Judson College board of trustees votes to close school

The Judson College faithful fought hard for five months trying to save the school, but in the end it just wasn’t enough.

During its regularly scheduled meeting May 6, the board of trustees pulled the trigger on what they had hoped wouldn’t happen — a vote to close the 183-year-old institution. Eighteen members of the 24-member board voted in favor of suspending academic operations and to move through an orderly closing through Chapter 11 bankruptcy.

The board appointed a committee of five executive committee members to work with school officials and bankruptcy counsel going forward.

“New donors did not materialize, student retention is much lower than expected and mounting debt pressures have increased,” Judson President Mark Tew told The Alabama Baptist. “The combined effect of these three items left us no choice.”

All avenues and potential large-scale donors have been explored, as well as all options for mergers, and only about 80 students are registered for the fall, down from 145 in December. Only 12 new students had been recruited for the fall as of early May. The mounting debt pressure is stressing the school’s cash flow and now prevents any chance of meeting the $9.1 million budget for the 2021–2022 academic year that begins June 1.

The board’s April 2 decision to forge ahead despite coming up $3.7 million shy of the needed $5 million in pledges stimulated the Judson students, faculty, staff, board and alumni toward the possibility of finding a path forward for the school. Along with its historic tie to Alabama Baptist life, Judson also serves an important role for the economy of Perry County and the town of Marion.

People across the county, state and nation desperately worked to save the school, Tew said.

“I really thought we could do it. I share the heartbreak of this decision that is felt by generations of Judson students, faculty and friends,” he shared. “While I have no doubt this is the right decision, my heart still sank as each affirmative vote was cast. At that moment my mind was drawn to Isaiah 46:10, where God declared, ‘I will accomplish all my purposes.'”

Board chairperson Joan Newman acknowledged the difficulty of the decision as well.

“Today’s vote is the outcome of months of interviews, research, fundraising, and yes, prayer. Acknowledging the incredible legacy of Judson, acknowledging the thousands of lives that were changed through a Judson experience and grateful for my own personal journey at Judson, it is with a broken heart that I accept the Board’s vote to suspend instruction,” she said.

Next steps

Next steps include completing the summer-related terms and then discontinuing academic operation after July 31, closing residence halls May 31 and moving immediately into an orderly shutdown with a phased workforce reduction, Tew explained. 

College officials will assist each student with transfer plans, taking into consideration their majors, remaining hours to graduation and institutional preference, and will work to help employees transition successfully as well.

Judson also will complete its corporate transition according to closure regulations of the Southern Association of Colleges & Schools and the U.S. Department of Education, Tew added. 

Alumnae and friends who made statements of future financial support for the 2021–2022 academic year will not be obligated to complete their gifts. 

“Judson has served the cause of Christ through Christian higher education for young women with uninterrupted dignity,” Tew said. “It now falls to the current trustees and administration to transition to Judson’s final days with equal dignity.” 

Background

Tew has been working to obtain a clear picture of the college’s financial situation and opportunity to avoid a crisis since coming to the role in March 2019, but it wasn’t until early December 2020 that he had to deliver an urgent appeal for help.

On Dec. 15, Tew explained that in order to open in January 2021, Judson would need $500,000 in unrestricted cash donations and another $1 million in unrestricted commitments of gifts to complete the spring semester.

Just 13 days after the announcement and five days before the Dec. 31 deadline, the Judson community, alumnae and friends mobilized quickly to provide the needed funds.

The school had secured $500,000 in cash donations and was halfway to the commitment goal of an additional $1 million. The board convened Dec. 31, 2020, and approved moving forward with the spring 2021 semester.

Of the total $1.5 million given or pledged, almost half was provided by alumnae.

Research report

Also approved by the board in December was the engagement of the services of Fuller Higher Ed Solutions to research the college’s changing markets and to explore potential avenues. The group conducted a review of the college’s financial situation and met with focus groups of students, faculty, staff, alumnae and board members during the first few weeks of 2021.

Fuller’s findings, outlined in this report, indicated two choices for Judson — to close “with dignity” or to “invest in turnaround.” The board received the report Feb. 19 and then held meetings Feb. 22, Feb. 26 and March 3 to deliberate over the findings.

The board approved the $9.1 million budget for the 2021–2022 academic year April 2. Also, during that meeting, the board affirmed the leadership and work of Judson’s president and staff members and expressed support of them going forward.

The newly adopted budget included action items for selected recommendations of Fuller. An update on plans for the action items as well as a report of new donors and resources was anticipated for the May 6 board meeting.

Judson’s financial journey

In recent years, Judson has operated on a roughly $9 million annual budget with 76 employees. Most expenses go to academics followed closely by care of the campus.

While Judson does have a board-operated endowment of $9.8 million, and another more than $6 million in perpetual trusts held by others, including The Baptist Foundation of Alabama, almost all of these funds are donor-restricted for scholarships. Judson does use earnings from the endowments as part of its annual income, along with students’ tuition and fees, about $1 million provided from gifts through the Cooperative Program, and $500,000 to $800,000 from donations.

Judson also received more than $2.4 million through the pandemic-related federal and state relief.

Without those funds, the school would have had to close in the fall of 2020, Tew reported.

According to the Fuller report, tuition brings in a little more than $14,000 per student per year, but the cost to the college per student per year is roughly $40,000 with current enrollment. That means the school has to make up a difference of more than $25,000 per student per year.

These numbers don’t include how room and board factors in, which brings in $10,000 per student per year. Currently, 127 students live on campus.

Judson also is out of options regarding credit because it already owes more than $15 million in unpaid debt.

Expenses were trimmed going into the spring semester by eliminating the associate in nursing program, restructuring the Summer Term, reducing personnel, and holding off on campus repairs/upgrades, but the $8.5 million budget remains out of balance.

According to Fuller’s estimates, Judson would need a windfall of $40 million to truly turn things around, even if that amount came in at $8 million a year for the next five years. The breakdown of the money needed, as outlined by Fuller, would be:

  • $5 million to close the operating deficit
  • $2 million to revive the buildings and infrastructure
  • $1 million for seed money for revamping and rebranding the school.

 

 

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