Fifth part of AN INTERPRETATION, continued from Fourth part
FINANCIAL DEVELOPMENT--
THE FAILURE OF SUCCESS, THE SUCCESS OF FAILURE
Donald L. Helfferich was not the first college president to regret that circumstances had made him a campus master builder. He wished that posterity would be able to remember him as an educator, not a bricks-and-mortar man. Yet, he knew that the Ursinus physical plant had to move toward first-class status before its educational performance and reputation could move upward. He knew also that the funds that flowed into bricks and mortar would not be available to advance the teaching and learning budget as such. Before retiring from the presidency, he encompassed both the capital and non-capital financial needs of the college in a two-phase financial development plan extending out to 1976-77. The second of his three major legacies, the financial development plan was the most ambitious the college had seen.
Helfferich, class of '21, had joined the board in 1927 as a young alumnus. The college hit the financial bottom in the Great Depression that started just two years later. When the board chose Norman E. McClure to succeed President George L. Omwake in 1936, it elected Helfferich, by then a successful bank officer, to be the college's vice president in his "spare time." McClure ran the educational program. Helfferich managed business and finance as a part-timer. Slowly and painfully, owing to this efficient allocation of responsibilities, the financial stability of the college returned.
By the time Helfferich reached the presidency in 1958 (he retired from his banking position), the college could begin to undertake the costly job of renewing and expanding the physical facilities. Helfferich said he had grown tired of keeping the plant together by "putting patch on patch." Ursinus, like other colleges, was anticipating an unprecedented demand for higher education when the baby boomers hit college age. Helfferich knew that Ursinus would be able to absorb its share of the cohort effectively only if its plant improved greatly. Step by step in his twelve-year presidency, he walked the campus through a radical transformation. (Radical though it seemed in execution, his grand vision of campus development rather closely followed a dream published in 1918 by his predecessor and mentor, Omwake.) The optimism surrounding the baby boom and the unquestioned hegemony of the American economy in the free world made these forward-looking steps easier to undertake. Helfferich received aid and encouragement in his expansionist plans when he recruited a number of professionally knowledgeable alumni and Philadelphia-area business people to join the board.
A list of building projects of the Helfferich administration creates an informative backdrop for the analysis of subsequent financial development in the 1970-1976 period. Completed were the power plant (1963), Wismer Hall (1965), Wilkinson Hall (1966), Reimert Hall (1967), a supply store/snack shop--a pre-fabricated structure behind Bomberger Hall (1966), the demolition of the "old main" of Ursinus, Freeland-Derr-Stine (1967), Corson Hall (1969), Myrin Library (1970), and Thomas Hall (1970). In the case of Reimert, Corson, and Thomas, the memorial names came some time after the buildings were in use.
When the board elected Pettit to succeed Helfferich in November 1970, the transformation of the campus was not complete. There were plans for a new physical education center (to be named for Helfferich) and the renovation of the old Alumni Memorial Library into a college union. Also, Pfahler Hall and Bomberger Hall were overdue for renovation and restoration.
Helfferich had unleashed the later part of this explosion of plant improvement through a so-called staff long-term planning committee. He had been cautious when he first assumed office in 1958. As the centennial year 1969-70 loomed on the horizon, however, he became eager to complete as much as he could of what had become his comprehensive vision for the advancement of Ursinus. Appointing Richard Richter chairman of the committee in 1966, he encouraged it to clarify and present plans as fast as possible. ("I'm a man in a hurry," he said.) The committee obligingly studied needs and packaged a series of plant improvement resolutions for him to take to the board for consideration and approval. Simultaneously, it identified non-plant needs for program improvement. Following Helfferich's direction, the committee in this way acknowledged that the heavy expenditures for buildings deprived the educational budget of improved support. The plan emphasized the need for "faculty development" (which meant professional improvement as well as increases in salaries), library acquisitions (a recognizable indicator of institutional quality), educational equipment and programs, student aid. The plan linked some of these goals to projections of endowment growth, and incorporated all items in a comprehensive two-phase plan covering the decade from 1967 to 1977. Having identified the major items of expense for improving Ursinus across the board, the plan showed where the funds would come from to bear the expense.
The plan was supposed to dovetail with the annual budgets of the college. Helfferich, however, tolerated a certain incompatibility between the annual budget and the fund-raising goals. In short, the ten-year projections were expressions of hope and optimism intended to motivate donors; they were not rigorous estimates emerging from the likely income and expense budget. As Helfferich's assistant, Richter thought more in promotional than financial terms, and he was still learning the institutional prerequisites for mounting a major fund-raising program. He and his committee members, urged on by the president, were reluctant to caution Helfferich against over-optimistic plans. The board, meanwhile, had come to regard Helfferich's views on all finance issues as definitive.
The college ran two back-to-back fund-raising campaigns to generate the gifts needed to realize the ten-year plan. The first phase was the All-Ursinus Anniversary Drive for $2.9 million, completed under Paul Guest's chairmanship in 1970. This was a concerted search for building funds. The annual giving program of the alumni sustained a flow of gifts for other purposes.
A convergence of events at the 25 September 1970 board meeting highlighted the intimate link between Pettit's presidency and Helfferich's financial development plans. This was the special meeting to elect Pettit president. But the board also transacted some other business.
Included was a final report from Guest on the successful completion of the All-Ursinus Anniversary Drive, with more than $2.9 million counted. Uses for the funds were the administration building (Corson Hall), the Myrin library, the life science building (Thomas Hall), and the physical education building. Guest also reported on the success of the college in borrowing $4.4 million in public funds for the physical education facility. The source of funding was the Pennsylvania Higher Education Facilities Authority (HEFA) on a forty-year lease with favorable interest. He capped that with the promising news that Ursinus would probably win approval for its application for an interest subsidy grant. This would bring a forty-year flow of federal government funds to help carry the HEFA loan.
Guest's comment on the successful campaign captured the optimism felt by the whole board--indeed, the whole campus community--regarding capital finances. Guest said that the funds from the Drive and the loan funds "should be adequate to accommodate all reasonable need for physical facilities at Ursinus College for at least the next ten years. You [the board] …are justified in claiming credit for lifting Ursinus College to the plateau it now occupies." And he thanked them. This optimism enabled the board to turn its attention toward the improvement of the academic program--although there was much capital construction remaining to do. Destiny's glitter, showering out from Helfferich's star, seemed to be illuminating the whole college.
Following Guest's report, William Heefner spoke. He already had accepted the role of chairman of a new ad hoc "Academic Development Committee." He said he spoke to faculty members and would speak with students. He was attempting to inform them of the board's interest in advancing financial support for the educational program, now that the All-Ursinus Anniversary Drive had taken care of capital needs. He was inviting feedback from both groups. He would report at a future meeting on the directions recommended for further fund-raising. He returned to the board meeting on 5 March 1971 and recommended approval to go ahead with "Century II (1970-1975)--The Case for Academic Development at Ursinus College." Heefner enumerated the academically related targets for funding improvement and declared that Century II aimed generally at "the preservation of the high levels of undergraduate teaching" commensurate with the college's reputation. The total came to $5.5 million, much more than the previous effort. This action by the board effected the transition into the second phase of fund-raising to fulfill Helfferich's ten-year vision. The new campaign, already well along behind the scenes, became public knowledge.
The enthusiastic plans of his predecessor, now etched into board policy for his administration, thus came to Pettit's agenda on the very day of his election and the follow-up meeting. While he had had much to do with the study of needs and alternatives leading up to this decision, the energy for the comprehensive plan came from Helfferich. Just as the board turned to Pettit to hold the line on the social code, to maintain order, and to keep a tight grip on the management of the college, it now turned to him to lead the most ambitious phase of the Helfferich legacy.
As things turned out in the 1970-1976 period, the college in the aggregate met the goal for new funds that it set. Because of flaws in the planning assumptions, the absence of a well-staffed and matured development function, and the fury of inflation in the national economy, this success failed in its primary goal--to bootstrap the professional educational program of the college to a new level, commensurate with the first-class facilities created in the first phase of the Helfferich plan. The funds raised through the Century II campaign, though in total equal to the goal set, were insufficient to bring improvement. (Of course, without the funds raised, the college would have been worse off than it was by the end of the period.) The Century II campaign became a point of contention in itself, as we saw in the bill of particulars in the faculty's 17 October 1975 letter.
In addition to the ten-year plan's promotional tilt, it contained some flawed assumptions that almost guaranteed that hopes and realities would not converge.
Because baby boomers were driving college enrollments up all over the country, the plan assumed that Ursinus would be able to grow from an enrollment of about 1,000 to about 1,250 students. The additional tuition payments, even at a moderate rate of annual increase, would generate a sizable increase in disposable operating income. The enrollment never grew as projected.
The plan did not account for the full cost of debt service incurred in the expansion of the physical plant. This debt was internal as well as external. That is, Helfferich had persuaded the board, not without opposition, to borrow the earnings from the modest endowment (about $6 million at the time of Pettit's election) to pay off plant debt. This meant that those earnings would not go to the direct support of educational activities. The additional burden of the external HEFA debt--even with the help of a federal interest subsidy grant--further tightened funds available for educational and general expenses.
Moreover, the non-capital goals of Century II lacked roots in rigorous program planning. They were numbers, more or less grabbed out of the air. They had the virtue of saying in a broad-brush manner that the college wanted to give new priority to the professional educational program. But they were hazy figures to faculty. They failed to draw a sharp line between ongoing operational income and add-on income for program improvement generated by fund-raising. Faculty could take heart from the declaration of a new priority represented by the figures. They could feel scant ownership of the numbers, however, and had no clear understanding of what they would mean in their daily professional lives.
The board compounded these planning flaws by deciding to count all non-operating income toward the total goal of $5.5 million in the Century II program. This was a step forward in the conceptualization of the fund-raising obligations of the board. Yet, it had several misleading effects. It allowed the campaign results to swell with federal dollars received for student financial aid. It allowed the general campaign total to include the continuing flow of gifts toward building projects of phase one that were not listed in the Century II goals. It allowed the counting of some irrevocable estate plans when donors and the college entered into them. The college could not spend these resources until the donors died at an unknown future date. At the end of the campaign, these accounting decisions made it possible for Heefner and Pettit to announce that Century II was a success. The log showed $5.6 million raised. But of the specific targets for advancing the educational program, Century II met only one:
TARGET/ Net Goal Set 1 July 1970/ Raised 30 June 1975
Faculty Development 1, 653, 958/ 600, 602
(Endowment)
Faculty Development 000, 000/ 278, 401
(Current Expense)
Faculty Research Funds 100, 000/ 30, 000
(Endowment)
Library Acquisitions 281,760/ 107, 443
(Current Expense)
Educational Programs
(Current Expense) 281,760/ 538, 224
Faculty had a hard time reconciling such numbers with the claim to general success in Century II.
Along with faulty assumptions for planning and counting gifts, the absence of a well-staffed and matured development function at Ursinus contributed to the problems of Century II. Helfferich's belief that fund-raising was a college president's peculiar responsibility reflected the common wisdom in higher education. In the penurious history of his vice-presidency (when he often acted as surrogate for McClure in seeking funds) and in his tenure as the president, however, Helfferich took this concept quite personally. As a banker, he thought of money as the key to administrative authority. The consequence was that he was reluctant to institutionalize fund-raising.
He was slow to build a professional staff with focused responsibility for systematic prospect identification and cultivation. Reimert and others had pushed him to hire Richter as a general aide in 1965. Helfferich gave him responsibility for fund-raising, but this move fell short of the need. Richter was in a learning mode. Helfferich gave him a full portfolio of duties beyond fund-raising. Helfferich added development staff members grudgingly and sparsely. He held onto the final responsibility for fund-raising in a way that relieved Richter of accountability.
These conditions prevailed when Pettit stepped into the presidency. He was in no position to halt the decision to go forward with Century II. Richter by then was in place as administrative vice president with major responsibility for fund-raising. Helfferich remained sitting on his cryptic bench as chancellor. Expected to keep a tight hold on expenses, Pettit sought to follow Helfferich in keeping the professional development staff at a modest size and in personalizing the fund-raising function. He worked hard to bring dollars into a campaign he had not initiated. But Century II went forward with only limited research into the wherewithal and the interests of prospective donors, with a limited organization of campaign volunteers, and with a limited schedule for cultivating new donor interest. All these activities would have gone into a matured development office. The campaign's best supporters were board members and other prospects to whom they and Pettit and Helfferich had direct access. Beyond that generous but limited circle and existing sources of annual support among alumni and friends of the college, the campaign did not break much new ground for support.
Even if the planning had lacked flaws, even if the organization and execution of the campaign had been at a high professional level, the fury of inflation that accompanied the disruption of the economy of the nation and the world in the mid-seventies would have made the outcome of Century II unsatisfactory. The same force that hurt the pocketbooks of faculty members hurt the operating budget of the college. Endowment income benefited from rising interest rates, but a large percentage of the money earned went into payment on the capital debt. Consequently, there were no double-digit increases in operating income to cover double-digit increases in operating expenses. By 1975-76, the board was approving an operating budget showing a half-million dollar deficit. The physical plant director was estimating 70% increases in annual energy costs. With the cost of energy going ballistic, the board urged the administration to effect economies in the operation of the plant. Ursinus probably cut the expense of operating the physical plant more than many comparable colleges. It did this through ingenious mechanical changes wrought by Howard E. Schultze, director of physical plant, and through successful efforts to motivate students and staff to live and work more frugally. Still, nothing could stop the drain on the value of the college's hard-won dollars in Century II. The 1974-75 fiscal year closed with a small operating deficit of $7,000--the first in many years. Insignificant in amount, the deficit symbolized the difficult operating conditions of the time. In his grand vision of a better future, Helfferich had not anticipated this.
Century II thus failed to generate the real added value it originally set out to find--even when it brought in new gifts.
When faculty members in the 17 October 1975 letter accused the administration of misleading the alumni about the success of Century II, it was evident that they had missed or were ignoring clear signals about the limits to Century II's success. Within the board, Heefner warned of two negative trends in 1973. One was inflation: "we would not have dared to project the runaway diminution in purchasing power of the early 70s even had we realized it." The other was the flattening of incoming gifts after initial success: "the curve of the giving has turned downward. If this continues, we will not reach the goal." Richter rang the same cautionary note that year in an alumni magazine article: "When we embarked on Century II, we thought that $5.45 million would do more to advance the academic program than in fact it will. Continuing inflation and the new 'no-growth' conditions within higher education itself will diminish its effect somewhat. Century II nonetheless is an important step along the broad road of improvement. It is taking Ursinus in the right direction." Pettit made similar statements in his ongoing communications with faculty and other constituencies.
Ironically, Heefner spoke about Century II in the September 1975 issue of the alumni magazine in a way that may have caused faculty members to include Century II in its list of concerns. Heefner did claim general success for the program. But, he said, "because of inflation and other changes unforeseen when the goals of Century II were set in the late 1960s, the program may not have done all that was originally hoped." Faculty evidently saw the headline but missed the disclaimer in smaller type. In light of the hopes and dreams that it represented at the outset--nothing less than the completion of Helfferich's vision of an improved educational program--this was understandable.
The story of Helfferich's second great legacy, then, can read as a failure to provide significant financial advancement for the professional practice of the college. Yet it is possible to see his plan in a more positive light. While it missed its short-term targets, Century II, under William Heefner's leadership, succeeded in expanding the vision of the college. Heefner stressed the importance of setting high goals. He believed that they would raise sights and spirits and tilt the institution deliberately in a desired direction. He endorsed Helfferich's willingness to take a long and comprehensive view of the college's fortunes. He exhorted his fellow board members and alumni to "reach" in their thinking about the future of Ursinus and their role in its development. Century II gave him an official bully pulpit for education in the hard game of institutional advancement, something he knew from other charitable activities in Bucks County and beyond. The ad hoc "academic development committee" that Heefner chaired became the board's permanent development committee after Century II. For future fund-raising needs, this was an essential transformation. It focused the eyes of the board permanently on its obligation to lay large plans and to garner new resources in support of them.
In the dispute over priorities, the board's decision to conduct Century II unequivocally announced that the college prized its professional academic practice. It stressed the importance of developing the faculty and the resources that supported their teaching. Nothing in the Century II program directly enhanced the parochial agenda at the expense of the academic enterprise. Because of its failure to bring substantial improvement to that enterprise, all parties by 1976 could agree on one thing: the college had to put more money into the academic program in the next phase of development. Whatever controversy remained over the priority of professional practice thus was in terms mainly of execution: how could the college gather new resources as fast as possible to improve the academic program? Faculty criticism of Century II faded quickly after Pettit announced his retirement. Faculty seemed to believe the board when it said it would not stop in its search for new funds to support academic improvement. It gave some substance to this resolve when it mounted the Ursinus 76/80 program immediately after the 1970-1976 period.
Helfferich's second great legacy, then, his ten-year development plan, was an over-all success that failed to bring specific advancement. Yet, it established a more comprehensive way to envision the advancement of the college. It began to mobilize the board for the long term evolution of Ursinus.
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