Why Ambiguity Causes College Leadership to Fail in Times of Crisis

Concept of Ambiguity and College Leadership

Michael Cohen and James March were the first to introduce the concept of ambiguity as a factor that confounds decision making in higher education. Decision-making is muddled because there is no single person who has final decision authority. Rather, decisions-making is diffused across numerous points due to a dual system of governance, boards of trustees who have no stake in their decisions, and presidents who avoid consequential decisions because they could imperil their careers their career.

The ambiguity of decision-making causes a high level of risk for financially fragile institutions. Quite simply, these institutions often lack the financial reserves to survive delays as strategic decisions meander through the decision system.

We need to take apart the concept of ambiguity in decision-making to get at its effect on decisions in higher education.

Exegesis: Concept of Ambiguity in Decision-Making

  • Decision Definition: is a statement to act at some time in the future, subject to the authority granted by corporation by-laws, the board of trustees, and the policies and procedures of the institution.
  • Traditional Structure of Decision-Making in a College
    • Positions authorized; in general, every position may make a decision subject to the by-laws, authority assigned to position, the scope of the work, and the set-of-levels in the organization or its clientele.
    • There are two decisions structures operating in most colleges –
  • Collegial structure that typically includes the faculty and researchers assigned to the faculty. Decisions in collegial structure usually require consensus of its members, and in most cases, it requires either unanimous consent or a significant majority.
  • Hierarchical structure where authority is distributed like a ladder with the scope of authority distributed from the lowest position with the scope of authority broadening as positions rise in the ladder.
  • In both the collegial and hierarchical structure, the scope of authority is customarily defined within narrow bounds that limits the range of decisions within both structures. In the case of a hierarchy, the scope of authority will also be limited by the type and number of subordinates and the relationship to a superior position.
  • Concept of Authority
  • This paper will only deal with the legal-rational aspects of authority and will not consider other forms such as charismatic or traditional (inherited by right of birth)
  • The paper uses Max Weber’s concept of legal-rational authority; i.e., authority is rules based through a legal set of policies and procedures.
    • Faculty Collegial Decision Authority; may have: decision authority over academic programs and operations without recourse by the president or the board of trustees; authority to recommend decisions directly to the board without input of the president; authority to recommend to president who has the authorization to pass the recommendation to the board, alter the recommendation to the board, or veto the recommendation.
  • Decision-Making Methods
    • Decision Action Options should clearly state: the action requested, the position to be charged with carrying out decision, the parties affected by the decisions, the costs and benefits of the requested decision, and the time line for implementation.
    • Choice Set includes the set of options concerning a particular decision.
    • Choice Analysis Conditions:
  • Deadline for Submission to Decision Authority
  • Description of the Issue
  • Data Describing the Issue
  • Cost/Benefit Analysis
  • Priority Rank of the particular issue compared to other issues that are being considered.
  • Decision Statement should clearly state the content of the decision, the date for implementation, who is responsible for carrying out the decision, others who are affected by the decision, and a method for evaluating the outcomes of the decision.
  • Ambiguities in Decision-Making; these are the factors which can confound decision-making:
    • Colleges and universities are hot beds for ambiguities in decision-making because they are a hybrid of an administrative hierarchy and a faculty governance system. Decisions that affect the productive center of the college involve collegial faculty governance and an administrative hierarchy. The problem for the administration is that they have a legal responsibility for long-term financial and operational stability of the institution, while the collegial faculty tend to work through governance issues in terms of their self-interests.
    • A complicating aspect of a hybrid hierarchical-collegial governance system is that before a decision can be proposed or implemented, the decision must be sanctioned by the next higher level and the next lower level below which is affected by the decision must concur.
    • The general condition of the college at the time that a decision is to be made. The general condition includes: financial, enrollment, general economic and political conditions, academic issues; accreditation, and law suits. In other words, any condition that muddies the decision-process and slows decision-making or renders a decision moot;
    • The number of competing interests in the college;
    • The leadership style of the president and the board of trustees;
    • The skills of chief administrators as they manage their areas.

Leaders and the Confounding Effect of Ambiguity in Decision-Making

  • General Definition of a Leader is someone who is has the capacity to: recognize the problem, see a solution, knows how to convince others within the organization of the existence of a problem and accept the solution to the problem, and is able to work with the needs of others so that they can direct their efforts to support a solution and gain the benefits of a solution.
  • Task-Oriented Leaders; least capable of producing an acceptable decision when the ambiguities of decision major crisis and people want to solve the problem to save their jobs.
  • Political-Oriented Leaders more capable of producing an acceptable decision when ambiguities of decision-making are operative; however, it may not be the decision that the college needs at the time.
  • Combination of the Task-Oriented and Political-Oriented Leader has the greatest chance of guiding an organization towards a goal that maintains resources to support its mission and to design programs to effectively deliver its mission.

Example of Failed Leadership When Ambiguities in Decision-Making Confounds a Leader An Example from a Recent Article in the Wall Street Journal[1]

This example discusses the leadership style of Elon Musk while he was head of Doge. Although his work was not in higher education, it did involve work in organizations where clear-cut decision hierarchies were not evident and where politics muddied and often distorted the decisions which he attempted to make.

“The qualities that made Mr. Musk a transformative force – his single-minded pursuit, his dismissal of conventional wisdom, his willingness to disrupt – become vulnerabilities when transplanted into political discourse.”

“What Mr. Musk encountered also reflects a broader societal shift. The technologist-politician- who believes solutions to human problems can be coded or engineered is an increasingly common type: Mark Zukerberg’s flirtation with politics, Bill Gates public-health initiatives, and Jeff Bezos’ influence in urban development all exemplify the appeal of applying technological problem-solving skills to societal challenges. Each also face backlash and controversy, underscoring the fundamental gap between the methodical logic of technology and the unpredictable passions of the electorate.”

“Politics require softer skills: empathy, strategic patience, and the ability to manage competing narratives.”

“Engineers [business] thrive by eliminating ambiguity. Politics thrive on it” An engineer’s worldview is insufficient to deal with partisanship, ideology and personal vindictiveness

  1. Clayburn, Joshua (June 6, 2025)“Musk is a Genius but He Isn’t a Political One”; Wall Street Journal; Musk Is a Genius, but He Isn’t a Political One – WSJ

Will 2026-27 Congressional Budget Push Your College into Financial Distress

As Congress negotiates the 2025 federal budget, the implications for higher education are far-reaching. From
student aid cuts to research slowdowns and shifting priorities around workforce development, the debate in
Washington is more than a fiscal exercise — it’s a realignment of values that will shape the future of colleges and
universities across the country. This post breaks down the key proposals, what’s at stake, and how institutional
leaders can prepare.

1. Pell Grants and Student Aid at Risk

This year’s House budget proposal would roll back several cornerstones of federal student support. The bill
eliminates eligibility for students taking fewer than half-time courses and raises the credit threshold for
full-time Pell status from 24 to 30 credits annually¹. Worse, it proposes reducing the maximum Pell Grant from
$7,395 to $5,710² — a cut of $1,685 per student. The CBO estimates this would reduce total Pell spending by billions
over the next decade³.

Federal Supplemental Educational Opportunity Grants (SEOG) would be eliminated under the current draft², and
Work-Study funding would be significantly reduced, disproportionately affecting low-income and first-generation
students⁴. For regional public colleges and community colleges in particular, this could have a severe impact on
enrollment and student persistence.

2. Research Funding Freeze Threatens Innovation

The budget also includes freezes and staffing cuts to major research agencies. The Trump Administration’s
directives earlier this year have already triggered layoffs affecting over 1,000 staff at NIH and a 10% cut at NSF⁵.
The proposed budget caps NIH indirect cost reimbursements at 15%, which many institutions argue is unsustainable⁶.

As a result, universities are reporting rescinded graduate admissions offers, delayed lab projects, and hiring
freezes. “The impact this is having on universities and students is chaos,” one administrator told The Guardian⁵. If
enacted, these measures would slow America’s research engine for years to come.

3. Workforce Pell Momentum — With Risks

Amid the cuts, there is bipartisan support for extending Pell eligibility to short-term, workforce-aligned
credential programs⁷. These initiatives, which target sectors such as healthcare, logistics, and skilled trades, are
positioned as faster and cheaper pathways to career entry — and a lifeline for non-traditional learners.

But concerns remain. Without stronger federal oversight, there is a risk that predatory programs will flood the
market, dilute quality, and undermine student return on investment (ROI) ⁷. Institutions would be wise to pair new
credentials with local employer partnerships and transparent outcome data.

4. Accountability and “Skin in the Game” Policies Expanding

Beyond cuts, the budget also includes enhanced oversight of institutions receiving federal aid. Proposals include
tying Pell and loan eligibility to student outcomes, such as completion rates and default levels. Lawmakers are also
exploring “skin in the game” provisions that would require institutions to repay a portion of a student’s loan if
the borrower defaults on it.⁹

These ideas align with the broader Congressional trend of shifting financial risk from the federal government to
institutions — especially for programs with poor ROI. Schools will need to strengthen data systems, boost student
support services, and prepare for stricter compliance reporting.

How to prepare?

Model Scenarios Now: Prepare for reductions in aid and research support. Stress-test your budget using the template
below.

Item

2026-27

2027-28

2028-29

Estimated Lost Federal Funds

A

A

A

A

Estimated Change in Unrestricted Net Assets without Lost Federal Funds

B

B

B

B

Estimated Total Change in Unrestricted Net Assets

C

C = (B – A)

C = (B – A)

C = (B – A)

Estimated Opening Total Unrestricted Assets

D

E

F

G

If Item C Is Negative

C

C

C

C

Estimated Closing Total Unrestricted Assets

E

F

G

H

If Item C Is Negative

C

C

C

C

Estimated Years Remaining Before Financial Distress

I

F/ C

G/ C

H/ C

If Item I is negative and between the range of 0 and – 5, then the college will be in a state of
financial distress.

If Items C and E are negative then change sign of I to negative, regardless of the I score, the
college will be in a state of deep financial distress.

References:

¹ Vox. “The big, beautiful bill is bad news for student loans.” May 2025. https://www.vox.com/policy/415793

² Washington Post. “Most Pell Grant recipients to get less money under Trump budget bill, CBO finds.” May 17, 2025.
https://www.washingtonpost.com/education/2025/05/17/pell-grant-cuts-house-budget-bill

³ Investopedia. “Millions of College Students Could Have Their Federal Aid Slashed Under Budget Proposals.” June
2025. https://www.investopedia.com/college-students-could-lose-grants-11752596

⁴ National Association of Student Financial Aid Administrators (NASFAA). “House Budget Proposal Includes Deep Cuts
to Student Aid.” June 2025.

⁵ The Guardian. “Chaos on campuses as schools warn Trump cuts could harm US ‘for decades.’” March 8, 2025. https://www.theguardian.com/us-news/2025/mar/08/trump-universities-higher-education-cuts

⁶ Science Magazine. “NIH indirect cost cuts spark alarm in university research circles.” April 2025.

⁷ Chronicle of Higher Education. “Short-Term Pell Expansion Advances in House with Workforce Focus.” June 2025.

⁸ Inside Higher Ed. “Accountability Provisions Gain Steam in Higher Ed Budget Talks.” May 2025.

⁹ Bloomberg Government. “Congress Revisits ‘Skin in the Game’ Loan Policies for Colleges.” April 2025.

Warning to Private Colleges: Clark University to Lay Off 30% of Faculty!!

Clark Universities announced on June 3 that they were cutting 30% of their faculty because of a ‘financial challenges and a dramatically reduced incoming [first year] class.” This is a startling turn of events for a university with a strong academic reputation and financial reserves. If Clark feels the pain of the demographic cliff in 2025, which was supposed to be a safe year, then all private colleges, especially tuition-dependent colleges, need to take notice.

Private colleges in states with student markets that are forecast to encounter the full effects of the demographic cliff within the next two years, cannot wait to take action. They need to immediately develop a strategic plan They cannot wait until they are over the side of the demographic cliff because their financial reserves will quickly shrink to zero.

Regrettably, too many private colleges tend to operate within a bubble with their focus only on the current year and the next budget year. The demographic shift will be so calamitous that delay will be a trap as they lose their financial flexibility.

 

Clark University to lay off up to 30% of faculty, significantly restructure degree tracks amid financial strain | Worcester Business Journal

Budgeting Under Enrollment Uncertainty

Colleges chief financial officers may be facing the greatest budget uncertainty in their lives. Here is a partial list of these uncertainties are:

  • Demographic Cliff – student markets will start to shrink dramatically in 2026;
  • Pell Grants – could see a potential loss of $1,655 per student;
  • SEOG – elimination of this grant;
  • College Work Study – large cuts in the grants with the amount undetermined at this time.
  • Student Loans – colleges would be partially responsible for students who failed to repay their loan; predicted large growth in the number of defaulters will provide further justification for Congress to approve requiring colleges to partially pay for defaulted balances;
  • Indirect Cost –indirect costs from federal grants would be cut to 15% of grants;

Budget Planning Under These Uncertainties

Unfortunately, there is no simple answer to resolve the potential and unknown losses caused by the uncertainties in the preceding list. However, there are several ways to reduce risks flowing from these uncertainties:

  1. Containing Enrollment Risks by Banding Enrollment
    • Budget enrollment forecast should use current enrollment; do not increase enrollment for the budget forecast.
    • Compute the standard deviation for enrollment for the prior five years;
    • Compute for the prior five years including the current fiscal year; the first and second standard deviation;
    • Only use the first and second negative standard deviation to band the current enrollment; this will capture 34% and 49% of the downside;
    • Compute the enrollment budget using the current enrollment with the first and second negative standard deviations as lower continent bands;
    • Plan enrollment and tuition revenue for all three bands;
    • Design contingent expenses for each band;
    • As the enrollment picture becomes clearer, move from the lowest band to the current enrollment band.
  2. If possible, do not increase the tuition discount because enrollment is not increasing for colleges with less than 2,000 students.
  3. Indirect Cost Risks consider additional endowment draws to support programs supported by federal grants; this will require board approval and if the withdrawals are large, it may require approval by the state of the attorney general’s office.
  4. Further Downside Protection: during the coming fiscal year, until the college has a better understanding of a) the impact of the demographic cliff and b) the effect of federal action on grants, loans, and indirect costs:
    • Freeze Hiring
    • Contingent Reduction-in-Force;
    • Freezing Discretionary Expenditures;
    • Reducing Debt Risk by renegotiating debt subject to interest rates;
    • Increasing the liquidity of endowments;
    • Constantly monitoring cash reserves.

Sources of Cash in a Financial Crisis

From: TIPS on Higher Education Leadership[1]

When a college sinks into a deep financial crisis, the president and CFO must find cash quickly, just to make payroll. Next, they must locate larger sums of cash to pay utilities to keep basic operations running and to make debt service payments. If they are unable to find cash for basic operations and debt service, the college’s existence, as with payroll, can immediately imperil its survival. Here are several suggestions on where to find cash. Some sources can be more quickly turned into cash, while others may take longer and may also require legal services to extract money.

Quick Sources:

  1. Collect unpaid student bills;
  2. Limit or stop all cash purchases;
  3. Identify any federal or state money that is owed the college but not collected;
  4. Sell all college vehicles;
  5. Eliminate all credit cards, except for emergency use with that card being controlled by the president
  6. Reduce benefits;
  7. Cabinet officers should take over daily work of their offices.
  8. Eliminate all assistants to chief administrative officers;
  9. Pause all construction and renovation projects;

Longer-Term Sources of Cash:

  1. Sell or rent unused buildings and open lands;
  2. Arrange for loans on existing buildings, assuming that they are not collateralized;
  3. Conduct emergency fund raising campaign among wealthiest donors and alumni.
  4. Sell academic programs;
  5. Negotiate with lenders to change the payment schedule;
  6. Contact the State Department of Education for help in identifying emergency funds.
  7. Contact state legislatures for help;
  8. Reduce the number of employees by cancelling programs that do not generate sufficient cash to cover the cash costs of their operation;
  9. Form operational partnerships with other colleges to cut the cost of IT, academic programs, and athletic events;
  10. Eliminate athletic teams in which net tuition revenue is insufficient to cover athletic costs;
  11. Consolidate offices and classrooms;

Check out the Doors to Academia for discussions about major issues in higher education.

This brief will be available on the expanded edition in TIPS on Leadership in Higher Education that is coming out in the Summer of 2025.