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Talking turnarounds

Transforming tuition dependent faith-inspired colleges into sustainable institutions of higher learning
University Business, March 2016

In the movie The Perfect Storm, a group of intrepid fisherman found themselves in the midst of a colossal and historic storm—a true worst case scenario. Deluged by the overpowering surf, the ship goes down with all hands on deck.

Scores of small, faith-inspired tuition dependent colleges are now sensing the turbulent waves under their hulls. Buffeted by the troubled waters of government regulation, rising tuition dependency, incremental tuition discounting, craven competition, and declining gifts, grants and philanthropy, these schools must make major mid-course corrections to stay afloat.

This got us to thinking about those schools that were able to right the ship and plot a successful course for future fiscal sustainability. In fact, we wrote a book published by Johns Hopkins University Press about these ingenuous success stories in 2009 entitled Turnaround: Leading Stressed Colleges and Universities to Excellence.

As we travel across the nation, we counsel colleges and universities to be on the lookout for certain fragility metrics that act like canaries in the coal mine, including:

  • annual tuition hikes higher than the competition
  • climbing student default rate
  • declining gifts and grants
  • escalating tuition discount rate
  • falling retention rates
  • high tuition dependency
  • increased debt service
  • lopsided endowment and operating budget ratio
  • low career placement and gainful employment figures
  • lower conversion yield rates
  • overwhelming student and family debt burden
  • short-term liquidity problems
  • spiraling insurance benefit costs.

Today, a new breed of small, entrepreneurial faith-inspired colleges are trough planning; conducting exit polling; collecting student satisfaction surveys; new program preference polling; and analyzing big enrollment, demographic, and workforce data. These schools anticipate the winds of change so they can recalibrate and make intentional adjustments in market positioning. These innovative religious colleges are reallocating resources to optimize available assets—while curtailing under-enrolled courses and programs. By carefully analyzing program outcomes and performance metrics, these colleges are in an intelligent position to effectuate economies of scale, efficiencies in operation, and avoid duplication of program and staff effort. These entrepreneurial schools typically add value to their higher learning product lines like double majors, accelerated credentialing, and rotating semesters overseas serve as a central cog in the next generation of global learning experiences. These schools have learned that it is best to plan for worst case scenarios, yet pray for sustainable solutions.

At Bryn Athyn College near Philadelphia, we learned of a turnaround story that should give hope to other small, faith-inspired colleges. In 2007 Bryn Athyn launched an aggressive $61MM plan to grow through significant infrastructure improvements and to reach beyond its traditional enrollment base of church-affiliated students. After the market collapse of 2008, Bryn Athyn found itself facing very significant and unsustainable budget deficits. The college knew it must act decisively. By overhauling their financial and business model in the face of new realities, Bryn Athyn avoided the cliff, and indeed, began to gain ground with just in time solutions for achieving long-term economic sustainability.

We learned more from Bryn Athyn’s chief Aacademic officer, Allen Bedford, about the college’s proactive strategy which included academic master planning; degree elevation; market repositioning; increased retention, persistence, and graduation rates; growing enrollment, increased program revenues while maintaining low student debt burden, cost control, renewed push for fundraising, generation of new revenue streams, and a reduction in endowment dependency.

The college cut its structural operating deficit by 75 percent in four years which breathed new life into the institution’s future plans. Counter intuitive though it may seem, Bryn Athyn introduced collegial athletics, which became a powerful recruiting tool, and importantly, added new, high demand academic programs. Between 2009 and 2014, enrollment at the school grew by over 70% as the college lowered its instructional cost per student while its net tuition per student rose sharply. Toward this end, the new administration was single minded and diligent in monitoring dashboard performance indicators and making key fiscal and academic resource decisions on a timely and data driven basis.

As we look in the rearview mirror at these small, entrepreneurial religious colleges we are reminded of Mark Twain’s musing: “the reports of my death have been greatly exaggerated”. Yet, time is still of the essence for these fragile institutions of higher learning—so the time for talk is done and the time for action is now.

—James Martin and James E. Samels, Future Shock columnists, are authors of The Provost's Handbook: The Role of the Chief Academic Officer (Johns Hopkins University Press, 2015). Martin is a professor of English at Mount Ida College (Mass.) and Samels is president and CEO of The Education Alliance.

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