Urbana U. begins first year after rare, rapid acquisition

Staying with the story

The Springfield News-Sun has provided unmatched coverage of the acquisition of Urbana University since it first broke the story in April. For this story, the paper dug through financial records, spoke to staff, students and faculty, as well as local community leaders.

By the numbers:

911 — Students at Urbana University this fall

6,277— Students at Franklin University last fall

404 — Employees at Urbana University in 2011

429 — Employees at Urbana University in 2012

$574,088 — Operating loss at Urbana University in 2011 fiscal year

$1.93 million — Operating loss at Urbana University in 2012 fiscal year

More than 900 students filed into Urbana University classrooms this week, many likely unaware that the university had teetered on the edge of closing its doors just a few months ago.

They are the first group of students to set foot on campus since Franklin University stepped in to acquire the smaller school this spring. The deal was made possible only after local banks agreed to absorb millions of dollars in losses.

But local leaders have said saving Urbana University was critical because it employs more than 400 area residents and has a roughly $31 million impact on the region.

Recent investments in the campus will be noticeable to students, said Jeffery Kalbus, dean of the College of Professional and Applied Studies at Urbana University. But perhaps more important, he said, is that the acquisition wiped clean debt that had been accumulating for years, and had cast a dark cloud over almost every financial decision previous administrations had made.

“We can now operate like a normal university,” Kalbus said. “That makes a whole world of difference over how you can allocate your resources.”

‘Right thing to do’

Since the acquisition, Franklin has spent about $1.6 million paving roads, upgrading technology, removing dead trees and removing asbestos in dormitories, said Pam Shay, senior vice president for academic standards and student affairs at Urbana University.

Franklin also invested about $3 million to meet payroll and operating expenses, although some of that money will be repaid from state and federal funding. Internet speeds were also quadrupled on campus.

Despite the initial cost, Franklin sees long-term benefits for both entities, said Shay, who also serves as vice president for accreditation and institutional effectiveness at Franklin.

“They had a few financial issues and weren’t able to get out from underneath it,” she said of Urbana University. “But it was the right thing to do. You’d hate to see the door shut on a great university that’s served students for 164 years.”

Some of the upgrades were noticeable last week, including new computers in some of the classrooms, said Curtis Galloway, a junior majoring in business and a defensive end on Urbana’s football team. He learned about the acquisition last spring during a field trip in the business program. On the first day of classes though, he said everything seemed fairly normal.

Galloway said he was looking forward to the start of the football season and was optimistic that the acquisition by Franklin will lead to further improvements. For example, he said wireless Internet in the dorms is often spotty.

“The WiFi is still not too good in my room,” he said.

The acquisition didn’t deter James Ricketts, a freshman from Northeastern High School in Springfield. A psychology major, Rickets said he chose Urbana because of the campus and its smaller size.

“I just love everything about it, and it’s real down to earth,” he said.

The initial investment was needed to keep the basic infrastructure of the campus intact, Shay said. Roof repairs and replacements will also be needed on several campus buildings after those upgrades were put on hold due to the university’s financial situation. That work could start as early as next month.

Rapid acquisition rare

Under the agreement, Urbana University will function as a division of Franklin. However, Urbana’s athletic teams and its affiliation with the NCAA will remain intact.

Franklin University, in downtown Columbus, is a much larger private university with about 1,700 employees, according to tax records obtained by the Springfield News-Sun.

Most of its students commute or take courses online. Franklin serves about 10,000 students overall and has smaller locations in Westerville, Dublin and Delaware, Ohio, as well as regional locations in Beavercreek and Indianapolis.

Similar acquisitions are unusual in higher education, experts have previously said. But Urbana’s precarious financial situation, and the need to ensure students could continue their education without interruption this fall meant an acquisition process that can take years was worked out in a matter of months.

“This is a very unique situation,” Shay said. “It’s rare that we see occasions when a nonprofit buys another nonprofit. It is extremely rare for the pace that this has moved.”

Most students will probably notice few differences under Franklin’s management, said Bill Bean, Urbana’s mayor and a graduate of Urbana. Saving the campus was important because students are often involved in several community organizations, and its closure could have meant a vacant 128-acre campus, causing a long-term headache for the city.

Some residents were skeptical that Urbana would maintain its identity, Bean said, but that has changed and most people have been pleased with Franklin’s commitment to the campus.

“They’re very much in tune to making Urbana University more a part of the community,” Bean said of the new administration.

The additional resources will provide stability and allow the faculty to be more confident about the future, said Dean Pond, dean of the College of Education at Urbana.

“It was a shot in the arm to our physical and academic environment and I’m very pleased with the way things seem to be progressing,” Pond said.

Broad range of students

The deal was attractive because both entities serve different populations, and because each offers academic programs and resources that appeal to a broad range of students, Shay said. Along with Urbana’s physical campus, Franklin officials believe programs like Urbana’s graduate certificate in sustainability and a new agribusiness program are important assets.

Because of its student population, Franklin specializes in taking existing programs and designing an effective online version, Shay said. The acquisition will allow faculty from Urbana to work with Franklin staff members and increase the number of programs taught online.

“If one person was to do it all by themselves, it would probably take them several months,” she said. “There’s a lot of work involved. But when you utilize that team approach, we’ve been able to turn things around pretty quickly. We can probably design a class in two to four weeks.”

Urbana officials recently announced they will offer a new Master’s of Science in Nursing program online beginning this fall, and it’s likely Urbana programs like sports management and exercise science will eventually be available online as well, Shay said. The nursing program would have eventually been online without the acquisition, but Franklin’s resources sped up that process.

Other projects underway include combining functions like human resources, financial aid and the registrar’s office to reduce costs, Kalbus said.

Faculty members have seen more emphasis on professional development, he said, an important item put on the back burner in recent years due to Urbana’s financial situation.

“With the new administration, they’re bringing in the necessary resources,” Kalbus said.

In the black

Tax forms filed with the Internal Revenue Service shed light on why Urbana’s former board members and administration sought assistance from Franklin.

Urbana had struggled financially for much of its history, but lean enrollment, a handful of failed business decisions and the Great Recession meant Urbana couldn’t take on more debt to survive, former Urbana board members have said. Five local banks accepted millions of dollars in losses to wipe the debt clean, allowing the transaction to occur.

Tax forms show Urbana saw about $572,000 in operating losses in fiscal year 2010, but that figure increased to $574,000 in 2011 and then shot up to $1.9 million in fiscal year 2012.

Franklin, though, saw more than $610,000 in positive revenue after expenses in fiscal year 2009, $6 million in 2010 and $2.9 million in 2011.

During that time, Shay said Franklin reinvested in its campus and programs. While it has done some fundraising in recent years, the Columbus university also built up its investment fund, which made the acquisition possible.

“Franklin has operated in the black and it’s had balanced budgets for years,” Shay said. “They realize the business side of higher education. Just because you’re nonprofit doesn’t mean you’re for losses.”

Nine faculty and staff members were laid off shortly after the acquisition in an effort to balance Urbana’s budget.

That was difficult because employees at the smaller campus are close, Kalbus said. At the same time, he said everyone knew steps had to be taken to ensure the long-term viability of the campus.

“One of the things that has been repeated this year was we will be in the black, simple as that,” he said.

Now that the school year is underway, one of the next steps will be to develop a long-term strategic plan, as well as plans for upgrading and maintaining facilities, Shay said. For example, she said athletic facilities and weight rooms on campus could be renovated, and plans are already in place to expand WiFi campus wide.

Students like Galloway said that’s positive news.

“I just want my WiFi to work better,” he said.

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