Penalizations by Accreditors

In recent new we have witnessed institutions that are struggling financially be penalized by their accreditors.  This only contributes to the cost disease of higher education.  Recently Lambuth University closed its doors after 168 years due to financial instability.  The university struggled for two years to become financially stable.  In 2009, Lambuth was listed along with over 100 other private institutions a school that failed a financial responsibility test by the Education Department.  Institutions were scored based on audits of financial statements 

After an unsuccessful appeal to reaffirm accreditation from the Southern Association of Colleges and Schools (SACS), the Board of Trustees was forced to cease university operations. Once accreditors withdraw accreditation colleges and universities typically have no other choice than to close as with Lambuth University.  If schools are not approved by federally recognized regional body such as SACS, they cannot receive federal financial aid.  This can be really detrimental to institutions that have a significant amount of their student population receiving some sort of federal aid.

In my observation the schools that face the biggest challenge of possibly losing accreditation like Lambuth University are smaller private institutions.  With the downturn of the economy, smaller institutions are finding it harder to compete in the big market of higher education.  In my own experience I have seen private institutions face financial difficulties for the following reasons: poor fundraising initiatives, embezzlement, mis-management of funds, and shrinking enrollment.  It seems that institutions continue to increase student tuition and fees yet it’s still not enough to pay the bills.  In addition to the normal tuition increases, institutions should look at other options.  One of the most important ways, in my opinion, institutions can fight cost disease in this instance is to hire and train top administrators to make financially sound decisions.  Administrators should be aware of the current trends in higher education finance.  I realize this may sound like a no brainer but to be honest before this course, aside from day-to-day budgeting like paying invoices, I never really delved into the current problems and analysis of higher education finance.  One option to increase financial stability could be to revamp fundraising initiatives.  This can be done by enhancing alumni relations as well as community relations.  In the same manner, institutions should also re-visit recruitment strategies and projected enrollments.  Instead of following routine admissions procedures, a complete analysis should be done to find the areas in which the school has traditionally had the most influence as well as areas that could be considered new markets.  For instance, increasing dual enrollment programs serves a two-fold purpose: 1) It recruits high school students to the institution while 2) simultaneously increasing enrollment.  Lastly, partnerships with other institutions or organizations can help change financial instability.  For example, in order to decrease debt and allow Lambuth students to continue enrollment, the state by way of the University of Memphis decided to take over Lambuth.

Field, K. and Richards A. (2011). 180 Private Colleges Fail Education Dept.’s Latest Financial-Responsibility Test. Chronicle of Higher Education Online. Retrieved October 24, 2011 from http://chronicle.com/article/180-Private-Colleges-Fail/129356/     

Morgan, R. (2011). Board of Lambuth University in Jackson votes to cease operations June 30.  The Commerical Appeal Online.  Retrieved October 24, 2011 from http://www.commercialappeal.com/news/2011/apr/14/lambuth-university-jackson-close-its-doors-june-30/