California College of the Arts contemplates major changes amid $20m deficit

The California College of the Arts (CCA) has become the latest art school in the US to square off against an existential financial crisis. The non-profit institution is seeking to climb out of a $20m budget deficit as enrollment plummets, leading the administration to re-evaluate its course offerings, contemplate layoffs and even entertain merging with another school to survive.

News of CCA’s struggles, which were first reported by the San Francisco Chronicle, came just before the kickoff of the school’s autumn semester on 28 August, headlined by a $97.5m expansion designed to consolidate the school’s campuses in San Francisco and neighbouring Oakland. But enthusiasm around the project’s debut is being complicated by the budgetary impact of its shrinking student body.

Enrollment at the start of CCA’s forthcoming academic year is projected to be down by around one-third compared to 2019, when the number of full-time students crested at around 1,800, per the Chronicle. The administration currently estimates between 1,250 and 1,300 full-time students this autumn, down from 1,400 last year.

David Howse, who became CCA’s president in December 2023, revealed the severity of the situation in a meeting with 300 staff and faculty members earlier this month, the Chronicle reported. He sent a follow-up memo on 23 August that broached the subject of possible layoffs tied to a makeover of the school’s course offerings in hopes of boosting enrollment.

“Our financial challenges are not insignificant, which means that we are being called to right-size the organisation and address what has become a sizable to a major deficit,” Howse wrote in the memo. “This is a movement that is beyond CCA, to think about efficiencies, alignment and streaming to create organisational efficiency.”

A CCA spokesperson tells The Art Newspaper that, although the school is “discussing the possibility” of layoffs, “no final decisions have been made. Additional planning work is needed as final enrollment numbers will become clearer in September.”

Plugging the hole

The only cost-cutting move known to be imminent is CCA’s downsizing of a planned two-day opening celebration for the campus expansion, which provides 90,000 sq. ft of new studio and classroom space. The complex also includes a new home for the Wattis Institute for Contemporary Arts, the school’s highly regarded gallery.

Fully funded by donations, the construction project was the nucleus of a capital campaign that raised more than $123m, with more than $25m going to “targeted increases in student and faculty support, and increased community partnership programmes”, the spokesperson says. They declined to comment on how much money the school would save by reducing the scale of the opening festivities, adding only that “this did not feel like the right moment to invest in such celebrations”.

More than 85% of CCA’s $60m in annual operating revenue comes from tuition, housing and other fees paid by students. The school’s endowment, which currently stands at $40m, generates only around $2m per year to be used for operating expenses.

To the administration’s credit, however, CCA is not proposing hiking the price of tuition to cover the shortfall. This autumn, tuition for undergraduates costs $59,376 per year; graduate tuition ranges by degree programme, from $43,170 to $75,096. The school provides financial assistance of some kind to around 90% of its student body.

“While raising tuition would offer some additional revenue, it would not significantly reduce the deficit and could make it more difficult for some of our students to continue their education at CCA,” the spokesperson says. “Our priority is to balance financial sustainability with maintaining accessibility for our students.”

To close watchers of higher arts education, the enrollment drought facing CCA might seem all the more surprising given the recent closure of what used to be its largest rival: the San Francisco Art Institute (SFAI). The Institute filed for Chapter 7 bankruptcy—a court-overseen liquidation—in April 2023, around a year after the opening of a new graduate campus in San Francisco’s Fort Mason neighbourhood and other drastic steps failed to rescue the school from its own multimillion-dollar debt pit.

The Institute’s assets, including a recently landmarked mural by Diego Rivera, were purchased for $30m this February by a consortium of non-profits led by the philanthropist Laurene Powell Jobs. Although she and her non-profit partners reportedly intend to launch a new art school on the former SFAI campus at some point, for the time being CCA remains the only option for anyone seeking to train at a non-profit art institution in Northern California.

Yet the absence of direct rivals has done relatively little to bolster CCA’s student population. Asked how many former SFAI students have enrolled there since the former school’s demise, the CCA spokesperson says the number is just 61. That would equate to less than 5% of the school’s full-time student population this autumn, should the total land within the administration’s current estimates.

Perhaps this is why Howse, who floated the possibility of solving CCA’s budget crisis by merging with another institution, cited as examples the long-distance unions forged between Oakland’s Mills College and Boston’s Northeastern University in 2022, and between the California Institute of the Arts and the Vermont College of Fine Arts in 2023. If there is an institutional saviour to be found, CCA must look for it outside the fine arts, outside Northern California or both.

Demographic dangers

Howse said that an overhaul of CCA’s curriculum could keep the school from hurtling over what he called the “demographic cliff” that its declining enrollment signals it is fast approaching. The school has long offered several degree programmes in the applied arts, including architecture and design and animation, as well as in select humanities. It is still anyone’s guess what the school’s academic options might look like after the forthcoming reassessment.

The budgetary problems plaguing CCA (and SFAI before it) transcend the borders of Northern California. Officials at the University of the Arts, a 150-year-old non-profit art school in Philadelphia, suddenly announced on 31 May that the institution would close only seven days later. (The Pennsylvania attorney general’s office opened an investigation into the closure shortly afterward.) The Pennsylvania Academy of the Fine Arts made known this January that the 2024-25 academic year will be the last in which it will offer degree-granting programmes. The Art Institutes, a consortium of for-profit art and design colleges, permanently shuttered their final eight campuses across the US in September 2023 after giving around 1,700 students only one week’s notice.

But spiraling costs and plummeting enrollment are threatening more than just the US-based colleges and universities that specialise in arts training. “A lot of challenges facing the art and design colleges that have closed over the past decade mirror those that have faced very small higher education institutions in general,” Deborah Obalil, the president and executive director of the Association of Independent Colleges of Art and Design, told Inside Higher Ed this spring. “They don’t have the benefit of the savings that come from having a certain scale of students.” Small US-based art schools are also worse off than their liberal-arts counterparts because so many of their programmes require specialised equipment and spaces, unlike “other disciplines that require solely faculty and a classroom”, Obalil added.

The number of students enrolled in four-year colleges in the US peaked in 2010, at around 18.1 million, and fell every year thereafter until 2021, according to the National Center for Education Statistics. Although the organisation expects such enrollment to gradually climb over the next decade, it also estimates that it will never again reach 2010 levels.

Even that projection may prove too optimistic based on some recent data. Analysis from the National Student Clearinghouse Research Center found that, although total undergraduate enrollment nationwide rose 2.1% year-on-year in autumn 2023, the number of incoming first-year undergraduates dropped by 3.6%. The decline suggests that the lustre and accessibility of higher education may be fading faster among younger Americans than among those even a few years older. The challenge appears especially steep for smaller schools championing the liberal arts and especially the fine arts, as worsening economic precarity pushes more and more young people toward higher-earning, higher-employment training in science, technology, engineering and mathematics (Stem) concentrations.

Emergency measures including tuition hikes, faculty layoffs, pared-down course offerings and even real-estate sales have at least extended the lifespan of some institutions straining under unsustainable debt loads. But even these drastic steps have not been enough to keep some other colleges and universities clear of the abyss. CCA is now confronting how to avoid following them over the edge.

“While CCA’s financial challenges are not insignificant, they are also not insurmountable—and CCA’s leadership team, with the support of our board of trustees, is laser focused on navigating these challenges and building on the incredible work by our students, faculty and staff that defines CCA,” Howse tells The Art Newspaper. “Our focus remains on securing a strong future for CCA—the only arts school in the Bay Area—and I’m committed to working to achieve that goal.”