Determining Sweet Briar’s fate

In early March, officials of Sweet Briar College in Amherst County stunned alumnae, students and faculty by announcing that, after 114 years, the private women’s college would close.

The college’s president and the chair of its board of directors cited “insurmountable financial challenges” brought on by a dwindling enrollment, with no upturn in sight.

Unless court action or a mediated settlement reverses its present course, Sweet Briar’s final day of academic operations will be Aug. 25. Sweet Briar had only about 530 full-time students on campus this year with another 170 studying abroad.

Plans to close Sweet Briar unleashed a flurry of lawsuits, including one from Amherst’s county attorney, while raising questions about the fate of the school’s endowment and donations.

The Virginia Supreme Court has scheduled oral arguments for June 4 on a motion by Amherst County Attorney Ellen Bowyer. She is seeking an injunction to stop the college from shutting down. With more than 300 employees, Sweet Briar is a major employer in Amherst.

At the invitation of Virginia Attorney General Mark Herring, college representatives  and the plaintiffs scheduled three meetings in May with a mediator in an effort to settle the dispute. At press time in mid-May, no resolution had been announced. (See updates on vabusiness.wpengine.com.)

The tension in the tug of war over Sweet Briar’s future prompted its president, James F. Jones Jr., not to attend an emotional graduation ceremony on May 16, possibly its final commencement exercises. Jones said in an email that faculty members and alumnae had threatened to disrupt the ceremony if he participated.

A shrinking number
If Sweet Briar were to close, it would join a growing list of women’s colleges that have shut their doors or become coeducational during the past half-century. The Women’s College Coalition says that there were 230 women’s colleges in 1960. By last year that number had shrunk to 47 in the U.S. and Canada.

In 2007, Randolph-Macon Woman’s College in Lynchburg changed its name to Randolph College and enrolled men for the first time. 

Despite their falling numbers, women’s colleges say they can offer female students a better education, a more supportive environment and increased opportunities for leadership than they would find at a coed school.

Virginia’s two other women’s colleges, Mary Baldwin College and Hollins University, report that they have seen no untoward repercussions from Sweet Briar’s closing announcement in March nor any decline in giving from alumnae.

In a March 11 letter, Hollins President Nancy Gray assured alumnae and friends of the university that it is growing stronger as it approaches its 175th anniversary in 2017. Roanoke-based Hollins has about 750 graduate and undergraduate students

She says Hollins has operated with no debt for the past nine years, its endowment has reached a record $180 million, and its most recent fundraising campaign, completed in 2010, raised $162 million and remains the largest conducted by any Southern women’s college.

At Mary Baldwin College in Staunton, President Pamela Fox says it is in the midst of an $80 million capital campaign, and there’s been no slowdown in giving, with about $70 million raised so far.

Mary Baldwin, which will become a university next year, has approximately 1,750 students enrolled on its Staunton campus and in adult degree and graduate programs across the state.

Fox says that although Mary Baldwin has a small endowment, about $35 million, it has a strong base of support, and a variety of tuition revenue streams.

Opponents raise money
Groups seeking to stop Sweet Briar’s closure have questioned the severity of the school’s financial situation and oppose the use of donations to wind down its operations.

Saving Sweet Briar, a nonprofit alumnae group, has collected $13 million in pledges for the school over the next five years. The group hopes to keep Sweet Briar open through at least the 2015-16 academic year so that its finances can be straightened out and a plan is created to make sure that the college is a on sustainable path. The college has about $25 million in debt.   

It is unclear how much money the college has on hand. Sweet Briar’s endowment stood at $84 million in 2014, down from $96 million in 2011.
In recent court testimony, an attorney for the college said Sweet Briar is spending about $3 million a month from its endowment for continuing operations. 

Perhaps because of the uncertainty of the road ahead, Sweet Briar did not respond to questions about how its endowment and other assets, including its 3,250-acre campus, would be dispersed if the college closed.

Herring’s brief
Before arranging mediation between the parties in the Sweet Briar dispute, Herring filed a brief in Amherst Circuit Court in connection with Bowyer’s suit. In the brief, the attorney general said that Sweet Briar is a corporation and, as such, any decision about whether it closes or remains open rests exclusively with its board of directors.

The attorney general laid out a possible future if Sweet Briar cannot remain an educational institution. Herring says the General Assembly anticipated that there would be a time when an institution might properly use funds for a purpose other than that for which they were donated and enacted the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

“A thorough evaluation of UPMIFA modification requests requires a review of each gift instrument to determine whether the restriction in question is ‘unlawful, impracticable, impossible to achieve or wasteful,’ ” Herring said, quoting a portion of the act.

Only the attorney general and the judiciary have the authority to make that determination, Herring added. He noted that Sweet Briar already had submitted requests to the attorney general’s office to modify the restrictions that were attached to gifts made to the college.

Blocked from asset sales
In response to a lawsuit brought by Sweet Briar parents, students and alumnae, Bedford County Circuit Judge James Updike on April 29 refused to stop Sweet Briar from closing but blocked the school from selling its assets for six months.

On the same day, Bowyer, the county attorney, filed her Supreme Court appeal. She is trying to overturn an earlier Updike ruling on a separate lawsuit, which seeks to halt any steps toward closing the college.

A third lawsuit, filed in April by a group of Sweet Briar faculty members, accuses the college of breach of contract.

One interested observer of these court battles is Mike Goldstein, co-chair of the higher education practice for the law firm Cooley LLP in Washington, D.C. He says that, when an institution such as Sweet

Briar closes, the nonprofit corporation establishing it remains. “It owns all the assets … including the land and buildings,” Goldstein says.
In his opinion, the attorney says there are usually only two courses of action left open for a college if it closes. “It can change the purpose of the corporation,” perhaps offering scholarships for deserving students, “or it can dissolve,” he says.

Goldstein emphasizes that individual state statutes and a variety of other circumstances dictate any final action. He added that giving money back to living donors could be problematic in that it might create tax issues for those donors, who may already have taken charitable deductions.

Virginia Intermont
Virginia Intermont College in Bristol, a coeducational liberal arts school, closed in May 2014. It was founded in 1882 as a women’s college. A management consulting group from Nashville, Tenn., Compass Executives, was hired to handle closing arrangements and to deal with the college’s debt, which is about $10 million, says Compass official Art Rebrovick.

Rebrovick, who also is the interim president of Virginia Intermont, says the ideal situation would be to repurpose the campus as an educational institution. But it’s not clear whether that will be possible.

Virginia Intermont continues to operate as a nonprofit entity. Rebrovick says that, although the college has closed, it still receives donations from alumnae and others.

Whatever the final disposition of Virginia Intermont’s assets, Rebrovick hopes it will benefit both the college and the community.

Wilson College case
There is only one known instance — involving Wilson College in Chambersburg, Pa. — in which officials of an educational institution decided to close, but the move was overturned through court action.

On May 25, 1979, just two days before what would have been the college’s final graduation, a local judge said the college — like Sweet Briar, a private women’s institution — could not close without his approval.

Judge John Keller, an elected judge of Pennsylvania’s 39th Judicial District, ordered the removal of the college president, citing “a gross abuse of discretion and authority.”

Keller said college officials had “panicked” because of budget deficits, a small incoming freshman class and the need to transfer money from unrestricted endowment funds to support the institution.

“It was a singular case in higher education history,” says former Wilson President Mary-Linda Merriam Armacost, who came into office shortly after the judge’s decision.

In Pennsylvania, she says, the law requires a school to go to court to change the terms of its restrictive endowment. She says Wilson’s trustees didn’t do that, deciding instead to close the college. “The alumnae saw their opportunity, and they grabbed it,” Armacost says.

Wilson, which now has about 800 students, determined it could not be financially sustainable as a women’s college. After a long study, the college’s board of trustees voted in 2013 to make the college coeducational beginning in the 2013-14 academic year. The first male residential students enrolled last fall.

Current Wilson President Barbara Mistick says that the college had its largest entering class in 40 years last year. “We are on an improving streak,” she says.

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