GoLocalProv | News | 5 Big Stories in Rhode Island This Week – December 16, 2023

#5

RI’s Shrinking University – Lost Nearly $100 Million in 4 Years While Execs Took Tens of Millions

Johnson & Wales University was a high-flying, fast-growing higher education corporation in the early 2010s.

Headquartered in Providence, it exploded in revenue, the number of campuses, and its top executive officers took mega-salaries.

In more recent years, J&W has faced a mammoth decline. 

Overall revenue fell from more than $529 million in 2014 to $344 million in 2021— an unheard-of 30% decline in seven years.

All the while, the leadership team took millions in salaries and other benefits. 

In a three-year period 2019 to 2021, J&W lost $99,085,047, according to tax records. Some of the University’s tax records and audits have only been made public in recent weeks.

J&W claims the economic decline was due to COVID. But those claims don’t hold up. 

“JWU like many colleges throughout the country had fiscal challenges due to the impact of COVID but we weathered the pandemic and have completed the current fiscal year with a surplus,” said Jennifer E. McGee, the Director of External Communications & Media Relations at Johnson & Wales University. 

The financial decline began years before COVID hit America’s shores in 2020, and the University received tens of millions of federal COVID-19 Paycheck Protection Program (PPP) funds.

The University, which was founded in 1914 by Gertrude I. Johnson and Mary T. Wales, two women dedicated to providing relevant and practical education, has dramatically transformed over a century and is transforming again.

Big Growth

J&W grew to multiple locations across the United States — locations in Denver, Charlotte, North Miami, as well as Providence.

The revenue exploded to more than half a billion dollars annually. 

In 2014, J&W’s revenue rocketed to $529,237,534 — and the net income jumped to $57 million for the year. In Providence, the company gobbled up real estate and expanded its campus in downtown Providence and along the waterfront off of Allens Avenue on the Providence and Cranston line.

But, behind the growth were fundamental problems, changes in education demographics, and big expenses.

The board was stacked with notable “business leaders.”

Board members included former GTECH CEO Guy Snowden, former BankRI President Merrill Sherman, and former Bryant University President William Truheart.

The board is responsible for J&W’s strategic direction, oversees its budget, and approves the compensation for top executives.

One financial board member was a financial advisor who ran into serious legal troubles. 

David Brochu, former Rhode Islander and founder of StrategicPoint Investment Advisors, served on the board for years. He was fined in New Hampshire in 2016 for violating state securities regulations and stripped of his license — and ordered to pay $1.3 million in restitution to twenty-two investors, including ten Rhode Islanders whom he owes $365,000.

The revelation was just one in a series of serious legal issues for Brochu, who in 2014 was arrested on sex and weapons assault charges in New Hampshire, and, in 2010, was embroiled in a court battle after selling StrategicPoint to Focus Financial Partners. All while he was serving on the J&W’s board. 

Salaries Explode for Top Executives

There were big salaries for top executives.

Then-Chancellor, President and CEO John Bowen received a total compensation package in 2014 of $1.5 million. Vice-chancellor Thomas Dwyer received more than $1 million that year. Those salaries were above average for executive compensation for university leaders, according to a study by the Chronicle of Higher Education.

J&W’s overall revenue jumped to $529,237,534.

While 2014 was the height of the revenue for the University, it was not close to the high point for the compensation paid to the top executives.

$5 Million Man

In 2018, Bowen’s compensation jumped to $5.3 million, and Dwyer’s was nearly $3.1 million.

In contrast, just across Providence, Brown University President Christina Paxson’s total compensation was just over $1.5 million. Brown is an Ivy League University and, in 2018, had a budget three times larger than that of J&W.

And in 2018, RISD’s President Rosanne Somerson received a total compensation of $641,000.

While the senior staff was receiving record compensation packages, the core financials had peaked and were on the precipice of collapse.

Over the past five years, Johnson & Wales University has lost more than $80 million — but the numbers are just some of the story.

Between 2016 and 2018, the University lost more than $8 million and Bowen alone received compensation of more that $8.2 million, according to J&W tax records. It is unclear if some of Bowen’s take was deferred compensation. READ MORE