Guest Column: Columbia College weathering economic storm, no drastic changes
As the drumbeat of the economic downturn continues to sound, many organizations are taking measures – some more drastic than others – to minimize the negative financial impact emanating therefrom. No sector of business and industry is immune, and so it is with higher education.
Many higher education institutions rely heavily on earnings generated by investments, usually through an endowment, to undergird the operating budget and provide scholarships. Therefore, as market losses increase, there is a corollary decrease in funds with which to operate. Only those institutions that have embraced and implemented a policy of fiscal conservatism over time and strategically have not incurred significant debt will weather solidly the storm, perhaps buffeted but not broken.
Fiscal conservatism, especially in the independent or private sector of higher education, has been somewhat of a hallmark of existence for some schools. Columbia College serves as an example. We have budgeted and invested conservatively for years. Market investments have consisted of a careful mix of equities and high-grade fixed income instruments.
So far, in the current climate, the Columbia College endowment has lost about 19 percent of its market value. Our losses have not been too bad when compared to some academic institutions losing 30 to 40 percent of market value because of a large portion of holdings invested in equities. The average college endowment has lost between 25 and 30 percent since last June, according to the National Association of College and University Business Officers. Columbia College is well below that level, thankfully.
As we know from local and national media, colleges and universities around the country have been forced to implement no less than draconian measures to maintain a semblance of equilibrium in the recession. Common practices include hiring and salary freezes, ending contributions to employee retirement funds, layoffs, furloughs and even the selling off of capital assets.
I am pleased to report that at Columbia College there is no need to implement such measures. All positions, whether newly requested or replacements, will continue to need presidential approval before filling. Expenses will continue to be monitored closely, but not curtailed, provided they are within budget. Fundraising will continue apace in support of scholarships and capital projects. Columbia College will issue merit-based faculty and staff salary increases this year. We will continue to provide previously announced student financial aid funded by the institution and other sources. The college will continue to fund 100 percent of the retirement contribution for faculty and staff.
There is a yet to be proven theory that, as the economy weakens, the number of students who enter or return to college increases concomitantly. That appears to be the case, and competition for students increases in parallel. Columbia College is uniquely positioned to serve these learners with flexible course schedules, small classes and affordable tuition.
The college “big picture” for winter 2009 shows a total of 2,319 new students, an increase of 9.2 percent from winter 2008, bringing the number of total students for the session to 16,901, an increase of 16.9 percent over the same period last year. As mentioned earlier, a distinct advantage, especially in a difficult economy, is that, as an organization, Columbia College is debt free. That happy fact is attributable to the fiscal conservatism practiced by the administration with the concurrence of a strong and supportive Board of Trustees. The premise is simple – do not spend money you do not have. Save first and then proceed. The incurring of debt was necessary in the not-too-distant past when the college struggled financially. The creative use of debt is a legitimate means of financing; we simply have chosen not to employ it while the college is prospering.
My hope is that this positive report shines a beam of light through the clouds of local, negative financial news. Columbia College, through its success, benefits not only itself, but the city, county, state and many states served by our 35 nationwide and online campuses. We are doing our best to help heal the economy, especially locally. We will continue to do so by remaining fiscally conservative while embracing the concept of strategic investment. By doing so, the college is positioning itself to face a future filled with opportunity.
Gerald T. Brouder
President,
Columbia College