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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