Knox College is designed to run on the tuition and fees of 1,400 to 1,600 students. This fall, Knox has 1,229. If the college is not able to compensate for the decline in enrollment, a growing financial deficit threatens the school’s stability.
“I relocated my family to come to Knox. I believe in the mission and I believe we are a survivor. I think there are times over the next five years where it might not feel like that,” said Vice President of Finances Paul Eisenmenger.
Knox’s decline in enrollment is not unique as the number of high school graduates has declined throughout the nation. Eisenmenger said the student drop between Fall 2018 and Fall 2019 was unanticipated. As the school has less students, its expenses exceed its revenue. Knox possessed a $3.4 million deficit for Fiscal Year 2019. At the early November Board Open Forum, President Teresa Amott said the deficit was then $4.5 million.
College enrollment is not projected to pick up again until 2026. In the meantime, faculty committees are discussing significant changes to the school’s academic program in order to bolster student retention. Where retention does not reduce the deficit, Eisenmenger is confident that the school’s sizable endowment can help Knox “weather the storm”.
Dean and Provost Michael Schneider said the academic program can be crucial in not only convincing students to see the value of a liberal arts education but to remain enrolled in one.
“If you are paying a lot of tuition, you should believe it is worth the investment that you’re making, not only your time, your resources, family resources, debts,” Schneider said. “So there is a really important way in which the curriculum and the experience in the classroom is a huge support to the budget.”
In order to advertise the value of their programs, Knox commits to capital projects such as the SMC renovations and the Whitcomb Art Center. Specific programs can also be key to making the school more attractive to potential students.
Besides the addition of the Bachelors of Science, Knox is currently searching for a director for the Peace and Justice Studies Program. By spring, a Journalism and Strategic Communications major will likely be added and faculty committees are exploring the idea of English-as-a-second-language certifications along with a major focused in entrepreneurship.
But even in a busy year, Schneider said the school would only hire four to five new tenure-track professors. Schneider compared the overall curriculum of the school to a large ship which can only change direction by a few degrees — a few positions — at a time.
“When you have a pretty steady state, reallocating positions just kind of has a natural churn. You’re just trying to maintain a steady state. But if we have to shrink a little bit but also do new things, the decisions become a little more difficult,” Schneider said.
Outside of staffing, faculty committees have entered the preliminary stages of possibly deciding on a new academic calendar.
“In an era or situation of budget difficulty, it’s only prudent to be able to defend and explain why your academic calendar is worth supporting, how does it support the curriculum,” Schneider said.
Schneider said by the end of the school year a suggestion will be made over calendar changes. Yet whatever significant changes the school may make to the curriculum or calendar, the pay off in enrollment is likely far down the road.
In the calendar’s case, the school will be unable to market it until the year it is already implemented and unable to study its effects in enrollment until the following year — giving a three year horizon before it may noticeably boost student enrollment.
“We saw an uptick … in student recruitment for the art building kind of just this last year. And the building has been completed for two full years now,” Schneider said.
The Knox endowment is a special pool of money which helps fund various projects and programs on campus — such as faculty salaries or the Power of the Student Experience grant. For the 2018-2019 school year, the endowment sits at $170,174,021 and has grown by about $86 million over the past eight years. It consists of contributions made by donors and the earnings Knox makes by having the endowment invested.
However, there are three different pools of money within the overall endowment: permanently restricted donor endowment, temporary restricted donor endowment and unrestricted board designated endowment.
“When we speak of the endowment, it is our greatest pool of resources,” said Eisenmenger. “It is just that it comes with some strings attached, meaning if it’s temp or perm, it’s got a donor restriction on it and we can’t spend it, can’t just say, ‘Oh, the donor wanted this to go to the scholarships, which, you know we really need a new roof on this building this year so we’re just going to pull it.’ You’ve got to honor the donor intent.”
Eisenburg said Knox has a larger endowment than many other schools its size, making it a strong resource on a “rainy day”. The Board of Trustees sets the percentage of earnings which Knox can spend from the endowment investments.
However, in times of financial strain, while it is helpful to use the endowment, using it too much can endanger the endowment’s overall amount and place the stake of the college’s financial health on the health of the stock market.
“The further our operating expenses get from our revenues, the more the endowment has to plug that gap. So when you’re leaning more heavily on the endowment, you run the risk of actually going in the other direction where you’re spending it faster than you’re taking it in,” Eisenmenger said.
Overall, Eisenmenger believes the progress Knox makes in increasing enrollment and taking advantage of the endowment can help Knox reduce the deficit and remain stable.
“Right now we have a deficit that has grown and you don’t get that all back in one fell swoop or one budget cycle, you really are looking at more of a glide path, back to balance, that may take three, four, five years but you try to whittle it away as best you can,” Eisenmenger said.