Mounting debt and declining enrollment — particularly among online students — combined to close Concordia University, less than two months after the arrival of a new executive.
Interim president Tom Ries had been at the helm of the Northeast Portland private university for just six weeks when its Board of Regents agreed that closing this spring was necessary to handle the college’s downward spiral.
“There's been a longstanding realization of the erosion of the financial picture at the university,” Ries said.
He said he came up through higher education as a finance administrator and immediately saw things at Concordia that rang alarm bells to him.
“I came on board, and we worked together with the board, eventually came to the decision that it was not recoverable,” he said
Ries said the enrollment problem was largely erosion of Concordia's online student population. A few years ago, Concordia's growth in online students helped the university hit an enrollment peak at a time when many private colleges were seeing their student populations drop. But in 2016, an investigation by the U.S. Department of Education found problems with a contractor Concordia used. Online enrollment declined after that, but Ries said the investigation is only part of the story.
“We know that it's a tough market for some of our key programs, and there are a lot of our programs where there are strong competitors,” Ries said. “That's probably a more significant factor.”
In terms of debt, Ries said Concordia had hit a ceiling in its ability to borrow. He said about two-thirds of the school’s debt came from big construction projects in recent years. Those included a new sports field and an investment in the new Faubion school, a Portland Public Schools K-8 program on the north end of Concordia’s small campus.
Ries said faculty and staff were aware that the university was facing financial difficulties, even if college leaders didn’t share the problems publicly, nor did the campus community get a warning that closure was coming.
“There's been a sense of dis-ease on the campus,” Ries said. “I would say, for a number of years … there has been no pay increases for quite a while.”
Staff had to take pay cuts a few years ago, he said.
“Just last, last year, I guess the university closed its college of arts and sciences and merged those programs into other colleges,” Ries said.
But at the time, the college told faculty, the public and students that the changes were not a sign of dire financial stress.
“We'd heard about some of the programs getting cut, and it kind of got played down as not being so serious as what it was,” said Kieran McMinn, a senior who enrolled at Concordia from New Zealand in part to play soccer.
McMinn was not happy with how Concordia shared the decision with the campus community.
“To just get this news dropped on us right after the staff just found out themselves — it doesn't seem like the right way to handle it to me,” McMinn said.
Ries said he’s heard from students who were surprised and sad, but not angry.
McMinn was upset, and not because he was worried about his own future. He’s on track to graduate this spring, just as the university closes. When McMinn spoke to OPB, he was with two teammates — international students like him, but juniors.
A teammate from Finland said he was hoping to find a college to transfer into, where he could graduate by December and ideally, play another season of soccer.
Lewis Coates, from the United Kingdom, was still trying to figure out what the decision meant for his academic future.
“I'm anticipating on graduating in December of 2020 from Concordia. But that's not going to happen now,” he said. “What will happen now? I've no idea what my future holds, but I'm just going to remain positive and transfer to another school, whether that is to continue playing soccer or not. I don't know.”
Concordia leaders said they are committed to offering transfer options and “teach-out” programs, so that students aren’t left partway through their college career. A teach-out program is an arrangement with another education institution to help students in a particularly field of study complete their degrees.
Coates is one semester short of completing a business management degree. He thinks he’ll find a program where he can finish up, but he’s anxious.
“I only had one semester left to go, so it seems like a big decision to make ... a big commitment ... only three months of my life just to get the degree that I've been here for like nearly four years now,” Coates said.
Recovery unlikely to work
Interim president Ries said he didn’t advocate for closing the 115-year-old college, but said staying open presented serious risks to the university. He said the alternative to closing would have been instituting a “recovery plan,” with specific targets and management changes. Ries said for Concordia such a plan would have needed to acknowledge certain factors.
“No capacity to borrow money, and we need to borrow more money,” Ries said. “If we would've stayed open, we would've had … aggressive enrollment targets, which actually we've been declining.”
While Concordia's on-campus student population showed recent signs of growth, the far larger online student population had decreased significantly.
Much as leaders at Lake Oswego's Marylhurst University leaders said two years ago when they chose to close, Concordia officials said they're closing while they can still do so responsibly, which includes helping students find programs elsewhere. While Ries said he didn't advocate either one way or the other, he said trying to pull out of the tailspin had big downsides.
“If you try a recovery plan and it fails, then you really have made the situation much worse and you cannot help your students transition,” Ries said. “We feel like we're in a good position to help them transition, but we want to move quickly.”
And had Concordia's board gone the other way, and tried a recovery plan?
“The odds of it working were pretty slim.”
Looking forward, there are many unanswered questions. Ries said Concordia has been working on teach-out plans for specific programs, but leaders didn’t have details. University leaders anticipate selling the campus, but Ries said he wasn’t aware of any interested buyers and suggested a sale was probably years away.
One building will not be sold. Faubion K-8 — the school Concordia helped build with Portland Public Schools — is owned by PPS and will remain part of the school district. For the last few years, Concordia education faculty have worked out of Faubion, and Concordia students have spent time with Faubion’s grade schoolers. Ries said he didn’t know if another institution would step in to continue that.
According to a statement from Faubion administrators, there’s certainly hope that the “3-to-Ph.D.” program will survive.
“We are also in continuing discussions with our 3 to PhD partners about what the second iteration of the initiative should look like,” principal Karmin Williams said in a message to the Faubion community.