Federal measurement of financial health gave no warnings about Chester College
Chester College may be teetering on the edge of bankruptcy, but you wouldn’t know it from the federal government’s measurement of schools’ financial health.
Chester College of New England didn’t show up on the list of private colleges and universities with low tallies on the most recent “financial responsibility scores” compiled by the U.S. Department of Education from audited financial statements. Those scores reflected the fiscal year ending June 2010, and continued the school’s good run; Chester had one of the best scores in the state in the 2009 listings, with a 2.1 score on a 3.0 scale.
The score runs from 3.0, the highest, to negative 1.0. Schools that fall below positive 1.5 are cautioned and receive further scrutiny; those that fall below positive 1.0 for three years can lose loan eligibility, and often accreditation as well.
The federal financial score is “an altogether strange measure,” said Roger Williams, president of New Hampshire Institute of Art in Manchester, which has been given much worse financial scores than Chester College over the past few years. “I don’t think that it necessarily is a sound indicator of the strength of an institution, or lack thereof.”
That criticism of the measurement has been echoed by a number of academic groups and institutions, although schools that do well – such as Rivier College, which has received a perfect score – tend to be more enthusiastic about it.
Chester College is a 45-year-old liberal arts college with fewer than 200 students on its campus in Chester, just north of Derry.
College officials announced last month that due to declining enrollments, it needed to raise at least a half-million dollars within a month or so, or else it would shut down. The news came as a shock to high school seniors who were planning to attend in September, since May 1 is the usual deadline for students to say which college they will attend.
The situation is bad enough that about 50 faculty and staff members also have signed off on a vote of no-confidence in college President Robert Baines.
Their statement says “the dire financial circumstances of the college were preventable had the President fulfilled his responsibilities and had the Board of Trustees held him accountable.”
A number of students held a protest Monday around the president’s office.
In a statement released Monday by the college’s board of trustees, the board confirmed receipt of the no-confidence vote, and released its own vote of confidence in Baines and “affirmed that his leadership is consistent with the direction of the board and the best interest of the College and its students.”
“The College has invested substantial funds and efforts in recruiting students, hiring talented staff including professional admissions and marketing personnel,” the board wrote in a statement. “Unfortunately, these investments have not produced results that met the targets set by the staff and approved by the board.”
The board plans on meeting after commencement to review its options.
Faculty and staff said supporters have collected more than $92,000 in cash and pledges, and said six-figure pledges had been made.
School officials said declining enrollment caused by the recession has hurt Chester’s finances. Tuition is about $20,000 a year.
For years, the U.S. Department of Education has issued financial scores for private colleges and universities. Publicly funded schools are not given a score.
The rating is used to determine whether schools can participate in the Title IV student loan programs.
Chester College has always had a score above 1.5.
The score results from a complex calculation that has drawn much criticism over the years.
For example, it gives considerably more weight to income from tuition than income from endowments. This is the reason for New Hampshire Institute of Art’s score, its president said.
“For the state of New Hampshire, our endowment is healthy in size, around $25 million,” said Williams. “But the vast majority is restricted (to certain uses), one of the primary factors in our low score.”
Under the calculations used by the Department of Education, restricted endowment gets little weight.
Williams said that while the recession has made life harder for many arts schools, the institute is coping.
“We have always operated with a balanced budget,” he said.
New Hampshire Institute of Art had a score of 1.3 in the federal tally through summer 2010, continuing a slow trend of decline since the recession started.
Two other New Hampshire schools are in similar territory: Lebanon College in Lebanon has a score of 1.1 in the most recent tally, and Thomas More College, a small Catholic college in Merrimack, has a score of 0.6. Thomas More College, which in 2009 has a score of negative 0.8, is moving its undergraduate program to Massachusetts and hopes to expand to 300 undergraduates.
Low scores can reflect financial problems. Daniel Webster College, for example, had scores below 1.0 for three years running at the time it sold itself to ITT in 2009.
David Brooks can be reached at 594-6531 or email@example.com.