What Does Accreditation Really Mean?

Most people think that college accreditation is a procedure that ensures good educational quality. A current dispute between a small college in North Carolina and the regional accrediting association tells a different story.

On June 21, 2007, the Southern Association of Colleges and Schools (SACS) voted to remove the accreditation of St. Andrews Presbyterian College in Laurinburg. The college quickly appealed, but was informed by SACS on August 23 that the appeal had been denied. Had St. Andrews done something educationally reprehensible?

No. In a statement issued on July 12, SACS provided the following explanation:

“The Commission voted to remove the College from membership for failure to comply with Core Requirement 2.11.1 (Financial Resources), Comprehensive Standard 3.10.1 (Financial Stability) and Comprehensive Standard 3.10.4 (Control of Finances) of the Principles of Accreditation. These standards expect an institution to provide evidence that is has (1) a sound financial base and financial stability to support the mission of the institution and the scope of its programs, (2) a financial history that demonstrates financial stability, and (3) control over all its financial resources.”

The problem with St. Andrews isn’t really about how it educates students, but about the school’s finances. In its public report, SACS has not specified exactly what is amiss with the school’s financial situation. The college’s president says that recently incurred debts have funded campus improvements that have led to enrollment increases and an increase in net revenues.

Lift the Veil Off the Finances of Colleges and Universities

Two leading members of the Senate Finance Committee, Sen. Max Baucus (D-Mont.) and Sen. Charles Grassley (R-Iowa), are trying to increase transparency in the financial reporting by nonprofit organizations. Many of the reforms the senators propose—outlined in a May 29 letter to Treasury Secretary Hank Paulsen—would have a profound effect upon the kind of financial information that colleges and universities are required to disclose to the public.

Colleges and universities are required to file Form 990 annually with the IRS (available to the public through GuideStar). Baucus and Grassley propose a major overhaul of Form 990. They contend that the current form does not adequately encompass information regarding large, complex nonprofits such as universities. They call for more detailed reporting tailored to the specifics of these institutions and for making their financial reporting more transparent.