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All-girls school in Calif. became first to admit transgenders. Now its facing a financial reality check.

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A Bay Area day camp in California caters to transgender children ages 4-12. Camp director Andrew Kramer told the AP that his aim is to "show these kids what a confident, happy, successful trans person looks like." (Sandy Huffaker/Getty Images)

Mills College, an all-girls school in Oakland, California, became the first all-girls school to begin admitting transgender males in 2014. Now the institution is facing financial backlash.

The school declared a "financial emergency" this week amid a massive budget shortfall, which college administrators said would lead to a round of layoffs.

According to Inside Higher Ed, Mills is currently running on a $9 million budget deficit, which equates to about 16 percent of the school's $57 million annual budget. Because of the shortfall, Mills president Elizabeth Hillman expects to layoff about 35 faculty members — including tenured professors.

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Under the college bylaws, a declaration of financial emergency can be approved when there is a "need to reorder the college’s financial obligations in such a way as to restore and/or preserve the financial stability of the institution." Under those bylaws, such a declaration "authorizes Mills to restructure all of its expenses, including staff and faculty salary and other expenses, in pursuit of financial stability."

Hillman said the college realized it was not declaring "financial exigency," the term that the American Association of University Professors uses for institutions that are in such dire condition that they may need to eliminate the jobs of tenured faculty members so the institution can survive. She said the board wanted to act on the basis of the Mills bylaws.

The budget shortfall comes amid a decline in student applications for enrollment.

Prior to the transgender policy change in August 2014, the college received 1,827 student applications during the 2013-2014 academic school year, admitted 1,242 and enrolled 217. Just one year later, the school received only 839 student applications, admitted 639 and enrolled 139 students.

In 2014, the previously all-female college changed its undergraduate admissions policy to allow students who "self-identify as female" to apply.

"Mills shall not discriminate against applicants whose gender identity does not match their legally assigned sex," the school's policy states.

"This includes students who were not assigned to the female sex at birth but live and identify as women at the time of application. It also includes students who are legally assigned to the female sex, but who identify as transgender or gender fluid," the policy explains.

However, female students who have since "undergone a legal change of gender to male" are "not eligible" to apply for admission to the school.

Meanwhile, Inside Higher Ed reports that the school is doubling down on their progressive leanings by implementing a curriculum change that focuses on "gender and racial justice."

According to Mills statistics, the school currently enrolls only 821 undergraduate students. Including room and board, it costs nearly $60,000 to attend the school each year.

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