While Saint Mary-of-the-Woods College remains fully accredited, a higher education accrediting agency has placed it “on notice” because it has been “at risk of being out of compliance” with criteria related to finances and governance.
The Higher Learning Commission (HLC) has changed the college’s status from “accredited” to “accredited on notice,” according to an HLC public disclosure notice.
The change of status was effective June 26.
The concerns, triggered by a fiscal year 2022 audit, were discussed during an HLC July 2024 “focused visit.” The college subsequently presented steps taken to address the concerns during a meeting with the Higher Learning Commission in March.
“We are fully accredited, but on notice for two years,” Brennan Randolph, college president, said Thursday. Much progress has occurred in responding to concerns raised, he said.
The college states it has taken the following actions, as recommended by Randolph:
_ Improved budgeting and financial oversight.
_ Increased board of trustees training and improved governance.
_ Conducted review, evaluation and improvement of policies and procedures for financial sustainability.
_ Hired, in April, Missie Schwab, a certified public accountant, as its chief financial officer. She had been serving as a consultant to the college since late 2024.
Said Randolph, “The college’s leadership team and I are fully committed to meeting and exceeding the standards of HLC and have been focusing on resolving these issues.” HLC will visit SMWC for its scheduled re-accreditation visit in fall 2026 and review the college’s progress during the “on notice” period. A frequently-asked-questions posting on the SMWC website says students remain eligible for financial aid, and they continue to receive credits and graduates continue to receive diplomas.
According to HLC, “notice” is a public sanction that allows the institution a period of time to resolve the areas of concern. The initial period for “notice” is up to two years. While on notice, the institution remains accredited.
Concerns, and progress, noted
In HLC’s July 8 formal notification to the college, it acknowledges progress in several instances.
But it also says the college needs to continue to address concerns related to financial reporting; sufficient board autonomy; effective governance and administrative structures; and resource base.
According to Randolph, after the fiscal year 2022 audit was complete, the firm that did it “abruptly departed us.” It took time to find a new auditing firm, “and that put us months behind” for the FY 2023 audit.
“That has been a bit of a pattern for the last couple of years,” he said.
However, he anticipates that for FY 2025, “We’ll be back on schedule submitting the audit and making sure they are done timely.” In winter 2024-25, “We had three certified public accountants helping us.”
Among the concerns outlined by HLC in its notification to the college on July 8, which notes progress in several instances:
¦As far as financial reporting, it stated the college “still faces significant challenges, including material delays in completing annual audits, difficulty accessing financial records and delays in paying local vendors.”
Brennan responded in an email statement: “The college has implemented policies and procedures that have improved access to financial records.”
¦HLC says the institution “has historically borrowed from and otherwise used endowment funds in ways inconsistent with institutional policy.”
It also states that while SMWC has developed a repayment plan for funds borrowed from the endowment, there is no evidence of adequate safeguards to ensure the integrity of restricted endowment funds.
According to Randolph, “The board of trustees acknowledged the need to exercise their fiduciary responsibility and oversee the management of the endowment. As noted by HLC, a repayment plan was developed and has been ongoing.
“Since my appointment as interim president in June 2023, an emphasis has been placed on the board’s responsibility with endowment oversight. In addition to their training, safeguards have been instituted at both the board and administrative levels.”
¦HLC also wrote in its formal notification that while there has been increased board engagement, the board is “transitioning from a period in which its operations lacked sufficient engagement and oversight and it needs to articulate policies and processes to sustain essential and appropriate levels of engagement.”
The HLC notice also states:
¦While SMWC experienced an increase in unrestricted giving that enabled it to meet its obligations to local vendors and move into FY25 with unallocated reserves of approximately $1.6 million, SMWC “nonetheless faces several issues that are intricately connected to its financial situation, including the need to develop practices and processes to address short and long term deferred maintenance and reducing over-reliance on uncertain revenue streams and lines of credit or loans.”
‘A pattern of improvement’
According to Randolph, HLC’s concern about uncertain revenue streams “referenced our ability to sustain the increased fundraising support we were happy to have in 2023-24. The 2024-25 Woods Fund giving results set a record with $3,576,244. Also secured last year were unrestricted pledges of more than $1 million to be paid in future fiscal years.”
Randolph further responded, “Our reliance on credit and loans steadily decreased last fiscal year and will continue to improve through fiscal year 2025-26.”
Asked about the overall financial health of the college, Randolph said, “We’re still in a pattern of improvement. We are much better than we were two years ago and last year.”
Small colleges in general are challenged to meet the needs and keep up with deferred maintenance and all the things connected to that, he said. “We have been very blessed in the last couple of years with very strong fundraising dollars.”
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