West Virginia regulators are allowing the troubled Alderson Broaddus University to continue operating — but only provisionally — and they’re demanding that it keep the state apprised monthly of its financial health.
The state’s Higher Education Policy Commission on Wednesday voted to reauthorize Alderson Broaddus, a private, Baptist-affiliated institution, through the end of June 2024. But the commission warned it could revoke its endorsement at any time should the university not meet West Virginia’s benchmarks for financially solvent colleges.
The policy commission made clear it remains concerned about Alderson Broaddus’ financial viability. And it’s making demands of the college — like telling it to secure student transcripts and financial aid records through a third party — seemingly as a precaution in case it goes under.
Without state approval, the institution’s survival would be in serious jeopardy. Higher education experts say it is highly susceptible to closure.
These are gloomy prospects for Alderson Broaddus, which has already confronted years of financial and leadership troubles, like in 2015 when it defaulted on bond repayments totaling more than $36 million, a rare occurrence among nonprofit colleges.
More recently, its governing board chair resigned at the end of June after posting a lengthy letter in May to the university’s website detailing the college’s financial woes and enrollment declines. The letter has since been removed from the university’s website, but exists in Internet archives.
The tumult also reflects the trials of many small colleges, which must compete for shrinking shares of traditional students in many regions of the U.S. The financial pressures are especially acute for religious institutions like Alderson Broaddus, in part because students have sought cheaper options amid economic turbulence.
What’s going on with Alderson Broaddus?
The most recently available federal data says that in fall 2021, Alderson Broaddus enrolled more than 800 students. Local press reports, however, suggest that number is lower today, at around 670 students.
West Virginia’s higher ed policy commission, concerned about the enrollment dip and the university’s finances, in June delayed a planned vote on whether to give it operating approval. At the time, state officials said they would need a detailed picture of the university’s financial condition.
The institution’s most recently available tax forms show for the fiscal year ending in June 2021, it had about a $522,000 deficit, smaller than the roughly $904,000 shortfall from the year prior.
University officials did not respond to requests for comment Friday.
When the state commission gave a provisional green light to the university this month to keep operating, it said it “would like to give the new leadership team time to possibly turn the ship around.”
The university is being run by an interim president, Andrea Bucklew. She was Alderson Broaddus’ provost and executive vice president for academic affairs and stepped in about two months ago for James Barry, who said he was retiring. Barry had been president since December 2015.
Despite allowing the university to continue operating, the commission set an Oct. 1 deadline for it to develop plans that would help currently enrolled students transfer to another college, called teach-outs. Teach-outs are common in postsecondary education, but institutions often formulate them when they’re closing, or are on the precipice of doing so.
The university must also report its financial performance to the state monthly, “including actual monies received and actual funds raised through fundraising efforts,” the commission said.
A rocky financial history
Alderson Broaddus’ financial problems arose anew with the COVID-19 pandemic, which drove down enrollment, according to the public letter from its former board chair, Rebecca Hooman.
Hooman stepped down late last month, saying she had “become a distraction to the good work” the administration was doing.
In her letter, she wrote that “a lack of clear messaging” about the university’s future in 2022 exacerbated the pandemic-era enrollment declines.
The university weathered these challenges, Hooman wrote, but was further stressed when expected tax credits were reduced and delayed. In spring 2022, the university borrowed from its endowment, $540,000, to cover costs, she wrote.
It had also done this about a decade prior, when the governing board borrowed the bulk of its endowment, about $14 million, to stave off a closure, Hooman wrote.
Hooman wrote she had been involved with the board since 2007 as an alumni liaison and observed the university’s enrollment dropping through 2011, to under 500 students.
But enrollment rose to more than 1,000 students by fall 2014 after the president at the time broadened athletics, which is a major draw for students at small institutions.
Federal data confirms in fall 2014, enrollment hit 1,108 students.
The university was issued a roughly $36 million bond in 2013 to cover housing for the additional students and a new athletic stadium, Hooman wrote, but it defaulted because of continually unbalanced budgets.
In 2018, Alderson Broaddus attempted to shore up its finances through a complex deal involving its endowment corporation. The university received a $27.8 million U.S. Department of Agriculture loan that the corporation used to acquire parts of the university’s campus, which were then leased back to the university.
“The USDA loan will allow for the reallocation of additional resources to cover operating expenses,” the university said at the time.
Given the financial turmoil, the university’s accreditor, the Higher Learning Commission, had put it on probation in 2017. But HLC lifted the probation two years later, citing financial improvements like the USDA loan.
At the same time, however, HLC gave Alderson Broaddus notice that because of its financial instability, it could be out of compliance with the accreditor’s standards. HLC removed that sanction in June 2021.
In March, HLC visited the Alderson Broaddus campus as part of the university’s typical accreditation evaluation. Accreditor officials will craft a report on the university’s operations and forward it to an HLC governing body that will make decisions on its accreditation status.
That body will consider in its decision action taken by state regulators, like West Virginia’s policy commission.
“HLC is still going through this process for this institution and final action has not yet occurred,” HLC spokesperson Heather Berg said in an email. “To protect the integrity of HLC’s due process, we cannot comment.”
Robert Kelchen, a higher education professor at the University of Tennessee, Knoxville, said Alderson Broaddus “is definitely at risk of closure.”
The state’s conditional approval seems like the university’s “last chance,” Kelchen said.
He said it’s also possible the state wants the accreditor to be the one to force the college’s closure, because it’s often an unpopular decision.
The timing of a potential closure could be poor to say the least. If Alderson Broaddus folds soon, it will leave students and employees with little time to prepare, he said.
“Unless something changes, they don’t have enough money to keep going. Then the question becomes, can they at least have an orderly closure?” Kelchen said.