In Higher Education, Teach-Outs and Growing Academic Programs Can Be Two Sides of the Same Coin

Managing Principal and President, Brian Mitchell, recently published an article in RealClear Education which describes the difficult set of circumstances many institutions of higher education currently face. “Many institutions are tuition-dependent, lack endowment drawdowns of any scale, and offer financial aid discounts that now average 56%,” says Mitchell.

While some institutions plan to weather the storm by cutting programs and potentially closing or merging their operations, others are encouraged by these macro trends and have created or modified programs and majors to attract prospective students and meet local and regional employment needs. You can read the full article on RealClear Education. 

“This tsunami of confusing and potentially catastrophic trends affecting American higher education presents a dilemma for colleges and universities, whether public or private. On the one hand, many of these institutions seek to weather the storm by cutting programs and potentially closing or merging their operations. On the other, these same trends encourage colleges to create or modify programs and majors to attract prospective students and meet local and regional employment needs. While Fitch Ratings concludes that further college closings and consolidations seem ‘inevitable,’ institutions must think strategically over the longer term to create new programs, approaches and initiatives that meet their organizational and strategic goals. What is the logical path for faculty, staff and trustees to follow?”

Managing Principal and President, Brian Mitchell, recently published an article in Forbes which describes the challenges higher education will face this year including impacts of the upcoming election, the looming financial crisis, the role of athletics and more. You can read the full article on Forbes. 

“Higher education does not operate in isolation. Many of the ongoing challenges faced by American society are also sweeping over the higher education community.

Some will have a dramatic effect on how higher education does business. Many are long-term issues and include but are not limited to immigration, geopolitical instability and climate change. But there are also a good number of short-term challenges, many of them unique to higher education, that will likely emerge more starkly in 2024.

Now is the time to make the first critical decisions on how to handle them. After discussion with colleagues at all levels across higher education and the media, here are some areas that are likely to become front-burner concerns for leaders in higher education.”

Managing Principal and President, Brian Mitchell, recently published an article in Forbes about steps institutions of higher education can take to better prepare themselves for challenging and uncertain times. You can read the full article on Forbes. 

“To me, the conclusion is painful but obvious: American higher education faces an existential crisis. Boards, administrators and faculty must wake up to the new realities that they face. For trustees, it may be too late to use an incremental band-aid. If the wounds are too deep, boards have a fiduciary obligation to plot a new strategy in an era of rising deficits to modify what the college offers, locate new revenue, seek new partnerships and affiliations, and merge or close. The goal must not be to postpone planning until the institution’s value is reduced to a real estate sale.”

Managing Principal and President, Brian Mitchell published an article in Forbes on better governance in higher education. You can also view the article on Forbes here.

Higher education is the repository of America’s intellectual capital, an engine for its workforce development and a big business. In 2023, it employed over 2.9 million people., according to IBISWorld. 19.4 million students attended colleges and universities in 2020, down about 10% from its peak of 21.6 million in fall 2010. How its leadership handles the scale and size of higher education could have an enormous impact on the American economy and the ability of the American economy to adapt strategically to the demands of the second quarter of the 21st century.

Higher Education’s Governance Model
Governance is critical in higher education because few understand how it works. Colleges and universities are not corporations when measured by how they govern. Among numerous stakeholders, there are three time-honored participants—the board of trustees, the faculty and the senior administration. There is a natural tension among these groups that is meant to ensure a kind of checks-and-balances system to produce thoughtful outcomes. If an imbalance occurs, the institution suffers, especially during times when critical inflection points determine their direction—both locally and across higher education. I believe America has arrived at one of these inflection points, fueled by the Great Recession, Covid-19, persistent inflation and an upcoming demographic cliff as enrollments decline.

In our book, How to Run a College, Dr. Joseph King and I argue that in a system of shared governance, the board has three basic obligations. The first is to steward the policy of the college. The second is to pass a budget. And the third is to hire, support, nurture, retain and when necessary, fire and replace the president. Fairness and due process must always override naked political will. The board is often the most inclined among the three groups to overreach, mistakenly confusing its overarching stewardship responsibility for day-to-day management across the campus. The weakest boards often nominate committees that either try to fill new board seats by duplicating themselves or by overbalancing membership based on a set of shifting priorities. They are often also too large and cumbersome to be effective. The result can be debilitating, with the most deleterious effect on the role that they have to approve long-term strategy and direction.

The faculty contribute as “keepers of the flame” and, ideally, focus on the academic program and related issues, including occasionally offering their perspective on student life. There is always a pull-and-push going on with the administration and trustees who want them under the academic tent but typically not moving beyond their historic responsibilities and duties. Faculty often do not trust board members whom they consider too business-oriented and male-dominated or deeply rooted in past affiliations like athletics and Greek life. Further, faculty are keenly aware that trustees approve salaries and benefits.

The administration manages the campus, serves as the liaison between other stakeholders and the board, and maintains the public face and outreach beyond the campus gates. As Dr. King and I note in our most recent book, Leadership Matters, there are three types of presidents: presiders, change agents and strategic visionaries. Any of them can fit the “moment” when selected depending upon the needs of the institution. In my opinion, successful administrations work well only if the search produces candidates with good management skills who represent what the college needs rather than aspiring to what the campus community might want. Once selected, the administration must establish a basis of consensus, heightened levels of transparency, and arms-length distance from faculty, trustees and key stakeholders. Presidents share two risks. The first is to assume that they are cardinals among bishops, becoming more authoritarian over time. The second is to survive politically by allowing either trustees or faculty to overwhelm them.

Reviewing And Improving Governance Practices
The end game in good governance is strategy. If the trustees, faculty and administration can find common ground, a good strategic plan can provide a blueprint for growth and sustainability in a market now as competitive as any industry. With the looming crises facing higher education, governance practices are often unprepared and unexamined centers of cultural inertia.

Good governance is the foundation upon which a lasting strategic blueprint should rest. Colleges and universities are both academic centers and economic engines. Each institution should balance both features to find a solution to what they face. Yet American higher education has a long distinguished history to guide it upon which college leadership can draw. To do so, they should begin with a review of whether their governance practices serve them well.

To begin, those involved in shared governance must commit to a reasonably and regularly reviewed assessment plan, transparency and tactics tailored to build momentum for the institution’s strategic plan. l It is fundamental to ask both the right and the hard questions with a commitment to act on outcomes, however surprising or disheartening some aspects of these findings might be. Good institutions adopt best practices they develop from a working knowledge of their peers. Any commitment should start based on direction from the board chair, with the support of faculty leadership and the president. Institutional leadership should recognize at the outset that this is not a rationing exercise or an expense audit but an effort to become more responsive, creative and efficient.

In my experience, the only way to determine if an institution’s governance practices are effective is to challenge their rationale, the size and scope of governing bodies and the premise upon which they were built. In the end, it’s about whether the process that shapes decision-making works, and there is wide variation among institutions. Effective governance in a highly competitive higher education environment is one of the best ways to compete and be true to tradition, mission and strategy. Absent good governance practices that are regularly reviewed and driven down across all levels of the campus, colleges and universities may simmer in a kind of cultural inertia that can dramatically diminish their ability to compete. This could have negative effects on America and its intellectual capital.

One definition of a college president is that he or she lives in a big house and carries a tin cup to search for money. A more accurate analysis might be that a president has a corporate title working as a 19th century political boss trying to manage a medieval craft guild.

A senior official at a large foundation asked me recently why college and university presidents fail to exert their influence as opinion makers in American society. It is a good question and an important one. Why do higher education leaders govern but seldom lead?

One definition of a president is that they live in a big house and carry a tin cup to search for money. A more accurate analysis might be that presidents have a corporate title working as a 19th century political boss trying to manage a medieval craft guild.

And therein lies the problem — the job has evolved but the national imperative for presidents to lead as well as govern remains constant. And presidents — who preside over universities that are America’s incubators of ideas — are ideally positioned to make a significant contribution.

There are obstacles. Higher education leadership trains for the technical and is spotty, episodic, and inconsistent. There is no farm league from which to pull promising candidates into the majors. New presidents are drawn from an increasingly wide field of applicants, and there is little evidence of trustee initiated succession planning. The system under which American higher education operates — shared governance — values process and consensus over outcomes.

Presidents live in a highly charged political environment in which passion flares even when the issues are small. One humorous story told about a major research university is that that although there was no decision on the issue the faculty were still pleased because they were certain that they had won the debate. Further, presidents report to trustees, faculty, parents, staff, alumni, students and donors — each with a different perspective and agenda.

Twenty-four hour print, electronic and social media make transparency a full-time job, even when dealing with the most sensitive issues that often require discretion and confidentiality. Full transparency is exhausting and seldom sufficient. In short, it is easier — and safer — to govern.

person looking through binoculars between two stacks of books

American higher education is facing an extraordinarily difficult academic year as the economic crisis sparked by the global pandemic calls into question how colleges and universities operate. The pressure will put many residential liberal arts college in deep distress from which a significant number will not recover.

Facing an existential crisis, governing boards of trustees should ask whether they have the right leadership to weather these challenges. Does their current leadership have the right mix of strategy, operational knowledge, and financial expertise to shepherd the college or university through this crisis?

If the answer is no (or their president has recently resigned or retired), they should be taking immediate action to secure the leadership that can save them.

Time, tradition, precedent not on colleges’ side

Higher education must quickly adapt to the remarkably different environment caused by the pandemic. One immediate change must be in how they handle the elongated presidential search process. Who and how they choose may be the most important decisions that boards can make in the near future. Time, tradition, and precedent are no longer on their side.

The tradition-driven, consensus-building presidential search process — usually undertaken over 12 to 15 months and involving in-person stakeholder consultation and interviews — no longer serves colleges and universities that cry out for new vision and strategy to adapt and survive as their financial and enrollment needs collapse around them.

***

This article a synopsis of “The Responsibility of Choosing a College President in Times of Crisis,” written by Brian C. Mitchell and published in the July-August 2020 issue of Trusteeship, the magazine of the Association of Governing Boards of Universities and Colleges. The article is available to subscribers on the AGB website. If you would like a copy, please email your request to Brian. 

LinkedIn, Brian C. Mitchell

 

American higher education is facing an extraordinarily difficult academic year as the economic crisis sparked by the global pandemic calls into question how colleges and universities operate. The pressure will put many residential liberal arts college in deep distress from which a significant number will not recover.

Facing an existential crisis, governing boards of trustees should ask whether they have the right leadership to weather these challenges. Does their current leadership have the right mix of strategy, operational knowledge, and financial expertise to shepherd the college or university through this crisis?

If the answer is no (or their president has recently resigned or retired), they should be taking immediate action to secure the leadership that can save them.

Time, tradition, precedent not on colleges’ side

Higher education must quickly adapt to the remarkably different environment caused by the pandemic. One immediate change must be in how they handle the elongated presidential search process. Who and how they choose may be the most important decisions that boards can make in the near future. Time, tradition, and precedent are no longer on their side.

The tradition-driven, consensus-building presidential search process — usually undertaken over 12 to 15 months and involving in-person stakeholder consultation and interviews — no longer serves colleges and universities that cry out for new vision and strategy to adapt and survive as their financial and enrollment needs collapse around them.

This article is a synopsis of “The Responsibility of Choosing a College President in Times of Crisis,” written by Brian C. Mitchell and published in the July-August 2020 issue of Trusteeship, the magazine of the Association of Governing Boards of Universities and Colleges. The article is available to subscribers on the AGB website. If you’d like a copy, please send me a LinkedIn message or email. 

Inside Higher Ed, Brian C. Mitchell and Richard K. Gaumer

Colleges must immediately develop flexible financial planning that accounts for what happens in the spring and what might occur in the fall, write Brian C. Mitchell and Richard K. Gaumer.

 

As the pandemic deepens, higher education has been fairly uniform in its response. Most colleges and universities have closed. Where they can, many of those institutions have pledged to convert to an online platform to complete the semester’s remaining coursework.

The solutions adopted make good sense to most observers. But clearly no one, including America’s college leadership, prepared fully for what the country is likely to face. In the stimulus package, higher education leaders requested $50 billion in federal relief but will receive only $14 billion, far short of the support needed. Many of them will confront a severe cash-flow crunch that may cause some colleges to collapse. With most students gone, now is the time to look at the damage done, plan for what to do and anticipate ways in which the crisis can be managed effectively.

First, the coronavirus pandemic has laid bare the fragility of the tuition-driven revenue model at most institutions. Many higher education leaders have pledged to prorate the second semester’s room and board fees for their students. In Boston, for example, local colleges and universities might refund up to $670 million in unused room and board. There are, of course, numerous ways to do so.

But brick-and-mortar institutions are highly labor and land intensive. At some point, the bills must be paid. Using room and board credits applied to the fall semester, insurance triggers that prompt reimbursements and refunds from food service contracts, as well as shifting money from other accounts or the unrestricted portion of the endowment, may work for many of them. But the effects on the overall financial picture will be serious and even dire.

Colleges must immediately develop flexible financial planning that accounts for what happens in the spring and what might occur in the fall. If the fall semester is delayed or canceled, the implication will move beyond the immediate financial bottom line to a question of institutional sustainability. Should students no longer fill available seats over the next six to 12 months, mergers, sales, closures and acquisitions will increase as part of a general shakeout across American higher education.

One internal political solution is to look at where efficiencies and economies of scale can be created that do not diminish the rationing pie jealously guarded by campuses invested in the status quo. There may be ways to adjust the bottom line. One example is, for instance, to determine whether prescription drug benefits might be lowered for self-insured colleges and universities and those that participate in larger self-insurance pools. The savings produced, which can start almost immediately, will cover some of the unanticipated shortfalls and provide discretionary money to undertake needed short-term steps, like online programming.

To put a Band-Aid on the immediate crisis, many institutions have pledged to convert to an online platform to finish this semester’s instruction. Shifting to online programming presents obstacles. First, many colleges do not support a robust platform that can be adapted to scale. Second, there are unspecified additional costs in training, technology upgrades, facilities, needed bandwidth and faculty and support personnel. Third, not all faculty may be willing to participate in online programming. Additional numbers of them are untrained. And will this cobbled-together online format produce a high-quality education for students?

For many institutions, it may be far better to work out a blended arrangement with groups like Coursera for Campus, which enable any college or university to offer existing courses and certificates to their students. Coursera recently announced that they are making Coursera for Campus available at no charge through July 31 to any college or university impacted by the coronavirus. Other providers, like Podium Education and the Foundry College, might also provide some adaptable assistance. In the post-coronavirus world, one outcome for colleges to consider is whether closer relationships with ed-tech providers might actually reinvigorate their existing curriculum while simultaneously preserving it. This approach ties the strength of traditional pedagogy to the needs of the 21st-century workforce.

This is also an opportunity for colleges to evaluate and improve campus services. Students and their families need assurance that critical services affected by the coronavirus will be provided. All services must be seamless, readily available and meet the needs that are challenged by the virus. TimelyMD, a telehealth company focused on transforming health care in higher education, is a good example of how colleges can improve existing campus services during the coronavirus crisis. It provides 24-hour access to telemedicine and counseling services that can support initiatives like social (physical) distancing. Additionally, counseling services delivered via telehealth improve access to mental health support for students facing increased anxiety and stress. These types of services enable colleges to have a clear value proposition for students returning to their campuses. Students might otherwise consider transferring closer to home or completing their education online.

And that’s the point for colleges and universities in the midst of an unprecedented disruption. This can either be a time to hunker down and fix the finances — at least temporarily, with financial parlor tricks — or an opportunity to understand how it can be used to plan for a sustainable future. If the disruption is an opportunity to become more adaptable, we may find a silver lining amid the panic and chaos of the moment.

Boston Globe Magazine, Brian C. Mitchell and W. Joseph King

Boston’s economy has thrived because of ‘eds and meds’ — education and health care. But that status is under threat.

 

High school students will soon be sending in their acceptance deposits to the nation’s colleges and universities. Many of the best and brightest from around the world will do so for Boston-area schools, whose excellence and variety make Boston a global magnet for students. Boston’s preeminence in “eds and meds” has made it one of the world’s most significant economic engines, despite its small population and compact size. Its ability to adapt to a changing global economy mirrors its greatest strength: the capacity to sustain and nurture a creative class. But cities from Atlanta to Pittsburgh to San Francisco are knocking at Boston’s door. To remain robust contributors of intellectual capital to the regional economy, Boston’s higher ed institutions need real adaptation and innovation. Here are some critical steps that local college and university officials must take now.

 

Collaborate more. Boston’s higher education institutions, public and private, have been powerful engines for the regional economy, despite being competitors. While Harvard University and the Massachusetts Institute of Technology are arguably the pistons of this engine, they cannot by themselves provide enough of a draw to bring Amazon and other heavyweights here. The city needs more efforts like the Colleges of the Fenway consortium (Emmanuel College, Massachusetts College of Art and Design, Massachusetts College of Pharmacy and Health Sciences, Simmons College, Wentworth Institute of Technology, and Wheelock College), whose schools work together on new ideas and programs, and create economic efficiencies to contain costs (and tuition increases). Area universities should also work toward sharing career services. Collaboration will make them a more formidable force in shaping public policy and economic development.

 

Combine to prosper. Most American colleges and universities operate with an unsustainable financial model. Boston’s institutions of higher education are not immune to these problems, as we’ve seen with the University of Massachusetts Boston’s struggle to control costs and address rising deficits. Cash-strapped colleges may have to reduce offerings, which can lower their value to consumers, i.e., students, who may lose confidence in them. Mergers, such as that between Wheelock College and Boston University, can strengthen both schools, increasing the value of a degree at each.

 

Manage themselves more effectively. Colleges in general are run more like mom and pop shops than sophisticated purveyors of valuable knowledge workers. Boards of trustees are often insular and bloated, and will likely be ineffective at facing broad questions about responsible budgeting and stewardship facing today’s colleges, plus new consumer, state, and federal oversight demands. Faculty must play a much more significant role in governance to foster innovation in teaching and research across their campuses. Suffolk University’s recent debacle over leadership illustrates what can happen when governance fails.

 

Find new assets. Colleges must reduce their reliance on tuition and government research grants and subsidies. They must look for ways to use their existing assets, such as real estate, more efficiently. Can they forge cooperative partnerships with business and industry to yield new kinds of revenue? In cities such as Boston, can they create economies of scale with one another when retrofitting or designing expensive new facilities, while working with the city to improve the quality of civic life?

 

Remember the liberal arts. Many schools now tout job placement rates for graduates. But universities cannot respond to economic pressures by converting to trade schools. There’s a real value to trade schools, but we need broad, high-quality liberal arts schools more than ever. The liberal arts are neither liberal nor narrowly about the arts. They produce graduates who can write, speak, apply quantitative methods, use technology, and work in a collaborative setting. These are precisely the skills of the next generation’s workforce. Even engineers — perhaps especially engineers — need nontechnical skills. Rather than apologize, colleges should double down on the liberal arts.

 

Expand their student base. Most higher education institutions use enrollment models built for an entirely different demographic. Growing numbers of college students are older than and have different life situations than the traditional 18- to 22-year-old applicant pool. Schools such as Lesley University, Bentley University, and Merrimack College have responded to today’s changing workforce by expanding the breadth and scope of their programming, while still staying true to their history and mission. Today’s schools must also devise financial aid models to get the right support to the most deserving students, adapt student life to accommodate a wider range of interests, and bolster their career counseling networks — perhaps, as mentioned above, across school boundaries.

An era of relatively easy times for colleges and universities is ending. If Boston’s higher educational leadership reacts only incrementally, the city could lose its powerhouse position in the global economy. It’s time to protect the intellectual capital that built Boston. It starts by leveraging the historic strength of Harvard, MIT, and the region’s other research universities to create a coherent, fully integrated economic development policy across higher education. Boston’s future as an incubator of the creative class depends on it.

 

Brian C. Mitchell is a principal in Academic Innovators and past president of Bucknell University and Washington & Jefferson College. W. Joseph King is the president of Lyon College in Batesville, Arkansas. Their new book is “How to Run a College: A Practical Guide for Trustees, Faculty, Administrators, and Policymakers.” Send comments to magazine@globe.com. Follow us on Twitter @BostonGlobeMag.

 

The Hechinger Report, Brian C. Mitchell

Trimming costs or enrolling more students can’t cure what higher education faces — but these other steps might.

 

Painting a grim picture for American higher education, Moody’s Investors Service recently changed the industry’s outlook from “stable” to “negative.”

This return to negative ratings reinforces a number of trends that bear close review.

The facts are clear and inescapable. The comprehensive fee – tuition, fees, room and board – will approach $70,000 a year at a number of high sticker priced colleges and universities.

Students and their families are voting with their feet, with 46 percent of first-time students beginning or having had some experience in community colleges.

Politicians sensitive to anecdote, polling or simply worried about the price of a higher education degree, promote policies that reinforce this optic. Recent efforts to tax wealthy endowments to skew higher education spending priorities, often towards demands for moderated tuition or increased financial aid, illustrate this point further.

Higher education has taken some steps. Efforts have been underway to trim rising costs and achieve basic efficiencies since the Great Recession. These efforts vary widely depending upon the urgency felt within an institution, its level of creativity and nimbleness, shifting demographics, and the relative strength of the net tuition revenue it receives. Trimming costs or enrolling more students, however, cannot cure what higher education faces. America’s colleges and universities have a revenue problem.

Fixed costs in land, labor, and debt repayment and rising costs in health care and financial aid largely determine a college’s operating budget. Labor alone might be sixty percent of a typical small college’s budget. Most colleges are heavily tuition dependent. There is little or no discretion in the operating budget. For some of them the financial aid discount rate now approaches seventy percent. Dorms will be full until the institution, desperate for revenue, closes, merges or is acquired.

Many of these colleges rely on other sources of support. Auxiliary revenue sources like residence and dining hall fees cover some of the territory lost to declining tuition revenue. Endowment income also helps but most colleges do not have sufficient endowment revenue to make a significant difference. Comprehensive campaigns and research grants and contracts address longer-term needs but do little to fund short-term revenue problems.

The truth is that colleges rely on an older, archaic operating model where tuition increases historically matched expenses to balance an annual budget, often aided by auxiliary services revenue. For many schools, it was that simple. As new financial, cultural, demographic, consumer, and program pressures build, these “Mom and Pop” shops do not have the flexibility or capacity to meet the new demands.

What’s the path forward?

There are a number of changes that must be made immediately to offset this growing crisis:

  • College governance is weak and ineffective and must be immediately adapted to meet new oversight demands, with the faculty playing a more important role in creating an innovative educational enterprise.
  • Colleges must understand the institution’s value proposition, if the mission is still relevant and differentiated from its peers, and where the college wishes to be in out years. Why should the college exist in the 21st century?
  • The “Mom and Pop” operations must give way to a newer, more flexible model that accounts for changes in how colleges use tuition, re-imagine underutilized real estate assets, re-configure capital campaigns to meet shorter-term needs, re-think the use of temporarily-restricted funds, and seek additional partners to produce new revenue streams.
  • Higher education institutions must set aside older enrollment strategies in favor of newer financial aid analytical models that differentiate academic programs, emphasize student life, expand when practical the traditional 18-22 year old applicant pool, and focus on outcomes through stronger career counseling networks that create a lifelong affiliation.
  • Stakeholders must work much more aggressively at retention and graduation strategies, using student life, including athletics, as an enrollment tool to increase student fit and the level of satisfaction.
  • Colleges must determine what facilities footprint the institution can afford. Its leadership must grow/shrink the college to create a better fit among people, programs and facilities.
  • Institutions must get out of those business arrangements that are eating up financial capacity for which there are better service providers. If the college can use its legal, accounting and student life teams to create a robust residential life program, for example, does it really need to own its housing, with its corresponding debt, that might otherwise go to academic support?
  • The campus community must think of technology as an ongoing operating lease rather than a draw against remaining levels of debt capacity.
  • Its supporters must remember that a college is both an educational enterprise and an economic engine for its region, and seek strong public private partnerships to mutual benefit.

Despite the dismal forecasts, the decentralized and complex higher education system remains a cornerstone of American ingenuity, creativity and promise. The task ahead is to imagine the possible.

This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our newsletter.

Brian C. Mitchell is a founder and principal of Academic Innovators and the past president of Bucknell University and Washington & Jefferson College. With W. Joseph King, he is the author of How to Run a College: A Practical Guide for Trustees, Faculty, Administrators and Policymakers (Baltimore: Johns Hopkins University Press, 2018).