13 April 2020  |

On March 6 the WASC Senior College and University Commission (WSCUC) accrediting organization issued a formal “Notice of Concern” about Pacific Union College (PUC). This statement was released between regular meetings of the Commission by the Executive Committee of that body, indicative of some urgency. It expresses concerns about PUC’s plans for the future, and indirectly the viability of the college. Since 2013, PUC’s enrolment has declined 45.6% compared to the 14.3% decline among all Adventist universities since 2012.

The statement was voted before the height of the COVID-19 crisis but now comes against the backdrop of the shutdown, which has taken all students from classrooms and residential students from dorms, and changed instruction of PUC’s approximately 900 students to online learning.

A Notice of Concern is not a sanction, but a finding that an institution is in danger of being out of compliance with a WSCUC standard. PUC is being requested to correct deficiencies so WSCUC can continue to accredit the school. The current statement was raised by an interim report on PUC’s operation of January 16, 2020. While the report is broken down into a number of requirements, three are emphasized:

  • Reduction of staff and faculty
  • A substantial infusion of financial support from the Pacific Union Conference
  • A contingency plan, including a “teachout” plan should the school be unable to come up to WASC standards

The Commission also asked for a progress report to be submitted on April 1 and mandated a special visit in spring 2021. If significant progress is not made by that time, more serious actions, such as a sanction, could be imposed.

PUC president Robert Cushman told Adventist Today that the process of reducing faculty and staff has begun. PUC’s Friday press release said that “Twenty-one faculty and staff positions have been impacted through a combination of attrition, early retirement, and reductions in force.”

The teach out plan means that PUC must prepare a plan that would provide opportunities for their students to find places in other schools should PUC not be able to see them through to graduation. Eventually this could mean having formal Memoranda of Understandings (MOUs) with other colleges: that they’ll accept the college’s students and come close to matching what PUC had been providing just in case the college has to close. If the college’s plans to succeed do not materialize, it could also mean an alternate plan that the college would agree not to accept any new students but teaching out the remaining students. 

Financial Support

WSCUC’s interest in PUC’s financial status has to do with its role as the accrediting agency that the federal government relies upon to assure that government investments in the school, by its grants and loans, are going to an institution that has a future. Every Adventist college relies on Title IV funds, such as Pell Grants for its students, to sustain operations.

According to knowledgeable higher education sources, the Adventist Church has funded its colleges at higher levels than almost any other denomination. The Pacific Union Conference is the only union with two higher education institutions—PUC and La Sierra University—and provides subsidies in the range of $4 million each every year to enable their financial sustainability. The WSCUC statement specifically identifies the Pacific Union Conference as the place where it expects PUC to get needed money.

In the past PUC ,which owns almost 2,000 acres of land in the Napa Valley, tried to develop or sell excess lands in order to create an endowment rather than having to rely solely on the Pacific Union and donors for the additional help every college needs to operate beyond tuition revenue. Those efforts failed. 

The Pacific Union Conference leaders wouldn’t give Adventist Today exact figures of PUC’s indebtedness, but an unnamed source told Adventist Today that PUC may have already drawn on the Pacific Union Conference for as much as $35-40 million, and is asking for millions more over the next several years. A turnaround plan was voted just before the COVID-19 crisis, though it isn’t yet clear how much money the Pacific Union Conference agreed to provide in that plan, or indeed will be able to provide in the current situation.

Elder Ricardo Graham, while hopeful for Pacific Union College’s prospects, told Adventist Today that “We don’t believe Pacific Union College has the capacity to repay the Pacific Union. We don’t see that currently.” He adds that right now

“The Pacific Union has at least eight other entities that may need money. The Hawaii Conference is small, and a complete loss of tourism means that their economy will suffer. Churches are closed across our union, reducing the capacity to raise money. Some people may pay tithes but perhaps not local offerings, so we may even have to help there. We are trusting in God, but we’ll have to be careful.”

PUC’s Turnaround Plan

The good news is that students have enrolled for the spring quarter, even though there will be no on-campus instruction. (Most institutions experience a decline in enrollment in the last quarter.) PUC’s Friday press release says

Even as PUC has transitioned to remote classes and online learning in response to the global COVID-19 pandemic, the college is seeing positive results. There are currently 924 students enrolled for spring quarter, a slight increase from the winter headcount of 921, and close to the fall 2019 headcount of 928 students.

President Cushman told Adventist Today that this enrollment isn’t quite the same as full-time student enrollment: it includes some high school students being offered special college classes remotely.

From a financial point of view, distance-learning enrollment also doesn’t take into account the loss of income from residential housing, normally an important source of revenue for many colleges. Cushman says that PUC will be applying to the recently passed CARES Act (Coronavirus Aid, Relief and Economic Security Act) to try to recover some of that loss. On April 9, the United States Department of Education released the estimated amount of funds PUC will be eligible for, with a total of $1,138,223 with half of that being released immediately for emergency financial aid grants for students.

Recruiting remotely has had a positive side, said Cushman. With everyone staying home, recruiters have been able to reach students by other means, and their overtures have been well-received. At this point, he says, the school is planning for a resumption of classes on campus in the autumn of 2020, though everyone realizes that uncertainty remains. With unemployment rate as high as it is, no one can know for sure what will happen with autumn enrollment, and PUC is also building into its contingency plans the possibility that the COVID-19 virus may still be a danger at that time.

The End of Small Liberal Arts Colleges?

The decline of small colleges has been warned about for years by education forecasters. The Seventh-day Adventist Church has ignored these warnings, even sinking tens of millions into at least one school, Atlantic Union College, whose death was widely thought to be inevitable long before it was closed for good.

But the church hasn’t been alone in its unwillingness to prepare for the shaky future of small colleges. Some experts say that a quarter to a half of all colleges in this category are endangered, and will close in the next decade—predictions made long before the COVID-19 crisis. Writes Michael Horn in a 2018 piece in Forbes magazine, “Our predictions may be off, but they are directionally correct.” 

A change in demographics means that the pool of 18-year-olds is shrinking, and there’s an increased feeling among them that a liberal arts education may not pay off in the workplace.

More importantly, the high cost of a college education has put it out of the reach of many, and those who do pursue higher education fear leaving with insurmountable student loan debt. Student debt averages over $31,000 per student just for undergraduate debt and even more when adding graduate debt. Realizing this, colleges heavily discount costs to students, meaning even less income. Writes Horn,

The average tuition discount rate was a whopping 49.9% for first-time, full-time freshmen in 2017–18, according to the National Association of College and University Business Officers. That means that students are paying roughly only half of what colleges and universities say they charge. A tuition discount rate above 35% puts a college in a danger zone, particularly when it is heavily dependent on tuition. Many institutions have discount rates far above that now.…According to Moody’s, at least 25% of private colleges are now running deficits.

No Adventist institution approaches the 50% discount figure, with only two in the lower 40% range and the rest lower. The average student discount among Adventist institutions was 26% in 2017.

Predictors say that the worst hit will be those small colleges located in small cities or rural areas far from major metropolitan centers, which is the case with some North American Division colleges. The colleges themselves are stuck with fixed costs that they can’t escape, usually associated with the operation of campuses with multiple high-maintenance buildings.

One of the lines in WASC’s statement of concern says that PUC must “Move beyond a continuous improvement focus to strive for a strategic breakthrough to address the college’s challenges in transformative ways.” This would seem to mean that WSCUC wants PUC to come up with a new strategy and branding beyond the business-as-usual, traditional campus, liberal arts college model, which is failing almost across the board. Indeed, among Adventist schools those specializing in medical professional fields, such as Kettering College and AdventHealth University, appear to be doing best.

But general liberal arts, say the experts, is no longer an adequate business model. Most of PUC’s majors are not in traditional liberal arts fields—nursing is the largest major—but the most popular programs are offered in the tradition of liberal arts through a strong general education program.

Others told Adventist Today that the ill-starred presidency of Heather Knight, who was dismissed from her position in mid-year (January 2017), damaged the school’s reputation and financial stability.

Disruptive Innovation

There is one more major threat to the traditional liberal arts college campus with students in residence: Writes Horn in Forbes,

Against this turbulent backdrop ripe for colleges to fail … the emergence of the first disruptive innovation in education since the printing press—online learning—could wreak even more havoc as students enroll in online learning experiences.

Could our forced social-distancing experiment result in an even greater acceptance of online learning? And what would that portend for Adventist colleges that we think of as geographical locations with great historical and sentimental value?

What seems clear is that major changes are ahead for many Adventist schools and colleges. Mourns Graham, “What worries me is that appreciation for almost anything Adventist has diminished—people aren’t committed to the church in the same way that we were even 20 years ago. Thus we’re not preserving the best parts of Adventism, such as our schools.”

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