Discover more from Econ Soapbox
That time a college tried to close itself
Why is it so hard to admit when you're wrong?
In March of 2015, the Board of Directors at Sweet Briar College made a shocking announcement. The college would be closing at the end of the academic year. The board vote was unanimous; all students would have to find a new college for the 2015-2016 school year, and all faculty and staff would be terminated in August 2015.
Sweet Briar College is a unique institution. Nestled in the woods of Virginia, it lies at the foot of the Blue Ridge Mountains. The campus is large relative to the student body. There are almost six acres of land per student! Sweet Briar also has challenges, notably being a women’s liberal arts college. Both women’s colleges and liberal arts colleges have not done well over the last half-century. By combining the two, Sweet Briar put itself in a difficult position.
Econ Soapbox is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
This announcement sent shockwaves through higher education1. Every year some colleges close. Contrary to some of the fear-mongering in the media and in higher ed itself, this isn’t the sign of a systemic problem. Institutions that close are usually small, underfunded schools that have existed in a zombie-like state for years. Generally schools with under 1,000 students and endowments under $10 million. Even then, the “closure” is usually a merger or takeover by another college. Students are allowed to transfer and most full-time faculty keep their jobs.
Sweet Briar’s potential closure was different. First, it’s somewhat well-known in higher education circles because of its uniqueness. While being a women’s liberal arts college in the woods of Virginia is challenging in some ways, it also provides a niche. Where else, for example, can a student learn on a liberal arts campus with a robust equestrian program? There may only be a few thousand students interested in such an institution, but that’s all the school needs and there are no competitors. Second, Sweet Briar has a robust alumnae network2. There are a lot of successful women from wealthy families that have attended Sweet Briar over the decades, especially from when single-sex higher education was more prevalent. Third, there was no prior indication that Sweet Briar was having financial difficulties. Schools that close often do so after a long decline.
Because of these reasons, outrage soon followed shock. Even when institutions of higher education close, they always announce this at least a year in advance. Often the gap is even longer, to allow current students to graduate and faculty to find another position. Telling students and faculty in March 2015 that the school would close in August 2015 is terrible timing. Both the admissions cycle for students and recruiting cycle for faculty for the 2015-2016 academic year had passed, meaning that everyone was left out in the cold.
Doubt also immediately rose as to the necessity of the decision. Sweet Briar certainly had its challenges. Enrollment had been falling for years. The school was using the endowment to cover operating expenses. Again, it is worth mentioning that demographic and cultural trends were working strongly against a rural women’s liberal arts college. That said, the financials of the institution weren’t that perilous. The college had an $84 million endowment. That’s not a healthy amount, but given operating expenses of $56.4 million, an operating deficit of $1.2 million, and $25 million in debt, the school was not on a precipice.
Defenders of the board’s decision will be quick to point out that a majority of the endowment was restricted, and thus could not be drawn on to maintain operating expenses. This was true, but it also is telling about the state of mind the board was in when it decided to close. Yes, a college cannot spend restricted endowment money to keep the lights on. However, Sweet Briar still had millions in its unrestricted endowment. Additionally, restricted endowments can be freed up during times of financial exigency or for other reasons.
This is where Sweet Briar’s Board’s actions become questionable. The school was sinking. However, there were no efforts made to right the ship. The board could have asked a court to free up some of the restricted endowment. The school could have spent millions in a last-ditch recruiting effort for future incoming classes. Most obviously, the college could have sent out a mass appeal to its alumnae network. They did none of them. The only path they seemed to have pursued was a merger with the University of Virginia, which came to naught. Instead, things went from business-as-usual to closure overnight.
The Sweet Briar community was not going to take this decision lying down. Within days, graduates and other friends of the university banded together and formed a non-profit called “Saving Sweet Briar”. Their initiative had three goals. First, replace the board of directors. Second, keep the school open for the 2015-2016 school year. Third, raise enough money to ensure the college would remain open. Saving Sweet Briar, along with several other individuals and groups, sued to keep the school open. They also demanded that the board resign. Additionally, the Sweet Briar Faculty unanimously endorsed a no-confidence motion of the board of directors and asked for their resignation.
This is when the board’s decisions went from questionable to doubtful. The board refused to resign and doubled down on its decision. The president of the college, James Jones, said, “To save Sweet Briar we would need $250 million into the permanent endowment tomorrow morning." Paul Rice, the chair of the board, said, “We have moral and legal obligations to our students and faculties and to our staff and to our alumnae. If you take up this decision too late, you won't be able to meet those obligations.” Members of the board wrote op-eds in the Washington Post defending the decision to close. The president’s statement is a gross exaggeration; a school with a $330 million endowment and a $56.4 million operating budget is in fantastic shape. Concerning the chair of the board’s claim, I’m not sure how any obligations are being met by closing with no notice.
What makes no sense about all this is that the chair of the board is correct in saying that board members have moral and legal obligations to do what’s right for the institution. How they could collectively abandon these obligations in their entirety makes no sense. Board members aren’t chosen at random, they often have a strong vested interest in watching their organization succeed. On top of that, of the 23 board members, 20 were alumnae! They must have convinced themselves they were doing the right thing. A video of the board meetings leading up to the closure decision would make for a fascinating psychological study. How did a group of 23 people committed to the betterment of an organization convince themselves that the only way forward was an unorthodox immediate closure? Some kind of destructive groupthink must have taken hold.
These are half rhetorical questions, but also half serious. I honestly don’t understand how a group of people can get into such a mindset. Even if, and this is a big if, closing more suddenly and while in a better financial position than any other college in US history was the right decision, why fight tooth and nail to prevent others from saving it? The board essentially said, “We are the group responsible for our organization’s well-being. We have decided to close in a manner and under conditions that any objective analysis would find questionable. We also refuse to let any other group even attempt to save this organization. It must close.”
Call this Sweet Briar Syndrome: when a group of leaders becomes so convinced their organization’s downward path is so inevitable, they refuse to let anyone prove them wrong and fight to make it so.
Fortunately, the story of Sweet Briar College has a happy ending. After mediation and under the threat of further litigation, the chair of the board and a majority of board members agreed to resign. Saving Sweet Briar raised over $13 million in under four months, which was donated to the school after the new board took office. A new president was brought in. Admissions and recruitment were retooled. It isn’t all good news; many students and faculty left. To this day, the college is significantly smaller than it was in 2015. That said, the college is financially stable, with revenue exceeding expenses and a building endowment. Sweet Briar will survive. The board of directors was unequivocally wrong. But don’t expect any of them to admit it.
This article, titled “Is Sweet Briar’s Closure a Warning Sign for Other Small Colleges?” provides yet more proof that Betteridge’s Law of Headlines holds true.
Alumnae is the plural of alumna, or female graduate.