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The New University - Herefordshire


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Since the article in The Hereford Times alerting citizens that Herefordshire Council has overwhelmingly backed the principle of passing its offices and other estate on to the countys university project.

The groundbreaking motion went through with just one abstention and no votes against at full council this morning (Friday). Support for the motion means fundraising for the project can begin in earnest.




The New University-Herefordshire is being conceived as a not-for-profit institution, with mixed funding, and operating with input from The John Lewis Partnership model. The assets and endowments of the university will be held in trust by The Herefordshire Tertiary Education Trust.

A working Development Team has been in place since late 2012, and is comprised of local business people and educators.
The Trust Board of Trustees will initially be comprised of nationally and internationally recognised educators and business leaders drawn from Herefordshire and from around the world. This group will have a 2-3 year mandate to design and fund the university and identify and retain the initial executive leadership team.
With seed financing of £3-4 million and an additional £10-13 million to open the university in 2017, the Board will be tasked over succeeding years with securing an additional £50-£75 million in financing; integrating resources from personal and corporate philanthropy, the social capital market, private investment, UK & EU Government funding, public sector asset transfers, and industry sponsorships.
The New University will be working in close collaboration with Herefordshire College of Arts, Hereford & Ludlow College, and the Royal National College for the Blind to ensure that Herefordshire is recognized as a national centre of excellence in education.

My first thought - money no object. Where did the seed finance come from? Not the council I hope as they will have to have parking meters along all the roads of Herefordshire to bring in any money to support this. Can any councillors explain as they all voted for this worthy cause, except one who abstained.

Noticed that the Blackfriars building used by the council has been vacated and fenced off completely. Did someone mention that the Robert Owen school was to be given the building?

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Hi Megilleland, it was me who said The Robert Owen Free school were going into Blackfriars. What I was, and still am, unsure of, was what financial arrangement they had made for this rather substantial building. The building is still listed as belonging to the council, so it hasn't been sold.

I would be very interested to hear, if anybody is in the know!!

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I think the plan is to kick it off locally, but I imagine they will be leaning towards a regionlism (ie EU) approach through the Marches Local Enterprise Partnership. That's why they are linking up with Ludlow colleges in Shropshire. The local council's role will diminish in education as the overall plan is to be indoctrinated from Brussels.

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One of the reasons I was banned from the HT was asking questions about the Blackfriars building.  It must be of very high value and yet seems to be just being handed over to the Robert Owen foundation.  It doesn't meet any real need as HCT could provide vocational education.  It is a case of Hereford doesn't need a free school but Michael Gove needs there to be one.  I have heard that they (the Robert Owen Foundation) are being given something like £3 million by the Dept of Education to make this happen.  This year they have had about 20 pupils (target was 60 for this year).  The principal (brought in from London) has resigned after one term.  Many of the council staff booted out of Blackfriars to make room have no real place to work.  Another HT report was that the council schools that would have educated the 20 pupils have lost the funding of 4 or 5 thousand per pupil but still the council bends over backwards to help the free school.


A completely unrelated observation is that one of the trustees of the Robert Owen foundation is one Geoff Hughes.  


And another unrelated observation is that the council director of 'places and communities' is one Geoff Hughes.


Can any of the councillors who are on this site confirm that the valuable land and building will at least stay in the ownership of the council (i.e. us) and not be available for the free school organisation to take away and sell for their own profit later?  Could any councillors who were keen to justify the selling at the best possible price of council property let us know if this `asset disposal' was at the best possible price?

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On 09/03/2014 at 09:44, megilleland said:

I think the plan is to kick it off locally, but I imagine they will be leaning towards a regionlism (ie EU) approach through the Marches Local Enterprise Partnership. That's why they are linking up with Ludlow colleges in Shropshire. The local council's role will diminish in education as the overall plan is to be indoctrinated from Brussels.



I heard that Ludlow college was in dire straits financially a couple of years ago and students were deserting it.  It wasn't so much merged, as rescued, by joining with HCT.  It was also looking at being taken over by other West Midlands bigger colleges.

Regarding the suggested university,   I suspect that, as with the `shopping mall' model of regeneration, Hereford is at least 15 years too late - the market for university education has peaked and is in decline as the costs increase.  What might work is an on-line one - but that doesn't need buildings, it wouldn't bring free spending students and professors to Herefordshire and would be competing with the big US universities that already run on-line course modules and the OU in this country which already has a high reputation.  

It would be great for youngsters in Herefordshire to have Higher Education available but not have to move away if they don't want to or are unable to - but the opportunities for having an outlying campus of established universities should be pursued first.  (This should already have been done but probably hasn't).  As Dippy said - the old cattle market would have been ideal - some educational buildings, some greenery and some accommodation would have provided more long term economic improvement than just shops.

I would park this idea in the same area as the Ukrainian missile factory, the velodrome, a council apology for mistakes and a bypass as - yes, it would be welcome, but we wont hold our breath.


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Thank you Aylestone Voice
You don't happen to know when the council decided it didn't need Blackfriars, do you? Or what role Geoff Hughes had in that decision?
Knowing a free school could do this, wouldn't you think they would act defensively and keep any such buildings of value in use until the school was housed somewhere else?
And if the building really wasn't needed then you'd have thought the staff in there would have adequate alternative places already prepared. 
Is the lack of protest from the council due to bigger politics and trying not to get on the wrong side of central government?  Is that also why the Hereford Times is ignoring the situation?


I have moved this here so not to distract from Saving the Working Boys Home topic. You need to go back to 2009 to find out how Blackfriars Street Site was disposed of:
Meeting: 04/06/2009 - Cabinet (Item 121)
Cabinet is asked to allocate the Council owned Blackfriars site in Hereford for possible use as a Higher Education (HE) Centre and reserve it for that purpose.
Additional documents:
Appendix 1, item 121 
Blackfriars 2, item 121 
Looks like the council didn't own all the site.
Wards Affected 
The site is located in Central ward. Benefits will be County-wide 
Cabinet is asked to allocate the Council owned Blackfriars site in Hereford for possible use as a Higher Education (HE) Centre and reserve it for that purpose. 
Key Decision 
This is a Key Decision because it is likely to result in the Council incurring expenditure above 
agreed budgets for the service or function (shown as a line in the budget book) to which the 
decision relates but allowing for virements between budget heads and savings within budget 
heads of up to £500,000. 
Recommendation THAT: 
a) the allocation of the Councils Blackfriars site as a location for a possible Higher Education Centre be approved, and; 
b) authority be delegated to the Director of Regeneration, in consultation with the Director of Resources, to finalise arrangements subject to development of a robust business plan. 
Lots of information in this report. Looks like Geoff Hughes was well and truly involved in the negotiations. Read the rest to discover the value of the site in 2009 was £1.2 million and who the The Higher Education for Herefordshire Management Board and consultees where.
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But as I see it that decision was in respect of the intended university not the Robert Owen School. So there must be a later decision. That said I expect Geoff Hughes authorised that as well - he has no problem confusing council and other interests just when it suits him. After all he is a died in the wool "yes man"

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Once again Megilleland, you have come up trumps!

There would appear to be no limit to the amount of hats Geoff Hughes wears - both officially and unofficially.

We could start a thread just about which of his fingers are in what pies.....it would be a not inconsiderable list!

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Let's be realistic here, if this "university" goes ahead, it's not going to be a nice university campus, it's going to be lectures in meeting rooms and back alley buildings dotted around the city. Look at the art college, that's now spread to various "media" centers all over town, filling old rooms and buildings like the old job centre.

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Let's be realistic here, if this "university" goes ahead, it's not going to be a nice university campus, it's going to be lectures in meeting rooms and back alley buildings dotted around the city. Look at the art college, that's now spread to various "media" centers all over town, filling old rooms and buildings like the old job centre.


Keep up - the council have taken over the old job centre, spent a load of money refurbishing it and (I believe) have moved their Bath St staff into it, ahead of a cosy deal with the Fire Brigade. They've also taken over the old Bulmers lab premises in Whitecross Road, Nelson House, currently scaffolded after a slate blew off. As an aside, they're also altering Plough Lane and spending millions on the Shire Hall.


The plans for Robert Owen/University at Blackfriars show two large new blocks to be built on the site. From their Q and A 'Beginning with as few as 300 students at its inception, the university will grow to 5,000 students between 2020 and 2025. The New University will be established in the immediate environs of Hereford City and will evolve campus hubs in several locations throughout the City.'

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Great research Megilleland.  Thank you.


So there have been two university development projects:


In 2009 the council agreed to give/rent Blackfriars to the first university project with Geoff Hughes as the director in charge of organising it and the Robert Owen foundation part of the group of organisations supporting the project.


In 2013 - 14 a completely different university project appeared and approached the council for the possible use of buildings.  Again agreed by council.  However by this time the Blackfriars building is no longer available because the Robert Owen Foundation (with Geoff Hughes as a senior trustee) has acquired the site for nothing for a purpose that is definitely not Higher Education.


Leaving aside the lack of need for the free school and the resignation of its headteacher after a term,  these questions spring into my mind:


- What happened to the first university project?

- When did Geoff Hughes join the Robert Owen Foundation?

- At what point did the council decide to drop its commitment to reserving the Blackfriars site for Higher Education (university use) - and is this recorded anywhere?

- My own opinion is that a  Higher Education facility would be of great positive value to the local economy - it has been proved in many places.  So why has our director for regeneration supported an alternative use (non higher education) for the site earmarked for higher education - thus blocking a major regeneration opportunity?


Perhaps we'll never know as the council, its departments and arms length companies and these various other bodies combine to make the most opaque situation I can imagine - and the director in charge of education seems to be the most silent on all these education situations. 

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Hope I can help.


It is the government that has told the council to hand over any redundant buildings to the Free school. The council has no say over the matter other than to say what redundant buildings they have. Official council policy, and one I totally agree with, is opposition to the Robert Owen School. However we have a duty of care to the students and therefore there is some involvement.


The government are paying for the refurbishment of Blackfriars and when it is finished will hand it over to the Free School, lock stock and thingy! When the Free School fails the government are likely to pass these buildings back to the LA!


The New University is a completely different organisation and has the backing not just of the council but industry, schools & colleges.

It is unlikely that there will ever be 5000 students in the county at one time. As it is a specialist university,a lot of the students will be doing their learning at specialist businesses and two US universities have also signed up. There is unlikely to be the need for a campus as we use to know them.

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Hi Chris, thanks for posting. I think the point that perplexes both GDJ and myself, is knowing this building - which is a central and valuable resource - could be commandeered and occupied rent free, WHY the council allowed this to happen??

Surely it was worth hanging on to.

From what I hear, Nelson House is having money spent on it, Plough Lane is STILL having money spent on it, and the staff who have moved into the media centre in Bath Street, are almost sitting on top of each other!!

It just doesn't seem like joined up thinking!

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Thank you Chris


Can you confirm that the Council will remain the owner of the site and buildings and that the Robert Owen group won't be able to sell it?


Also, I'm confused about the proposed new university - how will it have an identity and bring any prosperity if it the students and staff aren't located here?


Do you have any opinion on the director in charge of buildings and land assets being part of an organisation removing a million pound asset from the council for a use that the Council opposes?


I realise that the council has to allow a free school to use a redundant building - so why not define it as 'not redundant' - it was still being used by lots of staff until it was hurriedly emptied for the free school. 

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Keep up

I would, but, in all honesty, it doesn't interest me, I just think it's a pointless idea :P

the council have taken over the old job centre

You know, I did notice that it looked abandoned during my "30 ******* minutes" of sitting in gridlocked traffic :P

I don't know what's happened to that media center opposite sainsburys but that was part of the colleges at one point, I think last I saw it was covered in scaffolding

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On a lighter note - according to the documents linked by Megilleland,  ESG (the first incarnation of Hereford Futures) was part of the group looking to have a higher education centre on the Blackfriars site.


They have this plan on their website, of the whole area showing some of the things they fantasise about creating.  Your task is to spot the Blackfriars site and the idea they have for regenerating it.




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On 16/03/2014 at 00:31, Biomech said:

I would, but, in all honesty, it doesn't interest me, I just think it's a pointless idea :P

You know, I did notice that it looked abandoned during my "30 ******* minutes" of sitting in gridlocked traffic :P

I don't know what's happened to that media center opposite sainsburys but that was part of the colleges at one point, I think last I saw it was covered in scaffolding

That's now Nelson House and occupied by the Council, as much of Plough Lane is now occupied by Hoople operatives. A slate blew off in the recent high winds, triggering a massive H & S scare and building evacuation.

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Morning GDJ!

If my memory serves me correctly, which it may or may not!!, I thought the plan to leave Blackfriars was initially BECAUSE of the new development, but that was a long time ago now, and many things have changed since then. Though at what point Blackfriars became a "redundant" building, I am not sure.

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Good Morning Everyone,


Unfortunately the Council did not have much say over the disposal of Blackfriars. Many of Council owned/rented buildings are very costly to run and with more and more staff needing to hot desk, and because LA, NHS and occasionally others need to work together, it is easier to have fewer buildings better equipped.


Blackfriars was an awful building to run with lots of open spaces to heat, make a great school!! So it became surplus to requirements before the Free school came to mind. The government can dictate to every LA which building it requires to be handed over to a Free school provider. Herefordshire did fight against the idea but lost. Blackfriars now belongs to the government. The Robert Owen Group are not able to sell the buildings. They will revert back to the government who most likely will hand back to LA.


Students from across the World will come backwards and forwards to the county as will non students and businesses connected to the uni.

There has been a plan to have a university for many years but nothing solid till now. The ESG plan and it's successors, was a 25year plan of regeneration of which the OMS was first part. The link road and the area round it is next, Canel Road/Jewson opening up the old canal comes after that. The original plan was to have live/work units for the Art College around the opened up canal area!


No plan worth having is ever static, so much of this plan has either changed or stopped altogether. Hopefully our children will come up with ways of progressing the county's economy in years to come.

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Thank you again Chris,


That is becoming clearer - perhaps the fact that the government (with its much vaunted `localism' ethos) can confiscate a million pound asset from a local authority should have been highlighted and opposed more publicly and individuals such as the two MPs asked to give opinions and support local council tax payers a little more.  I suspect that if a Labour government had done this there would have been a lot more noise made in opposition.  The Hereford Times has also been careful to avoid any questioning of the situation since you put your head above the parapet and bravely opposed it in its first stages.  


I admit I am a little concerned by your statement that the government would `most likely' return the site to the LA if the free school no longer needs it - surely this is a defined situation.  I get the impression that you, too, are slightly uneasy about that.


I aslo agree that plans can change but the university plan hasn't `evolved' - it has completely changed and all preparatory work for the 2009/10 version ditched and a completely new group, funding plan and model produced.  Again,  this looks political - the first plan was under Labour, the new plan is under the Conservatives - the co-project leader is the Chair of the Conservative Association.  I have to say the project team looks very strong, though.


No comment on the role of Geoff Hughes in the fate of the Blackfriars site, which the Council fought against?


Thanks again

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Thanks 2wheels. It would make so much more sense to keep things together, what's wrong with them?


So, who reckons in 5 years time the OLM will include Nandos that has moved to the old hairdressers on whitecross, John Lewis Pickup moved to that white building by the duck pond and the 6th form student carpark used for customers... whilst all still be being called "the olm" :P


If they do go ahead and make an actual university - I mean a proper one, not a number of buildings dotted over the city that form part of an alliance to some other university - they need to have 1 big campus with all of the lecture halls and ammenities in one place, maybe this big splat of land that I don't know what it's called (you might have noticed by now I have no idea what anything is called in Hereford, maybe I should use the time spent in traffic reading the signs :P)


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Incidentally, I was told "down the pub" that a 44 tonner would be arriving today having been GIVEN the entire contents of the BlackFriars building for free. Obviously good money could be made from the contents, and the guy doing it, though happy, was incensed that we were giving stuff away. Maybe no one else made an offer - though some of it will go to a good home (believe it or not, another school that WASN'T given a grant to start up!) - maybe no one else was even asked.

Maybe it's who you know!

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  • 3 months later...
On 08/03/2014 at 23:11, dippyhippy said:

Hi Megilleland, it was me who said The Robert Owen Free school were going into Blackfriars. What I was, and still am, unsure of, was what financial arrangement they had made for this rather substantial building. The building is still listed as belonging to the council, so it hasn't been sold.

I would be very interested to hear, if anybody is in the know!!


Hereford Times News: Monday 23rd June 2014 by Bill Tanner
ONE of the countys biggest ever fundraising efforts starts this week – with a target of £20m in two years.
Working that total is a challenge for the Founders Fund crucial to making a university in the county happen.
The New University for Herefordshire (NUH) project is hosting a lunch for 100 individuals, business and organizations at the  Royal National College for the Blind, Hereford, on Friday.
So far, the project has received pledges worth £150k.
NUH project team leader Karen Usher said the same techniques were adopted by the founders of the great universities like Bristol or Leeds of over a century ago.
Over the next 18-24 months we shall be raising up to £20million, she said.
The Founders Fund will push NUH towards taking students by 2017.
Guest speaker at Friday's lunch is GlaxoSmithKline CEO Sir Andrew Witty, in the county to meet with the NUH project team and  discuss economic development with council and business leaders.
Sir Andrew advocates universities as instigators for economic growth and outlined his ideas in a report to government Encouraging an Invention Revolution.
The UK has an extraordinary wealth of ideas, technology and human energy, much of which is world-leading and capable of seeding not just new companies but whole industries with potential to build substantial export positions, said Sir Andrew.
Herefordshire is a microcosm of that. Universities have an extraordinary potential to enhance economic growth which is why I am delighted to encourage the Herefordshire team to pursue their ambitious plans with maximum vigor.
"Universities and I am sure Herefordshire will be no different have a key role to play from local SME and supply chain support to primary technology leadership and breakthrough inventions.
LEPs have up to 1 billion of European Structural and Investment Funds to invest in innovation. I urge them to direct a large share of innovation funding towards excellent universities and research centres in order to nurture sustainable growth founded in comparative advantage, and supporting innovative SMEs in their localities,†he said.
Herefordshire Council is ready to free up millions of pounds worth of land and buildings for NUH with six "start up" sites for student accommodation, administration and teaching identified.
Talks start soon on offering the sites to NUH at less than full market value if not transferred under lease.
In March, the full council passed a resolution backing the university project with time limited options on land and buildings seen as the most practical offer.
The forward plan values Franklin House and Blueschool House at £800k and £500k respectively with consent needed from Homes and Communities Agency (HCA) which has an interest in both sites.
One of the most progressive and highly rated universities in the USA could also be a key project partner.
NUH has opened talks with senior faculty at the Franklin W Olin College of Engineering, Massachusetts, recognised for its pioneering undergraduate engineering programme and informal approach to academia.
Already leading US institutions Harvard and the Massachusetts Institute of Technology, have been advising NUH on structure, governance and administration.

No grass cutting courses then? Seems to be a lot of American input here, don't we have any UK educational experts on how to set universities?

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Seems the Olin College is not without its own financial problems.




Losses soar at acclaimed Olin College

Needham engineering school relies on a large but hard-hit endowment
Olin College spent nearly $100 million more than it took in from 2008 to 2011, records show.
Olin College, with its sleek, glass-walled buildings around a peaceful grass oval, has earned glowing international attention for the successful ways it has pioneered the teaching of undergraduate engineering.
Built from scratch with hundreds of millions of dollars from a private foundation and a commitment to charging no tuition, 12-year-old Olin has attracted standout faculty, even though it does not give tenure. Top companies recruit its high-achieving students, who graduate at enviable rates into jobs with above-average starting salaries.
Behind the accolades, however, Olin has been bleeding red ink.
The tiny college of about 340 students spent nearly $100 million more than it took in between 2008 to 2011, the last year for which figures are available, according to financial records obtained by the New England Center for Investigative Reporting.
The predicament would have been even more dire if not for Olins considerable endowment, which once reached $470 million. But the endowment has lost $120.4 million in value since 2008 in a combination of investment setbacks and cash pulled out to cover operating costs.
No one envisioned that responsible management of an endowment could ever lead to a situation in which the amount of the endowment precipitously dropped, and thats exactly what we saw, said Olins president, Richard Miller.
Olins overall losses come to $129,412 per student annually, a staggering amount considering that Olin teaches only one subject, subcontracts maintenance and dining services, and does not offer an athletics program. Yet, its losing ½ times more than what other colleges spend annually for all purposes, per student, based on a report by the Delta Cost Project, which analyzes higher education spending.
While no one tracks operating losses at universities and colleges, national higher-education specialists said they could not recall an institution similar to Olins size that has lost so much.
In many ways, Olin is not typical of higher education institutions. Its unusually dependent on its endowment, which at one point generated enough interest income to allow the school to charge no tuition. Its teaching model, which the school boasts is a reinvention of the way engineering is usually taught, relies on a high ratio of faculty to students. And it is so new, it hasnt had a chance to build a large base of contributing alumni.
Olin is not a representative prism for analyzing broader issues in higher education, said Miller. Every school is different.
But all colleges and universities share certain basic business realities even one as unusual as Olin. They usually have the same sources of income, such as tuition, fees, and alumni contributions, and generally spend it in similar ways.
To higher education observers, the large and rapid losses by a small school offer a case study in the financial challenges facing higher education and the choices leaders make.
Like those at other institutions, Olins endowment crashed in the global economic collapse of 2008, and its investment income could no longer cover its expenses. And, like many other colleges, it responded by raising the price it charges to attend rather than by significantly cutting costs. In fact, it continued to add employees and give raises.
Olins struggles really do highlight the larger trends in the industry, said Karen Kedem, vice president in the higher-education division of the bond-rating agency Moodys Investors Service, which has been warning that college revenues are not keeping up with expenses, no matter how quickly they raise tuition. There is a constant battle right now between mission versus margin.
When Olins endowment tanked, school officials at first struggled to make up the difference without breaking their no-tuition pledge.
There was a lot of talk about cost-cutting, and then, as the months continued, the magnitude of the reduction in revenue became more clear, said Miller, noting that, at the low point, Olins endowment had lost 35 percent of its value, though it later rebounded slightly. How can you cut 35 percent out of your operating expenses? Miller asked.
That would have meant reducing the colleges budget from $38 million a year to $25 million, he said, just two years after having pruned it by 10 percent.
We concluded that it would create a complete abandonment of the academic model we'd created, Miller said. If you are going to choose cuts, you are going to abandon the mission.
So, the free tuition ideal was dropped in 2010. Olins advertised tuition and fees, not including room and board, now come to $45,156. After discounts and other financial aid, the net price students paid last year was $30,947, almost double the amount they paid in 2008, $15,633.
I cant tell you how much emotion there was about raising these charges, Miller said.
Its real money and it makes an impact on families that have to pay, added Stephen Hannabury, Olins executive vice president and treasurer.
As costs to attend Olin soared, administrators kept spending relatively constant, though payroll costs rose by 16 percent between 2009 and 2011, according to documents the college is required to file with the Internal Revenue Service. In all, the documents show, the staff of instructors and other personnel grew from 101 to 118, though Olin officials point out that enrollment expanded similarly.
Despite Olins small size, several top administrators at the college are paid significantly more than the median salaries of executives in comparable positions at other private colleges nationwide, according to the College and University Professional Association for Human Resources.
Hannabury, as executive vice president and treasurer, made $257,802 in 2011, compared with a median salary of $160,000 for chief business officers at bachelors degree-granting colleges in the United States. Similarly, Olins vice president for development and its vice president for external affairs each make more than $100,000 above the median salaries of their nationwide counterparts. Olin officials say the salaries are meant to attract top people to a school with high expectations.
At its start, Olin College charged no tuition for the 340 students it enrolled. But rising cost and the economic downturn cut into its endowment and the school now charges about $45,000 a year.
Olin is a place where people put their hearts and souls into what they are doing because they believe in it. They don not feel used, said Miller, who made $483,995 in 2011, according to Olins IRS filings. They dont feel like a tool that someone else is dealing with on a cold dollars-and-cents basis.
Miller said the Olin system only works if people who are involved in the college are emotionally committed to the cause that Olin stands for and dedicated to what Olin is doing.
Some critics say colleges are failing to cut as much as they can, though most declined to give an opinion about how Olin in particular has responded to its losses. Universities and colleges generally have to look at the spending side and not just to the revenue side. And, no, I dont think they have, said Rita Kirshstein, director of the Delta Cost Project.
Financial problems scarcely seemed a possibility in 1997 when the trustees of the F.W. Olin Foundation, established by industrialist Franklin W. Olin, decided to create a whole new engineering college. The college was given the foundations entire remaining bank balance as an endowment on the assumption that returns from investing the money would pay for almost everything. There wasnt even space in the administration building for a fund-raising office, Miller said.
When Olins endowment began dropping precipitously, officials were poorly prepared to start raising money from alumni and other sources as most other schools can.
Though the college eventually found room for a development department and is now starting to raise money, it has few alumni to contribute, and its endowment remains 25 percent behind where it was before the downturn.
And Moodys has downgraded its bond rating because of its deteriorating endowment, although the rating remains investment-grade.
It felt like the world was changing under our feet, Miller recalled.
Olin fired and replaced its investment manager, though in fact, Olins endowment loss was proportionally only slightly higher than what other colleges and universities experienced. But most colleges and universities recovered much more quickly, in part because of their fund-raising ability. Endowments nationwide last year were 11 percent higher than they had been during the pre-economic downturn levels, according to Moodys Investors Service.
Making Olins problems worse, the schools only subject, engineering, is very expensive to teach. Unlike other schools with a broader array of programs, Olin cannot subsidize engineering students by charging their classmates the same tuition for cheaper majors such as English and sociology. At many schools although they may not know it liberal arts majors are in effect helping to underwrite the high cost of science and technical education.
Engineering is a very, very expensive major, and theres nothing at Olin to offset it financially, said Kirshstein.
But Olin is actually better off than many schools in one respect: because its buildings are so new, they require far less maintenance.
Paradoxically, the shiny new buildings valued at more than $129 million in Olins most recent IRS filing actually make the financial shortfall look worse. Under commonly accepted accounting practices, universities are supposed to set aside at least 3 percent of the value of their buildings and equipment annually to make sure theres enough saved for when they need to be repaired or replaced. Those millions show up on Olins books as costs even though the money has not been spent yet.
For all of Olins troubles, students continue to apply in large numbers. After a dip from to 874 to 567 in 2010, the year tuition was imposed, the number of students who enrolled at Olin unexpectedly spiked. And the flow of applications has rebounded to 998 for the class that will enter in the fall.
That does not mean colleges like Olin dont need to find answers to their financial problems.
What were facing now could result in a need for a more fundamental change in the business model of higher education, said Kedem of Moodys. Something like that is very hard to achieve in any business. And higher education is very slow to change.
To be fair the Olin College response here.
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