5 Years Is Not Fast-Tracking

A recent Inside Higher Ed article described how Guilford College, seeking to stem a decline in enrollment during the last decade, redesigned its academic calendar and much of what it offers students. The good news: enrollment for traditional undergraduates for fall 2019 appears to be up 14 percent and perhaps more. But as the article notes, “The change didn't happen fast. Conversations about rethinking the curriculum started in earnest five years ago.”

The new calendar and programs are attractive, but jury is still out on whether the institution will be able to restore enrollment to anywhere near its previous high. Specifically, Guilford’s Data Digest reveals that between 2010 and 2018, the number of Guilford’s total FTEs (which also include a new part-time prison initiative and an enrollment-stable early college program) declined more than 40 percent, from 2,628 to 1,573.

There is much that the Inside Higher Ed piece or the Data Digest doesn’t reveal, such as Guilford’s tuition discount, net tuition revenue or deficits, fundraising results, debt service, or compensation levels. We don’t know if the college has significant deferred maintenance or has engaged in a right-sizing exercise. We don’t know what the accreditors are saying, whether or not the faculty understood that the financial picture was that dire and if there was a sense of urgency on the campus to address the problems.

As readers of Inside Higher Ed are painfully aware, Guilford is among the increasing number of institutions experiencing such problems. In response, many such institutions are freezing or limiting compensation and operating budgets for both academic and administrative units, further deferring maintenance, eliminating programs, outsourcing services, laying off faculty and staff members, seeking partnerships, and -- in a trend I am seeing more and more often, even at those institutions with relatively meager endowments -- drawing down unrestricted endowment.

More than any time in the past, I hear trustees and presidents discuss their institution’s “financial runway” -- that is, the amount of time their institution has, assuming its current course of action, before it would no longer have the resources to continue to operate. But based on my own experience as a former college president, and more recently as a consultant to dozens of colleges and universities, far too many campuses don’t take make it a priority to immediately deal with what they know can be impending disaster.

First, there is often a disconnect between those who believe urgent and dramatic action is needed (generally trustees and presidents) and those who believe that what the institution offers is of such value or of such long-standing duration that it will be fine (often longtime faculty members and some administrators). Some people in the latter group believe the problem is that the institution just isn’t marketing the excellence that they are certain they offer and/or that the institution is not effectively recruiting students. In embracing the status quo, however, they ignore the national trends that are often creating circumstances beyond their control.

Second, some campuses wistfully believe that the solution to their fragile finances is simply to raise more money -- even when both their fundraising history and the nature of their donor pool suggest such a hope is unrealistic. Nevertheless, they persist in building their operating budgets around unsubstantiated aspirations, thereby contributing to a year-end deficit.

I saw those challenges firsthand when I facilitated a retreat for trustees, senior administrators and faculty leaders at a college with an annual $12 million structural deficit which was seeking to identify new revenue streams and ways to cut expenses in the short term. The meeting began well. Committed to working collaboratively, the group generated an ample list of possible new programs and, not surprisingly, a shorter list of what might be cut.

The problem began when we turned to the timetable. The trustees and president were focused on acting immediately to secure new revenue streams and to eliminate nonessential expenditures, while the faculty members were assuming a five-year time frame. A faculty member argued that because many of the new initiatives required curricular change, a five-year process was actually “fast-tracking.” A surprised trustee responded that if the college didn’t change what it was doing right away, it would be out of business in far less than five years. He then suggested that he very much wanted the faculty to participate fully in the planning process, but if their doing so delayed the process, the board, given its fiduciary responsibilities, would be forced to make the decisions necessary to balance the budget.

The academic vice president, while granting that the institutional bylaws gave the board ultimate authority, pointed out that the policies in the faculty handbook vested in the faculty primary responsibility for the curriculum, for adding or discontinuing programs, and for hiring and terminating faculty. She also noted that the handbook mandated extremely time-consuming processes.

Such a disconnect -- about who is responsible for what -- between board bylaws and faculty handbooks is not uncommon. But even though it is likely than a board litigating this matter would prevail, such litigation would almost certainly fracture the campus community at a time when the institution -- as the Guilford story makes evident -- needs the most creative and committed efforts of the faculty to deal with its challenges and realize its opportunities.

What also became clear to me during this retreat was that the trustees and the faculty had not previously been informed about the extent of the deficit. Unfortunately, I have seen that same phenomenon at a number of other financially fragile colleges and universities. The reason: many boards, presidents and senior leadership teams fear that if they share such negative information with faculty and staff members, the institution’s financial vulnerability will become public. That could then discourage prospective students from enrolling and exacerbate the institution’s financial woes. While understandable, that approach is misguided, as it excludes faculty and staff members from offering valuable ideas and inevitably creates a culture of anxiety and mistrust.

Dealing With Impending Financial Challenges

Colleges can be stymied in their ability to move ahead and address difficult financial situations for other reasons. In certain cases, even when an institution’s leaders are fully transparent, they are simply uncertain what to do. The very circumstance of limited resources means that they are not able to fund the market research that might tell them what initiatives would probably bring them additional students. In the absence of data, members of the campus community often end up squandering lots of time and energy conjecturing about what might work. Yet those exercises -- often the equivalent of either navel-gazing or putting a finger in the air to try to determine the way the winds are blowing -- are seldom productive.

Then, there are the truly sad instances when a college or university has gathered the data indicating what new initiatives are likely to bring new revenues but nevertheless does not have either the resources or the time -- or both -- that would be necessary for it to design and implement those initiatives.

Finally, some trustees and presidents recognize the difficulty of asking members of the faculty and staff to participate in a planning process that may lead to the elimination of programs and/or to the layoffs of their colleagues. They are right to be wary. People who participate in such a process, believing appropriately that it could lead to more informed decisions, have often found that their involvement has come at a significant personal cost. Their colleagues may vilify them, and they feel guilty if their participation leads to others losing their jobs.

So what should colleges and universities do to bring about change when they become aware of serious impending financial challenges? Let me offer seven suggestions.

No. 1: When time is of the essence, a group of respected faculty and senior administrators should conduct data-informed analyses and then recommend solutions that can be implemented quickly. Indeed, knowing that their institution has a short financial runway has led more than one faculty to design major curricular changes within an academic year or so and immediately move to implement them.

For example, based on their financial circumstances and market research, the Agnes Scott faculty agreed in late 2013 to embrace SUMMIT, a program focused on women and global leadership, which it launched in 2015. As the college notes on its website, "Thanks in large part to SUMMIT, Agnes Scott has risen to the top of the U.S. News and World Report’s Most Innovative list -- twice. SUMMIT has also contributed to our largest first-year class -- the class of 2022 -- in the college’s history. And, for the first time ever, the college has more than 1,000 students enrolled.”

No. 2: The board, administration, faculty and staff should establish trust among themselves and create a collaborative partnership. Like the institution for which I facilitated a retreat, a number of institutions that I know have successfully launched their planning process with a retreat that included all three groups. In some instances, the co-chairs of that process have been a trustee, the president or provost, and a faculty leader, thereby modeling shared governance from the outset. Given that most institutional change will involve academic matters, it is especially important that members of the faculty are an integral part of the process.

No. 3: The president and board must be candid with the faculty and staff about the institution’s challenges. Not only is knowledge a motivator, but when information is scarce, people inevitably begin to imagine what’s happening -- often assuming it’s worse than the reality. Moreover, it is only fair to give people the information they need to make their own good choices.

No. 4: When a disconnect occurs between the bylaws and faculty handbooks, the president and board should clarify at the beginning of any planning process who will be responsible for making decisions. They should also agree who needs to be consulted and who simply needs to be informed.

No. 5: If declining enrollment is a problem, the institution should analyze whether its traditional enrollment goals are feasible going forward or whether it should reduce them. In such instances, campus leaders must be mindful that net tuition revenue, and not enrollment or the tuition discount, is the most important metric.

For example, Allegheny College, aware of the significant decline in college-age students in the Northeast, is deliberately reducing its enrollment. At the direction of the board, 50 members of the campus community over the summer of 2017 studied “issues of enrollment and access, programs and facilities” and recommended the college become smaller. Similarly, Yeshiva University’s Cardozo School of Law, confronted with the national decline in law school applications, made the decision to decrease enrollment in the interest of improving student quality, a strategy that has been successful.

A “right-sizing” exercise is, of course, a complex one, but becoming smaller may save the institution a significant amount of money. For example, if the institution has partially filled residence halls in need of renovation, a smaller student body may enable it to close of one or more of those halls -- thereby avoiding renovation and operation costs or perhaps freeing space for other purposes.

No. 6: When thinking about enrollment, colleges and universities should pay attention to retention as well as to admissions for at least the following reasons:

• Dropouts often are saddled with significant debt but lack the degree that will provide them with more lucrative employment opportunities.
• It is expensive to recruit new students to replace those who leave.
• The institution loses tuition and fees and perhaps room and board.
• Retention is often a key factor in the various rankings of colleges and universities.

No. 7: Presidential leadership, while always important, is crucial in moments of challenge. The most successful presidents I know are those who, after listening carefully and studying the data, share with their colleagues their own best ideas -- their vision for the institution. They are, after all, the one person on campus charged with thinking institutionally all of the time. Moreover, when a president doesn’t provide leadership, the institution is often paralyzed. In discussing such paralysis, a staff member said to me woefully, “Our president has been here for five years but insists that implementing change is premature because key ideas are still in development.” In many of the cases where the president does not provide leadership, they hope that the vision for the future will grow organically out of a planning process, something that in my experience seldom happens.

In conclusion, making data-informed decisions that lead to action, candor, collaboration, clarity about process and presidential leadership will not guarantee positive results. But they will create the all-important environment in which success is possible.