June 23, 2014 BY CERTIFIED MAIL. Dr. Wilma Mishoe, Interim President Wilberforce University 1055 North Bickett Road Wilberforce, OH

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1 June 23, 2014 BY CERTIFIED MAIL Dr. Wilma Mishoe, Interim President Wilberforce University 1055 North Bickett Road Wilberforce, OH Dear President Mishoe: This letter is formal notification of action taken concerning Wilberforce University ( the University ) by the Higher Learning Commission Board of Trustees ( the Board ). At its meeting on June 12, 2014, the Board issued a Show-Cause Order to the University. A Show-Cause Order is a procedural order that requires an institution to present its case as to why its accreditation should not be withdrawn. I enclose a copy of that Order. That Order is effective as of the date the action was taken. In issuing the Order, the Board considered evaluation materials regarding the University, including the focused visit report and supporting documents, the focused visit team report, the Institutional Actions Council (IAC) hearing committee report, the University s responses to these documents, and related information in the institution s file with the Commission. The University is required to present its case for accreditation by means of a Show-Cause Report due December 15, 2014, or eight weeks prior to the Show-Cause Visit that will validate the contents of the report. The report should provide substantive evidence that 1) the University has ameliorated each item of concern identified by the Board and 2) the University meets each of the Criteria for Accreditation and Core Components, including the Assumed Practices, and the Federal Compliance requirements. The report should also include the following specific information: evidence that the University Board has hired a president capable of moving the institution to fiscal viability and has set the expectation that an annual presidential evaluation will take place and will be conducted relative to clearly articulated goals; evidence that the president has retained a senior administrative team with appropriate qualifications to oversee all administrative functions; a comprehensive and integrated business plan leading to financial stability and addressing, at a minimum, enrollment, operating revenue and expense, debt service, facilities planning, and fund-raising. The business plan should include a five-year prospectus along with a clearly stated rationale for each of the underlying assumptions; evidence that a plan has been developed to assure basic deferred maintenance is being addressed and that the University provides a clean, safe learning environment for

2 Wilma Mishoe, June 23, students on an ongoing basis and that the plan is supported by identified financial gifts or grants; evidence that within two years of the date of this action the University will be able to pass all building inspections for all facilities currently in use and inspections related to food sanitation; evidence that the University Board of Trustees has membership with expertise or access to expertise in legal matters, finance, facilities, higher education, and other areas of strategic importance to the University; evidence that University Trustees fulfill financial and other commitments outlined in University bylaws; and evidence that the University has implemented regular processes for Board orientation, education, and evaluation aligned with clear roles and expectations for Trustees; The University is required to host a Show-Cause Evaluation Visit no later than February 9, 2015, that will validate the contents of the report and determine if each of the concerns the Board identified in this action have been fully ameliorated and the Criteria for Accreditation and Core Components, including the Assumed Practices and Federal Compliance requirements, are met by the University. In making its decision to issue a Show-Cause Order, the Board determined that the University is out of compliance with one or more of the Criteria for Accreditation and Core Components. The areas of concern include but are not limited to the following: The University is out of compliance with Criterion One, Core Component 1.A, the institution s mission is broadly understood within the institution and guides its operations, for the following reasons: the University has failed to demonstrate that its mission guides its current operations: o commitment to sustaining the mission of the institution does not drive decisionmaking by the University Board and its administration in addressing challenges to institutional enrollment, infrastructure, and budget and determining how institutional resources should be aligned to work towards resolving these challenges; o the University Board and President have not worked together to develop mutually agreeable goals or priorities each year based on the institution s mission; o the University Board and the President have not regularly reviewed the appropriateness of the institution s mission, particularly in light of concerns expressed by the Board about whether the mission should be revised; and the University has failed to demonstrate that its mission guides its future operations because the University Board and the President have not engaged in a process to develop or review ideas or proposals, such as the proposed program to develop entrepreneurs, to assure the future viability of the institution in light of the University s mission and goals. The University is out of compliance with Criterion Two, Core Component 2.A, the institution operates with integrity in its financial, academic, personnel, and auxiliary functions; it establishes and follows fair and ethical policies and processes for its governing board, administration, faculty, and staff, for the following reasons:

3 Wilma Mishoe, June 23, the University has not demonstrated that it operates with integrity in the following ways: o the full University Board has not acted to resolve the financial challenges facing the University despite its awareness of them; o the full University Board has inappropriately delegated its responsibility to oversee the institution to the President and a limited number of Trustees even though the challenges to the University demanded the attention of the full Board; o the University has funded operating losses by liquidating investment assets and though the University Board and President identified the necessity of repaying funds to the endowment, the Commission evaluation team was not able to determine that the funds were repaid to the endowment; the University has not demonstrated that it operates following appropriate policies and practices: o Board minutes indicate that the Board Finance and Audit Committee did not meet from fall 2012 to at least February 2013 due to the resignations or terminations of four members of the Finance Committee and three members of the Executive Committee, thus failing to follow appropriate governing board practices and compromising the Board s ability to determine institutional direction; and o in June 2013 senior administrators entered into additional short-term debt without the knowledge and approval of the University Board, and this activity was beyond the scope of their authority. The University is out of compliance with Criterion Two, Core Component 2.C, the governing board of the institution is sufficiently autonomous to make decisions in the best interest of the institution, for the following reasons: the University Board has not demonstrated that it is following a process to make decisions in the best interest of the institution: o the University Board does not fulfill its duty to understand the institution, insist on a strategic plan, and assist the institution in ensuring it accomplishes the goals articulated in the plan; o the University Board does not set annual goals for itself as required by its Bylaws, nor does it conduct any meaningful assessment of Board performance against such goals; and o members of the University Board have had a practice of working directly with the University community or employees without the knowledge or involvement of the President, thus undermining the Board s delegation of authority to the president for overseeing the day-to-day operations of the University; for example, the President indicated to the focused visit team that Trustees conduct meetings with members of the community without involving the president. The University is out of compliance with Criterion Five, Core Component 5.A, the institution s resource base supports its current educational programs and its plans for maintaining and strengthening their quality in the future, for the following reasons: the University lacks a sufficient financial resource base to support its educational programs and other financial responsibilities;

4 Wilma Mishoe, June 23, o the University ended FY2013 with an accumulated deficit in the unrestricted or operating fund of $9.7 million; o the University s operating losses for FY 2011, 2012 and 2013 were $775,000, $1.487 million, and $1.028 million, respectively; the University s operating loss for FY 2014 is projected at more than $700,000; o the University has bonds payable of $23 million and has been in technical default on the requirements of these bonds; o in attempting to solve the short-term funding problems of the University, the University has recently taken on more debt in the amount of $3.5 million, and, while the University hopes to attract donors to offset this debt, these additional monies have further escalated the institution s debt level; and o the University did not provide the focused evaluation team with a report on finances that reflected a planning process that fully appreciated the risk to the University of its financial circumstances or proposed reasonable strategies to address and alleviate its financial exposure; instead the University presented optimistic planning with no supporting evidence and little appreciation of, or attention to, its depleted resources; the University lacks a sufficient physical plant and technological infrastructure to support its students and its educational programs; o the campus had extensive evidence of significant deterioration and deferred maintenance that indicated an unsafe and unhealthy environment for the campus community; o the University s website includes information that is out of date or insufficiently detailed compared to other college and university websites; and o the University has not updated its website or its technological resources because of insufficient financial resources; and a 2012 Institutional Actions Council Committee identified specific financial information for the University to prepare prior to the fall 2013 focused evaluation, and the University failed to prepare that information, which indicates that the University may have lacked the capacity or understanding to prepare the necessary detailed financial information or the ability to analyze such information. The University is out of compliance with Criterion Five, Core Component 5.B, the institution s governance and administrative structures promote effective leadership and support collaborative processes that enable the institution to fulfill its mission, for the following reasons: the University Board does not function effectively to oversee the institution or its operations: o although several members of the University Board of Trustees have been on the Board for some time, Trustees articulated a lack of knowledge and understanding of the significant financial and other challenges the University faces; o the University Board has not had a practice of regularly setting goals for or evaluating the President; o the University Board did not develop or complete a self-evaluation process some time prior to the University s most recent comprehensive evaluation in March 2010, and it does not appear that the Board has completed this practice since that time;

5 Wilma Mishoe, June 23, o at the time of the focused evaluation, although the University President had already indicated an intent to retire at the end of the calendar year, the Board had not yet initiated activities necessary to ensure a smooth transition, including developing a succession plan, initiating a search process, or creating a presidential profile; o while the Academic Affairs Committee of the Board is charged by the Bylaws with overseeing the allocation of resources to ensure support for instructional and academic support areas, the Committee did not consistently engage with administration to review decreases in expenditures of $995,000 (FY2012) and $90,000 (FY2011) to ensure that sufficient resources were still supporting the instructional and support functions of the University; o while the Finance, Audit and Investment Committee of the Board is charged by the Bylaws with reporting to the full Board at each Board meeting on the University s financial status, despite the serious financial situation at the University, the Committee did not meet regularly for more than a year nor did it report to the full Board, thus jeopardizing the ability of the full Board to be effective at overseeing institutional finances, and it remains unclear how the Board ensures that it receives timely and detailed financial and investment information; o as of fiscal year 2011, some of the University s investment funds were at a market value below their historical dollar value (that is, underwater), yet the Chairman of the Finance Committee reported in that same year that the University would implement a 5 percent investment spending policy and further indicated that the University had eliminated previous operating deficits although the University had, in that fiscal year, experienced an operating fund deficit of approximately $600,000 and a decrease in net assets of $775,000; o the University Board has not had a regular practice of routinely reviewing and approving the annual operating budget or the audited financial statements; and o while the University has recently engaged consulting from the Association of Governing Boards, initiated a presidential search process, and enrolled new Board members, the belated nature of these activities does not indicate a board robustly dealing with its responsibilities in a timely manner. the University administration does not function effectively to help the University realistically meet its challenges: o the administration has put forward business models that involve increasing enrollment, raising net tuition, decreasing the discount rate, and increasing donorgiving opportunities, yet the University has no recent history of being able to achieve these results; o the enrolled freshman class for fall 2013 was reported to be 97 students but later decreased to 70 students, yet the University s business models projects 200 students for fall 2014, which is likely to be unattainable given recent enrollment data; and o the University s proposed operating budget for 2014 was based on 500 students, which was an unrealistic number of students given that actual enrolment was approximately 377 students. the University Board does not function effectively with administration to address significant issues the University faces such as enrollment, sufficiency of resources,

6 Wilma Mishoe, June 23, quality of academic programs, quality of management and faculty, policies and practices, and quality of University graduates. The University is out of compliance with Criterion Five, Core Component 5.C, the institution engages in systematic and integrated planning, for the following reasons: the University has not demonstrated its ability to make adequate and realistic plans for the future: o as noted with regard to Core Component 5.B, the University administration has put forth business models that do not reflect best practice in higher education and do not take into account readily available financial and trend information in higher education that indicate such enrollment increases are unlikely; o results of planning documents indicate that the University consistently fails to achieve its stated goals; and o the University continues to predict improved enrollment and revenues even as it is in a state of financial emergency and crisis to its physical plant and infrastructure; the University lacks processes for systematic development of plans that are realistic given its financial, management and enrollment challenges: o the University has set an enrollment projection of 200 students for the fall 2014 first-year class in spite of the fact that the University enrolled fewer than 100 students in the fall 2013 first-year class and in spite of the fact that 28 percent of the fall 2013 first-year class withdrew from the University during the fall 2013 term; and o while the University was predicting enrollment increases for next year, the team determined that the Director of Admissions position and one of two Assistant Director of Admissions positions were vacant; this situation further calls into question the University s enrollment projections for future academic years. The University meets Criterion Two, Core Component 2.B, the institution presents itself clearly and completely to its students and to the public with regard to its programs, requirements, faculty and staff, costs to students, control, and accreditation relationships, with concerns because the University has not updated its student handbook or its course catalogue in several years and it is not clear that the University provides students with accurate and timely information about University policies and procedures related to students; The University meets Criterion Three, Core Component 3.C, the institution has the faculty and staff needed for effective, high-quality programs and student services, with concerns because morale among faculty and staff appears to be low, the University appears to provide limited support for training or professional development, and the University has deferred or reduced faculty salary payments in the past; The University meets Criterion Three, Core Component 3.D, the institution provides support for student learning and effective teaching, with concerns because employees have indicated that severe cutbacks continue to affect the ability of staff to serve students and because the significant deferred maintenance in classrooms and common areas suggests that budget cuts have limited University resources for supporting learning and teaching; and

7 Wilma Mishoe, June 23, The University meets Criterion Three, Core Component 3.E, the institution fulfills the claims it makes for an enriched educational environment, with concerns because the focused evaluation team found that the poor condition of University residence halls, low staffing levels, and history of salary reductions and mandated furloughs have limited resources for programs and activities that contribute to the educational experience for students. Should the University not file its Show-Cause Report by the stipulated deadline, the Board may move to withdraw the University s accreditation. The Board may waive notice and call for a special meeting any time after the stipulated deadline to consider such an action or it may take such an action at its February 2015 meeting if the University does not file its report by the stated deadline. The Show-Cause Order is a public document that will appear on the Commission s website. The Order will remain in effect until the Board reviews, at its June 2015 meeting, the University s Show-Cause Report, the Show-Cause Team Report, and the University s response to the Show- Cause Team Report. In addition, the University will have an opportunity to meet with a subcommittee of the Board of Trustees at a Board Committee Hearing, which will be on the record, prior to Board action, and the transcript of the hearing will be provided to the Board. Should the University be unable to establish to the satisfaction of the Board that the University has ameliorated each concern identified by the Board and that the University meets each of the Criteria for Accreditation and Core Components, the Board will move to withdraw the accreditation of the University at that meeting on grounds related to the University s compliance with any of the Criteria or Core Components. If the Board determines that the University has ameliorated each concern and that it meets the Criteria for Accreditation and Core Components, the Board will establish a date for the next comprehensive evaluation and any other monitoring of the University. An institution under a Show-Cause Order issued by the Board should inform its Board, administrators, faculty, staff, students, including prospective students, and other campus constituents about the Order and how to contact the Commission for further information. The institution must post the Order prominently on its website. I ask that you copy your staff liaison, Dr. Anthea Sweeney, on s and other communications with constituents regarding this action and provide her with a link to information on your website and samples of disclosures. In addition, Commission policy COMM.A , Commission Public Notices and Statements, requires that the Commission prepare a summary of action to be sent to appropriate state and federal agencies and accrediting associations, and published on its website. The summary will include the action regarding the University. The Board action resulted in changes to the affiliation of the University. These changes are reflected on the Statement of Affiliation Status (SAS). Some of the information from the SAS, such as the dates of the last and next comprehensive evaluation visits, will be posted to the Commission s website along with information from the Organizational Profile (OP). The enclosed Public Disclosure Notice and Show-Cause Order will be posted to the Commission s website not more than 24 hours after this letter is sent. In addition, Commission Policy INST.G , Management of Commission Information, anticipates that the Commission will release to members of the public an action letter imposing a Show-Cause Order on an institution. The Commission will do so by posting this action letter on the Commission website along with the SAS and OP. The Commission will simultaneously notify the U.S. Department of Education, along with

8 Wilma Mishoe, June 23, appropriate state higher education agencies and accrediting agencies, of the Order by copy of this letter. On behalf of the Board of Trustees, I thank you and your associates for your cooperation. Sincerely, Sylvia Manning President Enclosures: Public Disclosure Notice Show-Cause Order cc: Chair of the Board of Wilberforce University Specialized and professional accrediting agencies Evaluation team members Herman Bounds, Director, Accreditation and State Liaison, Office of Postsecondary Education, U.S. Department of Education Toycee Hague-Palmer, Institutional Effectiveness, Research, and Planning, Wilberforce University Anthea M. Sweeney, Vice President for Accreditation Relations, Higher Learning Commission Karen L. Solinski, Vice President for Legal and Governmental Affairs, Higher Learning Commission