Darrell Kitchen, Wittenberg’s vice president for business and finance, said the change will have no immediate financial impact because the university has no plans to sell bonds, which universities use to raise funds for construction and other projects.
Board member and Springfield attorney Glen Collier said the university’s bond rating is different than its other qualities. “It doesn’t have any effect on the faculty, on our campus, on the quality of the students we continue to get, on the performance of those students while they’re here and when they leave. It’s the tail on the dog.”
Moody’s has downgraded the university several times over the past 10 years, ranking it now four levels below the average of schools in its category.
The report also confirmed what a newspaper investigation found in more than a dozen interviews with university administrators, faculty and board: that issues in the reports likely were involved in Erickson’s decision to “pass on the baton of leadership.”
Overcrowded market
“A lot of faculty don’t like the language,” said Jeff Ankrom, assistant provost for institutional research and planning, “but Wittenberg is a firm in a market.”
And a crazily overcrowded market it is.
Ohio is chock full of private colleges: Capital, Denison, Oberlin, Marietta, Wittenberg, Baldwin-Wallace, Mount Union, Otterbein, Heidelberg and Wooster were founded from 1830 to 1866.
Ohio also is flush with public residential, commuter and community colleges and universities. Among them is Miami, whose public price tag and private feel makes it “the 100-pound gorilla in the room” for Wittenberg, said Springfield businessman and former Wittenberg board member Pete Noonan.
A larger gorilla yet is demographics: As evidenced by the loss of two congressional seats, Ohio population is down, as is the supply of graduating high school seniors headed for college.
This is not a new problem. In an unpopular decision, former president William A. Kinnison moved Wittenberg from the Ohio Athletic Conference to the North Coast Athletic Conference in June of 1988.
“It got you into the Pittsburgh market, the Cleveland market — Cincinnati, Detroit, Indianapolis,” Kinnison said. “Just to compete for Ohio students did you no good.”
Geographic and demographic problems have been exacerbated by a shift in attitude away from the liberal arts. In part moved by college sticker prices and worries over student debt, more people see colleges as a “bang for the buck” proposition whose primary purpose is to land a first job.
Wittenberg soon was competing for a shrinking pool of students within a shrinking pool of students. A consultant brought in to help shore up enrollment called Ohio Wesleyan, Wittenberg, Wooster and Denison “The Bloody Four” because of their ferocious battles for students.
Said Noonan, “People don’t realize the kind of dogfight that Wittenberg is continually in for students, for the support of alums, for the support of other entities that put money into higher education.”
In “Liberal Arts at the Brink” released by Harvard University Press this spring, former Beloit College president Victor E. Ferrall, Jr. makes it clear Wittenberg is not alone.
Writes Ferrall: “Resuscitating (overall) demand for liberal arts education is the single greatest challenge liberal arts colleges face.”
‘Incoming’ students
When Wittenberg welcomed its incoming class of nearly 600 students Aug. 18, it welcomed its primary source of income as well.
As the June Moody’s report says, charges to students make up 73 percent of university income.
It follows incoming classes of 550, 531 and 535, whose low numbers impact the university financially for all four years before their graduation.
Former board member and Springfield businessman Tom Loftis said the need to provide more scholarship and financial aid to attract the best students “puts a strain on the operating budget” and will continue to do so.
“The only solution, in my mind, is to build up that endowment” to provide more funds, ” he said.
On endowment size, former president Kinnison takes a different view from Loftis’: “If you can focus resources on what you really want to do, it doesn’t take nearly as many.”
Whatever the philosophical differences, endowments buffeted by stock market slides after the Sept. 11 attacks recovered in time to be jarred by the financial crisis and are in state of flux again.
So Wittenberg and others have less room for operating error, something the latest Moody’s report says has been cause for concern.
Although it acknowledges Wittenberg’s efforts to control spending (faculty salaries were frozen for two years), Moody’s describes the period leading up to the bond downgrade as one in which “governance and management oversight” led to more spending from the endowment than is the industry standard.
Of 15 North Coast Athletic Conference and Ohio Athletic Conference schools with Moody’s ratings, only Wittenberg and Ohio Northern University share that low rating. The average or median rating in their category is A3, four notches above Wittenberg’s.
The latest Moody’s report noted “a $3 million draw from unrestricted endowment to fund strategic investments to try to grow enrollment through programs, recruiting and improved retention.”
Erickson said that what Moody’s sees as merely a draw on endowment, represents a strategic investment to move forward.
Moody’s also criticized Wittenberg for “heavy tuition discounting” — in essence, spending too much scholarship and aid money to boost enrollment.
Another issue it raised was “management turnover,” something that struck two of Wittenberg’s income producing departments: admissions and advancement.
Most surprising was the report’s recommendations for what the university might do to upgrade its rating. It simply said “Not likely in the foreseeable future.”
Erickson points out that neither this year’s strong recruiting class nor a recent $6 million endowment for the university’s Center for Civic and Urban Engagement are part of the Moody’s report.
“I was surprised by the extent of the downgrade,” Erickson added, “I’m hopeful as a reassessment is done we’ll find ourselves in a better position.”
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