A private liberal arts college is drowning in debt. Should Alabama bail him out?

A private liberal arts college is drowning in debt.  Should Alabama bail him out?

On a crisp fall day at Birmingham-Southern College, students headed to class, taking a few chilly minutes under the golden ginkgo trees. Inside the red brick buildings that dot the 192-acre campus, teachers prepared for exams for final week, while administrators prepared the first round of acceptance letters for the upcoming school year.

Yet looming over those quintessential scenes of college life was a troubling question: Would the school even make it to another fall semester?

The private liberal arts school in Birmingham, Alabama, has been plagued by financial instability for years, with the 2009 recession and coronavirus pandemic exacerbating the consequences of overambitious investments and huge debts.

Closure seemed imminent earlier this year, until Alabama lawmakers appeared to offer a lifeline: a law designed to save the 167-year-old school with a program that could lend millions of dollars. But in October, the state treasurer denied the school’s loan application, sending administrators once again scrambling to save the school.

For many outside the school, their fate is simply whether a private school that has mismanaged its finances deserves any kind of taxpayer support, especially in a state that has chronically underfunded its public education system. But for alumni and supporters of the school, it is also a question of whether a classical liberal arts education is still valued at a time when colleges and universities face intense scrutiny over their curricula, admissions and cultures.

Caught in the middle are hundreds of students and teachers, drawn by the promise of the school and now forced to confront its mistakes.

“There was a time when I didn’t even want to do my homework or my work or go to class because what’s the purpose now?” said Jadynn Hunter, 21, who is one semester away from graduating in media studies. She, like many on campus, had been shaken by fears of the school’s possible closure a year ago, before the Legislature acted.

If Birmingham-Southern were to close, it would be the end of one of the most prominent liberal arts colleges in a state that has very few. His allies also argue that the city of Birmingham would be deprived of a renowned institution that has channeled millions of dollars into the local economy and has prevented the state’s youth from leaving in search of opportunities elsewhere.

“If a state like Alabama loses Birmingham-Southern, it’s not good for anyone,” said Daniel Coleman, the school’s president and former Wall Street executive who used to commute weekly to Chicago and New York from Birmingham.

He added: “It’s easy to complain about flyover country, but if you want to do something about it, you have to support the institutions that are doing things about it.”

There is no denying the university’s long-standing financial desperation, which has its roots in the founding of a Methodist college, Southern University, in 1856. Previous administrations borrowed money generously to fuel a series of architectural improvements as a way to attract more students. (One artificial lake, in particular, represents what many on campus now describe as the folly of an “if we build it, they will come” attitude.)

And then, in 2010, the university learned of a multi-million dollar accounting error in how federal financial aid for students was calculated, and looted its relatively modest endowment without replenishing the funds. The debt soon became insurmountable, and last year trustees quietly began requesting up to $30 million from the state while also working to raise more private donations and rebuild the fund.

Although Alabama repeatedly ranks at the bottom of national rankings in money spent per student from kindergarten through high school, it currently has a surplus of education funding, fueled in part by federal pandemic aid.

“The challenge we face right now is really a political issue, not an educational issue,” said Ream Shoreibah, associate professor of marketing at Birmingham-Southern.

Since last December, students have struggled between transferring and possibly losing credits, or staying and risking school closure. Among the nearly 280 employees, teachers talked to their families about the possibility of moving and worried about whether cafeteria and custodial staff members would be able to find comparable jobs.

Enrollment at the school, which has an annual tuition of $21,500, although the administration said every student received at least some financial aid, has dropped to about 731 students this fall. One third of the student body is made up of first-generation college students.

“Some of my friends had to transfer to other colleges, just because their parents wouldn’t let them come here anymore, so this whole thing happening for the second time really affected the students,” said Gabrielle Houston, 23, a junior studying to obtain a degree in English. Like other students, Ms. Houston had believed that the Legislature’s creation of the loan program had permanently averted the threat of closure.

But Ms. Houston, who requires a number of classroom learning accommodations, said she couldn’t imagine continuing college elsewhere without that level of support.

The school’s survival is also irrevocably intertwined with Bush Hills and College Hills, two predominantly black neighborhoods that surround it in west Birmingham. The precarious funding situation has resurfaced some pain and criticism, such as the way the school’s imposing exterior wall, built after a student was murdered days after her graduation in 1976, fueled the perception that a largely white institution he was isolating himself from his black neighbors. (Black, Asian and Latino students now make up about a third of the student body, a figure the school considers higher than some of its Alabama peers.)

But several community leaders are concerned about the prospect of having nearly 200 empty acres between them. Closing Birmingham-Southern, they have said, would end a flourishing partnership: no more Halloweens where neighborhood kids can trick-or-treat on campus, no more student volunteers at the community farm and no more student teachers in their schools.

“Being a private university doesn’t stop us or stop us from thinking about ways we can educate this community around us,” said visiting assistant professor Marlon A. Smith, who had been attracted to the possibility. of building a black studies program in a city shaped by the civil rights movement.

“So are you going to choose an institution that can make that investment?” she asked. “I don’t know how well they’ve done it, but I wasn’t here then. I’m here now.”

Some professors, who have warily watched the conservative reform of public schools like New College of Florida, also said that working at a private institution gave them more freedom to challenge their students on sensitive issues.

“We are a liberal arts college, something that doesn’t translate very well to the state of Alabama,” said Jim Neel, who graduated from the college in 1971 and now teaches sculpture there. “A liberal arts education is the foundation of all higher education. “It’s not something new and it has nothing to do with partisan politics, but it seems to read that way.”

Although leading Republicans refused to provide a grant to the school, the Legislature eventually negotiated a loan program tailored to Birmingham-Southern’s circumstances.

Young Boozer III, the state treasurer, was given the authority to determine the worthiness of any applicant. In October, he rejected applications from both Selma University, a historically black Christian university, and Birmingham-Southern.

“It’s a shame, it’s tragic what’s happening to the students; there’s no doubt about it,” Boozer said in an interview. “But it is not my fault. The fault lies with the management and the board of directors of the school.”

He added: “I have just been asked to try to evaluate whether or not Alabama taxpayer money will be used to rescue a school that is private.”

The school unsuccessfully sued Mr. Boozer and also attempted to amend its application to address its concerns, pledging to prioritize its debt to the state and laying out an ambitious plan to raise enough outside money.

He has remained unmoved, pointing to the school’s small enrollment and low teacher-student ratio (both part of its appeal to students and teachers alike) as reasons for skepticism that the school can climb out of a deficit.

Birmingham City Council recently approved a $5 million loan for the school, joining with the Methodist Church to offer financial support.

But, said Victor Biebighauser, former president of South University, a private school in Montgomery, and an old friend of Boozer, “if they can’t solve their structural financial problems, that is, their declining income and excessive debt, those are just Band-Aids.” .

For now, the remaining students hope something changes.

“People really try to bring this school down and we keep rising,” said Anna Withers Wellingham, a 22-year-old senior and student body president.

“This is a school that teaches you so much more than a liberal arts education,” he added, “and it’s worth fighting for.”

kitty bennett contributed research for this story.