Private Alabama college seeks bailout, warning it may close
Birmingham-Southern College says it needs help after years of deficits and declining enrollment and is seeking a $37.5 million government bailout.
BIRMINGHAM, Ala. (AP) — A private Alabama college is seeking a $37.5 million government bailout after years of deficits and declining enrollment, with state legislators warning that Birmingham-Southern College may close within months without the money
The 1,000-student institution in Birmingham released a statement Saturday calling the request part of a plan “to put the college on a sound financial footing for the long term.”
Jefferson County state lawmakers are scheduled to discuss the proposal on Monday, AL.com reported.
“Birmingham-Southern has been operating in financial distress for over a decade. Without support, it will not be able to continue to operate after May 2023,” Sen. Jabo Waggoner and Rep. Jim Carns, both Vestavia Hills Republicans, wrote in a letter to lawmakers first reported by the news outlet. “Without a commitment from the state, the college will need to notify high school students that it will no longer be accepting applications by the middle of January.”
The college didn’t immediately respond to a question Saturday about whether it would close without the money. It has blamed its financial woes on the Great Recession of the late 2000s, significant investment in new buildings and an error in federal financial aid accounting.
The Methodist-affiliated college wants a one-time infusion of $12.5 million in federal COVID-19 relief money and $17.5 million in state education funding. Alabama has broad power to spend the pandemic funding where needed, including on the college, even though the school’s enrollment decline and financial troubles started long before COVID-19 started to spread.
The school also wants $5 million from the city of Birmingham and $2.5 million from Jefferson County.
“We believe Birmingham-Southern College’s contributions to the greater Birmingham area and the state warrant such an investment, which is clearly permissible under state law and for which there is considerable precedent,” the college said.
The school dates to 1856, when Southern University was founded in Greensboro, Alabama. That school merged with Birmingham College in 1918 to become Birmingham-Southern, with a campus west of downtown Birmingham.
The college’s troubles have been clear for years to financial observers. Moody’s Investors Service downgraded the college’s bonds in January, saying the college had spent down $17 million from its endowment to make up for “sustained enrollment and revenue declines driving deep operating deficits.” Institutions are supposed to spend earnings from endowments, but not the fund’s principal.
Moody’s said the college had a “perilously low” 24 days of cash on hand on May 31, 2021, the end of its last budget year, and had defaulted on rules governing some of its bank loans, although the banks waived the default and didn’t foreclose. Birmingham-Southern owed $33 million in debt then.
Enrollment at the undergraduate college has fallen from 1,345 in fall 2015 to 1,058 in fall 2021, according to college financial statements and federal reports. Birmingham-Southern ran a $10 million deficit in 2019 and an $8.2 million deficit in 2018, according to the most recent audited financial statement posted online.
The school slashed tuition in 2018 to try to attract more students, also recognizing that most students were paying nowhere near the sticker price. Small private colleges nationwide are struggling with a decreasing number of traditional college-aged students and competition from larger, richer institutions.
Some are closing, including Alabama’s Judson College, a women’s school that shuttered its campus in Marion in 2021.
The college says it’s trying to raise $200 million by May 2026 to rebuild its endowment. It says President Daniel Coleman has secured more than $45 million in pledges from private givers in the past 18 months.
“The government infusion would enable the fundraising to continue for three more years so that BSC can replace its endowment and continue to operate as an independent college,” the lawmakers’ letter states.
HBO’s new Billy Joel documentary is revelatory — even if it pulls some punches
The new two-part documentary, which premieres Friday on HBO, is a good example of the tension between access and objectivity that filmmakers face in making documentaries on celebrities.
A wildfire destroyed the historic Grand Canyon Lodge. It burned down once before
The Grand Canyon Lodge is the only hotel on the park's North Rim, which is closed for the rest of the season due to wildfire risk. The hotel was already rebuilt once, after a kitchen fire in 1932.
Why the Federal Reserve’s building renovations are attracting the White House’s ire
The Fed's $2.5 billion headquarters renovation is attracting mounting criticism from the Trump administration, which had been already attacking the central bank for not cutting interest rates.
Supreme Court says Trump’s efforts to close the Education Department can continue
The Trump administration had appealed a decision that had directed it to stop gutting the U.S. Education Department and to reinstate many of the workers the government had laid off.
Trump tells supporters not to ‘waste time’ on Epstein files. They’re not happy
President Trump is facing backlash from his supporters and opponents alike for how his administration has handled the release of evidence surrounding the death of disgraced financier Jeffrey Epstein.
24 states sue Trump admin to unfreeze more than $6 billion in education grants
The lawsuit comes two weeks after the Trump administration first notified states it was withholding previously approved funds for migrant education, before- and after- school programs and more.