This blog will list several major threats to survival. Regrettably, I do not have any sure-fire solutions to these problems. May be my readers will have suggestions.
Problem #1:
State education agency dawdles on sending funds, even though the colleges is in compliance with the conditions of the funds. What do you do? Pull out all the political stops for a joint meeting with the governor and head of the state education department.
Problem #2:
You fail to meet a debt covenant condition because you have a deficit or you fail to meet the cash to debt service, and the bank immediately threatens to call the loan. Of course, the college does not have the funds to cover the call. What do you do? Does the college have any asset that can be sold immediately and cover the loan? If not immediately meet with the president of the bank to ask if the call can be negotiated. Do not waste time with a loan officer; they may earn incentive pay when a loan is called.
Problem #3:
Your cash forecasts shows that the college will not be able to cover its payroll or bills over the summer? What do you do? Let’s assume that you have at least a semester to solve the problem. First, cancel any summer programs that do not generate positive net revenue. Second, cancel all faculty or staff travel for whatever reason. Sell any unused or underused assets. Cancel or postpone all construction and maintenance projects. Ask board members if they know of any sources for a quick cash loan. Ask wealthy donors for a cash gift to carry the college over the summer.
Problem #4:
The severe cash problem described in ‘Problem #3 will probably continue through the start of the next academic year and grow even worse next summer. What do you do? The problem may be the one that forces the college to look for a mergers or takeover. The Chronicle of Higher Education says that a college in this state of deep financial distress may not be choosers. These colleges need to find anyone who will take them over including major liabilities. The best outcome is somehow the name of the college will be retained by the takeover college. Possibly, the later college will keep the name if the distressed colleges have any unique academic programs or they may keep the name in some other way. Regardless, under these conditions, the college must take immediate action.
Problem #5:
One or more donors are threatening to sue to have their gifts returned because of dissatisfaction with news about financial problems. What do you do? The best that you can do is meet with each donor and then with the donors as a group to explain plans to end the financial distress.
Problem #6:
Student attrition is increasing at dramatic rates because students are leaving after hearing rumors that the college will close and because they see deteriorating services. What do you do? You have to meet with student leaders, students by academic programs, and possibly have an open forum, although that can be risky in today’s political environment.
Problem #7:
Colleges often have made decisions in the deep past that come back latter to haunt a college. These decisions may include promises to: some graduates twenty years ago to cover the tuition of their children; athletes on a championship team deep in the past that when a new gym is built that it will be named after them, but when a new gym in built thirty years later, no one recalls the promise except for the few members of the team who are still living; major errors in accounting from the deep past that were not corrected at the time and new auditors insist that they be corrected in the current audit leading to a sizeable deduction in net assets; or donors that their gifts would be used for certain purposes, but no one made a record of the promise and the current administration needs to use the gift for immediate needs. What do you do? Since many colleges were not diligent in record keeping a presidents must insist on deep research to determine if some action in the past will have an adverse effect on the present. Unfortunately, since as noted, the promises were verbal and not recorded or financial records are inaccurate, there is only one rule – Honesty is the best policy. Under these circumstances, the persuasive powers of the president will be sorely tested.