Tennessee Wesleyan on fiscal watch list

PDF: College financial stability rating

The economic and market decline of the past three years pushed Tennessee Wesleyan College in Athens, Tenn., onto the government's list of colleges that fail to meet federal financial standards, a new report says.

But interim college President Stan Harrison said Tennessee Wesleyan remains financially viable and he expects the college will again pass the "financial-responsibility test" by 2012.

"I don't think we're unlike a lot of small, private schools," said Harrison, the former vice president of enrollment services who replaced Steve Condon in April at the United Methodist Church-affiliated college. "We have every reason to believe that the year after next we will be off this list. The economy is starting to improve, and we're starting to see some benefit in regards to our endowment."

Tennessee Wesleyan was one of 149 private, nonprofit colleges in America, including four in Tennessee and three in Georgia, that were put on the U.S. Department of Education's watch list this year because of their relatively weak economic conditions over the past couple of years. The financial stability index is based on a series of financial ratios that measure assets and debt as well as operating surpluses and deficits.

The Chronicle of Higher Education said the number of colleges that failed the government's financial responsibility test rose by 23 this year and is up by 70 from the number two years ago.

With the unfavorable rating in the past two years, Tennessee Wesleyan has had to provide a bank letter of credit showing it has the assets to cover the amount of federal institutional aid awarded to students.

BY THE NUMBERS* 120: Tennessee and Georgia private, nonprofit colleges rated as financially responsible without further oversight* 6: Tennessee and Georgia private, nonprofit colleges considered financially responsible but requiring additional oversight* 7: Tennessee and Georgia private nonprofit colleges rated not financially responsible, requiring letters of credit

The market decline and slumping economy hit endowment income and gifts to the school, which was founded in 1857.

"Our lack of endowment revenue in recent years has played a large part in what the Department of Education regards as financial stability," Harrison said. "We're certainly running a positive budget now and our enrollment has been good this year."

The college set a fourth consecutive enrollment record this year with 1,103 students, up from 1,070 last year and 988 two years ago. The school, with campuses in Athens and Knoxville, has added new apartments and renovated the business school building in the past couple of years, Harrison said.

But its endowment dropped from a peak of more than $10 million down to about $6 million before rebounding to the current level of about $7 million. The United Methodist Church provides less than 1 percent of the college's $25 million budget.

The school cut $1.6 million in operating expenses in the past year, but Harrison said no academic programs were cut.

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340. Follow him on Twitter at twitter.com/chattreporter.

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