News from the Hilltop

FOR IMMEDIATE RELEASE
August 11, 2010

Birmingham-Southern College President David Pollick steps down, Board of Trustees makes other major announcements at called meeting

BIRMINGHAM, Ala.-The Birmingham-Southern College Board of Trustees accepted the resignation of President Dr. David Pollick today as the institution's 12th president effective immediately.

The full Board of Trustees met on the BSC campus for an overview and discussion of the events that have transpired since April concerning the college's finances.

Dowd Ritter, chair of the board and a 1969 Birmingham-Southern graduate, announced that current BSC Provost Dr. Mark Schantz will serve as interim president while a national search is under way for a replacement for Pollick.

In resigning, Pollick issued the following statement to the Board:

"College presidents and boards must be singularly and uncompromisingly committed to one overarching value-the welfare of the students through securing the health and destiny of their college. The recently emerging financial crisis and necessary budget decisions at the college require that the faculty, board, alumni, and students be immediately and totally focused on the future and all that now requires. I have concluded that the focus is presently on me and not on the creative and constructive process that must rapidly take place in order to protect Birmingham-Southern's future. Out of respect for our community and my dreams for this wonderful college, following deep reflection, it is not without significant hesitation and considerable sorrow that I have concluded that the essential healing and creative process will proceed more rapidly if I step aside as president at this time."

Ritter said that the Board of Trustees understood and appreciated Pollick's position.

"The entire Birmingham-Southern community appreciates the many positive things that David brought to Birmingham-Southern," Ritter said. "David brought a vision to grow the college in size and national stature that resulted in an increase in our first-year and overall enrollments, and in a significant restructuring of the fundraising operations that resulted in the successful completion of Phase I of the Destiny: Delivered campaign.

"Birmingham-Southern will build upon these accomplishments as we confront the current challenges we face and ultimately, without a doubt, continue to deliver the outstanding and world-changing educational experience for which we have been known the past 154 years. We all wish David and Karen only the best as they enter the next phase of their lives."

Ritter announced the formation of a Presidential Search Committee to be headed by Dr. Wayne Killion Jr., vice chair of the BSC Board of Trustees and president and chief executive officer of Shook & Fletcher Insulation Co. in Birmingham. Killion received his bachelor's degree in biology in 1972 and his Master of Arts in Public and Private Management in 1996, both from Birmingham-Southern. The Presidential Search Committee will select and employ a search firm, interview potential candidates, recommend two to three finalists to be interviewed by a much broader group, and then recommend the finalist to the full Board of Trustees who will select the next president to lead Birmingham-Southern College.

Schantz, who became the college's chief academic officer in June 2009, begins his duties as interim president immediately. He previously had served as associate provost for engaged learning, director of the Odyssey Program, and professor of history at Hendrix College in Conway, Ark. While at Hendrix, Schantz led the Odyssey Program from its inception in 2005. A component of the curriculum at Hendrix, Odyssey is a pioneering effort that focuses on engaged learning by encouraging students to embark on educational adventures that are personalized to their own interests and abilities.

He joined the Hendrix faculty in 1991 as an assistant professor and also served as chair of both the Department of History and the Social Science Area.

The Washington, D.C., native received his bachelor's degree in history Phi Beta Kappa from George Washington University, his master's in divinity from Yale University, and his doctorate in history from Emory University. He completed the Management Development Program in the Graduate School of Education at Harvard University in summer 2007.

Dr. Kathleen Rossmann, associate professor of economics and associate dean of First Year Programs at BSC, was named interim provost. Rossmann, who joined the BSC faculty in 1998, received her master's and Ph.D. in economics from the University of Colorado and her bachelor's in economics from Furman University.

Following the Pollick announcement, the Board of Trustees heard a full overview of the events surrounding the college's finances that led recently to the announcement of more than $10 million in budget cuts, including staff layoffs, reductions in salaries and benefits, and the elimination of five majors and 29 faculty over the next year. Following a discussion of the situation, the Trustees issued the following statement.

Many have asked in recent weeks, "What really caused the financial difficulties at Birmingham-Southern College that have been the focus in recent months?" The answer is a simple one, but must be taken in context. Birmingham-Southern College, as almost all private colleges, technically runs a deficit every fiscal year. This has happened for many, many years. The financials are balanced each year with withdrawals from the endowment and from current-year gifts to the college from alumni and other interested donors.

Six years ago, with the arrival of Dr. David Pollick, the Board of Trustees agreed with President Pollick that the path to a stronger financial position was to grow enrollment, thereby increasing student tuition revenues. In order to do this, there first was a need to improve the condition of the facilities on campus.

Normally, any improvements to facilities require fundraising for that purpose or withdrawals from the endowment and the income from the endowment. As the commitments were made to improve facilities, the early effects of 'the great recession' began-thus lowering the value of the endowment, the income from these investments, and donors' confidence in their ability to make donations to the college. This resulted in increased debt/borrowing to pay for the facilities improvements to beyond historical levels, thus creating higher borrowing costs and higher depreciation costs. All of this occurred at a time when, due to the deteriorating economic conditions, students needed increased financial aid.

At the same time, unbeknownst to the Board of Trustees, the scholarship monies being paid to students was in excess of budgeted amounts and was inaccurately shown in internal financial reports-not just Pell grants as has been widely reported, but scholarships and discounts to tuition, all in efforts to increase enrollment. As the situation worsened during this immediate past fiscal year (2009-2010), the college's Finance Department-also unbeknownst to the Board of Trustees-began to increase borrowings to meet the college's financial obligations.

The internal misstatements were discovered in early Spring 2010. Basically, the Finance Department overstated the revenues and understated the expenses-purely on internal projections and not in any audited past fiscal years. It took the past four months to truly 'peel back the layers of the onion' to see the total causes and ultimate degree of deficient funding. The total dollar amount at one time showed a projected deficit of $13 million for 2010-2011.

Many colleges and universities over the past several years, especially since the 'great recession' began, have been forced to reduce budgets through reductions in force, salary and benefits freezes/reductions, and prudent reductions in all other spending. Birmingham-Southern did not do this over the past few years-it actually increased salaries every year and increased spending levels every year, all based on a plan of growing enrollment. Unfortunately, once the facts were known, the recent reductions in staffing, academic programming, and general expenses, as well as revenue increases, had to be accomplished all at once versus over several years.

The reductions in expenses to date position Birmingham-Southern College much closer to a sound operating budget, the best in at least 10 years. The decisions were difficult-but essential. Today, that nearly $13 million deficit projection is almost a balanced budget thanks to expense reductions and new unrestricted gifts. Yet, the college remains with a heavy debt load still being an issue.

The Trustees of Birmingham-Southern College accept fully the governance responsibility of the college and regret the fiscal distress that has necessitated unexpected and sudden operational reductions. The Trustees remain committed to the long-standing mission of Birmingham-Southern and, very importantly, to the delivery of the best liberal arts education available. The mission and the standing of Birmingham-Southern as one of the nation's premier liberal arts institutions will be preserved and achieved.

The Birmingham-Southern endowment, while reduced over recent years, remains in excess of $60 million. Even with the anxiety the past few months over the economy and the college's finances, loyal alumni and other supporters of Birmingham-Southern have come forward with financial support, including several recent six-figure gifts.

The outstanding core faculty is in place and committed to our tremendous student body. A new academic year begins later this month, and our staff and faculty are ready to welcome another large class of incoming first-year students. The value of Birmingham-Southern to the Birmingham metro area, to Alabama, and nationally has never been greater, and we pledge that it will continue to be so. Our alumni are world changers in our community, in our state, in our nation, and literally across the world.

Birmingham-Southern College has overcome obstacles before in its 154-year history. With the dedication of our alumni and supporters, our faculty, our staff, and our students, we will emerge even stronger as we continue to provide a liberal arts education of distinctive quality that not only prepares students for a lifetime of learning, but that produces the graduates who are indeed changing our world.

Ritter also announced that James Stephens, current chair of the Executive Committee and past chair of the BSC Board of Trustees and chair of the board of EBSCO Industries in Birmingham, has been asked to lead a thorough review of governance at Birmingham-Southern.

"The sheer size of the Board of Trustees with 61 members and the massive committee structure with 12 committees is indicative of a need for a review of best practices today in governance of colleges," said Ritter. "We as a college and as trustees should learn from these lessons and never allow this to happen again."

Ritter also said that he had accepted the offer of BSC Trustee Bishop Will Willimon to have leaders in United Methodist higher education visit Birmingham-Southern in the early fall to assist in reviewing the college's governance, financial procedures, and overall structure. Willimon also offered to ask the United Methodist General Board of Higher Education and Ministry to provide to the college an experienced consultant in higher education funding. Willimon currently is Bishop of the Birmingham Area of the United Methodist Church.