BY ROBERT A. SCOTT
According to Moody’s Investors Service, about 25% of private colleges are experiencing budget deficits. It also is estimated that traditional high school graduates will decline by 9% between 2026 and 2031, reducing by almost 300,000 the number of four-year college students. Moody’s also predicts more campus mergers and closings. Finally, it is forecast that future college students will not be as willing as recent students to use debt to finance their degrees. For these reasons and more, it is essential that campus trustees and leaders understand their missions and their markets.
I recently visited a college where this was not the case. The campus had experienced a decade of financial and enrollment turmoil. Just before a series of natural disasters in the region affected home values and other economic factors, the college had borrowed funds to upgrade and expand its campus facilities. The goal was to make the college more attractive and up-to-date. Unfortunately, the external events resulted in declines in enrollment and tuition revenue, and forced budget cuts and staff layoffs.
With this as background, I read hundreds of pages of text and tables in preparation for my visit to discuss strategy and governance. On campus, I met with members of the faculty, staff, and board. My first observation was that the trauma of recent years had inspired defensive “silo” thinking instead of teamwork. Since layoffs had been common, administrators were protective of their staffs and faculty members were possessive of their course offerings. Unfortunately, these defensive measures affected enrollment strategies and fundraising efforts.
It became clear that one of the impediments to enrollment success was an absence of strategy in planning high school visits. Obvious targets of opportunity were ignored. Also, the number of course credits required for several popular bachelor’s degree programs was a problem. Instead of requiring the normal number of 120, some required 135 and more. As a consequence, students had trouble graduating in four years, especially if they changed majors or delayed in declaring a major. The structure of the general education requirements, and the number of credits required, also made it nearly impossible to recruit transfer students.
When I asked about these impediments to enrollment, I was told that the faculty had recently updated the degree requirements and was committed to them. No one wanted to give up a course requirement for fear of losing his or her position. I reminded them that the curriculum could be “perfect” and the college might have no students.
The trustees seemed unaware of these issues. They also seemed unaware of their own bylaws. Given all the financial difficulties, including staff turnover in key fiscal control areas, and the unusual refinancing of an equally unusual debt structure, I asked about the level of board oversight. For example, I asked if the board had an independent audit committee. I was assured by the CFO and the board that the college did. When I told them that the recently updated bylaws indicated that one did not exist, I was told I was wrong. So, I asked, “To whom does the independent Audit Committee report?” When the board chair replied, “The Finance Committee,” he realized what I had meant. I also asked about when the audit firm was last reviewed and no one knew. The board members also acknowledged that they needed to meet at least quarterly, not just three times per year.
For colleges and universities to achieve their goals, there must be alignment between and among the mission, the goals, the principles for decision-making, the student “catchment” area, the strategies, priorities for resource acquisition and allocation, metrics for monitoring progress, and results. There also must be alignment between and among the leaders of the board, the administration, and the faculty. It has been shown all too often that this alignment is unlikely unless there is trust, and without honest and full communication, there will be no trust.
I examine university governance and leadership in my book How University Boards Work, published by the Johns Hopkins University Press in January 2018.
Robert A. Scott is president emeritus and university professor emeritus, Adelphi University, and president emeritus and professor emeritus, Ramapo College of New Jersey. He also served as assistant commissioner of the Indiana Commission on Higher Education and acting executive director of the New Jersey Commission on Higher Education.
