This whole story seems like it’s just a bit too complex for most media sources. I think only the Roanoke Times has both delved deeply into it and come out with a reasonable perspective. This is a short blog post to give a representative example why this story is so difficult.
Figure 1 is a graph that is basically Sweet Briar’s real deficit over almost twenty years. It averages a little less than $3 million/year. When I see this graph, I don’t see hopeless, but absent any context, I can see why it could convince others of some of what the Sweet Briar board is saying.
But context is everything, and there are a lot of little pieces that have to be taken into account. The huge deficits in the early 2000s reflect a lot of spending on infrastructure meant to serve as a foundation for decades to come, but it appears now that some of that spending may have been excessive.
It is true that under President Jo Ellen Parker, the march towards a balanced budget stalled, but this was mostly due to President Parker implementing a revenue-draining recruiting/financial aid strategy and a choice not to hire a Dean of Enrollment, choices that cost around $5 million/year. Things wouldn’t look so bad right now with an additional $5 million/year.
Figures 2 and 3 show that even though Sweet Briar has mismanaged its way into getting about as little in tuition revenue as is possible – and I think anyone comfortable with noise trends, regression to the mean, or modeling of probabilistic processes would see that things were at a temporary low point – the situation did not deteriorate. The endowment – unrestricted, temporarily restricted, and permanently restricted – has not gone down in the last 6 years. It’s true that Sweet Briar did not take advantage of a stock market rise during that time, but it’s in no worse shape for it, financially. At the same time, Sweet Briar has cut expenses, and it’s learned that a particular recruiting/financial aid strategy is a revenue disaster.
With all that as context, and knowing that Sweet Briar had $28 million in unrestricted funds as of 6/30/2014 and several more million in temporarily restricted funds that could easily have been converted, would anyone really say that it was clear Sweet Briar had a hopelessly failing business model and so had to close? I’m not an optimist, but that doesn’t seem anywhere near hopeless.
But, for that conclusion, much context is needed. It is true that Sweet Briar has been running a deficit and spending more in the endowment than it should. It is also true that Sweet Briar has a viable business model. Understanding both of those simultaneously is what is difficult.