Many of the nation’s chiropractic colleges, like other small colleges that rely heavily on tuition, are struggling to stay in business.
At the same time that they are working to improve their stature in higher education and broadening their missions to increase their appeal, a number of the colleges are seeing enrollments plummet—and revenues are falling with them.
The colleges are also hampered by their own decisions to dole out hefty paychecks to their executives, compensation packages that, in some cases, have raised outsiders’ concerns about the effectiveness of oversight on the campuses.
Though public and private colleges alike are facing questions about how much their leaders are paid in light of budget cuts and stagnating faculty pay, those questions are even sharper for chiropractic institutions. The compensation packages of presidents at chiropractic colleges consume, on average, 2 percent of their colleges’ budgets, five times as much as the typical president at a private college with a budget over $50-million. And some chiropractic-college presidents earn nearly as much as leaders of research universities that are 10 times, or even 90 times, their size.
The history and traditions of chiropractic colleges, several of which grew out of family businesses, have also led to concerns about their governance structures, forcing some institutions to combat allegations of nepotism. Those problems are not unique to chiropractic colleges. Public institutions like the Alabama community-college system have faced scandals involving the hiring of relatives of some of its leaders. And other small nonprofit institutions like the Savannah College of Art and Design have been forced to try to assuage fears that one family has too much control over the institution’s affairs.
But concerns about management are central to the issues surrounding chiropractic colleges, and overcoming them may be key to the institutions’ efforts to build their reputations in mainstream higher education, draw more students, and ultimately, survive.
A Contracting Sector
Enrollment at chiropractic colleges fell by 8 percent over a decade, to about 12,000 students in 2010. Six colleges saw double-digit-percentage drops in that time, including four that lost roughly half of their students, according to The Chronicle’s analysis.
Those drops cut substantially into the budgets of chiropractic institutions, which on average earn 85 percent of their revenue from tuition.
There are now 14 nonprofit chiropractic colleges in the United States, plus two accredited chiropractic programs within broader universities, after the closure last year of the Cleveland Chiropractic College of Los Angeles. Its board cited declining enrollments and competition with other chiropractic colleges in California.
Those troubles have left creditors worried. Moody’s Investors Service, a credit-rating agency, has given Life University, the largest chiropractic institution, a Ba3 rating, making it a speculative-grade investment. In doing so, Moody’s cited Life’s “narrow market niche” and said the agency was troubled by the Georgia university’s limited revenue diversity, considering that enrollment is “vulnerable to the flex in demand for chiropractic education.”
Moody’s gave the Southern California University of Health Sciences an even-worse B3 rating, with a negative outlook, in its most recent report. Though the college adopted a plan for budget reductions, including staff cuts, Moody’s said it remained concerned about the college’s “volatile” enrollment and ability to maintain accreditation.
Despite many of the colleges’ troubles, leaders of chiropractic institutions say they see promising signs for the sector’s future. Eight of the colleges are experiencing enrollment growth, although most of their student populations grew much more slowly than enrollments grew at colleges nationwide. From the fall of 2000 to the fall of 2009, national enrollment grew by 33 percent.
David O’Bryon, executive director of the Association of Chiropractic Colleges, says he is optimistic about the future of chiropractic education. Among other reasons, he cites the growing acceptance of chiropractors by mainstream medicine, touting that chiropractors are now employed in veterans hospitals. He blames the sluggish California economy for the closure of the Cleveland campus there, and chalks up the enrollment declines to natural enrollment fluctuation and competition from other alternative-medicine institutions, such as colleges of osteopathic medicine.
Mr. O’Bryon also says chiropractic programs are “healthy” and stand up to tests of rigor, given that all but one, Life Chiropractic College West, are regionally accredited.
“They’re all evaluating our institutions as financially stable and in good shape,” he says.
Big Pay, Small Colleges
David Wickes, former chair of the Council on Chiropractic Education, the accrediting body for chiropractic colleges, says that the group assesses whether colleges have the financial resources to ensure the quality of their academic program, but that neither they nor regional accreditors have standards regarding executive compensation.
But issues of high pay can raise red flags for others, including Moody’s and the Internal Revenue Service. And the presidents of chiropractic colleges are taking in some of the biggest paychecks in higher education.
In 2009, the most recent year for which data are available, George A. Goodman, president of Logan College of Chiropractic University Programs, in Missouri, was the highest-paid chiropractic-college president. He earned $791,418, equal to 3 percent of the college’s $24.5-million budget. That’s nearly identical to the total compensation of Jean-Lou Chameau, president of the California Institute of Technology, which has a $2.3-billion budget. Mr. Goodman, according to The Chronicle’s analysis, earned more than all but one other public- or private-college president in Missouri. Mark S. Wrighton, president of Washington University in St. Louis, earned more. (See related article, Page A10.)
Mr. Goodman was not the only high earner. Fabrizio Mancini earned $606,087 leading Parker University, a Dallas institution with a $28.9-million budget. The year before, Mr. Mancini made almost $1-million. Bill Nardiello, chair of Parker’s Board of Trustees, says that year’s tax form counted bonuses the president was paid in both the 2007-8 fiscal year and the 2008 calendar year.
Several chiropractic colleges say they set their pay levels by using compensation studies.
“We compared ourselves not only to the chiropractic institutions,” Mr. Nardiello says. “We also looked at medical schools. We looked at the health-care industry.”
Raymond D. Cotton, a lawyer who specializes in presidential contracts, says he never heard of a nonprofit college with a budget under $30-million paying its president nearly $1-million. Nor does he think that medical schools provide accurate comparisons, because they are uniquely complex compared with allied health schools.
“These people are behaving like they’re for-profits,” says Mr. Cotton.
Bruce R. Hopkins, a tax lawyer and nonprofit expert, says unusually high compensation can catch the eye of the Internal Revenue Service and can subject nonprofits who overpay their executives to fines.
John C. Nelson, a managing director who oversees the Moody’s higher-education division, says small professional schools that pay their executives nearly $1-million are outliers that cause him to take notice. “What that signals to us is a potential governance weakness, that there’s too much concentration of delegation of authority in one person,” he says, “and the checks and balances of good governance may not be as strong in that kind of institution.”
Family Business
Mr. Cotton and Mr. Hopkins say that the strong family ties that run through some chiropractic colleges can also raise concern for the IRS about governance and oversight.
Leaders of the colleges, though, say they do not see the family connections as problematic.
Cleveland Chiropractic College in Kansas City is led by Carl Cleveland III, a grandson of the college’s founders. Mr. Cleveland also served as president of the affiliated and now defunct Los Angeles campus. His wife, Elizabeth, is executive director of the college’s foundation. He earned $537,152 in 2009, and she earned $185,019. The foundation’s federal tax form said she worked 28 hours per week. Their daughter, Ashley E. Cleveland, earned $125,223 as the college’s provost.
Mr. Cleveland is proud of the college’s heritage and calls his grandparents “pioneers.” He emphasizes that his wife has a master’s degree in business, and that the board, not he, asked her to work as head of the foundation.
The Clevelands are not unique. Elizabeth A. Goodman, wife of the president of Logan College, is dean of university programs there. When Sidney E. Williams, founder of Life University, served as president in the early 2000s, his wife, Nell, worked as vice president for student affairs. His daughter, Kim, was an assistant to the president, and his sister-in-law, Mildred Kimbrough, served as an assistant vice president.
The family ties on display at these colleges don’t help fight the skepticism that mainstream higher education and the broader public have shown toward the sector.
Such wariness was evident when a debate over whether Florida should start a chiropractic program at Florida State University reached a boiling point in 2005. Medical faculty at Florida State rebelled when state legislators made the proposal, calling the profession pseudo-science. One faculty member circulated a mock campus map with buildings such as the “Crop Circle Simulation Laboratory” and the “Yeti Foundation.”
“The whole thing is more myth and magic than science,” says Raymond E. Bellamy, a Florida State assistant professor of medicine who led the successful charge against the proposed chiropractic program.
One way chiropractic colleges are seeking to move into the mainstream, and draw more students, is by expanding their missions. Parker University, for example, was once named Parker College of Chiropractic, but has recently added other noninvasive wellness programs such as massage therapy.
Those steps may be necessary to ensure the survival of chiropractic colleges, Mr. Nelson of Moody’s says, though they will face stiff competition from well-established universities that have alternative-medicine programs. Having too narrow of a market niche can subject a college to ups and downs in the economy, if enrollment depends directly on demand for jobs in one sector.
In that way, chiropractic colleges’ financial struggles are similar to those of professional schools such as art colleges, optometry schools, and even law schools. Mr. Nelson says that most professional schools, including chiropractic colleges, do not generate a lot of philanthropy, making them particularly reliant on tuition.
In other ways, chiropractic colleges are like some liberal-arts colleges with narrow market appeal. “If your view of the future is that you’re going to have a more lackluster macroeconomic environment, there isn’t enough sustainability and revenue growth out there to keep all of these schools afloat,” Mr. Nelson says. “Whether it’s chiropractic schools or very narrow liberal-arts colleges, more of them will either have to close or merge.”