Robertson's Regent University in Financial Difficulty

Virginia Beach news sources report that Regent University, whose founder and chancellor is the esteemed Pat Robertson, is in financial trouble.

Now, that's an interesting statement to make for a university whose endowment, based on a $100 million founding gift from its founder's Christian Broadcasting Network*, now stands at $277.6 million, ranking it 203rd largest among American universities whose endowments are large enough to bother ranking. But the difficulty is that Regent has now operated at a deficit of between $12 million and $14 million for four years, financing the deficit by drawing down its endowment at a rate roughly double the recommended payout from university endowments of 5% per year.

In addition, Regent borrowed $99 million a few years ago to build residential facilities.

So, while there's lots of cash in the bank, unless income increases or expenses decrease, Regent will eventually run out of dough. Not next week, but not 300 years from now, either.

Regent's plan for recovery is massively to expand its nascent undergraduate division, which consists entirely of online courses (enrollment by headcount stood at 239 in 04-05 and 1046 last year; the goal for this year is 2500). Spokespeople say that they expect a surplus of tuition relative to expenses from online undergraduates and believe the potential pool of such students to be unlimited (Robertson, never one for understatement, once stated that he expected a quarter million online undergrads). They further suggest that because online students do not require classrooms, expansion can proceed indefinitely.

SWNID is skeptical of this plan, for several reasons, some of which we enumerate:

• Online courses can be unexpectedly expensive to administer. While they do not require bricks and mortar, they do require considerably more personnel hours than traditional courses. It is now legendary that universities underestimate the expense of online education.
• Expansion of online offerings requires expansion of the number of instructors who teach those courses and of administrative structures to maintain quality. There is a limited pool of folk who are qualified and willing to take on such tasks, and if Regent's enrollment were to expand rapidly, thanks to the immutable laws of supply and demand they'd be concurrently forced to pay more to get teachers and administrators, eroding their margins that they hope will balance their budget.
• Trends in online enrollment indicate that the majority of students who take online courses use them to shift time or fill in while they pursue a degree in a more traditional classroom. If such is the case, and if Regent continues to enroll only online undergraduates, we believe it will find that it will mostly enroll students from other universities in a course here or there, not full-time students who will take 40 courses from Regent to receive Regent's degree. It's no surprise that Regent is reporting headcount, not full-time equivalency, for its undergrad enrollment. We venture a guess that it has a very small number of students taking the equivalent of a full-time load of online courses, and not many more than that who are genuine degree candidates at their institution.
• The for-profit University of Phoenix is starting to look as if its bubble of online enrollment has burst. Meanwhile, it continues to pursue other delivery systems, largely in-person, nontraditional degree completion at scattered sites convenient to learners, which sustain its operations. Regent looks like it's getting on the bandwagon for the very strategy that Phoenix pioneered and from which it is now transitioning.

Regent University is saddled with other financial difficulties as well. It now owns the Founders Inn, a hotel built by CBN and, in a deal between Robertson-led entities, transferred to university ownership awhile back, which also operates at a deficit. Having once been a guest at a hotel (to conduct a most delightful wedding for a most delightful couple), we express an expectation that thanks to the location of the hotel away from the main tourist district of Virginia Beach and the mismatch between its cosmetic opulence and structural weaknesses (translation: it's a pretty colonial building with some of the worst noise and ineffectual plumbing we have experienced in a recently built hotel, and its starting to look shabby on the margins) it is probably doomed to bankruptcy. We've had better sleep downmarket.

Our interest in this matter is, we hope, not just Schadenfreude over the difficulties of an institution associated with a public figure whom we are accustomed to ridicule. We think that there are lessons here for our SWNIDish self and our colleagues in Christian higher education. To wit: the solution to budget deficits is not to wager everything on a new program that will generate income. It is first of all to look critically at patterns of expenditure while focusing on the health and quality of core operations. It is to do better what you do best and to bring expenditures into line with income, painful as that move is sometimes, than to throw a hail Mary downfield.

In fact, Regent seems to be doing what many other struggling universities have done, so much so that the narrative has become standard among the small cadre who consult with institutions of higher education. Rather than face the reality that its gift and tuition income are inadequate to support its current way of doing business (Regent's gift income has been, until fairly recently, less than the modest amount received annually by the much smaller and less famous joint of SWNIDish employment), it's pinning its hopes on something it hasn't done before and that others have attempted with, at best, mixed results. In essence, they're betting that their brand is strong enough to propel them to financial success in a new endeavor outside their immediate expertise, when in fact their brand is not currently strong enough to sustain what they already know how to do. Mr. Robertson's influence is diminished, his reputation tarnished, and with them the prospects are dimmer for the university best known for his having founded it.

For those who insist that it is a step of faith to embark in such a new venture on such uncertain terms, we counter that it is at least equally a step of faith to act on the conviction that God already supplies what we need to do our mission, if we rightly understand our need and our mission. "My God will supply all your needs" does not have the same behavioral outcome as "place your bets."

What's sad about this is that Regent has managed to create what seem to us to be some pretty good programs. Its law school has graduated some lawyers who are rising in conservative government circles, to the chagrin of the dominant left. Its doctoral programs in leadership, delivered as a hybrid of residential and online courses, are reported by SWNIDish friends to be beneficial. Its seminary program has recruited some fine scholars of the Pentecostal persuasion to do instruction.

It would be fine to sustain such operations to benefit more students. If they are not, however, Regent's alumni should remember that the real benefit of their education at what might eventually become a defunct university is not the panache of academic reputation but the intrinsic value of what they learned.
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*Side question, what was CBN doing with $100 million in extra cash? Was it raised specifically for the founding of the university? The pervasive criticism of Christian television in the United States, aside from its addiction to bad taste, is that the cost of staying on the air almost instantly turns even the most sincerely motivated new programmers into 24/7 crisis fundraisers. When such fundraising is successful and generates surpluses, the fundraising is then typically not reduced but continued to finance other ventures that result in a short-lived empire under the direction of the charismatic figure at the top of the broadcasting venture.