July 19, 2019; Chronicle of Higher Education
Cincinnati Christian University (CCU) has received a “show cause” order to demonstrate to the Higher Learning Commission (HLC) why it should not lose its accreditation. CCU began in 1924 as a seminary, and it continues to espouse Christian values; as it states on its school homepage, “CCU provides a Christ-centered, liberal arts education that prepares students to bring a Christian worldview into their chosen fields of study and build meaningful, successful careers.” Chris Hahn, the chair of the board of trustees, has asked for prayers as they face this challenge. His prayers have to cover a long list of missteps, poor governance, and possible malfeasance.
CCU has been struggling since the recession. Its enrollment in 2008 was almost 800; in the fall of 2017 it didn’t even reach 550. But many schools are facing falling enrollment; public higher education institutions have lost an average of 11 percent in funding in that decade, and many private colleges without substantial endowments face similar challenges.
CCU, whose mission statement includes “equipping and empowering their students with character, skills and insight,” began with the typical formula to fix its problems: cut expenses and attempt to bring in more funding. It has lowered enrollment standards to increase the pool of possible students. Laying off staff has increased the student-to-faculty ratio by 76 percent. As a result, student outcomes have declined. Retention rates for first-year students have fallen from 75 percent in 2014 to only about 50 percent in 2016, according to HLC. Graduation rates in 2017 were just 32 percent—a decline from the 38-percent graduation rate it enjoyed in 2015.
To attract more funding, CCU decided in 2015 to go all-in and bet everything on increasing athletics substantially, including plans to build a $5 million stadium, and revising the academic mission. That strategy did not have the desired result. The football team added to the debt, and enrollment continued to sink.
The school owes millions of dollars it cannot cover, including a $5.8 million mortgage at Central Bank & Trust. Before the announcement in 2015 that they were starting a football team, CCU spent only $1.28 million on all 11 women’s and men’s sports. A year later, they spent that on just the new football team.
“There is substantial doubt about whether [Cincinnati Christian] should remain accredited,” HLC relayed to the college president in a July 11th letter.
The HLC, founded in 1895, is an accreditor for degree-granting post-secondary educational institutions in the North Central region of the United States, a 19-state region that spreads from Arizona to West Virginia. A school that loses accreditation cannot obtain federal student aid, which would force it to close.
Beyond any perceived missteps in perhaps going too far in lowering standards or cutting too many faculty and staff, there is the issue of poor governance. HLC has placed blame for a litany of noncompliance and failure at the feet of the school’s leadership, starting with its president, Ronald Heineman. Heineman describes himself as a turnaround consultant with a master’s degree in Pastoral Counseling and some experience in running businesses. He has been fined and penalized by the US Securities and Exchange Commission (SEC) for making false statements to auditors while serving as the ostensible head of several associated companies controlled by a convicted criminal.
HLC believes that CCU’s trustees have forsaken responsible governance by naming Heineman as president without clear documentation in March 2018 while he was, and remains, a trustee. The accreditors found no minutes for a meeting that made the decision to appoint Heineman. There is no job description, and to date, no evaluation.
In addition, Heineman owes over $300,000 in state taxes, and he was in charge of the board of trustees’ finances while trustee. It is not apparent why the trustees—a group of people charged with being overseers, fiscally bound to this Christian institution that purportedly teaches character and oversees a $13 million budget—abandoned their responsibilities.
The HLC also states that Heineman puts the interests of the school’s creditor bank, Central Bank & Trust, above CCU’s. Heineman has been appointed “chief restructuring officer” to oversee the bank’s line of credit to CCU. It appears that Heineman single-handedly runs the whole show.
Still, that is not the worst of the CCU mess. The school’s set of published values really fall apart at the handling of its endowment. For nonprofits, the rules for endowments are sacrosanct. Donor agreements are fait accompli—for the IRS and individual states, endowments, trusts, and bequests are legally bound. The audit found that CCU has spent both earnings and principal of its restricted endowment, even using the endowment as an asset to acquire a loan. With the exception of Pennsylvania, all US states have enacted the Uniform Prudent Management of Institutional Funds Act (UPMIFA), which governs the endowments of nonprofits and educational institutions and how they are invested and spent, notwithstanding any donor restrictions in place. CCU is seriously out of compliance with Ohio’s UPMIFA. The institution has not kept its collective word to its donors, betraying their trust.
Paula V. Smith, a professor at Grinnell College and author of a book on risk management in higher education, says, “For me, the overwhelming impression from the letter is that the university looks like it’s in dire financial straits. The academic quality is eroding, and it’s difficult to see what anyone could do to turn that around.”
CCU gambled on a questionable leader and a lack of fiscal governance. It put a brand-new football team in an already crowded field and then turned to illegally plundering their endowment to pay overdue bills. It appears that the leadership should be the ones sitting in the classrooms, learning character, skills and insight.—Marian Conway