In May, Mills College announced that its board of trustees had declared a “financial emergency” after persistent budget deficits. The financial stabilization plan sent to the board by the college’s president in June recommended an administrative reorganization, recruitment initiatives, staff reductions that include ranked faculty, and the modification or elimination of academic programs. Five tenured faculty members have already received official notice of termination. Undergraduate majors in Latin American studies and philosophy were slated for closure, as were minors in creative writing in Spanish, Latin American studies, government, and physics. Master’s degree programs in mathematics and translation were also identified for elimination. The financial stabilization plan concluded by saying:
“After years of struggle with an intractable deficit and significant cuts, we understand now that Mills needs transformational change. We cannot build a new Mills by holding onto everything we’ve been doing in the past . . . The measures in this plan are taken because actions to date have failed to put Mills on a solid financial basis.”
Will the plan, if implemented, put Mills on the road to recovery? I think not, because the plan makes the same assumptions about market positioning that put the college in its current predicament. Mills has historically branded itself as a women’s liberal arts college, but that strategy has failed to give it an advantage in the higher education marketplace. Mills needs to abandon what isn’t working and develop a radically different model, if not an entirely new mission.
Why do I make this judgment? There is no longer enough demand for what Mills is offering. The number of women’s colleges in the USA has declined by eighty percent over the last fifty years. Enrollment at Mills, as shown in federally-compiled data, has decreased by at least six percent over the last decade. Mills has been trying to appeal to a demographic that’s disappearing.
A majority of the undergraduates who do enroll at Mills have such low household incomes that they are eligible for free tuition at California’s public universities. The U.S. Department of Education’s College Scorecard states that half of the undergraduates at Mills receive Pell grants. Mills is thus uncompetitive on price for a very large portion of California residents who might be interested in attending. Yet the programs targeted for elimination in the June stabilization plan enrolled fewer than twenty students in 2016-17. Trimming around the edges of the curriculum isn’t going to generate the revenue and efficiencies needed to make the college viable over the long term.
One can see the futility of this approach by looking at other financial markers. For example, Mills has what appears to be a healthy endowment of about $180 million. However, this endowment is approximately ninety-five percent restricted and can’t be used to resolve the college’s current crisis.
The endowment is also not large enough to put Mills on the same footing as other liberal arts colleges in the same regional market. Each year a college or university can responsibly spend from four to five percent of a rolling three-year average of its endowment’s total value. For a billion dollar endowment, that means $40 to $50 million per year that, if unrestricted, can be used to defray operational expenses and discount tuition. While this amount might not be very significant to a 40,000-student state flagship university, it’s a huge enrollment-proof revenue stream for a small college like Mills.
However, what really matters is the size of the endowment in relation to operating costs, and how this compares to other institutions. Using Charity Navigator, I looked at IRS Form 990s for 2015, the most recent year available, for Mills and some of the best-known small liberal arts colleges in California: Occidental College, Claremont McKenna, Harvey Mudd, Pitzer, Pomona, and Scripps. If we compare the ratios of these colleges’ investment assets to their functional expenses, Mills is second from the bottom. While Pitzer has a smaller ratio than Mills, its brand and bottom line benefit from its participation in the Claremont consortium. It also has more affluent alumni.
We see the same pattern if we compare Mills to well-known women’s colleges across the country—Scripps, which is Mills’s geographically closest competitor in this category; Agnes Scott; Bryn Mawr; Mount Holyoke; Simmons; and Wellesley. Mills is again second from the bottom, above Simmons.
While Simmons may not have the same cachet as Mount Holyoke or Bryn Mawr, its undergraduate enrollment is twice as large as that of Mills. Also, its graduation rate is higher. By this measure, Mills is again at the very bottom of both comparison groups. It is not as successful as other market players in recruiting and retaining students.
Why is recruitment and retention more difficult for Mills than its competition? If we use College Scorecard to compare average salary earned after attending against the average annual cost of attendance, we see that the return on a student’s educational investment at Mills is less than other colleges. In fact, Mills again ranks last in our sample. Mills is tied with Agnes Scott for lowest earnings after graduation, but its cost of attendance is more than thirty percent greater. Bryn Mawr is twelve percent more expensive to attend than Mills, but its graduates earn on average over thirty percent more. Potential students with the requisite academic abilities, economic resources, and interests to attend a private liberal arts or women’s college are going to view schools other than Mills more favorably.
All of these signs indicate that Mills is trying to operate in a market where it has already lost to the competition. Yet the college appears to be basing its turnaround strategy on doing what other colleges and universities are already doing well. Plans include increasing LGBTQ enrollment while remaining a single-sex institution, which ignores the fact that Mills already has trouble attracting enough students who identify as women. Administrators want to develop the same kind of “signature undergraduate experience” that Agnes Scott College spent $20 million and two years creating—money and time that Mills doesn’t have. They have also emphasized trying to recruit more students interested in STEM fields, but Mills is in close proximity to several well-established science and engineering powerhouses, and profiles of recent Mills alumnae with successful STEM careers are hidden several pages down on the college’s website instead of appearing front and center on the homepage. None of this bodes well for the future of Mills College.
 Operating expenses comes from Total Functional Expenses, IRS Form 990 Line 25, Part IX. Investment assets comes from the year-end total of Investments—Publicly Traded Securities and Investments—Other, Lines 11 and 12, Part X. The number of full-time undergraduate students comes from the Integrated Post-Secondary Education Data System (IPEDS).