ACICS Annual Meeting Recap: Address to the Membership

From the Chair, Dr. Rafael Castilla

Good morning, I am Rafael Castilla, chair of the Council and the Board of Directors of ACICS. As executive vice president of Eastwick College in New Jersey, I am one of the commissioners representing the member schools of ACICS. I also serve on the Academic Issues Committee of the New Jersey Presidents’ Council, the entity in charge of reviewing new program proposals, initial licensure, and other key higher education processes in New Jersey.

Thank you for making time in your busy schedules to attend the 2021 Annual Meeting. It is important to remain connected and share our experiences, even when it is not possible to do it in person.

I would like to introduce you to the members of the Council and Board of Directors. Serving with me on the Executive Committee are public member, Dr. Billy Ferrell, chair-elect and assistant superintendent of instruction of Cityscape Schools in Dallas, Texas; public and academic member, Dr. Judee Timm, treasurer, business and international business professor at Monterey Peninsula College in California; and public/academic member, Dr. Patsy Robles-Goodwin, professor and director of ESL/bilingual programs at Texas Wesleyan University. Serving on the Council and Board of Directors are public member, Dr. Shannon Groff, instructional program manager at Florida State College at Jacksonville, Ms. Elizabeth Guinan, former president of the Art Institute of Charlotte in North Carolina; school member, Dr. Víctor Molero, academic director of ISDI in Madrid, Spain; public/academic member, Dr. David Teneyuca, assistant professor in practice at the University of Texas at San Antonio; and school member, Dr. Patti Yakshe, president and CEO of the Pittsburgh Career Institute. It is my honor to work with such a distinguished group in pursuing the agency’s goals and effecting positive change in our students’ lives.

Oddly, as we begin to see the way out of the COVID-19 pandemic, returning to normal activities looks like a major challenge. Lingering fears about contagion, perceptions about vaccination, and ambivalences about the role of remote work will likely result in a difficult transition in the months to come.

Our challenges are compounded by the existential threat facing ACICS. The recent report of the Office of the Inspector General and the events of the last NACIQI meeting showed how bias and lack of due process harmed the agency, its member institutions, and above all, our students.

The Board of Directors stands firm behind the work of President Edwards and the ACICS staff as they navigate the procedural steps to file an appeal with the Secretary of Education in response to NACIQI’s negative determination at the March 2021 meeting and the Senior Department Official’s decision to terminate recognition.

Meanwhile, ACICS and its member institutions must continue their work to deliver high-quality programs that advance our students’ careers and continue to contribute to the workforce needs in their communities.  

Thank you. I will now turn it over to President Michelle Edwards.

From the President and CEO, Ms. Michelle Edwards

Thank you, Rafael. I am Michelle Edwards, President and CEO of the Accrediting Council for Independent Colleges and Schools, and I am delighted to welcome you to our 2021 annual meeting. 

Before I dive into organizational updates, I think it’s important to acknowledge the challenging times each of us has faced in response to the COVID-19 pandemic. I am proud of all of our institutions and how quickly you were able to adapt to different modes of delivery to prioritize the safety and well-being of our schools, our faculty, staff, and students, as well as the communities in which we operate. 

I am proud of the tireless efforts of the ACICS board, staff, and team of evaluators. To say that we have put our blood, sweat, and tears into enhancing our policies and procedures would be an understatement. And I am proud of the schools that have shown their commitment to our shared objective. We are all stronger together.

It has been a challenging and bumpy journey since I started in my role nearly four years ago, as we set out to address the deficiencies of the past. But I am proud to sit here today and tell you that ACICS is a fundamentally different organization than it was five years ago. We have taken a cold, hard look at every level of our operation, and when we saw problems, we set out to tackle them.

Over the past five years, ACICS has implemented almost 100 new Accreditation Criteria and procedural changes to improve the effectiveness of our accreditation process.

Let me share with you some key statistics from the 2020 Campus Accountability Report that illustrate who we are today.

  • Let’s start with student retention rates. I am proud to say that 100 percent of our schools are in compliance with the 60 percent retention rate, and in fact, the average retention rate today is 79 percent.

  • Today, the average placement rate for our institutions is 73 percent. And as you know, those placements are rigorously verified by ACICS.

  • The average licensure pass rate for the 2020 reporting period was 81 percent.

We have faced challenges and setbacks in our journey to build a better future. We are operating in a larger ecosphere, one that presents parallel challenges that we cannot entirely mitigate—from financial and technological changes to social and political ones.

Today ACICS has:

  • 82 campuses enrolling nearly 40,000 students

  • 9 staff members. That’s an average of 9:1 school to staff.

  • We currently operate in 22 states and 8 countries outside of the United States.

  • 35 percent of our campuses do not participate in Title IV.

  • We have zero campuses owned by publicly traded companies.

  • 20 percent of our campuses are not for profit.

  • 90 percent of our campuses are degree seeking.

  • 72 percent of our institutions offer a bachelor’s or master’s degree.

  • According to the most recent College Scorecard, our institutions have a 58 percent average graduation rate, and

  • According to the most recently published Cohort Default Rate (CDR) report, our institutions have an average CDR of 10 percent.

These are statistics that should be recognized and many of them are cause for celebration. Unfortunately, much of the media coverage over the past couple years has not reflected this reality. But it’s important that each of you knows the facts, and I would encourage you to be proud of the work you do and the company you keep.

And of course, the big lingering question relates to the Department of Education. As I’ve shared with the membership, ACICS appeared before the National Advisory Committee on Institutional Quality and Integrity (NACIQI) the first week in March, and after two days and many hours of testimony and questioning, the committee voted to recommend the Department of Education terminate recognition of ACICS for lack of compliance with the criteria. And just last week, the Senior Department Official (SDO) at the Department of Education notified us of his decision to accept NACIQI’s recommendation to terminate recognition of ACICS. 

If you know me at all, you know that I am a bit of a stickler for process and details. In my presentation to NACIQI and our subsequent comments to the SDO, I presented what I believed was overwhelming evidence to support the position that ACICS is in substantial compliance with any objective, consistent, and reasonable interpretation of the recognition criteria. Over the past five years, ACICS has made important strides to strengthen our organization, our accountability, our procedures, and accreditation criteria. I urged NACIQI members and the SDO to judge ACICS by the improvements we have made and our effectiveness as an accreditor today, not by distant history, distorted media coverage, or political pressures. Unfortunately, we were not given that opportunity.

ACICS filed comments with the Senior Department Official in early April. Our comments systematically documented our assertions of bias and misapplication of the recognition regulations. We urged the SDO to reject the NACIQI recommendation and renew ACICS’s recognition based on all the evidence in the record, which I believe shows without question that we are in substantial compliance with all recognition criteria.

It is difficult to reconcile NACIQI’s recommendation and the decision of the SDO with the findings of the Department of Education’s Office of Inspector General, released literally the day before the NACIQI hearing. The SDO made clear in his decision last week that the findings of the Department of Education’s Office of Inspector General, released March 2, 2021, which determined that the Department did not comply with the regulatory requirements in its 2016 review of ACICS that leads directly to today’s action, are of no consequence. The OIG reviewed the work of the former Senior Department Official (SDO) and determined that the evidence supported the SDO’s decision in September 2018 that ACICS complied with 19 of the 21 recognition regulations in question and could demonstrate compliance with the two remaining regulations within 12 months. The OIG also found that the Office of the Under Secretary (“OUS”) in the Obama Administration exhibited disregard for the recognition regulations in ways that “unnecessarily slowed and negatively affected the recognition process for ACICS.” In addition, the OIG concluded that the Department’s lack of “detailed procedures…can and has led to inconsistencies across agency reviews regarding the amount of documentation that is deemed sufficient to demonstrate compliance with Federal recognition requirements.” Apparently, none of that matters.

As you might imagine, receiving this kind of validation from the OIG and then to have it completely disregarded by NACIQI and the SDO is extremely frustrating to say the least.

I believe that the Department of Education failed to apply the recognition criteria to ACICS in a fair and objective way. I believe that Department staff assumed facts simply not in evidence and ignored relevant evidence. And I believe the Department staff at times misread, misunderstood, or misapplied both the recognition regulations and the ACICS accreditation standards and policies in forming its recommendations.

Perhaps most significant, I believe ACICS was held to standards and a level of scrutiny that are not applied to other accreditors, that fail to give us the appropriate professional discretion regarding the enforcement of our standards, and that are quite simply not required by the recognition regulations.

In short, I believe NACIQI and the SDO relied on factors outside the recognition criteria, failed to consider all relevant evidence, and offered explanations that run counter to the evidence in the record.

ACICS should be held to the same standard, the same rules, and the same processes as any other accreditor. Unfortunately, that has not been the case – far from it.

On Friday ACICS notified the SDO and Secretary of Education Miguel Cardona of our intent to appeal the SDO’s decision. In the meantime, the decision is stayed pending the appeal. We have worked too hard over the past five years to strengthen our organization, our accountability, our procedures, and accreditation criteria not to fight this decision. All that we ask is that a decision regarding our continued recognition be driven by the improvements we have made and our effectiveness as an accreditor today, not by policy priorities and outside pressure from political activists. The deadline to submit our appeal is July 2, 2021. We can assume that the Secretary will waste no time in issuing his decision, most likely by the end of the summer.

Meanwhile, and this may come as a surprise to all of you, but we are also scheduled to appear before NACIQI this summer for our renewal petition which was submitted in February 2020. This is a separate proceeding, and at this point I have no way of predicting how it will unfold.

Nor do I know how the Secretary will ultimately rule. Here’s what I do know: I believe that we have implemented significant reforms designed to address concerns and enhance our ability to hold schools accountable for meaningful student outcomes. I believe we were and remain in compliance with the recognition criteria. I believe we are well-positioned to continue to foster an environment of rigorous quality and continuous improvement, both at ACICS and our accredited schools. 

And we remain committed to each of you. We have some great challenges ahead of us today, and I look forward to working with all of you moving forward. Thank you for being with us today, and thank you for being part of our journey.

Let me now introduce our Treasurer, Dr. Judee Timm.

From the Treasurer, Dr. Judee Timm

Thank you, Michelle. As with previous audit years, in January, ACICS again received an unqualified opinion of our FY2020 audited financial statements. Basically, that means we again had no findings. Like many of our institutions, our financial situation has changed over the last several years. The most recently audited fiscal year ending June 2020 reported nearly $1.4 million in revenue and $3.6 million in expenses. Legal fees leveled out in FY2020 at just about $300,000 but have more than doubled year to date in our current fiscal year as we work to maintain recognition with the Department of Education. We have and will continue to cut expenses where we are able, including our move last year to a new, much smaller office space.

The audited operating results for the fiscal year ended June 30, 2020, demonstrate ACICS’s continued stewardship of its financial resources. Revenues for the year were down from budgeted projections, but most of this decrease is explained by interruptions in institutional operations and travel caused by the pandemic that impacted accreditation visit revenues and workshop fees. ACICS was able to adjust its expenses to compensate for much of this revenue loss, and its financial performance was further enhanced by the rent abatements that ACICS realized from its relocation that are not reflected in these results due to accounting rules. Including the investment portfolio results and disregarding non-cash depreciation, ACICS operated at breakeven for the fiscal year in what clearly were challenging circumstances.

ACICS expects to continue adjusting and rightsizing its budget to achieve breakeven status by fiscal year 2024, with reductions in net assets during this period funded by the investment portfolio. Consistent with that goal, the fiscal year 2021 budget projects an operations-level improvement of nearly $300,000 as compared to the fiscal year 2020 budget.

However, a recent draft report from the Department of Education notes that “ACICS reported sufficient reserves to cover the expected operating deficits, and the level of those reserves are in line with other similarly sized accrediting agencies.” The Draft Report also concludes that “ACICS currently has sufficient financial resources to carry out its accrediting responsibilities.” This draft report, however, was disregarded by Department staff in their final report and by that of the SDO.

ACICS’s investment reserves as of May 31, 2021 exceed $8,000,000. 

Thank you, that concludes the treasurer’s report. I will now turn it back over to Michelle.