The Question of Closure

Earlier this year, the State Higher Education Executive Officers Association (SHEEO) reported that roughly one university or college has announced it is closing per week. As anyone who has been involved knows, closing a college or university is a complex and sensitive process that requires a careful and empathetic strategy. AGB’s publication Higher Education Business Models Under Stress offers insights and guidance for governing boards facing financial challenges and, too often, the specter of shutting down. For board members and senior leaders wrestling with the question of closure, here are six practices adapted from the publication:

Confront Tough Questions.

Boards must confront tough questions regarding the institution’s ability to fulfill its mission, meet academic and fiscal obligations, and manage reputational and legal risks. This includes assessing whether students could find greater value elsewhere and whether the institution is a shadow of its former self. Options range from strategic partnerships or mergers all the way to closure. A group of higher education experts have laid out many of those board-level conversations in the report Collaborative Leadership for Higher Education Business Model Vitality.

Monitor Financial Health and Make Timely Disclosures.

Campus leaders and governing boards have the primary responsibility to track and manage indicators of fiscal sustainability and communicate them appropriately to major stakeholders. They also have a responsibility to make decisions in a timely manner. Waiting too long to decide about closure limits the institution’s ability to ease any transition for students, faculty, and other stakeholders.

Oversee Closure Processes.

If the board and president decide closure is the most acceptable outcome, they must consider the practical implications. Some considerations include (but are not limited to) developing a comprehensive closure plan, caring for students through teach-out plans and transfer agreements, supporting employees, maintaining campus security, negotiating a successor institution and records retention program, and organizing a communications plan.

Engage with Regulatory Bodies and Stakeholders.

Planning when to engage and seek guidance from regulatory bodies and related stakeholders is vital. Each entity, including accreditors, creditors, insurance providers, government regulators, and other oversight bodies, has a separate set of protocols that the institution should follow.

Seek Appropriate Transparency.

Governance during a closure involves balancing transparency, communication, institutional financial interests, fiduciary responsibilities, and preserving the integrity of the institution’s mission. This includes managing the release of information carefully to not derail any agreements while keeping key constituencies informed.

Embrace Core Values.

Perhaps most importantly, effective closure requires embracing values that include a functional commitment to protect the institutional mission. Additionally, empathy for those most affected is crucial. Consider how transparency, communications, and other decisions will affect students, faculty, staff, and others. Marylhurst University is a prime example of a board and leadership embracing core values. They made the heartbreaking decision to close with enough time to create meaningful plans to support students and did not shy away from their fiduciary duties. Read more about Marylhurst’s approach to closure in Higher Education Business Models Under Stress.

By following these best practices, institutions can navigate the challenging process of closing with grace, ensuring that the impact on students, faculty, staff, and the broader community is managed with care and respect.

AGB used AGB Board Bot^TM in the development of this blog post to help summarize recommendations from our extensive library of content.