January 22, 2019

College closure threat growing, state seeking new powers

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Mount Ida College in Newton closed last year.

Citing a need to boost confidence in higher education, state officials are ready to begin erecting a new process to screen, monitor and, if necessary, intervene to protect students when officials determine a private college or university in Massachusetts is at risk of closing within 18 months.

After meeting since May and following talks with Attorney General Maura Healey's office, Board of Higher Education (BHE) members who served on a working group are set to make their recommendations, which call for a new Office of Student Protection, to the full board Tuesday during a meeting at Framingham State University.

Under the centerpiece of their plan, if by Dec. 1 a college or university cannot in the department's judgement ensure it has the financial means to complete the current and subsequent academic year, the institution would need to notify students and a full contingency plan would need to be completed and approved by the state.

"The board is being asked to vote to go ahead," board chairman Chris Gabrieli told the News Service.

Mount Ida College's abrupt closure in 2018 stirred public concerns and vaulted college closures up the public policy priority list. The working group, which included Higher Education Commissioner Carlos Santiago, former Education Commissioner Robert Antonucci and former Economic Development Secretary Ranch Kimball, determined the threat of further finance-driven closures or mergers in Massachusetts is "significant, ongoing and likely growing" and the current framework for identifying at-risk colleges and protecting students is insufficient.

"We came to the conclusion that the current systems don't work," Gabrieli said, citing insufficient oversight from the federal government and accreditors and an inability for the board to be proactive within the bounds of its current levels of authority. The regional accreditor is the New England Commission on Higher Education.

The proposed process, which involves confidential annual screening and monitoring, is needed due to an enrollment decline, projections of fewer high school graduates, and the "substantial number" of Massachusetts colleges and universities that "show problematic financial health across multiple measures."

Twenty-four percent of private non-profit four-year institutions in Massachusetts saw enrollment decreases of more than 10 percent between 2011 and 2016, according to the Transitions in Higher Education: Safeguarding the Interests of Students (THESIS) Working Group's final report. And expenses at 34 percent of those institutions rose by five percentage points or more above revenues in 2016, compared to 2011, the report found.

The report does not identify those colleges and universities.

"It's going to get worse in the next ten years," Gabrieli said, referring to closures, mergers and challenges facing colleges and universities due to shifting demographics and dynamics.

The report identified six Massachusetts schools that have closed in the past five years: Sanford Brown College; Marian Court College; Le Cordon Bleu; ITT Technical Institutes; New England Institute of Art; and Mount Ida. Six more schools have closed as part of mergers: School of the Museum of Fine Arts; New England College of Acupuncture; Boston Conservatory; Episcopal Divinity School; National Graduate School of Quality Management; and Wheelock College, according to the report.

On Jan. 15, officials at Hampshire College in Amherst announced they were seeking a "long-term partner that can help us achieve a thriving and sustainable future for Hampshire" and "carefully considering whether to enroll an incoming class this fall."

The report, compiled with pro bono assistance from EYParthenon, found states have differing levels of private college oversight, "with Massachusetts having a lower level of oversight of private institutions."

The plan calls for passage of a bill to provide confidentiality assurances to colleges and universities. "We would want the Legislature to support that," Gabrieli said. "This is new and significant work."

If the board agrees to move forward Tuesday, the goal is to embark on a process to put regulations in place to safeguard students beginning in the 2019-2020 academic year, Gabrieli said. He said he expects some resistance from private colleges -- "There'll be some disagreements," he said -- but believes the new process minimizes new burdens on universities; for instance, it does not require them to produce new information for regulators.

The active monitoring proposed in the working group's recommendation would apply only to schools approaching the 18-month threshold and would remain confidential until and unless the 18-month threshold is crossed.

"We understand the challenges faced by Massachusetts public and private colleges and universities and believe the concepts raised in the THESIS Report are important points of discussion, with further refinements based on the significant issue of confidentiality of any financial metric," Richard Doherty, president of the Association of Independent Colleges & Universities in Massachusetts, said in a statement. "We will continue to work with the Department of Higher Education to ensure that any further action will protect the future of small and large private institutions in the Commonwealth and the students we serve."

While the colleges are privately run, they enjoy tax benefits associated with their non-profit status, and the group's recommendation is not without teeth. Suspending or revoking degree-granting authority would be an option in "the most extreme cases," the group reported, and financial aid could be an enforcement tool.

"We recommend that the new participation agreement make clear that by agreeing to accept state financial aid for students enrolled in their schools, they are also agreeing to comply with all aspects of this plan, including both sharing information as required for monitoring and providing timely student notification and a thorough contingency plan, if required by DHE," the report said. Failure to comply "should be clearly grounds for immediate termination of any further eligibility for state financial aid to the institution. It is fair and appropriate for Massachusetts to place such strings upon publicly financed aid provided to schools."

The attorney general's office, given its statutory role concerning non-profits and consumer protection, could also be a "vital partner" in connection with the proposed heightened level of higher education oversight.

The report described public higher education institutions in Massachusetts as "already subject to much more regulatory oversight as well as having the fundamental backing and oversight of the Commonwealth," but said those institutions will also need to "adapt to future trends and needs and avoid any disruption to students."

The other working group members are BHE member Alex Cortez, partner, NewProfit; Katherine Craven, Babson College chief administrative officer; Matt Hills, private equity investor and management consultant and past president of the Newton School Committee; BHE member Paul Mattera and board chairman at Salem State University; and Gabby King Morse, executive director of uAspire Massachusetts.

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