Calvin College Enters Final Stage of Restructuring Finances

The Calvin College community is on the final leg of a journey to put the college’s finances on a sustainable track by 2017.

That journey—the prioritization process—began during the 2012–13 academic year when the college recognized the need to develop a long-term restructuring plan to meet the college’s debt obligations and put Calvin’s finances on secure footing.

The process included a five-part strategy that was put forth by the college’s planning and priorities committee in December 2013 and approved by the board of trustees in January 2014.

Those strategies included 1) raising $25 million to pre-pay principal on the college’s long-term debt, 2) selling non-core real estate assets, 3) refinancing remaining long-term debt, 4) increasing revenue through enrollment and new program growth and 5) reducing annual operating expenses $4.5 million by June 30, 2017.

The college has made significant progress on all five of these strategies, including exceeding the fundraising goal in spring of 2014 and selling a number of non-core real estate assets, which has allowed the college to pay down $26 million in principal since July 1, 2014. These measures have brought the college’s overall debt below $90 million.

The college’s financial services team has now turned its attention to preparing for the anticipated refinance window in 2017. Higher-than-expected enrollment in fall of 2013 also helped the college earmark more net revenue than expected toward its annual debt service payment.

The college has been working on the fifth prong of the strategy since the 2012–13 academic year, when the college began reducing expenses, which involved cost reduction, reorganization and personnel reductions in every division of the college.

While the college has made great progress on all of these strategies, Calvin College president Michael Le Roy describes the last steps as “some of the most difficult.”

The last steps involve restructuring within the academic division. The final draft of the prioritization plan prompted some departments to make curricular revisions to improve efficiencies.

In addition, faculty reductions by attrition and buyout were undertaken in alignment with the plan’s objectives. Further work by a nine-member faculty task force began this past spring to review all academic programs that fell below specific enrollment thresholds.

This faculty task force­—keeping the college’s mission statement, prioritization plan, strategic plan and educational framework at the fore—studied each program, reviewed enrollment patterns and trends, assessed demand for programs under review and met with faculty from programs under review to understand the human factors that go beyond the numbers.

“In an academic community that values relationships, these kinds of program and personnel changes are painful and difficult,” wrote Le Roy, in an update on president's office website in early October.

“Yet, in all of my years of higher education work, I have never seen such a thoughtful, decisive and forward-looking set of recommendations from a faculty task force, and I believe that we as a Calvin community are indebted to the task force for its good work.”

The task force reached consensus on its recommendations in September 2015 and forwarded them to Provost Cheryl Brandsen. After some further discussion with students and faculty, Brandsen, in early October, made final recommendations to the college’s planning and priorities committee, which, in turn, made final recommendations to the board of trustees.

On Oct. 13, 2015, the board of trustees ratified those final recommendations, which included the elimination of five majors—art history, classical languages, Greek, Latin and theatre—and the architecture minor. The college will retain the classical studies major and minors in art history, Greek, Latin and theatre, and the college will continue to support the Calvin Theatre Company.

Le Roy said that the enrollment in these programs over the past several years did not appear to be sustainable in an era of increased concern about the affordability of higher education.

While the college will no longer offer these majors and minor, Le Roy emphasizes that any student who is currently enrolled in any of these areas will be fully supported in their effort to complete their degree at Calvin.

The task force also recommended changes to the organization of some academic departments, an ongoing commitment to reimagining the arts and humanities at Calvin and changes to the review of program viability going forward.

“We will as a college be much more strategic and deliberate about regular reviews of opportunities, cost savings and efficiencies that might be gained college-wide by new ways of thinking about academic programs,” said Le Roy.

“I want to add that the faculty task force was unanimous on this point (and I concur): Calvin will not thrive if the only outcome of prioritization is offsetting debt. On the contrary, the college must be deliberate about continuing to invest in its own reinvention and innovation. Put otherwise: Calvin must, in going forward, be as creative as it is careful.”