For Immediate Release
WASHINGTON, DC (October 5, 2021)—The Association of Governing Boards of Universities and Colleges (AGB), the premier organization advocating strategic board leadership in higher education, today published Higher Education Business Models Under Stress: Achieving Graceful Transitions in the Academy. The book details the necessary considerations that boards and senior leaders must make to ensure institutional financial health, and suggestions for evaluating what the authors call an “academic transition”—merger, affiliation, strategic partnership, or closure.
The publication lays out the myriad factors leading to a disruption in the traditional higher education space, including the impact of the COVID-19 pandemic, fluctuating demographic trends, the rise of educational alternatives, and other challenges. To address these issues, the authors argue that higher education leaders must respond with strategic agility, focusing on three primary objectives: student success, the financial well-being of the institution, and the education of stakeholders.
The book was written by experts Melody Rose, chancellor of the Nevada System of Higher Education, and Larry D. Large, a higher education consultant in Oregon. Both worked together to close Marylhurst University in 2018. Rose served as president and hired Large to provide outside perspective.
“The determination to go through an affiliation or other transition, including the difficult decision to close an institution’s doors, is one of the hardest decisions a board will ever make,” said Rose. “Some may think that considering these choices is admitting failure. That is farthest from the truth. I hope that exploring these ideas and sharing our experience at Marylhurst will give boards and senior leaders the courage and foresight to discuss their options and make the right decisions.”
The book dives into metrics and indicators that help college leaders monitor the health of their institutions—and encourages boards to hold conversations about partnership opportunities such as mergers, affiliations, or building consortia before financial exigency forecloses these options. When confronted with poorly trending metrics, and after exhausting these partnership opportunities, the final option boards need to consider is closure. Boards and campus leaders must avoid optimism bias and the kind of unforeseen, catastrophic closures that can inflict lasting damage on students, faculty, and higher education as a whole. The book leads readers through the stages of closure, beginning with planning and ending with the dissolution of the corporate entity.
Perhaps the most striking recommendation from Rose and Large is the suggested level of transparency and communication between leadership and other stakeholders. While governing boards have the ultimate authority for all institutional decisions, many different groups inside and outside the institution contribute to its success. Regularly communicating with faculty through the prism of shared governance about the institution’s health can result in much greater campus support for any controversial but necessary decisions. More broadly, while some data are confidential, many accreditors as well as state or federal regulators can request reports that could trigger unease or even panic. Institutional leaders must be able to explain the details of these reports, contextualize them, and ultimately educate stakeholders on their significance. Doing so also offers senior leaders the chance to communicate thoughtfully and candidly rather than via knee-jerk responses to unexpected inquiries.
The authors use their experience closing Marylhurst University as a case study for what closure can look like. The book includes detailed examples of communications, the board’s closure resolution, the teach-out plan, and other details. The final chapter outlines advice for leaders who want to understand the actions and attitudes necessary for an institution to close “with grace.”
Recent articles in the media highlighted new data from the U.S. Department of Education’s Integrated Postsecondary Education Data System (IPEDS) that show a decline in the number of colleges and universities eligible to award federal financial aid—a proxy for determining the number of higher education institutions in the country. The data demonstrate that these academic transitions were growing in prevalence for several years prior to 2020, and that the COVID-19 pandemic exacerbated the sector’s challenges. AGB Consulting offers support in multiple practice areas to assist members with mergers and affiliations as well as other forms of strategic transformation.
“Many board members and chief executives recognize the disruption facing their institutions,” said Henry Stoever, AGB president and CEO. “AGB is focused on empowering board members to serve as strategic thought partners for campus leaders who need to be discussing challenging topics from multiple perspectives, including options to acquire, merge, affiliate, or close.”
A complimentary e-book version of Higher Education Business Models Under Stress is available for AGB members on the website. A hard copy is also available for purchase with a membership discount.
The Association of Governing Boards of Universities and Colleges (AGB) is the premier membership organization that strengthens higher education governing boards and the strategic roles they serve within their organizations. Through our vast library of resources, educational events, and consulting services, and with 100 years of experience, we empower 40,000 AGB members from more than 2,000 institutions and foundations to navigate complex issues, implement leading practices, streamline operations, and govern with confidence. AGB is the trusted resource for board members, chief executives, and key administrators on higher education governance and leadership.