Under Plunkett's tenure, Burlington College falters

Burlington College President Christine Plunkett in a speech two years ago said she never set out to be a college president. Former president Jane Sanders, who Plunkett called a mentor, encouraged her to consider the possibility, which she said sounded “almost comical.”

Two years into her presidency, Burlington College’s situation is much more serious. The school has failed to meet the enrollment and fundraising goals Plunkett and Sanders set four years ago when the school bought a new $10 million campus.

And the school has been plagued by financial problems. Recently, Burlington College failed to deposit payments to employees’ retirement funds, used restricted scholarship money to pay for operating costs and an outside audit questioned whether the college can continue to operate.

Many faculty members say Plunkett has sacrificed the school’s mission in favor of a plan to sell half the campus to a real estate developer. Staff say Plunkett creates a toxic work environment. Students say they don’t think the school can survive with her as president.

The board of directors says it is working with Plunkett to manage the challenges, and Plunkett said the school is focused on growing enrollment and has a plan to improve finances.

During her tenure, the administration has monitored emails to the board of trustees and threatened employees who speak to the media, sources said. In two years, 11 of the 14 people she hired when she started have quit, as well as others who started before or after Plunkett transitioned from finance director to president in 2012.

Internal documents call into question the process by which Plunkett came to be president and show a different side of the publicly positive leader.

Plunkett has an MBA in finance, and says she helped develop the precursor to the Excel spreadsheet and attended leadership trainings on how to run a college.

Two years in a row, Burlington College failed to correct substandard financial practices cited in audits and its financial difficulty has led to a potential loss of accreditation.

Audits from her first two years reveal 11 internal control deficiencies. The school’s cash and accounts receivable are not balanced at the end of the year or during the year. No one verifies that checks agree with invoices, the audit said.

Plunkett this week said those deficiencies are a result of staff turnover in the business office. The controls will be back on track soon, she said.

“We had an unfortunate staffing in the finance office over the past year that was not a good fit,” Plunkett said.

The school in the past two years has been more focused on enrollment growth, she said. But documents show the college has not met the enrollment goals it said it needed to stay financially healthy. The school is six students away from this year’s revised goal of 180 undergraduates and has two more masters students that it expected, she said. Originally, the college told its bonding agency it would enroll 400 students within a five-year period.

Burlington College faces the same challenges of any small college and has made its financial problems public, she said.

“There’s not a lot of news here,” Plunkett said this week when asked about the lack of internal controls.

Plunkett has said she is deeply attached to and fiercely proud of the liberal arts school that offers individualized majors.

PLUNKETT’S HIRING

Plunkett’s time as president was controversial from the start. The former board chairman “derailed” the hiring process, according to people who were on the board at the time.

Plunkett was one of three finalists in 2012, along with the late Vermont Law School professor Cheryl Hanna and Carlee Drummer of Chicago.

Then-chairman Adam Dantzscher spoke with the finalists and then told the board that Drummer and Hanna asked for salaries of about $180,000 and Plunkett asked for $110,000, according to a letter to the board by former board member Jonathan Leopold.

Dantzscher then told the board the two external candidates were not viable options because the FY13 budget allowed for a $125,000 salary, the letter said. Plunkett asked for $110,000, Dantzscher told the board, according to Leopold.

Leopold’s letter said Dantzscher acted inappropriately because the board had not discussed salary or the annual budget or authorized him to discuss salary with the finalists.

“I feel that the entire search and selection process has been derailed on the basis of a budget that was developed by the in-house candidate and approved by the chair but never substantively discussed, debated or approved by either the finance committee or the board,” Leopold wrote. Leopold did not respond to a request for an interview for this story.

Robin Lloyd of Burlington who was also on the board at the time, said in an interview this week that the board discovered Hanna had not asked for $180,000 as Dantzscher had reported.

On May 22, 2012, the board ultimately confirmed Plunkett’s hiring on a 4-3 vote, Lloyd said. Lloyd resigned as a trustee about nine months later when the board’s makeup became too “corporate” and included no academic professionals, she said.

A month after Plunkett’s hiring, Dantzscher wrote his own letter to the board, standing by his assertion that both external candidates had “greater (salary) expectations” than the school’s chief financial officer.

“The selection of Christine as president was never a foregone conclusion in my mind,” he said.

Plunkett in a recent interview said she received no unfair advantage in the hiring process.

“I absolutely didn’t have any kind of separate access or separate information with regard to the search,” she said.

Because the school has not filed an annual financial statement with the IRS since 2011, information about Plunkett’s salary is unavailable.

HISTORY

Christine Plunkett grew up in northern Vermont on a 700-acre farm, she said in a 2012 speech to a group of female educators. Her mother was a teacher and her father was a microbiologist who taught her how to garden, plaster the walls of their 100-year-old farmhouse and go snowshoeing at midnight.

She began her career in Boston after receiving her MBA degree in 1982 at Northeastern University, working as a cost accountant at a government contracting company that manufactured gaskets for bomber aircraft, according to the speech.

In Boston, she also worked for Software Arts, the company that developed the first desktop computer spreadsheet, VisiCalc. Her job was to test the mathematical functions embedded in the software, she said.

That job taught her the “benefit of comfortably delegating; allowing employees to take responsibility for their work and trusting that they will do it successfully,” she said in the speech.

She also worked as an independent financial and software consultant in Boston for 10 years, according to her biography on the college’s website.

She and her husband, John Watson, moved back to Vermont to try apple farming, she said in the speech. Plunkett said she learned how to write a business plan, excite others about her work and climb a tree with a chain saw.

After that, Plunkett, who has five children, worked at the Gailer School, a private secondary school that moved from Middlebury to Shelburne then back to Middlebury, where it closed in 2012.

Plunkett, who lives in Middlebury, was the finance director at Gailer and also served as interim head of the school from 2000 to 2002, according to her biography.

A review of the Gailer School’s IRS filings from Plunkett’s time there reveal the school also had annual deficits, with some exceeding half a million dollars.

The school finished 2002 with a $109,000 surplus, but in 2003 it started losing money and every year thereafter finished with deficits, including $592,611 in 2005.

Three employees who worked with Plunkett at the Gailer School said she was meticulous and responsible with money. Gailer’s problems were similar to other small private schools that struggle with fundraising and enrollment, they said.

“I didn’t think of her as trouble at all,” said Edorah Frazer, who was dean of students at that time.

Plunkett arrived at Burlington College in 2007 as finance director. She attended a leadership training in 2010 at Southern New Hampshire University focused on fundraising, board relations and finance, according to her biography.

In 2011, she was chosen to attend a yearlong executive leadership training program sponsored by the American Academic Leadership Institute, the American Association of State Colleges and Universities and the Council of Independent Colleges.

She is also on the board of the Association of Vermont Independent Colleges and the board of the Vermont Campus Compact, according to those organization’s tax filings and websites.

Former staff said Plunkett and Sanders worked closely as they prepared documentation to apply for a loan to purchase the 32-acre Roman Catholic diocese property on North Avenue in 2010 but a rift arose between them soon after the school moved into the new building and Plunkett sought staff help to oust Sanders, whose leadership style staff and faculty had also criticized.

FINANCES

Sanders and Plunkett in 2010 put together a plan to borrow $6.7 million from People’s United Bank through a bond agreement with the Vermont Educational & Health Buildings Financing Agency and $3.5 million from the diocese. Growing enrollment and fundraising would pay for it, the plan said.

The bank loan was for 10 years with a 30-year amortization and a balloon payment due after 10 years with an option to refinance. The school planned to pay back the $3.5 million diocese loan in four years with a final payment of $500,000 in fiscal 2015. The school defaulted on that loan according to the fiscal 2013 audit, although the school’s attorney has written a letter arguing it is not a default.

The college in 2010 said it was in the silent phase of a capital campaign and intended to raise $2 million in FY11, $1.5 million in FY12, $1.25 million in FY13 and $1 million in FY14. It has not met any of those goals.

Two $1 million gifts pledged while Sanders was president never materialized, Plunkett said.

Board of trustee meeting minutes from 2012 and 2013 show Plunkett urged board members to help her raise money by introducing her to their friends, neighbors and colleagues who might be potential donors.

In an interview this week, however, the president said the college has abandoned fundraising and is focused only on enrollment.

“The only, only, only answer to our tight operating budget is to grow enrollment,” she said.

The problem, Plunkett said in the October 2012 review, is a “wait-and-see” mentality of donors in Burlington who are waiting for someone else to write the first check to a financially struggling school.

Plunkett recently created a BC Financial Task Force to help right its finances, chaired by trustee Karen Paul.

The group includes David Coates, a former managing partner at KPMG, David G. White, a Burlington real estate investment adviser, and Win Smith, principal owner of Sugarbush ski resort, according to meeting minutes.

Plunkett also told the board she has met with and has used several consultants recently, including contractor Jeanne Morrissey, who agreed to volunteer her time to advise the school on how it can bring half of the building that was built in the 1880s up to code so it can be used.

The school originally projected having 333 students by 2014 and 400 the next year. Plunkett on Thursday said the school was pleased to have 174 this fall, which nearly matches its revised goal of 180.

Part of the problem in enrolling new students has been turnover in the admissions office, which for a long time did not have a director, she said.

This summer Plunkett hired Galen Hench, who graduated with bachelor’s degree in 2013 from St. Mary’s College in Maryland and last worked as a research assistant at the Naval Warfare Center, according to his LinkedIn profile.

The school is also shuffling some existing staff to cover the duties of financial aid, student accounts and registrar, Plunkett told new students in a welcome email on Monday, the first day of class.

Plunkett over the years has also mentioned other money-making ventures she hopes will help the school’s bottom line, including a partnership with the Essex Resort and Spa, Hotel Vermont, Jay Peak partner Bill Stenger or a group of antique boat builders who wanted to build a marina and boat storage facility on the lakefront property, according to the 2012 annual report to the board.

But although Plunkett kept talking about “elegant weddings” that would bring money to the school, money was not materializing, said former CFO Bill Breen, who worked for a year at the school until mid-2013.

Breen said the college went out on a limb when it purchased of the 32-acre campus from the Roman Catholic diocese in 2010.

“There was literally no fundraising occurring,” he said.

Not only were loan payments behind, Breen said, but payments to vendors were overdue, equipment needed replacing, and there just wasn’t the cash to pay bills.

The school’s debt to equity ratio was $8 to $1, according to the fiscal 2013 audit. It had a negative working capital ratio of $1 to $2.42, meaning the school had $1 to cover every $2.42 in liabilities, according to an independent review of the college’s financial statements.

Breen said it didn’t take him long to notice Plunkett’s methods were chaotic. Audits and IRS forms were repeatedly delayed, he said.

“There just aren’t any internal controls,” he said.

Auditors at the Montpelier firm Sullivan, Powers & Co. in fiscal year 2013 cited the school for 11 internal control weaknesses, including three from the prior year that had not been fixed, according to the audit. Some deficiencies have been corrected, the audit said.

Plunkett this week in an interview said Breen came from a corporate finance background and did not have the skills for a nonprofit.

“It made for a difficult year in terms of reporting,” she said.

Breen said there were no financial controls in place when he arrived, although Plunkett had been finance director before him, and by the time he found them, he had decided to leave the job. Breen was also tasked with administrative duties such as refurbishing the library and the art gallery, he said.

“Internal control problems were there when I got there they were there when I left, I’ll be the first to admit that,” he said.

The major problem all around at the school was a lack of staff, he said. There were three bookkeepers in his 13 months on the job and for four months there was no bookkeeper, he said.

Burlington College rejected his suggested budget cuts, he said, and Plunkett instead asked him to increase the school’s line of credit based on enrollment projections he said he naively believed.

Breen said Plunkett kept a tight hold over the books and repeatedly delayed and canceled meetings he requested to go over the college’s budget line by line. Plunkett was “always busy, but never getting anything done,” he said.

Money likely isn’t “going out the back door,” Breen said, but it was not well-managed, he said. Some weeks it was hard to find enough money for payroll, he said.

Breen said he believed in the school’s mission and at first was impressed with Plunkett’s charisma but soon realized it was simply vanity.

“As time went on it was like pulling back the curtain of the Wizard of Oz,” he said.

Plunkett rejected the idea that the school’s current finance director, Gibson Smith, does not have access to the books, as Breen said he did not.

“No, I’m not doing the books,” she said. “Our CFO certainly has access to the books.”

Breen discovered that restricted scholarship money had been spent on operating costs. He said he also discovered the school had failed to collect $150,000 in past-due tuition.

The audit from FY 2010, Plunkett’s last year as CFO, came back with only one weakness and said there had been no weaknesses in FY 2009. Audits from prior years do not include notes from the school or comments from auditors, making it impossible to know whether auditors had found deficiencies in the past. Plunkett said they had not.

Some of the specific concerns auditors found during the 2012 and 2013 audits include:

• No internal controls to ensure that monthly bank reconciliations are reviewed for accuracy and performed in a timely manner;
• No internal controls over disbursements to ensure that final approval of disbursements is documented after the bookkeeper processes checks for payments;
• Inadequate controls over preparation, approval and posting of journal entries that help ensure entries are valid and appropriate;
• No internal controls that ensure manual payroll checks are limited in frequency and recorded in the general ledger;
• No controls to ensure proper supporting documentation to each federal work study drawdown;
• Inadequate controls to ensure that the return of federal Title IV funds calculations are reviewed for accuracy and agreed with supporting documentation.

ADMINISTRATIVE STYLE

Faculty, students and staff, meanwhile, have their own concerns with Plunkett. The student union, which the college does not officially recognize, as well as the faculty/staff council, recently took votes of no confidence in Plunkett.

They say their voice was marginalized as the board became filled with individuals who have no academic or educational background.

Email to the board of trustees is moderated and must be approved in order for trustees to see it, to ensure that members are not “inappropriately contacted for issues that are not in their purview,” Plunkett said.

The school’s personnel handbook also says the college may also “access employees’ computers, computer files, emails and other documents.”

During Sanders’ tenure, the school restructured the board of trustees and took faculty and staff off the board, creating instead a faculty/staff council that submits its minutes to the administration and is invited to give updates to trustees at board meetings.

Plunkett said this year she will make herself “less accessible” by scaling back some of her public meetings and changing her open-door policy to office hours. She will cut from two hours to one her monthly meeting with staff and faculty and end president’s dinners because of low attendance.

The president still plans to continue her annual hike up Camel’s Hump and community breakfasts that are open to the larger community, she said.

A June 20 letter to the board of trustees, sent the night the college found out it had been placed on academic probation by the regional accrediting agency, has a more desperate tone than Plunkett portrays in public.

The New England Association of Schools and Colleges (NEASC) put Burlington College on probation for two years because of financial concerns. But NEASC also cited the school for poor organization and governance, a citation not mentioned publicly by the school.

Minutes from trustee meetings show that NEASC in September 2013 was concerned about the school’s governance and finances, and asked its leaders to come up with a plan and present it to its main creditor, People’s United Bank.

Plunkett in the letter to the board said she believed Burlington College had met the governance standard but the commission cut her short when presenting on that topic at a meeting, wishing only to hear about the finances.

“We are angry about the organization and governance finding, as we believe we proved that we securely meet the guidelines of that standard,” Plunkett wrote.

The driving factor of the probation was that the school anticipated ending fiscal year 2014 with a very low cash balance and a fully drawn line of credit.

The fact that the school has a letter of intent for a $250,000 cash deposit from real estate developer Eric Farrell in August or that the school will have “other possible funding sources” over the coming year did not make a difference because NEASC was concerned about liquid, immediate cash, the letter said.

The school had seven to 10 days to file an appeal to the decision, but Plunkett wrote that the school “most likely do(es) not have the grounds for an appeal” and it would cost $50,000 in legal fees.

The school is entitled to submit evidence that its situation has improved during the two-year probation, Plunkett wrote.

The school had a “critical window” of about 10 days to bring in between $500,000 and $1 million and that several board members and staff were looking for potential sources of money and “creative ways to move forward,” she wrote. It is unclear whether the school raised that money.

“I remain confident that together we can develop some creative solutions to this latest challenge,” Plunkett wrote to the board.

Plunkett’s letter acknowledges that the public would be notified about the probation, even if the school were to appeal it. Plunkett said her staff was thinking about “enforcement of confidentiality” on this subject, once staff and faculty were notified.

“We feel leaking this news would be grounds for dismissal,” the letter said.

Plunkett this week released a list of “myths” she believes the media has conveyed about the school along with responses, distributing it to students and staff on the first day of class and posting it to Facebook.

Burlington College was required to submit a report to NEASC in July and will be required to submit other reports in September, November and December with data about the FY 2014 audit, enrollment and finances.

The school’s board of directors has called an emergency meeting Friday to vote on a revised budget, based on an enrollment of 160 students, Plunkett said, even though the school has enrolled more than that.

Students are planning to protest by walking out of the school at 9:15 a.m. and staging a sit-in at the board meeting, to be held at the Lake Champlain Regional Chamber of Commerce.