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    Steps Toward Financial Health

    Efficient, well-run institutions make education more affordable for students. But what happens in a tight economy?

    Randy Frame

    Theological seminaries and graduate schools and the students who attend them share at least one financial goal—making ends meet. Not surprisingly, there is a strong connection between an institution's financial health and its capacity to enable students to attend affordably and to graduate with little or no debt.

    1. The part-time student

    In recent years, as with the society at large, the financial health of seminaries has been negatively affected by the struggling economy. Institutions typically write into their budgets income projections based on interest from investments, but lower interest rates and a weak market produce lower dividends. Seminaries are wrestling with reduced income, but other factors affecting tuition rates are also at work.

    As the number of students increases, so do various operating costs associated with student services. There is not, however, a corresponding increase in income from part-time students. These days, seminaries think not just in terms of the total number of students. Rather, they focus on the concept of full-time equivalency (FTE). So four part-time students each taking one class usually equal one full-time student. In reality, two full-time students can have a more positive financial impact on institution than seven or eight part-time students.

    2. Decreased scheduling efficiency

    In some ways, the trend toward part-time students has served as a sort of launching pad for other, related trends and has, as we will see, served to shape other realities and tensions.

    Back in the days when most seminary students attended full time, the scheduling of classes was a breeze. By and large, students took the same classes at the same times as they moved through their educational program at roughly the same pace. Class size was predictable, and therefore scheduling could be managed efficiently.

    Now, with students coming and going—and moving through at different paces and expecting classes to be offered at different times—efficiency has taken a hit. The ideal class size for the typical seminary professor is 15 to 20 students. Any more than that risks the intimacy of the student-professor relationship. But smaller classes are less efficient from a business perspective. What does a seminary do, however, when only two or three students are registered for a particular class, but the class is essential to the students' educational program?

    3. Concerns for educational quality

    If certain course offerings are dropped in favor of efficiency, the accompanying risk is a compromise in the quality of education. This heightens the tensions among faculty, students, and administration, as they may not be of one mind as to which courses should be dropped.

    4. Maintaining quality faculty and facilities

    Some seminaries are located in areas where the cost of living has increased dramatically over the last decade. To attract and keep the best scholars and teachers requires seminaries to offer more competitive salaries and benefits. In addition, it is important to keep the physical environment at the institution safe, up to code, and attractive. Many seminaries are more familiar than they would like to be with the term "deferred maintenance," a euphemism for repairs or improvements that ought to be made but can't be made because of the lack of funds.

    5. Declining donor base

    Many schools receive support from graduates who went on to become doctors, lawyers, and businesspersons and who are now in a position to provide significant financial support to their alma maters. The typical seminary graduate goes on to become a pastor or missionary. Though these people might care deeply about the future of their alma mater, they are not usually in a position to demonstrate their concern through their dollars.

    6. The price tag for modernization

    Beyond this, those who attended an institution as full-time students tend to feel more of a sense of loyalty than those who attended part time. This often translates into less financial support. What's more, among the most loyal financial supporters are those who graduated back in the 1960s or earlier. The ranks of these loyal alumni are thinning, and at many schools there is no generation of loyal donors coming along to replace them.

    Operating costs in a number of areas have increased in recent years, especially in the area of technology. Forget the stereotype that educational institutions are stodgy and incapable of change. When the technological revolution came along—e-mail, the Internet, classes via satellite conferencing—seminaries accepted and embraced the revolution. If they did not already have the expertise to employ the new technology, they went out and found it. Some schools are at the forefront when it comes to new delivery systems for theological education. But there is, quite literally, a price to pay to stay current with technology. As a result, the operating costs at the typical theological seminary have increased dramatically over the last decade.

    A plan that works

    Tough economic times have spawned both creative and efficient thinking, focused in such areas as program offerings, scheduling, and fund raising. Seminaries' ability to weather the current economic storm strongly reflects their importance to the mission of the church and the faithfulness of their supporters. It also reflects active leadership by administrators who saw the shifting climate and took action.

    Gordon-Conwell Theological Seminary is one example. Begun under the administration of Robert Cooley, and developed further by current president Walter C. Kaiser Jr., the master plan for Gordon-Conwell addresses many of the challenges outlined here.

    For any significant change to take place, the plan would have to be embraced by all sectors of the institution. From the beginning, faculty were involved in the discussions about what change might mean for class offerings and for their workloads. Kaiser describes the result of the open dialogue in terms of "an unusual sense of cooperation."

    An analyst the school hired concluded that too many students were taking too few courses per year. The thinking was that increasing the number of full-time students would enable the school to move toward maximum efficiency—defined mainly in terms of achieving optimal revenues and limiting costs while maintaining the school's high quality of theological education.

    Thus the immediate goal became to increase the number of full-time students.

    Attracting such students would require some financial incentive, which came in the form of a major scholarship program, kick-started by many of the seminary's most generous donors. To qualify for a scholarship, a student would have to take at least 10 courses per year, making him or her full-time.

    With sacrifices by the faculty (such as larger class sizes) and increased giving (from an expanded donor base), the plan worked. Within three years, Gordon-Conwell went from 13 percent full-time students to 54 percent, surpassing its goal of 50 percent. Today, over 300 of the 670 students at the seminary's South Hamilton, Massachusetts campus (the school has branch campuses in Boston and in Charlotte) are attending on scholarships averaging $4,200 each. This amount is deducted from the yearly tuition of $10,800 for ten courses.

    At many schools, like Gordon-Conwell, donors recognize the relationship between theological perspective, Bible knowledge, and practical ministry skills and successful local church ministry. They recognize the importance of specialized programs in such areas as leadership, family counseling, and church renewal. Many donors have maintained or increased their support during these tough times, assuring that those schools that may be struggling now can hold their own and look forward to a day when they can once again thrive.

    With positive actions by institutions developing student and donor bases, many seminaries and graduate schools are poised for a new era of theological education and ministry to local churches.

    Randy Frame, a freelance writer and editor, also serves as Executive Director of Marketing and Communications at Palmer Seminary.