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UU seminaries feel economic pinch

With devalued endowments, schools in Berkeley and Chicago implement cost-cutting measures.
By Michelle Bates Deakin

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Rebecca Parker and Lee Barker

The Rev. Dr. Rebecca Parker, president of Starr King School for the Ministry, and the Rev. Dr. Lee Barker, president of Meadville Lombard Theological School. (Courtesy of Starr King School for the Ministry and Meadville Lombard Theological School)

The recession has not been kind to seminaries. Across the country, theological schools of every denomination are struggling to meet operating expenses as their holdings decline and their expenses grow. The two Unitarian Universalist seminaries have not escaped the trend, with their endowments severely devalued and their leaders scrambling to achieve financial sustainability.

Starr King School for the Ministry in Berkeley, Calif., has lost nearly one-third of its endowment, with funds falling to about $5 million from a high of $7 million. As a result, its operating income has dropped, which, in turn, is reducing the amount of financial aid per student the school is able to offer.

The endowment at Meadville Lombard Theological School in Chicago has also shrunk by about one-third, falling to $12 million from approximately $18 million six years ago. The school relies on its endowment to fund one third of its operating revenue. The decline in funds has led the school to retain a consulting firm to help it examine the possibility of downsizing, partnering with other institutions, selling assets, or changing its programming.

"All theological schools are under enormous financial pressure right now," said Lawrence Ladd, chair of the Meadville Lombard Board of Trustees. "These events are not about Unitarian Universalism; they are about theological education. Seminaries of all denominations are under distress."

Indeed, the spring issue of the magazine of the Association of Theological Schools is devoted to the financial woes its member are confronting, and its cover depicts a man in a Sisyphean struggle to push a boulder uphill, a metaphor for keeping theological schools, which have never been an affluent sector of higher education, solvent amid the sharp losses in the stock market last year and the recessionary economy.

Neither Starr King nor Meadville Lombard carries any debt, so they are insulated from the toughest problem many theological schools face—trying to service debt and meet operating expenses with a shrunken endowment. However, both rely on their endowments to fund operations.

Starr King draws 5 percent annually from its endowment for operating income, according to the school's president, the Rev. Dr. Rebecca Ann Parker. That leaves less money available to provide scholarship money to students, she said. "The impact is that student debt will go up. We're putting extra efforts into raising more scholarship money," she said.

The school has been tightening its belt across the board, freezing salaries and forgoing merit or cost-of-living adjustments for faculty and staff. Parker said that they have managed to avoid any layoffs.

In response to its shrinking endowment, Meadville Lombard has retained consultants to help set its course for the future. With the aid of Auburn Theological Seminary's Center for the Study of Theological Education, based in New York, Meadville Lombard is analyzing four possible courses: downsizing, selling off some of its $8 million worth of real property, adjusting programs, and entering into partnerships with other institutions. The school expects to make an announcement by the end of 2009 about which course it will take. "It will probably be a combination of all four," said the Rev. Dr. Lee Barker, Meadville Lombard's president. "We need to look at all the possibilities."

Meadville Lombard Board President Ladd said that all over the country, seminaries are merging, closing, selling their buildings, and downsizing. "We may be part of that trend," he said.

Neither Barker nor Ladd would speculate openly about which seminary might be a logical choice for a partnership. Ladd did say that it needn't be a school that is nearby given the growing use of distance learning in theological education.

In addition to retaining the consulting team, Meadville Lombard has been cutting costs on campus. The budget for fiscal year 2009-2010 has been cut to $2.8 million, compared to approximately $3 million last year. Not only did staff and faculty not receive pay increases this year, but many took voluntary pay reductions. Jobs have been reevaluated and reorganized, and two staff positions were eliminated.

No reductions have been made to student aid at Meadville. "We've been giving to students at the same levels as in past years," said Barker. "This is not a problem that will be solved on the backs of our students. They're already stressed financially. We can't add to that burden."

Prior to the economic downturn, both Starr King and Meadville Lombard were retooling the schools, revamping their curricula, and becoming leaner and more flexible.

"We'd already set a new direction for the school before the economic crisis,"said Starr King's Parker. That school's new educational model incorporates a "low residence" program, which allows students to take many classes from their homes rather than relocating to the San Francisco Bay area.

Prior to the downturn, Parker had also been studying the issue of fiscal sustainability with nine other Bay Area schools in the Graduate Theological Union. "We already had a strategic plan in place," said Parker. "The economic downturn makes it tougher, but it makes our strategic directions even more important, and it makes it clearer that we've charted a good path for the future."

Meadville Lombard is also unrolling a new education model, which similarly incorporates distance learning, and those plans will continue to move forward. It has had to put its plans to construct a new building near the University of Chicago on hold as it assesses its future direction.

At both schools, generous donors have helped fund the new models and financial aid for students. The Unitarian Universalist Congregation at Shelter Rock, N.Y., through its large grants program, has awarded a $200,000 grant to be split equally between Meadville Lombard and Starr King to assist both schools as they develop and implement new educational models. And in May, the UUA's Panel on Theological Education recommended that in addition to a grant of $190,000, both schools receive an additional, one-time grant of $25,000 for this fiscal year.

In addition, individual donors have endowed scholarships at both schools. These include a $100,000 anonymous grant at Starr King and a $300,000 donation to fund the Hardy and Betty Sanders Scholarship for Excellence at Meadville Lombard.

Enrollment is up at both institutions. In September, Starr King expects one of the largest entering classes in its history, with 31 students. Enrollment is also increasing at Meadville Lombard at a time when, Barker notes, enrollment in mainline Protestant seminaries is declining.

At both schools, there is also a sense of optimism that, as they have in previous economic downturns, they will weather this one.

"The board and I are extremely confident about the future," said Meadville Lombard's Barker. "One of the strengths we bring to the planning is the ability to be extremely realistic about our circumstances and to meet them head on. It would be easy to look the other way and to wake up one morning and discover we've lost all opportunity to create a future for ourselves. That's not the case here. We're really dedicated to seeing our way through this problem."

At Starr King, Parker said that she, too, remains confident and positive. "It's easier for us than for schools that rely more on their endowments. Ironically, it's a good time to be endowment poor," she said. "It's not good that we're endowment poor, but in this climate, it's harder for institutions where more of their income stream is coming from their endowments."

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