Update from Kathleen Bowman

President Kathleen Bowman recently addressed alumnae at the Winter Wonderland Weekend. In her remarks, which are below, she addressed the challenges the College is facing in the current higher education environment and explained the Board’s decision to engage in the current strategic planning process.

WINTER WONDERLAND 2005
Remarks by President Kathleen G. Bowman

I speak to you tonight at my last Winter Wonderland Weekend. Daniel and I have enjoyed these intimate December gatherings with alumnae over the years, and we will miss the tradition of officially beginning the holiday season in this special way. I note with sadness the absence of Nancy Lininger, one of the most faithful participants in WWW, who passed away this past year. I also want to thank to Muriel Casey and Heather Garnett for their work in putting this year’s event together.

College presidents in their last year of office are normally engaged in reflection, assessing institutional accomplishments and savoring the rituals of an academic community for the last time. And I am doing some of that. But for the most part I am engaged, as is everyone in the College community, in a very intense process of examining the College’s long-term future. I find myself in a unique position—being able to look back at all that the College has achieved during the past 12 years, as well as look forward to how the College might, over the next 10 to 15 years, reposition itself while retaining its unique strengths and values in a rapidly changing environment. So tonight I want to share both a reflection on where we’ve come, and a commentary on the higher education landscape for the future—the context in which our planning takes place.

Over the past 12 years, we have succeeded in developing a 21 st century expression of the College’s historic mission of educating and empowering women. We have attracted some of the brightest young women from around the country and the globe to a vibrant liberal arts community committed to excellence---one that develops leaders who can address the challenges of a world in which women play an increasingly crucial role. We have increased both the diversity and quality of the student body; developed new academic majors in Environmental Studies and American Culture; greatly strengthened Asian Studies, Global Studies, and the sciences; developed the Susan Davenport Global Leadership Program; established a vigorous program of student/faculty research; developed endowed professorships to bring international scholars to the campus; and created programs to give faculty and students global experiences that have changed their lives. Our success at creating a thorough-going international community was validated when, in October 2003, the College was nationally honored as an exemplar of successful globalization.

We entered the 21 st century in many other ways. During this period we greatly strengthened athletics---a huge area of demand for today’s young women given the success of Title IX. More than 60% of our entering students played on at least one varsity sport in high school. We improved the status of our coaching staff; developed new recruiting strategies for scholar-athletes, and built a new athletic soccer and softball field that is the envy of the ODAC conference. We created a first-year program that includes a major wellness component so that young women establish good habits as soon as they enter the College gates. And we now have architects at work designing a new fitness and activity center to replace the woefully outdated 1961 PER building. In that regard, I would like to acknowledge the latest gift to this project, from Becky Rawls Habel ’73 and her siblings, to name the athletic director’s office in honor of their mother, Mary Helen Macklin Rawls ’46. Becky and Jim are here with us tonight-- would you please stand?

We also brought state-of-the-art technology to classrooms, residence halls, the library, and student social spaces. We completed a multi-million dollar facilities enhancement program, preserving the historic beauty of the College’s architecture while developing contemporary spaces for teaching, learning, and performance. Those renovations converted an old Pines House into magnificent art studios and transformed 23 classrooms, the Leggett Building , Smith Hall Theatre and Presser Recital Hall. And finally, we created major public programs, such as the Pearl S. Buck Award and the annual symposium, that have raised the College’s public profile both regionally and nationally.

All of these significant transformations were part of a strategic plan initiated upon my arrival and developed by the College community in the mid-1990s. They have been supported by the success of the largest capital campaign in the College’s history, aptly titled “Changing Lives for a Changing World,” which began with a goal of $75 million and will conclude this June with a total of $100 million.

So here we are: a College with an astonishing track record of producing bright and successful graduates; strong and vibrant academic programs; an endowment of $133 million; and the largest campaign in the College’s history with current commitments of more than $96 million. Why, given all of this, did the Board of Trustees see fit to begin a process that has resulted in market research, valuation of College assets, even a study of the possibility of going co-ed? As many of you have put it, “How can all of these wonderful things be going on at the College, and suddenly we learn that there are major challenges to address?”

The answer lies in the dramatic changes in both the marketplace and the economics of higher education that have been developing over the last decade and are now being felt keenly by small private liberal arts colleges, and particularly women’s colleges.

We are not an institution in financial crisis. We have the financial resources and talent to sustain us for quite some time. But, given the market forces I am about to describe, you will see the Board’s wisdom in engaging in long-term planning now, with the College in a position of strength, rather than waiting 8 or 10 years with the risk of our market position deteriorating and our resources deployed in unwise directions. Many institutions have made that mistake. Your alma mater will not.

What does the landscape of higher education look like, and how is it already affecting R-MWC? As an editorial comment, let me say that I am personally dismayed by some of the societal trends I am going to share with you tonight, but as a College community we must nonetheless confront their reality.

Decline in Demand for Private Women’s Colleges and Liberal Arts Colleges

This is an era in which the vast majority of students are looking for large, public, co-educational, and professionally-oriented institutions, often in or near large metropolitan areas. How is R-MWC experiencing this trend? Every year we identify the top ten institutions with whom we share applicants—what we call our “overlap” institutions. Over the past decade, that list has changed significantly. Over time there have been fewer and fewer women’s colleges, fewer and fewer liberal arts colleges, and more and more public institutions on the list. This year, seven of our top ten overlap institutions were public, co-educational institutions—the highest number ever.

When Art & Science conducted its market research on Inquirers (those prospective students who had requested information about the College), they found that not a single private college was named as the preferred college of those surveyed. In that same Inquirer data, co-education was a factor three times as powerful as any other in explaining respondents’ preferred schools. Moreover, nearly half of our admitted applicants (those who completed the application process at R-MWC and were notified of their admission) said they preferred co-education. Those of you with daughters, granddaughters, or nieces understand this trend toward co-education very well. It is very difficult to persuade a 17-year-old to seriously consider a women’s college.

Seventeen-year-old high school students now believe, whether it is true or not, that their empowerment has already occurred---through single-gender K-12 education or through single-gender math and science classes in public schools, or because they naively believe that their voices will be heard in co-educational classrooms and that equal opportunities await them in the workplace. Admissions staff of women’s colleges routinely hear from high school counselors that they “don’t have any students who ‘need’ a women’s college,” reflecting the growing view that women’s colleges are for those who require special attention and emotional support to get through college. This concern is expressed frequently at meetings of women’s college presidents, and one of the Counseling Center staff observed this fall that we seem to have more “wounded gifted” students than ever before.

It should not surprise us, then, that there are now only 61 women’s colleges, compared to the 84 when I came to R-MWC in 1994, and the more than 300 that existed prior to the era when men’s colleges began to admit women.

Being a liberal arts college also has its challenges. Studies have shown over and over again that the general public has very little understanding of what a liberal arts education means. AAC&U, for example, recently conducted focus groups with current and prospective college students from four regions of the country. Here are some of the findings from an article by Carol Geary Schneider and Debra Humphreys:

We found that high school students are almost entirely

unfamiliar with the term “liberal education” and that

college students are only somewhat familiar with it . . . Some

think it occurs only in the arts and humanities, rather than in

the sciences . . .

 

 For some students, a liberal education is one that is politically

skewed to the left. As one college student put it, it is education

directed toward alternative methods, often political in nature.”

Whether the pendulum will eventually swing back to women’s colleges, small private liberal arts colleges, and colleges in settings away from big cities is an interesting question. Prevailing demographic movement is toward cities, and the current cultural assumption is unfortunately that bigger is better—whether it’s SUVs, hamburgers, McMansions, or the seating capacity of football stadiums. Those of us who have experienced the intimacy of a classroom of 10-15 students and professors who not only know your name and but also your talents and aspirations understand perfectly well that bigger is not better. But to a 17-year-old student, the lure of a university campus is very powerful.

College Cost

Another major trend has to do with the issue of college cost, which has risen dramatically over the last decade. The explanation lies in the tremendous increases in the cost of educating students, who in fact pay only about a third of what it costs to educate them. Institutions face escalating costs in health care, utilities, library and scholarly resources, technology, and many “amenities” that this generation of students is demanding—whether it is rock-climbing walls, apartment-style living, or gourmet food. Meanwhile, parents of this generation of students are bargaining for the “best deal,” and believe that their sons or daughters are entitled to scholarships. For most families, the bottom line drives most decisions. Parents of accepted applicants compare financial aid offers in the same way that savvy shoppers compare prices on the Internet. They routinely fax us offers their daughters get from other institutions and ask, “Can you beat this?”

From the standpoint of private colleges, a very important development occurred in the early 1990s. The federal government changed its definition of “need” in the awarding of financial aid, opening the door for institutions to use financial aid to shape their student bodies and to try to reduce the cost to the customer, so to speak, to something closer to the tuition of public institutions. This was the advent of tuition discounting. R-MWC began this practice in 1993, just prior to my arrival. It became what economists George Winston and Mike McPherson have termed an “arms race” among private institutions, in which the competition for students has had the adverse effect of lowering net student fee revenue. It also had an adverse impact on lower and middle class students, as more and more institutional dollars went into so-called “merit aid,” providing huge discounts for families who could well afford to pay the full bill.

The practice of tuition discounting has reduced net student fee revenue for R-MWC and other private colleges. It is especially acute at women’s colleges, since financial aid is often used as a marketing device to overcome other objections to looking at a single-gender institution. So while our enrollments have remained steady, and our student quality has actually increased, our net student fee revenue has increased only very incrementally and surely not in proportion to our increased costs.

Meanwhile, during this same period, the public sector has been busy repositioning itself. Huge state scholarship programs, such as the Hope Scholarship, have sprouted up everywhere, designed to keep resident students in their home state institutions. And a curious thing happened: study after study has shown that the wealthy more often than not send their children to public institutions, while private liberal arts colleges, with their tuition discounting, have become the places of access for middle- and lower-income students. (This finding has resulted from studies in state after state— Minnesota , Florida , Oregon , and others.)

Then, faced with criticism that they were not serving low-income students, the public universities responded with “access” programs that guarantee students whose families earn below a particular dollar figure an education that will leave them debt free upon graduation. William & Mary, one of our chief competitors, recently created “Gateway William & Mary" to do just this. While we can compete with William & Mary on the basis of quality, we cannot go head to head with them on the basis of price and expect to win. The same is true for the University of Virginia, another of our top five competitors. With the 18-year-old population set to begin to decrease in three years, competition is only going to intensify.

These are a few of the many challenges affecting the future of private colleges, and the Board’s strategic planning process is designed to look them in the eye and devise a plan for the financial stability of the College, not just for the next few years, but for the long term.

Achieving Financial Equilibrium

“Can’t the endowment solve the problem?” Surely, you might be saying, an endowment of $133 million throws off enough revenue to make up the difference.

Endowment income is indeed crucial to the College for operating revenue. In fact, over the past 15 years or so, as tuition revenues have remained relatively flat because of tuition discounting, we have become more dependent on tuition discounting.

During the bull markets of the 1990’s, when strong investment performance increased the value of our endowment, the Board was willing to increase our spending from endowment income. However, after the “crash” of 2001, in which the endowment value dropped from $152 million to $100 million, the Board wanted to do all it could to rebuild the endowment for our long-term security. It instituted a plan to reduce the spending rate gradually, and that rate now stands at 6.5%. As the spending rate goes down, we have fewer dollars for the budget, and the reduction required us to cut $1.5 million over the past three years in order to balance the budget.

The prudent spending rate for an endowment, however, is 4 or 5%. That is what protects the endowment against inflation and allows reinvestment of income to the principal. It ensures, in other words, that the College will exist in perpetuity without deterioration in its quality or spending power. Part of the proposed strategic plan, and the Board’s financial model, is to reduce the spending rate to 5% over the next five years. Thus, over time, the plan is for the College to garner an even smaller percentage of its operating revenues from the endowment.

Well, you say, what about gifts? Our alumnae are very generous, and we’ve just completed a big capital campaign. True enough. Our alumnae are exceptionally generous—so generous, in fact, that our Annual Fund is nearly double that of Sweet Briar and Hollins. When the Annual Fund is already performing at that level, however, it cannot expect to see rapid dramatic growth. Indeed, the Development Office set a stretch goal last year of $3.6 million—which is what we needed for a balanced budget, but we received only $3 million, a more realistic figure.

As for the campaign, we are facing the reality that more than 40% of the commitments made were deferred gifts—gifts we will receive after the donor dies. These are treasured gifts to be sure, but we have no idea when the College might benefit from them, which makes planning very difficult.

One of the realities of R-MWC is that historically it has not had “mega-donors” who make $75 million gifts or $100 million gifts or those transformative gifts that you read about in the newspaper—such as happened at the University of Richmond . In fact, in the campaign now concluding, we did not have a single gift at even the $5 or $10 million level; gifts in that range are considered crucial for establishing the nucleus of a successful campaign. Whether donors are reluctant to make gifts of that magnitude because they wonder about the viability of women’s colleges is an interesting question, and one to which we do not have the answer. So for the long-term future, it is not clear that we can count on large increases in major gifts. Even if we could, increased giving will not resolve the challenges we face in our marketplace of 17-year-old women.

What the College must do to ensure its future is threefold: increase giving; strengthen endowment; and improve our position in the marketplace. Work has been under way in each of those areas in the strategic planning process. A&S has already done a study of alumnae and will undertake a survey of selected donors in the spring. A consultant has examined our Annual Fund strategies to recommend improvements. An investment task force has revised investment policy and restructured the College’s portfolio.

The College must also take action so bold that it will create a larger applicant pool-- large enough to allow us to reduce the discount rate. Parents who are able to pay must also be willing to pay.

As you know, the Board originally asked Art & Science to probe the market to identify ways in which R-MWC could retain its status as a women’s college of high caliber yet be financially viable for the long term.

You know from Board President Jolley Bruce Christman’s letter that the market research findings were not especially encouraging in that regard. The researchers found that to remain a single-gender institution that is financially viable over the long term would require more students than the market research study suggested would be forthcoming, as well as more than $100 million of new unrestricted endowment within a period of five or so years. That is a major challenge.

Everyone in the campus community, including the Board of Trustees, hoped and expected that the study would show that with one of the distinctive future identities that were tested, we could capture enough of a shrinking market to sustain ourselves for the long term.

There is not time tonight to go into the specific findings of the market research (but do look for a summary on the Website that will be posted on December 16). But I do want to make a comment on the Board’s decision to proceed to do a second study—that of the co-ed option, this time to see if it is possible for R-MWC to retain its important rigor, character, and values yet attract men to an institution with a distinctive identity.

What is being done is a study of the co-ed option. Studying the feasibility should not be confused with an assumption of its desirability, and a study does not constitute a decision. It means that the Board is doing its due diligence and exercising its fiduciary responsibility here, as it is in so many other ways. The study will include men, women who previously expressed no interest in the College, and women who have indicated interest. It will also test whether any additional initiatives hold the promise of sufficiently dramatic market appeal to enable Randolph-Macon Woman’s College to remain a single-gender institution.

It is not yet clear that becoming co-ed would make a small private college in Lynchburg , Virginia , any more attractive. And there are other options being explored that include other revenue-producing programs and creative alliances with other institutions that might allow us to remain single gender.

I can identify with those of you who are troubled by the inclusion of co-education as an option to examine, just as you can well imagine my own feelings and those of my colleagues as this study goes forward. It feels invalidating somehow, to have market data that suggest that despite our quality, our values, our history, and our success at empowering women that we are somehow not attractive, that we may have to change some important dimension of our character. “Oh, you may say, she’s leaving in six months; she can’t possibly understand the feelings of alumnae."

That would be wrong. I came to Randolph-Macon Woman’s College because it was a woman’s college, because it was a liberal arts college of high academic standing, because of its unique character, its tone, its atmosphere, its energy. Indeed, I turned down a job at a good co-ed college in the Midwest to make this choice. I have spent 12 years living and breathing the mission of this College 24/7, advocating for it at every turn.

Loving this College and asking hard questions about its future are not contradictory. Indeed, to love it is to be vigilant about how it can best position itself in the midst of external forces beyond our control: a society that values big over small, ordinary over excellent, credentials over real education. It is a society that pretends that women have equal standing with men. It is a society that therefore does not teach many of its 17-year-olds to look seriously at places such as Randolph-Macon Woman’s College.

Nonetheless, I have great faith that the innovative and pioneering spirit that created our College will prevail. That solutions will be found that honor the values and dreams that we have all found so electrifying behind the red brick wall.

We ask for your help in keeping the faith, in spreading the messages I have conveyed tonight to your fellow alumnae, for reducing rumor and alarm, and for remaining engaged with the College, giving us your views and your support.

As always, I thank you for all that you do for the College, and I will miss you all next year when the first weekend in December rolls around.