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The National Herald - April 6-12, 2019

Alarming Letter from MA Dept. of Higher Ed. to HCHC

By Theodore Kalmoukos

BOSTON – An alarming letter (“Letter”) dated March 13, 2019 from the Massachusetts Department of Higher Education to Rev. Christopher T. Metropulos, President of Hellenic College and Holy Cross Greek Orthodox School of Theology (HCHC) expressed grave concern about the present course of HCHC academically and financially. The communication leaves open the possibility that State authorities may stop HCHC from issuing any more diplomas, clearly stating that “the Board may conduct an adjudicatory hearing to determine whether to revoke or suspend the institution’s degree-granting authority.”

The Letter states that, “Since 2011, HCHC has operated with a structural deficit and projects another deficit for the current fiscal year. The practice of the institution is to budget for a deficit number, which in FY18 was exceeded by the actual final deficit by almost $1.4 million. For FY19, HCHC is projecting a $1.6 million cash flow gap. The draft operating budgets through FY21 project deficits, though diminishing, for each year.”

THE ONLY GROWTH IS IN BORROWING

“As of June 30, 2018,” the Letter notes, “HCHC had borrowed nearly $9.5 M from its temporarily and permanently restricted funds to finance its ongoing unrestricted operating losses. The borrowing has increased significantly over the past few years, from $1.4 million in FY15 to almost $3 million in FY18. The institution has acknowledged that there is no plan for repayment for these loans…While HCHC’s trustees froze borrowing from the endowment in January 2018, the draft operating budgets through FY21 show that HCHC is at least considering continuing to borrow from its restricted assets to pay operating expenses in the amount of $1.9 million per year.”

The Letter adds, “While the institution claims it has a strategy to ‘reduce and eliminate’ this deficit, there is no detailed and credible plan to do so currently available, and indeed HCHC has failed to break even for almost 8 years. For example, the general strategy includes ‘improving [i.e. reducing the] discount rate and [increasing] enrollment’; however, there are no concrete goals set for the coming academic year or beyond for either…Beginning in February 2019, measures were taken to reduce expenses to close $1.5 million of the projected deficit, but HCHC has only provided evidence for a small portion of this reduction (less than $350,000) in the form of staff retrenchments. HCHC has submitted no evidence regarding the release of collateral pledged for a line of credit or details regarding the amount saved or reclaimed in reduced ‘professional services.’ It is clear that some of these reductions are one-time adjustments and cannot be counted on to stabilize HCHC’s finances in FY20, which does not indicate a sustainable financial model. Furthermore, it is difficult for the Department to evaluate whether the cuts being made are impacting core areas such as academic or student support programs to the detriment of HCHC’s students and the nonconformance with minimum regulatory requirements.”

DECLINE IN ENROLLMENT

“HCHC failed to meet its enrollment targets for the first two years of a three-year enrollment plan begun in 2017,” the Letter reveals, noting that, “In 2017, HCHC was short by 43 FTEs and in 2018 by 70 FTEs; HCHC’s enrollment actually declined between 2017 and 2018, which is the opposite of what was needed and projected. While the goal for 2019 was lowered by about 100 students, which allowed HCHC to meet the new target, the institution’s low enrollment clearly has a consequence for its revenue expectations.”

INADEQUATE BUDGET AND PLANNING PROCESS

Regarding planning, the Letter says that “as of March 1, 2019, HCHC had still not passed a budget for FY19. While this budget is due to be presented and voted on by the Board by April 1, 2019, it is not accepted practice to be so far into the budget year without one.”

Commissioner Carlos Santiago also wrote, “I am requesting that HCHC submit a proposed corrective course of action, which must include reasonable and feasible proposals to stabilize HCHC’s finances, to the Department by Friday, March 29, 2019. I am also requesting a meeting with the appropriate members of HCHC’s administration and leadership to discuss HCHC’s compliance issues and its corrective course of action, to be held the week of April 1, 2019…Please note that, while the Department’s focus at this time is on HCHC’s compliance with 610 CMR 2.07(3)(f), there are other areas where HCHC’s compliance with the Board’s degree granting regulations is in question.”

The Letter copied: His Eminence Archbishop Demetrios, Chair of the Board of Trustees, HCHC; Patricia A. Marshall, Deputy Commissioner for Academic Affairs & Student Success; Cynthia F. Brown, Senior Advisor, Academic Affairs & Student Success; Ashley H. Wisneski, Deputy General Counsel; Meghan Mcinnis, Administrative Coordinator & Executive Assistant to the Commissioner.”

In the meantime, a few weeks ago Kevin Derrivan, the Chief Financial Officer the confidant and co-administrator of Fr. Metropulos, suddenly resigned. His resignation effective May 2, 2019 was announced by Fr. Metropoulos on March 15, 2019, who wrote that “Kevin is departing to assume the CFO position at a neighboring Boston area college. Mr. Derrivan has ably served our school with dedication and commitment for close to 6 years. We are grateful for his service and rejoice for him over his new opportunity.”

Metropoulos also mentioned that “Kevin will be undergoing open heart surgery during the month of April. He will remain as the CFO until May 3, 2019, his last day here to ensure a smooth transition. I ask that you please pray that the upcoming surgery will be successful and that Mr. Derrivan may have a complete and quick recovery.”

TNH has learned that during a recent visit of Archbishop Demetrios to the School many members of the administration and others informed him in detail of everything that is going on at the School. The Archbishop told them to keep everything confidential and not to leak anything to the press.

[ The National Herald - April 6-12, 2019 - pp. 1 and 9 ]

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  April 2, 2019 ]