University Business - October 2006 - (Page 25)

FUTURE SHOCK Shaky Ground in Troubled Times It's a perplexing paradigm that of fragile American colleges and universities. By James Martin and James E. Samels I A GENTLER MERGER MANIA T'S THE SUMMER OF 1987, AND When we predicted the higher ed merger the scene is the venerable Tam Bar mania of the `80s and `90s, we were and Restaurant on Beacon Street in wrong well, perhaps not totally wrong. Brookline, Mass. In walk Drs. Martin and For sure we had the American college Samels for an evening of banter, ideation, merger model figured out. But we had not and reinvention of higher education. anticipated in our earlier writings which First thing, Martin brings in a Chron- included our November 1989 article in icle snippet announcing another small, The Chronicle of Higher Education titled single-sex-affiliated, tuition-dependent College Mergers Have Become Creative yada, yada, yada institution has bitten Effective Means of Achieving Excellence, the dust. So we think to ourselves, there's and our book Merging Colleges For Mutual something going on here not yet pal- Growth Johns Hopkins University Press, pable, but discernable in subtle ways. Sure Students and parents 1994 that college mergers could occur enough, since that fateful night at the through far less intrusive means: soft, Tam, scores of small private colleges have wonder if their school gentle takeovers vertically integrating and met their untimely economic demise. of choice might sometimes distinguishing diverse campus Fast-forward to today. Just about any- meet its end before cultures, programs, and market shares. body who knows anything about higher Over time, we learned that, through ed knows that over the past 20 years commencement day. strategic alliances i.e., affiliations, out- private higher education has averaged sourcing, co-developing, co-branding, and nearly 6 percent annual tuition increases. names that's maintained by Ray Brown co-programming , institutions could effec- Meanwhile, our economy seems to have www.wcmo.edu/wc_users/homepages tuate economies of scale, efficiencies in op- reached a 3 percent plateau. Clearly, the /staff , director of institutional research at eration, and non-duplication of program differential grows significantly as tuition Westminster College Mo. . Over the past effort. Thus, the contemporary notion that pricing outstrips inflation and for-profit 20 years, more than 200 colleges and uni- remaining institutions would not so much competition infringes with value-added versities have closed or merged. play out the scenario of the meek shall in- career connections to the workforce. A correlation analysis of these closures herit the earth, but rather transform into For its part, the middle class is being and consolidations indicates a median collaborators through mission-comple- squeezed out of private choice and into frequency profile that looks like a small, mentary partnerships. the public system. Indeed, of the nation's single-sex, religiously affiliated, tuition-de- approximately 4,000 institutions, there pendent, modest-endowment-ratio, heavy- FISCALLY FRAGILE are close to 1,200 technical, community, depreciation, high-default, poor-retention, Now, you ask, how does one determine and county colleges. In 2007 Americans low-conversion-yield, junior or liberal arts whether an institution is fragile from will increasingly flock to state and com- college having underleveraged, nonper- munity colleges in big numbers, as small, forming assets. These challenges create a private liberal arts colleges discontinue, cloud of deferred maintenance that detracts James Martin is a professor at Mount Ida Col- merge, or consolidate. from curb appeal and that turns off pro- lege Mass. . James E. Samels is president and For those who doubt the existence of a spective and current students and parents CEO of The Education Alliance. Their book merger and consolidation megatrend, take who are left wondering if their institution is Presidential Transition in Higher Educa- a look at the list of colleges and universi- of choice might meet its end before their tion: Managing Leadership Change Johns ties that have closed, merged, or changed appointed commencement day. Hopkins University Press, 2004 . www.universitybusiness.com October 2006 | 25 FuShck.indd 25 9/21/06 9:38:02 AM http://www.wcmo.edu/wc_users/homepages/staff http://www.wcmo.edu/wc_users/homepages/staff http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - October 2006

Contents
College Index
Company Index
Advisory Board
Editor's Note
Behind the News
Marketing
Future Shock
Admissions
Viewpoint
Financial Aid
On the Hill
Beyond Baldrige
Made in America
Wiring the Dining Experience
Lighting The Way
Internet Technology
What's New
Calendar of Events
Direct Connect
End Note

University Business - October 2006