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Colleges That Change Lives
The Business Journals
Growing Pains: Earlham College in Richmond, Indiana
A small Indiana college highlights big strategic changes — and challenges — emerging throughout higher ed
By Hilary Burns, Associate Editor, Boston Business Journal
Feb 18, 2021
Last month, Earlham College penned an unusual deal with the state of
Indiana's community college system as part of a broader strategy to
broaden the school's student pipeline amid years of enrollment declines.
Earlham President Anne Houtman said such credit-transfer agreements are
more common among larger public universities although, in the case of
her school, it is a logical means to diversify its campus recruiting.
Based on the fall's enrollment, her private school in Richmond,
Indiana, could use the help.
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Recent financial filings indicate Earlham's undergraduate headcount
tumbled to 755 students at the beginning of the 2020-21 academic year,
off 21% from the prior fiscal period and down 31% from 2012. Between
2016 and 2020, applications dropped 24%, while this year's entering
class of 158 students was down 57% from four years earlier.
Earlham’s agreement with the Ivy Tech Community College system is one
example of how small colleges are innovating to offset the Covid-19
pandemic's effects as well as long-smoldering enrollment and revenue
challenges affecting all of higher ed. While still early in the
process, those who succeed will likely serve as models for other
schools with limited means to experiment with strategies that veer from
their traditional coursework and target student.
Other like-sized schools are plotting separate, albeit similar, paths
in search of greater stability. Among them is Robert Morris University
in Moon Township, Pennsylvania, which saw full-time equivalent
undergrad enrollment fall 23% between the 2016 and 2020 fall semesters.
The school, like Earlham, recently announced a dual-enrollment
agreement called RMU Gateway with four regional community colleges.
“I've always wondered, why don't more small privates do that because,
first of all, we know if we're really wanting to increase diversity of
our student body, which is a big commitment here, then many students
from underrepresented groups start at community colleges,” said
Earlham's Houtman.
Still, other schools are taking more extreme measures. Saint Joseph's
University in Philadelphia, for example, on February 10 said it was
exploring a merger with University of the Sciences.
Education experts say innovating is no longer optional for schools
facing enrollment and budget pressures that have only worsened during
the pandemic. Rick Beyer, a senior fellow of the Association of
Governing Boards of Universities and Colleges, said more college
trustees are taking a proactive approach when troubling signs appear on
the horizon.
“I think there is a consciousness across the country at the board
level, and definitely the president level as well, that we need to
think vastly differently. It's going to be all about innovation and
creativity,” Beyer said.
NOT OUT OF THE WOODS
Earlham's enrollment declines have contributed to substantial budget
deficits in recent years. The school in turn has used its unrestricted
endowment funds to help offset the shortfalls — a luxury that many
schools of Earlham's size and stature do not have.
In fiscal 2020, the college's net tuition revenue was $10.3 million,
off by nearly a third from what was recorded four years earlier. The
revenue hit, which reflected effects from Covid-19 in the spring 2020
semester, was offset last year by a $5 million reduction in operating
expenses and draws on the school's endowment, which ended fiscal 2020
at $380 million.
Houtman said the school's financial resources, which roughly translate
to a healthy $503,349 in endowment assets per student, give her
confidence in Earlham's ability to navigate the sector's operating
challenges.
“We're solid,” she said. “We're not going anywhere.”
Still, difficult decision have been needed. To improve Earlham’s
financial position, Houtman said she eliminated 34 positions last
spring and restructured an additional 27 roles, resulting in about $7.6
million in savings. No tenured or tenure-track positions were impacted,
she said, noting the school has no plans for additional cuts.
Founded in 1847 and located about 70 miles north of Cincinnati on the
Indiana-Ohio border, the college also added new majors, including
exercise science and data analytics, to improve its retention and
recruitment efforts, Houtman said.
Covid-19 exacerbated the school’s troubles as international students —
about 20% of the college’s student body — couldn’t easily travel back
to the U.S. during the pandemic. Houtman said international enrollment
dropped about 50% in the fall, a decline that has contributed to her
new approach to recruiting.
CARES Act funding helped offset lost revenue and costs associated with
bringing students back for in-person learning, Houtman said, adding
that the college's new partnership and recruiting strategy aims to
attract more students from Indiana.
“I don't know if we'll ever get them back, because my experience with
international students is that you get a few kids from a high school
and then they tell their friends who graduate a year or two later,”
said Houtman, who joined Earlham in July of 2019. “And if we've broken
that chain in the United States, it's going to have a big impact on
higher education.”
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