Due to decades of demographic change, as well as the dreadful coronavirus epidemic, the existential crisis facing higher education is forcing schools into implementing long-discussed and rarely implemented strategies. Campus consolidations, the sale of land, and the elimination non-core programs, are some of the most prominent.
Here are some key points from a panel discussion with Erwin and O’Reilly and Jim Hundrieser (vice president of advisory services for the National Association of College and University Business Officers) and Rick Beyer (senior Fellow of Association of Governance Boards of Universities and Colleges), who together have provided advice to institutions that face financial and enrollment pressures. Discover about: https://dedebt.com/
Takeaway 1: Don’t forget to consolidate.
The University of Maine spent five decades working to become an accredited entity, rather than seven different accredited campuses. This approach was deemed more cost-effective by administrators and will improve accountability and collaboration within the system. . The New England Commission on Higher Education approved the unique accreditation at its June 23rd meeting. Information on the plan consolidation of the system is not yet available.
Erwin claimed that declining enrollment caused the most damage to the rural campuses of the system. Erwin also stated that there was already support in place for closing down struggling campuses even before the pandemic. Erwin felt that “it was vital not to abandon our countryside institutions because that would really mean abandoning our rural population, which we weren’t going do.”
Erwin stated, “We were very fortunate that we had seven institutions in the network.” One of them was absorbed by the University of Maine. The others decided to go the other way and instead of approaching it in that manner, we decided that unified accreditation was the best option. It was a slow process.
The move was approved on June.
“This is a great tool in the future. There are cultural, and structural barriers. He stated that you cannot just wave a magic sword and say “OK, let’s have an engineering program and one for nursing, which will save money.” . “We are able to see the extent of consolidation taking place. It is clear that we have the ability to consolidate in places that will work, and save money. This creates a completely new culture in the system: collaboration and business-thinking, not campus thinking.
Takeaway 2: Be true to your mission.
After Covid-19 caused the school to be in worse financial condition, Pine Manor College of Newton, Massachusetts decided to merge with Boston College. O’Reilly explained that the school had explored various options, such as becoming a foundation, or moving, before reaching out to BC. As they look for a new direction, O’Reilly said that Pine Manor should take care of its students, staff, and Mission. O’Reilly also gave advice to financially struggling colleges. He suggested that they understand their mission and strengths as well as think about which organizations might be most benefitted by partnering with them.
“We served a very special demographic at colleges. 85% of our students were from color and 80% of them were the first to attend college. We also received 80% Pell Grant. What can we do now to continue this mission? O’Reilly spoke. “(We considered) founding a foundation. … We wanted to know if it was possible to move. Could we take some equity out of our current location and pick up the property? Could we succeed? Finally, could we find a partner that believes in our mission? We found a partner at Boston College in our case.
“I think that most people think of Boston College as a place where they can say things like, “Wow! What a power of finance and athletics. What a power of academics. “Everything President (William), Leahy accomplished during his time there. He was thinking about the fourth leg. He wanted to try to be known as a force for social justice. This is what gave rise to a unique opportunity for a relationship.
“Majority of people said that they would like to combine with you. We would love for you to move in. We are open to selling your assets. Someone said that it made sense for their own values and they wanted to sell the assets. These value propositions match. You could be the most influential person in your city, town, or any other place. You may be able to create a special partnership with these government entities, municipalities, or a metro system. However, you must be clear about your particular value and who would be interested.
Takeaway 3: Boards should not waste their time
Hundrieser explained that colleges do not close immediately. However, he noted that when challenges arise, boards have ample time to make difficult decisions about the school’s future strategy. However, Hundrieser warned that they could face disaster if they try to continue with their business as usual. This is due to the many obstacles that exist in higher education.
Hundrieser stated that wasting time can cause you to shut down abruptly. “It just sits there on the board. Others think that there is no other option than to merge and lose their jobs. We can resist if we try.
“Boards must take the time and educate themselves. The board is often the best place to learn about the differences between closing and other options. There are many options. If you wait until you’re strapped for cash, all your options are gone. It is important to be proactive and fully understand your surroundings. Because it is so emotional, this decision can sometimes be the hardest for the board. It is a difficult decision for the board because it can be so emotionally charged. They must remember that it could mean the difference between closure or prosperity.
Takeaway 4 – The action has only begun
Beyer predicted more schools will seek mergers and sharing of services in the next few months.
Beyer said, “The era for consolidation will accelerate.” “I always try and talk to the institutions about it. How do you proceed once you have saved the money. It’s still up to you to make this happen. The mother of invention is necessity.
He said, “Our entire industry needed to pivot and immediately find ways to teach.” “We had no choice. It is a sign that we are capable of doing more, I believe. Sometimes we inflict too many self-inflicted wounds. Don’t get me wrong. We are in financial crisis especially on campus. Margins don’t work. However, you can still build a great campus model and invest more money in your students’ success.
“We are seeing more boards say that they are not in danger, but they don’t like trendlines. So we need to do more. At the board level and certainly at president level there is awareness that we must think differently. It will be all about creativity and innovation. This will result in more schools closing. However, there are always people who will do what is right.
“While the industry is facing many systemic problems due to student loan, changing demographics and new entrants to market, as well as a decline in enrollment over nine year, there has never been a better moment to buy prosperity. There is no guarantee of prosperity when everything is perfect and there is nothing happening.
“Over five years, there are great opportunities. I am very optimistic about small colleges. They should be able become more agile. Amazing things can be achieved if you have a good track record and good leadership skills. It is important to be ready to face the market wherever it is at the moment and where it is going, as the market is very different from what you have previously known. We can’t look at the rearview mirror and expect to see our future. There are many great opportunities. However, there will be some closures. They will.