The Days After

It’s a disheartening but undeniable fact that for many colleges and universities, the proverbial chickens are coming home to roost. Facing unsustainable financial turmoil, institution after institution is closing its doors. We saw the latest instances of this trend a few weeks ago in Pennsylvania when both University of the Arts and Pittsburgh Technical College suddenly announced they were shuttering.

In April, journalist Jon Marcus highlighted in the Hechinger Report that colleges are closing at a rate of one a week. A closure, and especially a sudden closure, can be devastating to the very constituents higher education is meant to serve: students, faculty, staff, community members, alumni, and so on. Last year, the State Higher Education Executive Officers Association (SHEEO) found that students of institutions that close are less likely to reenroll in college. Faculty and staff face the shocking uncertainty that comes with a job loss. And more broadly, there are ripple effects that affect the local and state economies, not just immediately but for years to come.

While closure always will be painful, particularly for an institution with a long and distinguished history, it doesn’t have to be a gut punch. Boards and presidents have a fiduciary responsibility to hold themselves accountable for the decision to close a campus as well as the way in which they steward that closure. Serving on a governing board is not simply about donating money or showing up at sports games and commencement. Board service is a difficult, and immensely rewarding, volunteer opportunity that demands a deep and abiding love for the institution and those it serves. Sometimes that means loving the institution and its mission enough to admit that closure is the best of the worst options. Ignoring that reality to avoid the consequences of poor board leadership is understandable, but also a betrayal.

Experts say that forecasting an institution’s fiscal health is harder than it might seem. Boards and senior administrators look at everything from revenue statements to enrollment trends, labor costs, and more, with each revealing a slightly different story. Institutional leaders also must anticipate unforeseen circumstances—such as the COVID-19 pandemic and the impact of the Free Application for Federal Student Aid (FAFSA) fiasco.

Yes, determining a college’s future is hard, but ultimately the buck stops with the board and chief executive. They must embody their institution’s core values and the values of higher education. The board members’ fiduciary duties obligate them to support the college’s mission and those it serves, including creating space for the institution to develop closure plans, create teach-out agreements, and communicate effectively with those who will be most impacted. Ego (“I can’t let the institution close under my watch!”) and hope (“We’ll turn the ship around somehow!”) do not a strategy make. Instead, higher education’s responsibility to the public good demands that boards be courageous, thoughtful, and empathetic.

Anxious leaders will argue that sharing budgetary concerns publicly will hasten a closure via a “death spiral” where bad news discourages philanthropic investment, grant funding, enrollment, or some other potential lifeline to the institution. Although there is such a thing as bad publicity, that is not an excuse to allow the fiscal situation to deteriorate so profoundly that the institution must close without warning. Determining what level of transparency can be reached is a balancing act, but so is all of board service. Navigating constituent interests is one of leadership’s most important jobs, and boards do not get a pass in this instance.

We at the Association of Governing Boards of Universities and Colleges have repeatedly challenged college boards and senior administrators to have the right conversations about the future when the institution still has the flexibility to plan for sustainability or closure. Last year, we joined forces with several other organizations with business model expertise to provide a framework to have those high-level, crucial conversations before institutions reach a point of no return. Any closure will be painful, but when leadership puts empathy at the forefront of its decision-making, has the right conversations before making key decisions, and considers the timing of any actions to ensure students, faculty, and staff are supported in the transition to follow, the board and senior leadership will have fulfilled their fiduciary duties well.

When institutions make the hard choice early, they have a better chance of allowing their mission to live on in another form. Sometimes that means merging with a more sustainable college. Sometimes it’s in the form of an alumni association proudly carrying on the traditions and goals of its alma mater throughout the world. In contrast, a sudden closure will wash goodwill away and will further blacken higher education’s struggling reputation with a skeptical public.

Unfortunately, another institution will close soon enough. More students will turn away from higher education. More communities will lose a source of economic and cultural benefit. But boards have the power and obligation to ensure their institutions’ missions live on, not only on the last day, but in the days after.

Mary Papazian is the executive vice president of AGB.

Morgan Alexander is the director of strategic communications and public policy at AGB.