University Business - February 2009 - (Page 33)

James Martin and James E. Samels from 610 to 1,030 during her eight years of leadership. She agrees that a turnaround must begin with mission and finances. On turning around the institution financially, Townsley is blunt about what was required: “The president and CFO must be totally up front with the board and all outside agencies that may be monitoring the institution’s progress, or lack thereof. Tell them, ‘This is what we are going to do,’ explain to them that it will take two years to accomplish, and then go out and do it, and remember always to design a highly conservative business plan that is realistic in the extreme. Then perform above that level.” Townsley cites three classic indicators as trigger points for a group of more serious problems: tuition discounting of more than 35 percent, tuition dependency of more than 85 percent, and debt service of more than 10 percent. This group includes the most common at-risk characteristics we studied over the past six to eight years; we found dozens of presidents and CFOs who were wrestling with these three issues in order, as Joseph Short, former president of the now-closed Bradford College (Mass.), described it, “to make the financials work.” Michael Townsley, author of the chapter on managing financial challenges in a turnaround, adds a comment that synthesizes the thoughts of a group of higher education leaders on presidential awareness and response during a crisis: “Most presidents of an at-risk college or university are all too aware of the deteriorating condition of their institution if it has a history of deficits, declining enrollment, costs rising faster than revenues, or ever-increasing levels of short-term debt to cover daily cash requirements. … These presidents have learned to cope with decline: whether they are successful at coping is another issue.” inFrastructure Clearly, after mission and money, the declining condition of the campus and the institution’s continuing inability to reverse almost all aspects of that decline form one of the most intractable problems within a turnaround. Considering the horizon of challenges from which to choose on a fragile campus, Dennis P. Jones, president of the National Center for Higher Education Management Systems and author of the 1986 study “Indicators of the Condition of Higher Education,” told the authors in an interview on the study’s 20th anniversary in 2006 that the two indicators of institutional vulnerability to which he pays most attention today are deferred maintenance and the technology budget. He put it simply: “Pay attention to buildings and technology.” E. K. Fretwell believes that campus leaders need to reduce their budgetary appetites and that many are failing in this regard: “Avoid getting into difficult situations by not purchasing the attractive ‘bells and whistles’ during new construction. … Hold back the appetite of your institution and don’t go further than is necessary. Don’t pay for ‘frills.’ ” Focusing on the area of technology, Kevin W. Sayers, assistant provost of Capital University (Ohio), and John F. Ryan, assistant provost of Ohio State University, co-authors of the chapter on the value of institutional research (IR) in a turnaround, comment on the dangers of underspending on technology while simultaneously trying to considered in any substantive way. As Sandra Elman, president of the Northwest Commission on Colleges and Universities, wrote, without a commonly understood vision across campus, “a weakened institution is likely to flounder and make arbitrary decisions that go unchallenged.” Placing mission first in a turnaround process focuses the leadership team on the institution’s core principles that should drive new program development, personnel hiring, and strategic marketing. Finances Daniel J. Levin, former vice president for publications at the Association of Governing Boards of Universities and Colleges, observes concerning the campus resource crunch, “The public policy debates in the nation’s capital should not preoccupy presidents of at-risk institutions. The real action is in their own backyards: fixing the school’s finances and establishing a solid relationship with an engaged board.” The chapters of this book collectively confirm that restoring financial stability and confidence, in concert with an authentic reconsideration of the institutional mission, is the most essential element in a higher education turnaround. Debra Townsley, president of Nichols College (Mass.) and one of the nation’s few college CEOs to lead an institution back from junk bond status to a rating of BBB–, has raised Nichols’s endowment from $5 million to $14 million and its student enrollments universitybusiness.com February 2009 | 33 http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - February 2009

University Business - February 2009
Contents
Editor's Note
College Index
Company Index
Advisory Board
Behind the News
Viewpoint
Sense of Place
Independent Outlook
Wireless Windfall
Share and Share Alike
Achieving the Turnaround
Internet Technology
What's New
End Note

University Business - February 2009