operation, your money, your debt, and deferred maintenance would take 1/3 of the funds in reserve. I know, I know, this is a college (and a pretty one) and we all like to have rosy thoughts about the mission of educating and the delightful social growth. But we can’t just play on the phrase, “Build it and they will come.”
I’d like to see the college triumph. But I won’t throw in my enthusiasm until I see/hear of a viable plan. Talking about continuing finaid isn’t a “viable plan.” The idea Momofthreeboys gave, to go with stripped down operation while they rebuild, makes some sense-- but why can’t SSB toss a few kibbles our way?
It’s not enough for them to say, “We’ll get to that.” They’re asking alums and others to give financial support, students to come back (or come) based on “a wing and a prayer.” We all know that.
And what was stated before is that they need roughly 12 million annually to operate. Granted, this is a response to Troutman-Sanders, but:
…in order to operate the College going forward, Sweet Briar College would have needed to raise $10-12 million per year in unrestricted funds, in order to operate the College for the 2015-2016 academic year. The College would need to raise a similar amount each year of operation into the indefinite future, unless and until it could increase the endowment by an additional $200-250 million to fill the gap between operating revenues and expenses permanently.
Maybe SSB thinks that if being allowed to operate for another year will bring gobs of new donors out of the woodwork- again, that’s not “a plan.”
Suppose you ran, oh say, a lovely retreat for learning. And over time, you couldn’t get enough people to come? Would you really say, well, we have enough to run X more years before we’re dead broke, we’ll let the physical place decline, shed down the very folks who make this a place of learning (faculty,) tell our creditors to suck air, but put on a happy face?
LF – lighten up.
The SSB folks obviously don’t have the plan – yet. It would be impossible for them to have it by now. If they did purport to have a fully baked plan at this point, it would have been hastily prepared and likely suck and be the wrong plan.
The prior management decided to throw in the towel. That may be the ultimate right result. The SSB folks are willing to pony up $12 million to buy enough time to develop what the plan is going to be. That $12 frees up restrictions on $16 of endowment funds per the VA AG. That’s enough cash to fund a turnaround attempt of 1-3 years in duration. If the turnaround shows some success in the next couple years, more money will obviously be needed. That extra money would likely be there if the turnaround effort shows signs of success.
Go read “Good to Great.” Step 1 for any turnaround is getting the wrong people off the bus and the right people onto the bus. That’s where things are right now. Developing and executing the plan comes second.
Kudos to the SSB folks for putting in enough of their own money to hold stakeholders (creditors, faculty, etc.) harmless while the turnaround is attempted. Their impressive financial rally in the face of the shutdown quite likely is going to be a big part of whatever the plan turns out to be.
The 12 MM plus the release of 16MM from the endowment --if funded entirely-- will give the new Board the time to review the alternatives. From there, the "trick: will be to ascertain how replicable the saving grace can be. Will the renewed enthusiasm of the alumnae continue or will it return to its past Sleeping Beauty stage? Raising 10-12 millions annually will be quite a feat, and the history does not seem to support the optimism.
Releasing funds from a restricted endowment might work for some time, but what happens when you start hitting the terms of the restrictions head-on? Can the restrictions be lifted every year? Doubtful.
In addition, all the above still pales with the reality of the difficulty to attract a student body that responds to a minimum of qualifications and attracting a faculty that is willing to assume the risk of teaching at a school in such dire situation. The decline in enrollment is not a problem that concerns SBC only. It is a problem faced by many schools, and especially the ones that offer a narrow set of services.
At this stage, all the numbers are nebulous. Does the school really expects to operate with only a 2MM shortfall --as written above-- when financial aid will require 8 to 12MM only? Take a look at the Form 990 that are available and the picture is quite different. This school has been sinking in the past 3 years.
Perhaps they’ll turn around, but the odds are that they are simply rearranging the chairs of the Titanic.
I’m not asking for a fully baked plan. Just more than "We did it!!!"and the rest of the self congratulations. In the world of spin, it is true they stopped the closure, so far. But now the hard part begins. I just wonder what ideas they’ve accumulated in the past months, to go with winning this step. The new board is a good start. Sure.
How much tine do you think they have, xiggi? For me, it’s not the simple arithmetic- X dollars divided by Y drain per year equals Z years. And the first hurdles are roughly 8 weeks away.
^ I have no idea about how long they have, as it all depends on the willingness to throw good money after bad. This situation is one directed by emotions over common sense. The alumnae woke up from years of apathy and raised (or pledged) a large sum in a time of desperation. They might very well do it again and keep plugging the leaks of the lifeboat. Political forces might very well keep on amending the restrictive terms of the endowment or even the assets base.
I made an analogy to a restaurant before. As seen on TV, owners often cling to the bitter end to save a failing restaurant. In the end, the key is to get patrons in the door who come for a reasonable meal at a reasonable price, or an extravagant meal at a ridiculous price. What kind of restaurant will SBC be? I am not sure they know and they will need to find plenty of people who are long on emotions and short on common sense.
If they collect the $12 million, they have a guarantee of one year of operations.
They probably have decent visibility for a second and third year, although those plans would be based on a lot of assumptions that are, well, assumptions.
One anonymous alum plunked down $1 million current plus another $1 million to be paid over the next five years. TBD whether that was smart or stupid money.
Xiggi, I don’t think they can count on12 million a year, they are already asking donors to accelerate multi-year giving plans etc.and add to that probability that at least 10% won’t fulfill their pledge contributions. In my opinion this is a one-shot deal and anything after this year should be used to rebuild what will be a depleted endowment fund. The new board will need to figure out how to cut absolutely as much as they can in the next 60 - 90 days and then how much long-term can be carved out of the former operating budget. to bring expenses and revenue more in line. If they make it this will be studied for years in business schools no doubt. I don’t think they have more than a year to right the sinking ship. At a minimum if there were 500 students in that college and the average charge after grants, etc. for tuition, room & board was $30,000 that was 15 mil per year…rumors had it they were discounting so far that the average was $15,000 a year or 7.5 mil per year. if they can only get 200 students and they charge those 200 families $30,000 that is 6 million and if they have discounted so deep and promise to match last year 200 families at $15,000 is only 3,000,000 in revenue. There is no way they could do this for more than one year, the deep discounting will have to go at a minimum.
They have to be spending at a minimum at least a couple million on plant/facility and probably more even with deferred maintenance, Add a million or so here and there for student services and institutional support plus whatever they had to pay professors. It’s pretty easy to see why the ship was sinking and it’s pretty easy to see what has to be surmounted. I’m sure the Saving Sweet Briar Crowd must have a plan, otherwise they literally prevented an orderly dismantling with a potential for a rebirth…right now the patient is on life support.
I don’t think LF needs to lighten up and I just think that it’s not as easy as “getting the right people on the bus”…there were plenty of smart people involved with Sweet Briar the past 5-7 years. And I’m not seeing where a one year financial transfusion solves the problem…if that were the case Jimmy Jones is an excellent, excellent fund-raiser and it would have seemed mission appropriate for the board to ask him to do that rather than wind down operations and with a Sweet Briar alum for a wife it’s got to make a rational person stop and ask “why” did the board not try and “save it”…
“I’m sure the Saving Sweet Briar Crowd must have a plan, otherwise they literally prevented an orderly dismantling”
They may have a plan, but I’m not sure they MUST have one, because they were acting out of grief and desperation, not long-term thought. On the alumnae conference call, they sounded exactly like family members being told a patient is too far gone. Many of them were not hearing or processing what they were told. We heard all the stages of grief: denial, anger, bargaining, etc. If they have a workable plan, great. But they may just be hanging on for dear life, and they’ll worry about the long term later.
Panicked family members prevent orderly, painless deaths all the time in order to squeeze some more time out of a patient’s life. That wouldn’t be anything new.