Concerns are increasing about the number of university and college systems in financial distress or drifting toward it—and many may be beyond repair without outside help, according to the latest analysis by education tech company Ellucian.
Three familiar boogeymen—shrinking pools of students, rising operating costs and workforce disruptions—are worsening the financial outlook for the nation’s higher education networks.
The organizations studied in this report oversee nearly 1,200 institutions serving 15 million students. The “condition of these systems is the condition of the sector,” writes Dan Greenstein, report author and former chancellor of Pennsylvania’s state higher education system.
Thirty-nine out of 91 college and university systems are experiencing some form of distress, and more than a third face “acute risk” as enrollment declines and financial challenges worsen, the report found.
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Course-correcting a “structurally broken” system will be difficult, as the conditions causing the distress also deplete the reserves needed to recover.
“The central challenge is to address structural changes before the resources needed to do so disappear,” writes Greenstein. “For the most distressed 34 systems … it is nearly, if not actually, too late to do that.”
“Massive third-party intervention” will be required, he adds.
Twenty-seven systems are operationally sound but are sliding toward distress. They have two to four years to change course before they, too, fall into runaway decline.
Institutions at this “tipping point” include:
- The Pennsylvania State System of Higher Education
- The University of North Carolina System and North Carolina Community College System
- The Alamo Colleges District (Texas)
Strengthening college and university system leadership
A system’s success comes down to savvy leadership, as being enormous doesn’t ensure financial health. Some of the nation’s highest-enrolled systems are among the most distressed, the report found.
Leaders can consolidate programs and redirect resources, but they also need data and transparent financial information to set a bold strategy.
The systems in deepest distress “inherited policy environments, governance structures, and operating models designed for growth that have not been adapted to contraction,” Greenstein concludes.
