Working University

Working University

Education by Jean Gruss | Editor/Lee-Collier

Hodges University has built a solid reputation helping professionals advance their careers. Starting this fall, most students won't even have to set foot on its campus.

It wasn't that long ago that Terry McMahan was working in a shopping center.

But instead of peddling shoes, he was selling an education to working folks who had full-time jobs and families.

When it was founded in 1990 at the Gulf Gate Plaza shopping center on U.S. 41 in Naples, International College was teaching accounting, business management and paralegal work to 85 students. With few options south of Tampa, this kind of education was sorely lacking.

Since those humble beginnings, International College changed its name to Hodges University after a $12 million gift from retired Naples funeral business owner Earl Hodges and his wife Thelma earlier this year. Enrollment is expected to swell to 2,000 students by 2008 on its Naples and Fort Myers campuses.

The university's rapid growth can be attributed to the fact that it has a clear focus on working professionals. The average student age is 31 and 80% are full-time students who have a job and other obligations.

The subjects, class times and online support are all geared to helping working people further their education. Miss a class because your child is sick or the boss needs you to stay late? No problem. You can follow the lecture online late at night or early the next morning.

"That's where the technology comes in," says McMahan, the university's president.

In October, Hodges plans to offer most of its courses online. "They would literally never have to set foot on this campus," McMahan says.

Already, the university has spent $1 million building the Internet platform it needs to create the new online campus. Although the price tag is lofty, it's a lot less expensive than new buildings.

The not-for-profit institution has grown almost entirely using its own revenues to fund operations and interest on a bond issue. Revenues reached $17.1 million in 2006, up 8% from $15.9 million in 2005. Now, it plans to raise more money through a foundation it created in 2004.

Hodges University's foundation is in its infancy. It has $3.6 million in net assets and $1 million in pledges, says Louis Traina, vice president of institutional advancement. By contrast, the Florida Gulf Coast University Foundation in Fort Myers has $64 million in assets.

But Hodges' foundation is growing quickly and others are likely to follow recent multimillion-dollar donations. It started 2004 with just $342,000.

Go to virtual class

The challenge for working people is that they can't easily attend regularly scheduled classes. They may have to work late, their child may be sick or they might have to leave the area for business.

If most all classes are online, working professionals don't have to attend classes on a preset schedule or get penalized for failing to attend. Already, half of the 22 programs are now fully online and the rest are partially online. Roughly 30% of the 1,800 students take classes online today.

Once all the programs are online, there's no limit to the number of people who can take classes. The biggest such online institution is University of Phoenix, which has 200,000 students. However, it has 17,000 faculty members and support staff. "We've got to have the faculty and support systems," says McMahan.

Educators at Hodges University are not likely to be cut from the same cloth as their brethren. For one thing, there's no such thing as tenure at Hodges. Instead, professors sign contracts ranging from one to three years and promoted based on student and peer evaluations. The faculty has to teach year-round, evenings and weekends. Of course, they have to be able to teach online as well.

Despite the lack of tenure, McMahan says it generally hasn't been a problem recruiting new faculty. However, he concedes it's harder to find professors with doctorates in accounting and computers.

For now, Hodges plans to use the online classes to help its existing student population and reach out to students from Hernando County to Marco Island. McMahan says the university is contemplating expanding to the east coast, including Palm Beach County.

Physically, Hodges University can add buildings on its campuses in Naples and Fort Myers. "Charlotte County is on the horizon," McMahan says. But if most students earn their degrees online, the university won't have to spend millions buying, building and maintaining expensive property.

Humble beginnings, large gifts

When McMahan helped found International College in 1990, he knew the institution had to be accredited in order to grow. That's because states won't let students spend public grants at non-accredited colleges.

However, accreditation program is long, arduous and expensive, costing the college $500,000 to apply, McMahan estimates. The Commission on Colleges of the Southern Association of Colleges and Schools accredited International College in 1998. In all, recruiting the faculty and building the necessary facilities cost "millions of dollars," McMahan says.

Accreditation was the turning point. Enrollment jumped 40% the following year and the college raised $19.2 million with a tax-free bond issue to grow its campuses in Naples and Fort Myers.

In 1999, McMahan recruited Traina to reach out to wealthy potential donors. In particular, many of the donors are self-made entrepreneurs who appreciate the university's focus on working professionals who seek advancement.

Traina and McMahan created events ranging from an annual golf tournament to its Humanitarian of the Year Award luncheon, a well-attended annual event that was held at the Ritz-Carlton in Naples earlier this year.

They also established donor-recognition programs, recognizing the growing trend of philanthropists such as Warren Buffett and Bill Gates giving while they're still alive. For example, a donor who gives a minimum of $1.25 million can name an endowed chair. "We've actively courted them," says Traina.

The courting of donors started paying off last year when Lavern Norris Gaynor, a Naples resident and heiress to the Texaco oil fortune, gave an undisclosed gift to endow the president's compensation in perpetuity. It's likely the gift was substantial: according to the university's 2006 tax return, McMahan's total compensation was $416,349.

Gaynor's gift was quickly followed by another from Kenneth Oscar Johnson, whose name is now part of the business school. Like Gaynor, the size of Johnson's multimillion-dollar gift was undisclosed. Johnson was the former CEO of Florida-based Belcher Oil.

Then, in the spring, Earl and Thelma Hodges gave $12 million to the university and the board of trustees renamed the university after the couple. Hodges is a self-made millionaire who built a successful funeral business in Naples and made his fortune in real estate. Thelma Hodges was a nurse who helped establish Naples Community Hospital before it opened in 1956 and subsequently ran the emergency room. Both are well known and highly regarded in the community for their generosity.

"I wanted their reputation to be our reputation," says McMahan. "It's the kind of story that inspires our students."

Who are Earl and Thelma Hodges?

When Earl and Thelma Hodges married in June 1958, money was so tight Thelma had to pay their $3 marriage-license fee.

Scraping together the little savings they had and borrowing the rest, Earl Hodges started a funeral business in what was then the outskirts of Naples. Fortunately, Thelma had a job managing the nurses at the newly opened Naples Community Hospital and could provide some income.

"I sold my car; it was my most valuable asset," says Hodges. "I couldn't afford to fail."

Hodges built a successful funeral business in Naples and made his fortune investing in real estate. The couple recently pledged $12 million to International College, which was renamed Hodges University.

"I like the way they operate, what they stand for and how they've attracted students," says Hodges. He receives 10 to 15 solicitations every day and most end up in the shredder, he says.

When he's visited the campus, Hodges says he was impressed with the students' maturity. "You don't see a lot of horseplay in the halls up there," he says with a hint of an accent from his native Tennessee.

Hodges says he was impressed with the fact that the university focuses on working professionals and where the average age of a student is 31. He says most high-school graduates should go to work before going to college.

"If I had children now, I'd almost insist on that," he says. "Too many people send kids to college because it's the thing to do [and they] waste parents' money and time."

Ideally, Hodges says, children should pay for their own education so that they value it more. That mirrors Hodges' education, working for a year after returning from World War II and paying for a degree from Gupton-Jones College of Mortuary Science in Nashville.

When Hodges started his funeral business in Naples in 1962, he worked every day for five years without taking a break. The key to success was personal contact with those who had a recently deceased loved one, even if it meant getting up at 2 a.m. "Be a good listener because they want to talk," he says. "Don't forget who's really keeping you in business."

Hodges retired in 1993 and sold his funeral home to the Loewen Group, a national chain of funeral homes. "The funeral business enabled me to get involved in real estate transactions," Hodges recalls.

For example, he bought land in the 1960s surrounding his original funeral home for about $150,000 and recently sold the land for $5.5 million.

His advice today: buy waterfront land. "Waterfront in Naples is always going to be valuable," he says.

REVIEW SUMMARY

Industry. Education

Trend. Online courses

Key. Building a university on the Internet broadens educators' reach.