Recent moves show Wesley College is trying to shore up financial health
Millions in state taxpayer dollars have not alleviated concerns about whether the private Wesley College can remain financially solvent or if it will merge with or be absorbed by another institution.
The state has given the Dover liberal arts school more than $2 million – and approved another $1 million – since 2018. In June, the U.S. Department of Education placed the school on a monitoring list for the second time in three years because of concerns about “financial responsibility.”
Money intended for renovations has instead been spent on operating costs. In September, the school discussed rerouting money from a scholarship fund to also help cover costs.
Robert E. Clark II, president of the college, acknowledged the school’s financial "challenges" and the maneuvers to deal with them but said this is not a new situation for Wesley and he is confident in the school's future.
It is part of a larger problem, he said, that similar small schools across the country face. Wesley has to break with the traditional business model of small private colleges if it hopes to survive, he said.
“Do we have extreme challenges? Absolutely,” Clark said in a phone interview. "You and I could be having this discussion 10 years ago, 20 years ago, 25 years ago.”
While Clark said financial problems are nothing new, the infusion of state money into a private college is not common.
There are other signs that the school's financial troubles are more extreme this time around:
- The school is seeking potential partners, but Clark would not comment on specifics. Wesley could join forces with another school, or it could be absorbed under the umbrella of a bigger college. “It’s a wide spectrum,” he said.
- Last year, the state gave the college $1.375 million to renovate the old Dover Public Library. This June, with the Legislature's permission, the school reallocated that money to cover general operating expenses.
- This year, the state gave another $1 million to Wesley to “retain the proper account balance” so that the federal government would continue to provide students with financial aid.
- The state also approved an extra $1 million this year to be released to Wesley on an as-needed basis.
- Over the past year, three school administrators deeply involved in fundraising and enrollment have left — the vice president for enrollment, the vice president for institutional advancement and the chief financial officer.
- Undergraduate enrollment has declined in the past six years, from 1,600 students in 2013 to "approximately 1,200" this fall, Clark said.
In August, the school presented cash projections to the state in its request for additional taxpayer money, but the information was blocked to the public because it was considered private.
“It’s easy to say, ‘Well shoot, maybe Wesley should have thought about this years ago,’ and that’s probably a valid question,” said Clark, who came to Wesley in 2015. “But I can’t talk about the past. I can only give you some insight into what we’ve been doing and how we’re going forward.”
There are also conflicting reports as to whether the board of trustees plans to shore up the school's finances by using $1.75 million originally designated for student aid.
Clark vehemently denied "any discussion of using donor designated student aid funds for anything other than their intended purposes," in an email to The News Journal.
However, a summary of September's board meeting obtained by The News Journal includes detailed notes about the student aid money and how it is able to be maneuvered to operating expenses.
The summary is recorded by faculty liaisons and includes in-person notes taken at board of trustees open sessions, as well as summaries drawn from committee minutes and executive session reports.
Two faculty members with knowledge of the role told The News Journal that liaisons first send a draft summary to the college provost, who offers recommendations or strikes inaccuracies.
The summary is then sent to faculty members. September's meeting summary was recently approved by the provost and emailed to all faculty members.
The student aid money, willed to the school in the 1970s, was originally restricted to loans for students. However, when Wesley stopped giving out loans itself, the board added it to to a "miscellaneous" scholarship fund, freeing it up to later be used for other purposes.
A resolution to reclassify the funds is "known to have passed during the executive session," according to the document.
When asked about the document, Clark said that because the summary is not the official minutes approved by the board, it "lacks any validity" — even though it is distributed to all faculty members — and is a "subjective" and "perceptive account."
Wesley’s inclusion on the Department of Education’s cash monitoring list puts the school’s finances and administration of federal student loans under stricter oversight. Schools have to meet certain financial standards in order for students to access federal financial aid, like FAFSA.
“That’s nothing new, and that’s a lot of schools,” Clark said of being on the list. “Wesley continues to be financially responsible. They’re just monitoring.”
Wesley was last under financial scrutiny by the federal government for a six-month period in 2017.
The school first received tax dollars in 2018 to renovate the old Dover Public Library, which was bought from the city for $1, with the understanding the school would renovate the building in the central business district.
A spokesman for the state budget office, who has been working there for three decades, said it was the first time he remembers a private college getting state money for capital projects.
Clark said the focus shouldn't be on whether the state is investing in a private or public institution, but whether that institution can bring the state a high return on investment.
"Is it private or is it public? I think that's the wrong measure of investment,” he said.
But details regarding the potential return on the state's investment are scarce.
While Wesley has provided some financial documentation to the state — most of which was redacted when requested by Delaware Online/The News Journal — the public is largely unable to get the full picture of the school's financial state.
Because Wesley is a private institution, its books are not open for public review. Its most recent publicly available financial documents are more than 2 years old. As a nonprofit, it discloses limited financial information on federal form 990, but those forms are traditionally 18 months to two years behind.
Board of trustees meetings are closed, and minutes aren't reported publicly. Emails from the school are not subject to freedom of information laws, and annual budgets are not available for public review.
Sen. Colin Bonini, R-Dover, continuously points to the school’s economic impact to justify giving a private institution taxpayer dollars, both in the jobs it provides Kent County and from alumni who stay and work in Delaware. Supporting Wesley is akin to the state giving private companies money to support economic development, he said.
Bonini is a Wesley alum and one of the school’s most vocal supporters in the General Assembly. He advocated for the taxpayer allocations to the school.
The school employed 940 people in 2016, according to its most recently available financial documents.
“Economically, we can’t afford to not have Wesley,” Bonini told The News Journal.
There is nothing wrong with giving a school that is “having some financial difficulties” money to help “right the ship,” Rep. Sean Lynn, D-Dover, told The News Journal in June.
The new state money will help Wesley “maintain and operate at the level that it has been able to historically,” Lynn said.
But according to some faculty members, operations have been historically tenuous. Professors who have been at the school for over a decade told The News Journal that rumors of closure or takeover by another institution come up every few years, and even more frequently in the past three.
Receiving $2 million from the state this year felt anticlimactic to some professors. Administrators had built up the possibility of obtaining state money as a do-or-die moment, urging faculty not to do or say anything that would jeopardize the school receiving tax dollars.
The money didn’t feel like an investment, they said. It felt like a Band-Aid.
The Longwood Foundation also gave Wesley $1 million to help renovate the library. That money also has been rerouted to cover operating expenses.
The school requested "some flexibility," which the foundation agreed to, said Thére du Pont, president of the foundation.
"If they have any shorter term cash flow need, they could use the funds for that in the short run, as long as they get the project done," du Pont said.
Of the money contributed by the state and Longwood Foundation to the library, “hundreds of thousands” have gone toward the initial design and zoning stages of renovations, Clark said. The library is meant to house the master’s of occupational therapy program.
Wesley is not unique in its financial struggles. Some small liberal arts colleges with low endowments have struggled to stay open for years.
Declining enrollment is a national trend. For instance, enrollment at Pennsylvania State System of Higher Education colleges has declined 20% since 2010.
Since 2016, 23 small liberal arts colleges have either shut their doors or merged with other institutions, according to Education Dive, an online education news outlet based in Washington, D.C.
Wesley is actively seeking potential partnerships, and even plans on hiring a consultant firm to help market itself to other schools, Clark said. Without going into detail, he said the school does “have several suitors.”
Undergraduate enrollment has declined nationwide, putting extra pressure on schools like Wesley that rely on tuition as a main source of revenue. Schools tighten budgets each year as operating expenses climb and enrollment dwindles.
Last fall, Wesley enrolled 1,228 undergraduate students, a 15 percent decline from the previous year. Beyond getting students in the door, the school also struggles with retention: 57% of students who enrolled as freshmen in 2016 returned the next fall, according to federal data.
Wesley saw a continued decline in undergraduate enrollment this year and did not meet projected numbers, Clark told The News Journal.
The school may request more state funds, but must first demonstrate “a sustainable financial plan for the future,” said Robert Scoglietti, the spokesman for the state Office of Management and Budget.
“I’m going to continue to find investors where and when I can," Clark said. "And I’m going to continue to ask investors across the spectrum — state, business, foundations — to invest in Wesley. Do I see us asking for some more? More than likely.”
Natalia Alamdari covers education for The News Journal. You can reach her at (302) 324-2312 or firstname.lastname@example.org.