Nyack College, a Christian and Missionary Alliance (CMA) school in the New York City area, received an independent audit in 2017 with an opinion any institution dreads: “substantial doubt about its ability to continue as a going concern.”

The evangelical school with a 120-year history in New York was looking at looming insolvency, according to the audit, because of its tens of millions in debt and falling revenues.

Nyack has about $70 million in debt, according to its IRS 990 forms, on which it paid about $4 million in interest in the 2017 fiscal year. The 2017 audit noted that Nyack had to withdraw the majority of the funds from its endowment to cover expenses (some of that has been paid back), stopped paying into employee retirement funds in 2015, and has violated its debt covenants. Still, the school has managed to stay open to offer classes this fall.

“They’re good Christian people dealing with a market that’s gone really south … [but] it’s an ugly financial picture,” said Thomas Bakewell, a CPA and attorney who has consulted with dozens of faith-based colleges and universities on financial issues. He also served for 15 years on the board of Lindenwood University while it went through a major financial crisis. (Bakewell hasn’t consulted for Nyack.)

Since 2010, Nyack has lost across its programs at least 1,000 students in its total enrollment, which was down to 2,315 in 2018. Each year since 2016 Nyack has been operating $6 million to $8 million in the red—huge losses for an institution with a roughly $60 million budget. From a random sampling of 990s, most similar Christian colleges operated in the black even with falling enrollment.

When Bakewell looked at Nyack’s 2017 audit, the most recent that is publicly available, what he saw was a “failing college,” but he cautioned that his assessment was based on a 2-year-old audit. Nyack declined to provide its 2018 audit, and New York State Department of Education officials said Nyack had not yet filed the audit with them—it’s due in October.

The U.S. Department of Education has the school on “heightened cash monitoring” because it scored a −0.2 out of 3.0 on its FY 2017 “Federal Financial Responsibility Composite Score,” where a minimum score of 1.5 is required to avoid federal monitoring.

Nyack is an extreme example of the financial crisis in Christian higher education, where falling enrollment has hit hard at schools without big endowments. Some colleges have closed in recent years, or lost accreditation, or looked to wealthy alumni and donors for big money bailouts. Cincinnati Christian University is one that is facing the possible loss of its accreditation over its finances amid falling enrollment (see below).

Financial minds think the best way forward for these schools is to stick to their Christian commitments and their educational mission as a way to remain a distinctive product that Christian students will choose. Schools also need to learn to be more nimble in making difficult reforms.

“It’s just demographics. There’s a limited pool there for everybody,” said Gary Carter, longtime CFO of Union University, a Southern Baptist college in Jackson, Tenn. “You’ve got to be careful that you don’t let the tail wag the dog,” he added. “You have to guard your mission and your identity, and what’s happening in the classroom.”

Nyack is selling its aging 107-acre campus in affluent Nyack, N.Y., about 30 miles north of the city, and consolidating the entire school (including its affiliate Alliance Theological Seminary or ATS) into six stories in a skyscraper in lower Manhattan, right around the corner from The King’s College.

The college characterizes the Manhattan move as a return to its roots because it began in New York City in 1882, focused on training missionaries. It moved to the Nyack campus in Rockland County in 1897. A century later the school began offering some classes in Manhattan, and then recently decided that the aging Rockland campus was “no longer financially viable.”

Though already straining under debt, the school in 2016 took out a $55 million mortgage from a French investment bank, Natixis, to buy its Manhattan campus and consolidate the school there. Students will live in housing in nearby Jersey City. With extra space in its Manhattan property for now, Nyack has been offering its available space at affordable rents to other ministries like Cru (formerly Campus Crusade for Christ) for offices in the city, a project called CoLab NYC.

The Nyack campus went up for sale this year, and President Mike Scales said the school has no particular requirements on who will buy the campus. The school has also recently taken out a $38.5 million loan from Procida Funding & Advisors (a non-bank lender) to help with debt and operations costs, according to a report in the Rockland/Westchester Journal News.

Nyack noted in filings with the state that the school had found the Jersey City dorm property through a philanthropist connected to the school.

Nyack administration and board members, as well as officials from the CMA, declined interviews.

Other financially struggling schools have taken a similar route of selling prime real estate and moving, although usually to less expensive areas. Fuller Theological Seminary announced in 2018 that it would be selling its historic campus in pricey downtown Pasadena, Calif., and building a new campus in Pomona, an area with lower housing costs. That would put “a Fuller education in reach of more people,” then-acting Provost Mari Clements told the Los Angeles Times.

Nyack’s retention has been difficult in the transition, as students don’t know exactly what is going on with the school’s plans. Nyack first announced that all classes and dorms would relocate for the fall 2019 semester, and then reversed course earlier this year and said it would continue operating on the Rockland campus this fall semester, with a planned start at the new consolidated Manhattan campus in the spring semester.

Kaelee Pearson, a rising junior from upstate New York, enrolled at Nyack because she wanted to go to a Christian college close to home that was affordable, and she loved Nyack’s racial diversity (it’s majority black and Hispanic). She has loved her two years at Nyack and was heavily involved in student leadership and other activities. But Pearson decided not to return for this fall semester because of the confusion and lack of communication to students over the campus changes. She said most of her friends have transferred. The school didn’t tell Nyack students about the possibility of a move into the Manhattan campus until November 2018.

“If there was more communication, they would have had a lot of people stay,” she said. “[President Scales] never apologized to us for making our lives crazy.”

She wasn’t sure if her Youth and Family Studies major could continue in the city, and said several of her professors from her major weren’t going to move to the city. (Scales said in a statement that all the same courses would still be offered.) Also, when she recently called the college, she found her financial aid counselor had changed to someone in the Manhattan campus.

“Communication-wise, you’re handling my money and I didn’t even know?” Pearson said. “I’m trying to give them the benefit of the doubt. Financially, they always try to make a way for me to continue going there. … But it is very unorganized at the moment and very uncertain.”

Pearson was also surprised that chapel, which she found a central part of the college’s spiritual community, would no longer be mandatory at the Manhattan campus. Other alumni have voiced concerns about this as well. Nyack said chapel would still take place three times a week in Manhattan, but did not answer a question about making it voluntary.

Instead of returning to Nyack, Pearson decided to take a yearlong internship that began this summer. Afterward she plans to transfer, and she’s thinking of attending another Christian college in Florida, where the cost of living is more affordable.

“I’m just going to trust God and see where He leads me,” Pearson said.

Douglas Oliver has been an online student at Alliance Theological Seminary, which is part of Nyack and shares its campus in Rockland. A member of the CMA, he’s also taught mechanical engineering at secular and Christian colleges. He is upset that schools like Nyack are accepting more students to fill up enrollment—Nyack’s acceptance rate is 98 percent—and Oliver wonders if all those students are college-ready. If not, they may drop out or transfer after incurring debt.

Oliver said Christian institutions in particular have a responsibility not to put students in that position. Right now he’s counseling a couple in his church who are deep in debt after the wife attended a Christian college and never graduated. He also sees the debt-based approach as leading schools to make unnecessary investments in amenities and athletics and thinks colleges should be more “bare bones” to bring debt levels down.

At the same time, colleges desperate for students are giving bigger and bigger discounts on tuition, sometimes as high as 60 or 70 percent. Union’s Carter says that creates its own death spiral because a college rarely can reverse that pattern to lower both tuition and the discount rate.

But big bailouts have helped Christian colleges find new life. When Oral Roberts University was suffocating under $52 million in debt, the Green family of Hobby Lobby wealth stepped in with a $70 million gift, and then stepped in with at least another $40 million in following years. The Greens pledged the funding on the condition of financial reform and leadership changes, and enrollment has been growing.

“Organizations become tradition-bound, and it’s particularly bad in higher ed,” said Bakewell. “They don’t adapt quickly.”

Fumbling the ball

Cincinnati Christian University, losing hundreds of students and millions of dollars, decided in 2015 to focus on athletics. Now CCU’s accrediting body, the Higher Learning Commission (HLC), has said the university is in grave danger of losing its accreditation.

The HLC issued the university a “Show-Cause Order” on July 11. It lists CCU problems including insufficient faculty, confused mission, and executive conflicts of interest. Some of the concerns stem from CCU’s 2015 plan to bring in more students and funding by building a football team and a $5 million stadium. CCU grew the number of student athletes from 150 to more than 400, but the number of incoming nonathletes in 2017 shrank to 39.

CCU laid off 34 faculty and staff members and hired David Fulcher, a former NFL player with the Cincinnati Bengals, as football coach. The faculty-student ratio soared from 1:21 to 1:37. The graduation rate fell from 42 percent in 2015 to 32 percent two years later. CCU halted plans to build the stadium. Meanwhile, the football team struggled: Last fall the team had zero wins and 11 losses and was outscored 574 to 90.

CCU President Ronald Heineman told me on Aug. 8, “We’re probably expecting 525 undergrads and 118 in our graduate programs.” Neither Heineman nor Jonathan Sams, vice chairman of the CCU board of trustees, was able to tell me the average SAT scores for incoming students, but Heineman said the students are “hitting the minimums” set by the National Association of Intercollegiate Athletics.

The HLC requires schools in accreditation trouble to “publish the Show-Cause Order prominently on its website,” but the order is three clicks away from CCU’s homepage. I told Heineman it took some searching for me to find the announcement, and asked if he thought the posting met the HLC requirement. He said CCU has engaged outside legal help to meet the requirement and that “if it didn’t, we would switch it.”

Lee Mason, a 1968 CCU alumnus and former teacher, found out about the Show-Cause Order through Facebook. He told me the school’s troubles go all the way back to the 1980s. His daughter, Kristina Rickert, graduated in 1990. As we spoke, he turned to her and asked, “What do you think about what’s going on at school?” She replied, “My school’s gone.” —Leah Hickman