Moody's Is Right, and Wrong About Higher Education

Ann McClure's picture
Friday, February 15, 2013

This January, Moody's Investors Service issued a negative outlook for the nation's colleges and universities for the fifth straight year. The credit reporting agency's perennial gloomy forecast underscores the challenge academic leaders face daily: preserving excellence while a still-limping economy exerts downward pressure on revenues from virtually every source.

But this year, the agency's report was bleaker than ever, amended to include the country's elite, best-financed institutions. To preserve current programming and ensure funding for future initiatives, Moody's urged "bolder actions" on the part of campus leaders from all sectors to take on what it identified as "the entrenched cost drivers" of the sector's business model: shared governance, classroom instruction, tenure, and student life services.

Indeed, these volatile times require vision and courage to make the high-stakes decisions that will shape college campuses for generations to come. But I would argue that Moody's prescription for reform is counter productive. The real test for educational leaders is how to solicit diverse opinions in our decision-making as we assess the benefit of bedrock services to provide an excellent educational experience for our students. The entrenched cost drivers Moody's cites are, in fact, fundamental to our principles and our enduring value as institutions.

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