Fast forward to 2012. Cornerstone is riding the crest of record enrollment, and both tuition revenues and donations are soaring. Cornerstone is projecting an audited net income of $4.6 million for fiscal year 2012.
What changed? According to one current executive staff member who was at Cornerstone during the troubled old days, as well as two members of the current board of trustees, it was the arrival of new university president Joseph Stowell, who not only refocused Cornerstone on its Christian heritage, but also made the tough financial decisions that stanched the flow of red ink on the books.
"Dr. Stowell instituted a new vision statement," said Marc Fowler, Cornerstone's executive vice president and COO who served under the previous administration of Rex Rogers. "His identity and mission statement refocused us as a Christ-centered Christian university. When we put that in place, a lot of these other things turned around for us."
Rogers was president of Cornerstone from 1991 to 2008. He now serves as president of SAT-7 USA, the American promotion and fundraising arm of SAT-7, a Christian satellite television ministry by and for the people of the Middle East and North Africa.
Stowell, who had spent 18 years as president of Moody Bible Institute in Chicago, brought in a heavy dose of corporate realism. He cut 4 percent, or nearly $1.5 million, from expenses for the fiscal year 2009 budget (June 2008 to May 2009). Some reductions also impacted the 2009-2010 budget.
The cuts came from multiple areas of the university's operations, including services, salaries, travel, printing, selected academic programs, personnel and even pension contributions. Cornerstone eliminated several faculty and administrative positions, got rid of an academic major (Spanish) and an athletics program (women's golf), and reduced some benefits — including pension matches and health insurance for spouses who had other options for coverage.
Salaries were cut from 2 percent to 8 percent depending upon salary levels, with top positions taking the biggest hits.
Fowler said Cornerstone now reviews its budgets quarterly, keeping a much closer eye on the university's finances just in case adjustments have to be made.
He also said the re-emphasis on Christianity has attracted more students of faith. All incoming students have to declare on their admissions forms that they have a personal relationship with Jesus Christ.
All these changes have produced dramatic results. On-campus residency has increased from 50 percent to 65 percent for traditional undergraduate students (ages 18-22). The Professional and Graduate School program will have about 1,084 students this fall, up from 1,005 in 2008. The university's seminary enrollment will be 325 this fall, compared to 289 in 2008.
"The numbers tell the story of refocusing," Fowler said. "They back up the changes that Dr. Stowell made when he came in."
Cornerstone Board of Trustees Chairman Steve Hawks agrees with Fowler that Stowell has done a tremendous turnaround job. Hawks, the line of business manager for Fifth Third Investment Advisors, graduated from Cornerstone in 1981 when it was known as Grand Rapids Baptist College.
"The downturn in the economy created an enrollment problem," Hawks said. "Universities have X-capacity for X-number number of students. When revenue matches expenses you break even. Most colleges try to generate 95 to 100 percent of revenue from tuition to cover expenses. You want revenue to exceed expenses and not tap the endowment."
When a school has an incoming class, say 60 students fewer than it budgeted for, those 60 fewer students hurt the school's overall budget for four years, as the class progresses from freshmen to seniors.
"Prior to Joe's arrival, enrollment was down three years," Hawks said. "He brought in new cabinet members. He defined a new mission and purpose."
Hawks said under the Rogers administration, a shift was made from a small-Baptist college theme to one that embraced a more liberal arts college experience. In fact the name was changed to Cornerstone College, later Cornerstone University.
"The focus during that period was on making a lot of positive changes to get us to the point where we needed to go," Hawks said. "We moved from more of a pastoral type programming to liberal arts. Rex did a phenomenal job there. We went from a Baptist college to a broader Christ-centered college that was not denominationally focused. The percentage of Baptist students today is lower."
Rogers built the foundation and made the necessary changes, Hawks said. But the next phase needed more of a warm leadership connection, an individual who related to the faculty, students and community. He said Stowell was perfect for that role.
But Joe Slaughter, a 1969 Cornerstone graduate who now serves as chairman of the board's audit committee, said he did not see a loss of focus under the Rogers administration. Slaughter is chairman, president and CEO of Herff Jones, an Indianapolis manufacturer and publisher of educational products, recognition awards, school spirit and graduation-related items for the school market. He said Stowell is just a more active leader who likes to spend more face time with students, faculty and staff.
Five years into the Stowell presidency, all the economic indicators at Cornerstone are pointing up, Slaughter said. Construction is underway on a new all-weather baseball field and about 30 student baseball players will be attending classes this fall. At the same time, the university is building a new residence hall. Together they represent a $20 million investment in the facilities. Cornerstone also is spending about $11 million to build a new chapel and media center.
"More important to me than adding sports is we're getting better quality kids," Slaughter said. "We have to give professors better raw material if we hope to enhance the rigor of our academic programs. What we're seeing is an improvement in our ACT scores. It's a good indicator of what we're bringing in the front door."
"When I'm on campus, I do make it a point to interact with the kids," he said. "I'm very impressed with their commitment to Christian standards, value and actions. I'm impressed with the passion I see among the graduates for their chosen professions. I'm impressed with kids we're turning out."
Stowell said when he arrived on campus in February 2008, there was a question looming about whether Cornerstone was still a viable university.
"Enrollment was down," he said. "Donations were down. Only a handful of donors were still committed."
Stowell said one of them was C. John Miller, CEO of Miller Energy Co., an oil and gas exploration and production company with headquarters in Kalamazoo and an office in Houston. Miller provided what Stowell described as a major financial gift to help Cornerstone bridge the financial gap. In 2003, Miller Energy entered into a joint agreement with Grand Rapids-based Wolverine Oil and Gas and other partners to explore Utah's Central Hingeline that includes the Covenant Field, a major domestic oil and gas strike.
Step two was slashing the overall budget and making the academic, program and staff cuts, what he described as "a season of shared sacrifice."
These hard choices in 2008 resulted in a small net profit in 2009. Three years later, Cornerstone is projecting net income before unrealized gain on investment of more than $5 million in fiscal year 2012.
Stowell, a student of history, characterized the changes he made at Cornerstone with a paraphrased quote from former British Prime Minister Winston Churchill: "England has always been lion-hearted; I provide the roar."
Coming to Cornerstone was coming home for Stowell. His parents were married in Wealthy Street Baptist Church, where Cornerstone's initial classes were held. His grandmother accepted Christ at Mel Trotter Ministries while working there as a teen. Best of all, his daughter and son-in-law live in the area with their three children.
As he drove to meet the Cornerstone trustees for dinner in Kalamazoo, he and his wife, Martie, wrote a list of what he wanted the job to look like.
"While we were talking at dinner, it was like the trustees were reading the list in my pocket," Stowell said.
As he prayed about the position, he knew there was one last confirmation he needed. His 90-year-old mother, who is legally blind, would be left behind in Illinois.
"After I told her what I was considering, through tears, she looked at me and said 'If God is leading you, you must do it,'" he said. "That was the final sign I needed. I felt released to go to Cornerstone after that."
Savion Sanford, who will be a senior at Cornerstone this fall, is glad he did. Stowell personally recruited him.
"I was initially never attracted to Cornerstone," said Sanford, 20, who attended East Kentwood High School. "Upon graduation from high school, I didn't apply for any colleges. I wanted God to lead me in the right direction. I prayed and asked him to show me where he wanted me to go. The day after that I was contacted by Dr. Stowell, who offered me a presidential referral scholarship. He knew me because I had been active in (Grand Rapids) Mayor Heartwell's Youth Council."
What has the Cornerstone experience been for Sanford?
"It's been amazing. Life-changing. I initially had a double major in psychology and family studies. I wanted to make money. But now my life has taken a turn. I don't want a job for myself anymore, to just make money. Instead, I now want to lead a life of servant leadership, where I'm giving to others. I'm hoping God once again will provide me with direction. I know he will."
Sanford said he's been impressed by all the changes made since he began his freshman year at Cornerstone.
"Our school has improved so much since I came here," he said. "It's only getting better. Cornerstone is helping me build a life that matters."
Mike Brennan is senior technology writer at MiBiz. His day job is editor and publisher of MITechNews.com