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A Cautionary Tale for Small Colleges

By  Patricia McGuire
May 2, 2019
A Cautionary Tale for Small Colleges 1
John W. Tomac for The Chronicle

“Wisdom for Life” is the motto emblazoned on banners across the campus of the College of New Rochelle. Sadly, wisdom was elusive at New Rochelle in the last decade, and the college will close in August.

But this is not just another story of the failure of a private college. New Rochelle currently has more than 3,000 students, well down from a high of more than 9,000 in 2005, but still far more than other fragile colleges like Sweet Briar or Bennett. (Thanks to a transfer agreement, New Rochelle’s students will have a new home at nearby Mercy College.)

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“Wisdom for Life” is the motto emblazoned on banners across the campus of the College of New Rochelle. Sadly, wisdom was elusive at New Rochelle in the last decade, and the college will close in August.

But this is not just another story of the failure of a private college. New Rochelle currently has more than 3,000 students, well down from a high of more than 9,000 in 2005, but still far more than other fragile colleges like Sweet Briar or Bennett. (Thanks to a transfer agreement, New Rochelle’s students will have a new home at nearby Mercy College.)

New Rochelle’s death is the immediate result of financial misconduct by the college’s former controller, Keith Borge, who failed to pay more than $31 million in payroll taxes and other obligations. In March, Borge pleaded guilty in federal court to securities fraud and failure to pay federal payroll taxes; that same day, the Securities and Exchange Commission brought a civil lawsuit against him, charging fraudulent misrepresentation of the college’s financial condition by falsifying financial reports, thus misleading bond investors.

The death of any college is a tragedy for the students, alumnae, faculty, staff, and neighbors who cherish the place as far more than the campus and buildings. A college is a small society of relationships and lifelong friendships, a place of intellectual and cultural enrichment, a worthy investment for generous benefactors as well as a provider of extensive community services. The tragedy of New Rochelle becomes more painful in the realization that one man’s actions ruined the legacy of generations.

But Keith Borge’s financial misconduct isn’t the whole story. In a newspaper interview, Borge’s lawyer hinted that his client’s defense will be that he just tried to keep things going in a declining situation in order to "… insure that the college’s employees were paid … that the college’s educational mandate to its students continued without interruption.” The fact that he did this through fraud, rather than restructuring expenses, is one of many puzzling questions about the demise of New Rochelle.

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Historic Roman Catholic women’s colleges like New Rochelle have long been on the “endangered species” list because of fragile funding and small enrollments. Founded by visionary nuns at the turn of the 20th century to educate Catholic women excluded from the men’s colleges of that day, the sector expanded to more than 150 institutions by 1960. Today, just eight institutions identify as Catholic women’s colleges; most are diversified institutions with traditional women’s as well as coed adult-education programs.

While coeducation after the 1960s drove the decline in women’s colleges generally, for the Catholics, an anomalous financial structure proved even more treacherous. Those institutions were built through the investments of their sponsoring religious congregations, and the sisters who staffed them did not take salaries through a practice known as “contributed services.”

When nuns started leaving their orders as a result of the liberalizing influence of Vatican II, the Catholic women’s colleges faced fiscal catastrophe with rising labor costs to replace the religious at the same time as coeducation eroded enrollment revenue. The need for reinvention came much earlier to those colleges than to the rest of higher education.

In 1972, Sister Dorothy Ann Kelly, Order of St. Ursula, became New Rochelle’s president, and she soon earned a reputation as an innovative collegiate leader. Kelly knew that New Rochelle, an iconic college for Catholic women in Westchester County, N.Y., could not sustain the traditional model serving only full-time undergraduates. She created New Rochelle’s School of New Resources to educate adults throughout the New York City region, opening locations in the South Bronx, Harlem, and Bedford-Stuyvesant, in Brooklyn.

New Rochelle soon grew to thousands of students in seven locations, serving predominantly low-income African-American women while continuing the traditional women’s college on its main campus. New Rochelle was hailed as a model for compelling change among the remaining Catholic women’s colleges like my own institution, Trinity in Washington.

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Kelly’s successor, Stephen J. Sweeny, became president in 1997 after two decades of service in Kelly’s administration. Sweeny continued Kelly’s mission commitment to expansive outreach to adults in the New York region until his retirement, in 2011. Hence, for a period of nearly 40 years, from 1972 to 2011, New Rochelle built a progressive, mission-driven business model rooted in the vision of two like-minded leaders.

When did New Rochelle lose its mojo? I have no inside information; I only know what I can gather from public records. Enrollment peaked in the period from 2004 to 2008, and then began a long decline similar to that of other small colleges. Fierce, new competition emerged as big universities discovered adult education and online for-profit providers moved into the markets for low-income students.

The demand for continuous innovation in higher education is urgent and exhausting, particularly for small, underresourced institutions. A mission commitment to serve large numbers of low-income students requires a fervor that is hard to sustain among new generations of faculty and staff members who often find the work stressful, especially when resources are thin.

The New Rochelle story is a cautionary tale for succession planning at small institutions with long-serving leaders whose zeal might not transfer to the next administration. New Rochelle did try some new strategies in the last few years, including full coeducation, but somewhere along the line, the mission-driven fervor flagged, things fell apart, and at least one person, Keith Borge, responded to the looming crisis in a fatally insidious way.

Borge’s misconduct is a president’s worst nightmare. How many presidents sign the management representation letters to auditors while asking ourselves, “But how do I really know what’s going on in the business office?” The New Rochelle case should strengthen every president’s vigilance to ensure appropriate layers of controls, a vigorous board asking probing questions, and rigorously independent auditors.

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But if all we take from the New Rochelle story is bewilderment over the fraud and governance failures, we have not learned enough. Let the requiem for the College of New Rochelle be not so much sorrow for the circumstances of its demise, but respect and gratitude for how this venerable college inspired others to pursue mission-driven innovation that opened broader access for students previously excluded from higher education. Even as the banners are rolled up and stored with the archives of this once-iconic college, the New Rochelle spirit of “Wisdom for Life” continues to influence countless lives.

Patricia McGuire is president of Trinity Washington University.

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
Opinion
Patricia McGuire
Patricia McGuire is president of Trinity Washington University.
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