Jewell, much like other higher education institutions throughout the United States, stores the majority of its financial resources in an endowment fund. This fund holds its principal in perpetuity, meaning it is maintained at a similar value over an extended period of time with no fixed maturity date.

Endowment funds are invested into funds and ventures that institutions believe will be successful and generate income. Over 90 percent of these funds remain invested and untouched throughout the academic year, while the vast majority of colleges and universities in the U.S. spend between 4 and 5 percent of their endowment annually.

Straying from the pack, Jewell chose to increase their endowment draw for several years to support the College’s operations and reduce debt. Since the early 2000s the College has made annual endowment draws as high as 11 percent in fiscal year 2008 and averaging at a rate of 8 percent between 2007 and 2017.

According to Brian Clemons, vice president for Finance and Operations and treasurer of the college, the decision to direct resources to pay off debt was intentional and beneficial.

“We were paying down debt. We made an intentional decision to reduce that debt,” said Clemons. “We restructured the debt, we shortened the term, […] got a lower interest rate, and we said ‘we’re going to pay down debt.’”

In 2017 the Higher Learning Commission (HLC), one of six regional institutional accreditors for colleges and universities here in the U.S., challenged Jewell’s endowment draw practices and placed the College on probation. The HLC gave Jewell a condition to regain full accreditation: the College had to reduce its annual endowment draw to 5 percent annually.

In the words of the HLC, the College was required to make changes to their fiscal policy in early 2019 ahead of a probationary status revaluation in Nov. 2019.

The HLC’s ruling was challenged by Jewell officials who believe endowment spending data was not evaluated holistically and, in response, the HLC reexamined the case, reissued a probationary notice – with updated justifications for the probation ruling – and accelerated their timeline.

The updated action letter from the HLC, issued July 17, 2018, outlined updated next steps for the college – if Jewell could provide documentation showing that its endowment draw was down to the industry standard of 5 percent by Oct. 1, 2018 then the HLC would reconsider the institution’s accreditation status in July 2019.

Jewell succeeded in meeting that goal.

Yet, ahead of the upcoming verdict from the HLC, the question is begged: what was going on with Jewell’s endowment? The answer to this question requires a holistic look at what the endowment is and why College officials chose to draw from it at a rate exceeding the industry standard.

The endowment – which could be likened to a savings account – is made up of large donations to the College and other major gifts. These can come in the form of property and industry, as well as monetary donations. This financial capital is invested into different assets, which increase in value over time, this increase in value is seen as returns for the institution.

In Jewell’s case, approximately three quarters of the endowment is invested primarily in traditional stocks and bonds through a contracted money manager. The other one quarter is invested in – what is broadly referred to as – real estate, specifically royalty interests in oil and gas in Texas, and a former golf course in Liberty, Mo. Both of these assets were gifted to the College.

The returns gained by Jewell through investing the endowment – for example, money gained from selling stocks or royalty interest on the gas and oil produced – is invested into projects that improve the institution over time. A portion of the endowment is also given to students in the form of scholarships.

Jewell also benefits from large non-endowed gifts that support long-term investment projects include building the Pryor Learning Commons, renovating Mathes Hall and constructing a new athletic facility.

As well as the endowment, colleges have an operating account – comparable to a checking account – which is funded through tuition payments, fees, grants and annual donations to the Jewell Fund that the institution receives. This money goes towards daily operating expenses, including utilities and employees’ salaries.

Money remaining in the operating account at the end of the financial year may be directed into the endowment fund. Alternatively, through fiscal year 2017, any deficits existing after operating expenses have been paid are covered by the endowment despite that not being its primary purpose. Due to decisions made in 2018, the endowment will no longer be used to cover these deficits.

That seems pretty simple. However, what also must be acknowledged is that most colleges in the U.S. have very large debts. Often times this debt comes from overspending on the development of campus buildings and facilities. For colleges founded in the 19th and 20th centuries it is even likely that this debt was incurred well before the current policies surrounding the institution’s finances were instated.

While institutions borrowing funds to spur development isn’t necessarily a red flag, how an institution manages its debt can be.

In the U.S. colleges and universities collectively owe $240 billion – and this debt must be accounted for. According to researchers at the University of California, Berkeley, American institutions of higher education annually spend, on average, nine percent of their operating budget servicing debt.

Having to commit so much of their operating budget to servicing debt reduces an institution’s financial flexibility and the amount of money that it is able to commit to day-to-day expenses which improve the college experience. Jewell officials decided to divert some of the endowment funds to paying off the College’s debt to improve the institution’s financial standing in the long-run.

“Instead of taking on more debt like other places did, we took more out of the endowment,” said Clemons.

Though contested by the HLC, this decision has resulted in a decrease in Jewell’s debt from $20,695,000 in 2010 to $13,800,000 in 2018. That means the College was able to decrease its debt by almost $7 million over an eight-year period – oweing an average of close to $875,000 less each subsequent year.

Over that same period of time, Jewell’s endowment has changed from $60,605,000 in 2010 to $63,796,000 in 2018 – a net increase of over $3 million.

That means that Jewell’s current endowment-to-debt ratio is close to 5-1 – an extremely healthy measure. At its lowest in 2010, the endowment-to-debt ratio was 3-1 meaning that over the years the College has successfully reduced money owed while still increasing money available.

Despite the positive outcomes of the decisions made regarding Jewell’s endowment, challenges by the HLC were likely the result of this being an atypical tactic for institutes of higher education.

Whereas in personal finances it is typical for people to pay off their debt as soon as possible so they are more financially healthy in the long-run, many businesses and organizations choose to maintain a higher level of debt so that more money can be devoted to day-to-day expenses. Jewell’s spending policy indicates more of a focus on the long-run and the financial future of the College, rather than daily operations.

Decisions about the College’s endowment are made by the Board Investment Committee chaired by Board of Trustees (BoT) member Robert Gengelbach. Full committee approval is required for any decision regarding the endowment and – while the committee is made up entirely of BoT members – a faculty member is consulted about these decisions, typically before voting is conducted.

The current faculty member on the Investment Committee is Dr. Kelli Schutte, Department Chair of business and leadership. Faculty representatives are selected from the Faculty Council and serve for the entirety of their term on the Council – typically three years.

Utilizing a divide and conquer strategy, faculty are assigned to a BoT committee that matches their field of expertise. With Schutte’s background in business and finance it makes sense that she is serving as the faculty representative on the Investment Committee.

“I sit in on all their meetings, and I will sometimes get questions from the chair, and he’ll ask me, you know, what do faculty members think of this or that. But, I don’t vote,” said Schutte. “The way things are set up […] is to facilitate information flow, it is not a control mechanism or a responsibility mechanism.”

The board is ultimately responsible for the endowment and how that helps the college operate, including decisions regarding investing endowment assets and drawing from the fund.

Despite the struggle endured between the HLC and Jewell due to the College’s distinct use of endowment funds, the institution’s financial future is strong and – with less debt than many other colleges – established for years to come.

Dr. MacLeod Walls addresses students, faculty and staff in YGCU 221/222.

Dressed in a blazer of the College’s signature crimson color, William Jewell College President Dr. Elizabeth MacLeod Walls raised her arms as she opened the third Town Hall of the 2018-2019 school year with, “It’s a great day to be a Cardinal.”

A good portion of Jewell faculty, students and staff attended the Nov. 30 Town Hall during Jewell Time, eager to hear College officials’ level of preparedness regarding the Higher Learning Commission’s (HLC) accreditation evaluation set to take place Dec. 3-5.

The HLC is visiting to review a sanction they placed on the College after a regularly scheduled annual visit when the Commission found that Jewell was using endowment funds to support operations at a rate that exceeded industry norms (five percent).

After briefly opening the event, MacLeod Walls welcomed Vice-Chair of the College’s board of trustees Gary Barnes to speak. Barnes expressed his optimism about the HLC’s visit and relayed a request to the Jewell community.

“We feel confident that there will be a successful result… In any interaction you might have with a visiting team, can you help them understand how special Jewell really is?” Barnes asked.

MacLeod Walls supported Barnes’ request to the students, describing how they can interact with the HLC.

“Be honest: Say what you love; say what we’re working on,” MacLeod Walls said. “Be positive. Talk about how we’re using data to improve.”

MacLeod Walls followed with an outline of what the College has done to ensure it is in the best possible position both for external review and for the internal integrity of the institution.

“We created a new mission statement [and a] strategic plan around that mission statement, and the board approved both of those. We established new value statements… that are reflective of the mission. We also have been on a parallel journey as an institution… We have worked especially hard as a community to rightsize our budget and to gain our financial strength,” MacLeod Walls said.

MacLeod Walls announced that the College is in the strongest financial position its been in decades, pointing to several distinct initiatives made over the past year to get financial operations in optimal working order.

Among these initiatives are the “painful but vital” removal of 3.5 million dollars from the operating budget, the sustained and continuous lowering of institutional debt, the growth of endowment value (over a 4:1 endowment to debt ratio), a strong financial responsibility score from the Department of Education (2.93 out of 3.00) and the Insider Investment Fund that has raised 12 million of the 25 million dollars raised thus far for the College’s 75 million dollar campaign goal.

Repeatedly, MacLeod Walls emphasized her confidence in the College’s readiness and her optimism about the HLC’s visit.

Opening the floor for questions from attendees, MacLeod Walls addressed faculty and student concerns about possible outcomes. Most notably, MacLeod Walls again reinforced her confidence in the College’s preparedness, asserting that she believes the evaluation will conclude with the best possible result: continued accreditation for Jewell.

Despite the negativity associated with the HLC’s visit, MacLeod Walls ensured the community of the College’s widespread support – including that of governmental officials like Senator Roy Blunt (R-Mo.) – and “unstoppable” growth in the face of this setback, and she concluded the Town Hall with an applause-drawing announcement.

“Right now,” MacLeod Walls said, “we have more deposited students for the fall of 2019 than we have had in the last seven years at this time at William Jewell College.”

Conclusions from the visit will be made in mid-January, and final results should be available to the public by June.

Cover photo by Savannah Hawley.

*Correction: An earlier version of this article incorrectly stated that the Insider Investment Fund raised 25 million dollars out of a 75 million dollar goal. It should have said that 25 million dollars out of a 75 million dollar campaign goal had been raised, with 12 million dollars of the 25 million dollars being from the Insider Investment Fund.

The Senate cabinet is currently working to develop a new poster and flyer approval policy. Under the current policy, all advertising displayed on Jewell’s campus must be vetted and approved by Student Life. The newly proposed policy seeks to eliminate the approval step in the process.

Jakob Miller, Student Senate president and senior economics and mathematics major, argued that this new process will give community members more responsibility.

“[The new policy] gives the community more responsibility in reflecting about what goes up on the walls on our campus,” said Miller.

The topic of the recent dissolution of the Gamma Nu chapter of the Alpha Delta Pi sorority on campus was brought up by attendees who commented on a slew of letters written about the topic and the difficulty of distinguishing between truth and falsehood.

Alex Blevins, senior accounting and Spanish major, commented on feeling frustrated about the issue.

“It’s just really hard,” said Blevins. “With all of the letter writing and different opinions shared it’s become hard to discern the true narrative.”

The Senate also discussed the upcoming visit from the Higher Learning Commission and their recent partnership with the Office of Counselling Services for an on-campus Mental Health Awareness campaign.

The Town Hall is a regular event hosted by the Student Senate to foster communication between different campus groups, the next is scheduled to occur Nov. 26 during Jewell Time. More details about Senate activities can be found here.

Dr. Elizabeth MacLeod Walls, newly inaugurated Jewell president, has been working with the Board of Trustees for almost a year and a half regarding endowment spending. The 2017 budget she inherited set the endowment draw at nine percent. By working with the Board, she was able to reduce it to seven percent by not filling open positions and utilizing on-hand cash at the end of the fiscal year. Now, the Higher Learning Commission (HLC), one of six regional institutional accreditors for colleges and universities in the U.S., has challenged MacLeod Walls and the Board to decrease the endowment draw to a permanent five percent in the next 18 months.

The HLC placed the College on probation effective Nov. 2, but the Administration was not notified until Nov. 14. The College will retain its accreditation while on probation and has two years to address the HLC’s concerns.  

The College has been talking with the HLC about this issue since 2010. Last year, the HLC focused more on the issue when it restructured its review process. The new process, which applies to all the institutions it accredits, requires the HLC to review an institution twice in a 10-year period: at years four and 10. Previous rules required only one review during a 10-year period. The College was in year seven when the HLC implemented this change, so a review was conducted last year that sparked the push to decrease the endowment spending more quickly.

To decrease spending to the necessary level, changes have begun to be implemented across campus. The Administration has been in contact with faculty and staff since mid-October. On Nov. 7, MacLeod Walls notified students of the impending changes through a letter, which was also sent to faculty, staff and 15,000 of the College’s 18,000 living alumni.

“I am writing with news of important work that we are currently engaged in on campus in order to strengthen our institution and ensure a vibrant future for William Jewell College,” said MacLeod Walls in the letter.

The letter stated that the College “will recalibrate some curricular offerings and College operations” due to the necessity of reducing endowment spending. Over the past seven months, the Administration has evaluated how effectively the curriculum is being delivered.

“[We] looked first and foremost at operational dollars, so we didn’t go straight to people,” said MacLeod Walls. “That’s always the last place that you want to go.”

A thorough investigation into operational dollars was not enough to attain the necessary budget goal. The next assessment was staff efficiency. Staff positions were evaluated and maintained or eliminated based on whether or not the position is directly involved with the student experience.

“[We’re] part of a community, and it’s been painful to watch people leave, particularly when they’re leaving through no fault of their own,” said MacLeod Walls.

The budget is also impacting some aspects of the curriculum. Provost Dr. Anne Dema has been working with a group of faculty since the beginning of the academic year to discuss possibilities.

“Where possible, I’m trying not to act on departments, but I’m also saying I don’t want them to have to make decisions that they shouldn’t be making and so that’s our job,” said Dema. “There’s some level of these decisions that we have to make.”

Programs with fewer than 20 declared primary majors as of the end of September 2017 were evaluated based on their contribution to the core curriculum and to Oxbridge.

“There’s two things that we believe are defining for this institution: one is the core curriculum and the other is Oxbridge,” said MacLeod Walls. “They’re unique to Jewell. You don’t find them anywhere else. And we believe, particularly with the core curriculum, that is where critical thinking is happening within a profound learning community. And so, when we apply the lens of the Jewell philosophy to these two entities within our larger curriculum, then what we came away with was saying, ‘This is who Jewell is.’”

The main areas of the curriculum being assessed are the visual art department and the languages, mainly French and the classical humanities. As of September, the College had three declared studio art primary majors and three secondary majors. Four of these six students will graduate this year. There were two primary majors and three secondary majors, one of whom will graduate this year, in the French department. There were no declared Classics majors. Students cannot declare an interest in these majors anymore, and they have been removed from the Course Catalog as options for prospective students. The Administration has decided to stop putting resources into the art department altogether, but languages are still under review.  

“We want to be really transparent about saying you know at one time these programs were really important for students at Jewell,” said MacLeod Walls. “The landscape has changed, and we are now following, sort of, the shifting marketplace, and we’re going to have to end these programs, but let’s celebrate what they contributed to this institution and to alumni lives.”

The College currently has a language requirement for a Bachelor of Arts degree. At least one semester is required even if a student tests into a 300 level course. There are 27 100 and 200 level courses across the seven offered languages. The faculty, headed by Dr. Gary Armstrong, Associate Dean of the Core Curriculum, will be engaging in dialogue to decide if the language requirement should be maintained for a Bachelor of Arts degree. The group is researching aspirant colleges’ requirements to ensure that Jewell remains competitive. This decision will be finalized by the time next fall’s course catalog is released.

“We don’t want to be ignorant of what these kinds of decisions might do for our future,” said MacLeod Walls. “So all of that complexity is in there for us, and we’re reliant on the faculty because they’re closer to it than we are and so they know what the future holds for their department, their discipline, and what their needs are.”

MacLeod Walls does not foresee any significant changes in rates of either retention or admissions as a result of these shifts.

“We’re less about specific majors at Jewell than we are about graduating critical thinkers…I think for alums, they had a really good experience in those programs, but they also had a larger experience at William Jewell,” said MacLeod Walls.

Different options for the future have been offered to faculty in the affected departments. The College will honor tenure, so tenured professors in the departments being eliminated will be able to teach in the core curriculum if they wish to remain at Jewell. Certain qualifying tenured faculty in all departments were offered voluntary buyouts in October. Tenured faculty were eligible for this if the met criteria based on a combination of years of service and age. Once tenured faculty make their decisions, if budget cuts still need to be made, untenured faculty will be evaluated based on their expertise and contributions to both their departments’ curriculum and the greater College community.

The Administration has indicated their intent to do their best to allow students within these programs to finish their studies. Dema is working to identify all students who will be impacted by these changes.

“None of us have forgotten that for the students who are in those programs, or for the alumni that graduated from those programs, that they have had a high quality experience and that is a passion that they have had,” said Dema.

Different resources could allow students to finish pursuing their degrees. The College currently has agreements with other local institutions, such as the University of Missouri – Kansas City and the Kansas City Art Institute, where Jewell students can take classes.

“One of the things that is so special about Jewell is that we can customize an experience for a student, and we certainly will in this moment, and not every place can say that,” said MacLeod Walls.