Facing a $20 million deficit, Albright College is making cuts, borrowing from endowment

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Over the past year, Albright College in Berks County has cut 53 positions, canceled some academic majors, and considered selling property and art as part of an effort to close a $20 million deficit.

Despite those challenges, interim President Debra Townsley struck an optimistic tone during an interview with Spotlight PA in early December, noting that the private liberal arts college had cut expenses in half from 2023 and highlighting revamped admissions, advancement, and fundraising efforts.

“There’s only two things we can affect: revenue and expenses,” Townsley said. “We’re working on both sides of that, and that will right-size the organization.”

What Townsley did not mention was that Albright would soon seek permission to borrow up to $25 million of its endowment fund. Officials said they needed the money by Jan. 1 to prevent “the risk of closure,” because Albright was running out of “basic operational funds.”

Donors say they were blindsided by the request, which also gives the college unrestricted access to scholarship funds.

Albright is one of several small colleges or universities in Pennsylvania grappling with major financial challenges due to declining enrollment exacerbated during the COVID-19 pandemic.

In court documents, officials also attributed the college’s financial strain to “unfavorable market conditions…and large unanticipated capital needs.”

The commonwealth has seen 10 colleges shutter or merge since 2017, including a slew that closed last year. One such college was the University of the Arts in Philadelphia, which filed for bankruptcy and shuttered on June 7, 2024.

College officials downplayed the urgency of the endowment request, which was granted on Dec. 20, insisting that Albright College would only use the loan “should the need occur.”

“We do not believe that we will have to draw on the endowment this semester as we are currently running breakeven on our budget,” said college spokesperson Justin Roy, who added the endowment fund currently has $65 million. “We are optimistic about the future of Albright and have made many financial decisions in the last six months to set the college up for success.”

Endowment access

In Albright’s emergency petition, the college said it owes $50 million to “several financial institutions” and has experienced a “net asset decline of more than $46 million from 2022 to 2024,” which required the college to take “significant measures to lower its deficit.”

Officials in court documents said they don’t plan to borrow the “full $25 million immediately,” but instead will have Albright’s Board of Trustees “monitor and approve any draw down on the loan.” The 20-year endowment loan has a 5% interest rate.

Roy said the endowment loan will be used like a “self-funded line of credit” that Albright will draw from if necessary. He said schools often use a “line of credit in the summer months” to buoy finances until tuition arrives in the fall.

Colleges using endowment funds for operating expenses isn’t new. In fact, amid the pandemic, higher education institutions across the country considered borrowing from endowments to buoy finances as enrollment and donations decline.

“We are choosing to self-fund this through a loan from the endowment instead of a bank,” Roy said.

According to court documents, however, the college couldn’t secure a bank loan “on favorable terms” because of its existing debt and was quoted interest rates as high as 25%. Officials argued those rates “would not allow Albright to recover financially.” And it is already grappling with a $17 million loan with a variable interest rate.

The endowment loan agreement requires trustees to report usage quarterly to the attorney general for “complete transparency and oversight.”

The Pennsylvania Office of Attorney General has enforcement authority over charities and nonprofit entities, which allows it to review nonprofit conduct and potentially take an entity to court should it do something improper.

Brett Hambright, press secretary for the attorney general, said the office will review the quarterly reports from Albright and, if “anything concerning” is found, the state can take the college to court to “correct that problem.”

“We will advise Albright of any concerns, and they may voluntarily agree to address what we find problematic — and if they do not, and they have not convinced us there is a good reason for their conduct, we can go back to court,” Hambright said.

Program changes

Before Albright dipped into its endowment fund, it cut staff, eliminated unpopular classes and majors, and added in-demand programs and extracurricular activities.

Townsley said all the changes administrators are making aim to strengthen and refocus on the college’s core mission — academic programs and the student experience. She said they eliminated classes and programs that didn’t meet Albright’s mission.

“Our mission is to provide students with an education that enables them to live their best lives possible now and in the future,” she said.

Albright College has also made program and curriculum changes to better align with prospective students’ interests.

Over the next few years, Townsley said the school will phase out economics and philosophy majors while incorporating new majors like cybersecurity, vocal performance, and music production and establishing new business tracks like human resources management. She said the class eliminations were based on low enrollment in those courses, while additions were based on student interest and employment demands.

That doesn’t mean Albright will eliminate all economics classes — business majors need those courses, Townsley noted, but the major will be cut. These decisions were made in concert with faculty and staff based on declining enrollment in those majors, she said.

The school is also offering new athletic programs including men’s and women’s wrestling and a new NCAA DIII Stunt program, which includes cheerleading, dance, and stunt. Administrators refused to explain the financial impacts these additions will have.

To improve the student experience further, Townsley said qualified applicants are admitted within 72 hours of applying.

Other smaller, private colleges in Pennsylvania have followed suit. Eastern University in Delaware County introduced “life flex” online programs, allowing students to obtain MBAs in less than a year for under $10,000, doubling its enrollment. Neumann University not only introduced new programs, like forensic psychology and a master’s in nursing, but also reduced dining services, eliminated shuttle services, and moved printing in-house.

Just before the pandemic, Albright College cut its tuition by 45%, hoping to lure more prospective students to the small school located on the outskirts of Reading.

It joined a growing number of private colleges in Pennsylvania and across the country that slashed tuition, including Immaculata College, which cut tuition by 25% in 2017-18; LaSalle University, which reduced tuition by 29% in 2017-18; and Rosemont College, which cut tuition by 43% in 2016-17. Many of those same educational institutions are struggling financially.

Albright administrators won’t say how much these measures have saved, arguing the numbers are a “moving target” since they have added new positions and programs. Nor could college officials pledge there wouldn’t be more staff cuts, instead pointing to current open positions.

Selling art, property

Albright College doesn’t expect to fetch millions of dollars for its artwork like La Salle University did with its museum collection in 2018, but it’s another way to scrape together cash. Some of the pieces Albright owns have local or regional significance to the area, but college officials didn’t elaborate further.

“If we have a $15,000 piece of art, that’s not going to solve the gap. But why do we want that in an office when it has some value to a museum?” Townsley, appointed to the interim role on July 1, told Spotlight PA. “That is their business, so that’s what we’re looking at.”

College staff is working with the Reading Art Museum to identify artwork the local museum wants to purchase for display. The Foundation for the Reading Public Museum confirmed it has had “preliminary conversations” with Albright administrators about displaying the Freedman Gallery collection.

Albright’s art museum should primarily display student and faculty artwork, Townsley said.

“We have things that our students are creating — that’s what should be in our art gallery,” she added.

Albright College also is looking to offload “extraneous properties” that it has no use for, Townsley said. She said the college has two vacant lots behind a gas station and convenience store it plans to sell.

“We’re never going to use that land, so we’ve put it on the market,” she said. “We don’t need to be carrying the insurance on it and mowing the lawn.”

Discord remains

Townsley was appointed interim president last July with the difficult task of addressing the financial crisis and restoring trust in the college from staff, students, and donors.

Unrest built on campus among students and faculty last year who were frustrated with the previous administration’s lack of transparency about the college’s longevity and future. Then in April last year, Albright College faculty voted “no confidence” in school president Jacquelyn Fetrow, Townsley’s predecessor, and college provost Karen Campbell drew similar complaints.

Fetrow resigned a few weeks after the “no confidence” vote and shortly before the college’s Board of Trustees announced dozens of cuts to faculty and staff. She had been president since 2017, and in 2022, the board of trustees voted unanimously to extend her contract through 2027.

During a Dec. 5 interview with Spotlight PA, Townsley said she has held regular forums with students to answer questions, meets regularly with faculty and staff, meets monthly with Albright’s Student Government Association, and attends community events and webinars to inform the general public of the college’s progress.

But deep job cuts — and the recent move to borrow millions from the endowment fund — have continued to strain the relationship between the college administration and the community at large.

Some faculty, who requested anonymity for fear of losing their jobs, told Spotlight PA that they’ve seen improvement in how the administration relates to students and staff. However, continued fears of more job cuts have damaged morale. One professor described how they could be working with a teacher at noon and find out that person was laid off at 4 p.m.

Leaders of the college’s Faculty Executive Committee declined to comment for this story. Albright’s alumni and student government associations did not respond to Spotlight PA requests for comment.

Albright’s latest pursuit to use endowment funds for operating expenses wasn’t discussed with donors and other funders before the college received approval.

Kevin Murphy, president of the Berks County Community Foundation, said the group met with Albright’s new administration in September where the college laid out its stabilization plan but their intention to borrow from the endowment fund was never mentioned.

The nonprofit community foundation helps organizations manage charitable funds and distributes grants and scholarships.

While the foundation is not a donor, it manages a scholarship fund for Albright College that is not part of the endowment. Murphy said it has overseen grant disbursement to Albright in the past.

He said Albright’s move to borrow from its endowment undermines donor confidence permanently, even if the college went through the proper process and approvals required by Pennsylvania law.

“At Berks County Community Foundation (and probably every community foundation) we never think it’s a good idea to raid organizational endowments to fund operating losses,” Murphy said.

The emergency petition also allows Albright to use small scholarship funds totaling less than $100,000 for operating expenses. The college eliminated spending restrictions on funds less than $25,000 last year, which gave the financially strained institution access to about $2 million, according to court documents.

Julia Klein oversees the C.H. Briggs Hardware Co. scholarship fund established at Albright decades ago. She expressed frustration that the college did not alert donors to the scholarship funding changes. She and others, including the Berks County Community Foundation, found out through the press or other channels after the emergency petition was granted.

“Although the challenges in higher education are well known and somewhat universal, we strongly object to the liquidation of [our scholarship] fund to meet Albright’s current cash needs, regardless of the college’s promise to use the money as intended this year,” Klein said. “We are committed supporters of liberal arts education and understand the challenges, but the lack of transparency here raises red flags.”

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