Seminaries related to the Presbyterian Church (U.S.A.) are not teetering on the brink of collapse, but they are making major adjustments to cope.
At a recent meeting of the Committee on Theological Education (COTE), which gathered on the campus of Union Theological Seminary and Presbyterian School of Christian Education in Richmond, Va., seminary presidents and other leaders of theological education compared notes on fiscal issues, among others. Barbara Wheeler, president of Auburn Theological Seminary and director of the Center for the Study of Theological Education in New York City, led a discussion on the status of Presbyterian theological schools.
The good news, she said, is that the theological schools affiliated with the PC(USA) are the richest group of seminaries anywhere associated with any single denomination. Three PC(USA) seminaries rank among the top ten in assets; seven rank among the top 20. All PC(USA) seminaries are listed among the top 30.
Denominational financial support of the seminaries has fallen through the past 40 years from more than 20 percent of their budgets to just 2 percent, but the actual funding of the seminaries has grown substantially. Expenditures increased by a rate doubling inflation. How have they done that? By raising those funds from donors and grant organizations. PC(USA) seminaries raised $20 million in 1997. In 2007 the seminaries raised $50 million, which was repeated in 2008.
Wheeler cited three lessons learned from this situation. “Our schools are well endowed.” They have money on hand. “They are educationally energetic and ambitious; they don’t use the collapse of denominational funding as an excuse” for mediocrity in their programming and educational quality. And “they are competent in the raising and management of funds.”
In fact, as the economic landscape has changed, “our schools have taken amazingly wise steps to address those situations and prepare for the future,” Wheeler added.
Because of that competence, most of the PC(USA) seminaries already were tightening their belts before being hit by the economic crash of September 2008. They already were doing the obvious: holding frequent meetings of their finance committees with investments advisers, trimming non-essential spending, postponing non-essential projects, suspending faculty searches, and increasing the teaching load of existing faculty.
Once the downturn hit, the schools took more drastic measures: canceling expensive degree programs (Union-PSCE dropped four), and suspending admissions to other costly programs. Union-PSCE suspended admissions to its Ph.D. degree program, said its president, Brian Blount. Most cut or temporarily suspended making contributions to retirement funds; gave incentives for early retirement. Several offered voluntary separation packages to employees not eligible for retirement, Wheeler pointed out.
Austin Seminary was one of the seminaries making painful staff cuts. “We were counseled by the board — business people — to keep in mind that these are not terminations for cause,” reflected President Ted Wardlaw. “You don’t have to march them out at knife point to their cars. We tried to be as gracious as possible and to provide severance packages as generous as possible.” At the end, he said, “We had a service of lament, and a reception in their honor. This softened the blow.”
McCormick Seminary in Chicago took a different path. Cynthia Campbell, McCormick’s president, said that the board directed the staff last November to make cuts of about ten percent. She and other administrative leaders were determined to retain all their existing faculty and staff. In addition to cutting program and administrative expenses, and renegotiating some outsourcing contracts, they asked everybody to “share the pain” of cuts. They suspended making contributions to retirement funds for the year and cut all salaries — seven percent for the highest paid, five percent for the middle, and three percent for the lowest paid.
McCormick’s board also formed a visioning task force, made up heavily of faculty and trustees to try “to see where we want McCormick to be on the other side of this five, seven years out,” said Campbell.
Pittsburgh Theological Seminary has weathered a little better than some of the rest due to its historically conservative pattern of taking only two-thirds of its available draw on the endowment. “We are wanting to be very responsible in our endowment draw,” President Bill Carl told the Outlook, “to smooth out the speed bump that’s coming.” At the same time, the seminary is trying hard to strengthen their annual giving, “because we haven’t done that real well in the past,” he added.
While Pittsburgh has one of the largest endowments, the University of Dubuque Theological Seminary has one of the smallest, which means that they are not heavily dependent upon their investments. “I told my board members that not in a million years would I have imagined myself being glad we don’t have a big endowment,” commented President Jeffrey Bullock, “but it has happened.” The seminary and university endowments have been growing through his tenure, but the downturn has cautioned him from becoming too dependent on them.
This process has pressed all the leaders to reconsider the role endowments play. “Endowments are not savings accounts but engines,” said Wardlaw. “When you open the hood and take out some of the parts, the engine doesn’t keep working. We have to keep tuning up that engine and keep it stoked.”
One concern not solved in the meeting was that of the potential impact of possible changes to the IRS code, eliminating the charitable contribution deduction, which “could produce potentially huge catastrophe for philanthropy,” said Bullock.
One thing all the presidents agreed upon is the need and practice of keeping their alumni and other constituents well informed about their challenges. Nevertheless, many Presbyterians know little of these developments.
Wheeler commented, “A major purpose of COTE is to do a much more vigorous job of making those connections. Whenever the Presbyterian Panel sends out a survey related to seminaries, a huge number come back blank with just the comment, ‘I don’t know anything about any seminaries.’”