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[menotyou2222]

As the current economy and decades of bad financial decisions continue to take it their toll on the small private liberal arts college where I work, I’m left to wonder what are the tell tale signs that a college is about to go under?

[systeme_d_]

Aandsdean has posted some extremely valuable information that relates to your question on these threads:

http://chronicle.com/forums/index.php/topic,46826.0.html
http://chronicle.com/forums/index.php/topic,44535.0.html
http://chronicle.com/forums/index.php/topic,53653.0.html
http://chronicle.com/forums/index.php/topic,55968.0.html

This thread might help you make some comparisons to what is going on elsewhere in response to tough economic times:
http://chronicle.com/forums/index.php/topic,57884.0.html

And some posts on the latter pages of this thread may give you some insight into what to look out for:

http://chronicle.com/forums/index.php/topic,39968.0.html

[riptide]

1.  You are told you have to buy your own trash can.....and empty it.

2.  You are told that there is no longer a photocopier.

3.  There is no heat or air conditioning.

4.  There is a "For Sale" sign outside your building.

[choirguy]

Thsi article gives some excellent observations about school in trouble.

http://chronicle.com/article/How-Does-a-President-Shut-D/17468/

[larryc]

I turns out that the "other duties as assigned" in your contract means cleaning the restrooms.

[temporaryname]

The provost regularly sends out emails to all faculty and staff talking about how there is no problem.

[sacroiliac]

I turns out that the "other duties as assigned" in your contract means cleaning the restrooms.

...and you have to bring your own toilet cleaning brush.

[madhatter]

For about six months during my long stretch of unemployment, I consulted at a place I called Circling the Drain University. I fell into their clutches when I innocently applied for an opening they had, showed up for the interview, and learned just how dire their straits were. They offered me a regular, full-time position, but there was no way I was going to chain myself to the railing of the Titanic, so I suggested a consulting contract, which they agreed to.

The warning signs were pretty much red downward arrows across the board. Familiarize yourself with your university's institutional research office and fact book.

1) Declining enrollments, over multiple years, in pretty much every program and demographic category. They may try to pass it off as a shift in demographics or similar legerdemain, but if you're not seeing declines in some categories balanced out by strong increases in others, you have a problem. Circling the Drain U liked to blame their enrollment problems on 9/11. Many businesses liked to use this excuse in 2002 and 2003. In 2009, it doesn't fly as well.

2) Declining revenues, multiple years, multiple categories, yadda yadda. Circling the Drain U was strongly tuition-driven. Enrollment decline meant tuition was down. Fundraising was also down. They managed to sorta balance the books by using one-time grants from local government to patch over operating costs. This was like eating their seed corn. If the money is drying up, and there isn't a credible reserve that could be invested in new initiatives to try to turn things around, then you have a death spiral.

3) Terrible leadership. The president had hung around for years and years while the institution was in decline. The board's job is to fire the prez when a school is in such straits. Whether or not the prez is directly to blame, part of the job is taking that blame. They eventually did fire the prez, but by then, the school was a few months away from shutting down, and the course was irreversible. Besides having a weak prez, the rest of the leadership team was barely competent, at best. Watch out for senior leaders who can't seem to get their departments' acts together, and a whole lot of "interim" deans/VPs who become permanent because nobody competent can be recruited to take their place. Some internal promotions are good -- but if all the senior folks are internal promotions, it most likely means that you have an ill-prepared leadership team.

4) Even the accreditors take notice. Now, listen. Your typical regional accreditor can annoy the crap out of you with scary-sounding pronouncements about your school's "weaknesses" and "failures to meet criteria." They may schedule all kinds of special visits and monitoring reports. Although some institutions develop a culture of panic when dealing with accreditor criticism, most of this has very little chance of actually affecting a school's operations. However, if the accreditor starts to zero in on financial & operational problems, you may have a real problem. The only institutional deficiency guaranteed to lead to serious accreditor sanction (including loss of accreditation) is inability to operate financially. If that's the circumstance at your school, The End Is Nigh.

Four months after I started consulting at Circling the Drain University, they were notified that they were losing their regional accreditation. Four months after that, their accreditation officially ended and the school stopped serving students. There's a skeleton staff remaining, trying to come up with a plan to reconstitute the university, though with what funding I have no idea. However, none of this just "happened." The wheels were set in motion by the accreditor 2-3 years before I even started there, and it was obvious to anyone with experience how and when the train ride would end.

[retired_at_last]

I’ve been in academia for a long time, too long, and I’m glad the struggle is now past. I've seen way too much!

However, don't be afraid, if a college is to fail, let it!

Just stay out of the sucking whirlpool!

Good news and bad news: The current depression/recession has an upside, after many personal sacrifices of individuals. These economic events can be seen as a natural selection process for businesses and institutions. The weaker should fail, the strong survive and thrive again. If and only if we don’t prop up those that should fail, of course. This is natural selection, or survival of the fittest.

I academia, the public component of these institutions have serious protections against failure, set in law by protections for public entities. They obey different laws than businesses. This is humorous, since education is trying to adopt the business model.

When economic woes face a public institution, there are several stages in approaching potential demise.

For the sake of students, institutional demise should occur when an institution is not viable. That is why there is a clause in financial aid contracts with students about failed education institutions. Weak institutions have failed, even in the best of times.

Stage One: Furloughs and Reductions
Many states are using furloughs (rather than cutting services) in academia to cope with shortfalls in state tax revenues. This technique has a black underside that, maybe, administrators have not considered.
A. Furloughs impact percent income at about twice the rate for faculty as administrators (because of the difference in contracted hours). Faculty will ‘notice’ and remember. When times get better, house sales begin again, strong faculty will flee states that double-taxed them, and leave behind the weaker faculty.
B. Furloughs will be seen by banks as ‘missing payroll’, instability, and will lower credit ratings. This will impact any financial maneuvers in the future and impede re-growth.
C. Furloughs require administrators to 'reveal' their right to ‘do-over’ contracts any time they wish. Businesses which issue letters of employment or letters of re-employment and do not follow through get sued for ‘losses incurred by false advertising’. This recognizes that when an individual receives a letter with stated terms, that individual then makes financial commitments based on that promise; the individual has the right to recover losses made from false promises. Public entities have a “subject to whatever changes we want to make whenever we want” disclaimer in them, and faculty are forewarned of what could happen. These days, it is happening. Public entities may not, at least immediately, suffer. But every time they ‘reveal’ their naked power, institutions also reveal to faculty their failure to govern stably. There are better and fairer ways to weather a loss of operating revenue. Furloughs are just easy. Stronger faculty will remember and flee when they can. Poorly administered colleges will only be able to retain poorer faculty. The adminstrators believe a myth: "there's always another naive faculty memebr around the corner, so we can defacate on the ones we have". Faculty are often un-informed, but not stupid.

Stage Two: Breaking Tenure
If furloughs (or a fairer across the board salary reduction) don’t work, administrators move to stage two. This begins with lay off’s of all temporary and adjunct faculty. It moves then to breaking tenure.
If faculty look at their contract agreement and personnel practices guide, they will find an exception to regular tenure rules. “If in the view of the institution it becomes necessary because of blah blah blah, departments may be closed and tenure will not be honored.”
This has happened historically, and I expect it is ahead of us again.
Low enrollment, high cost per student programs will be deleted, and all faculty will be released.
The exception to the above will be departments who ‘serve’ other departments that are large and thriving.
Usually, historically, this is as far as it goes. But …

Stage Three: Closure or Merger
This one is pretty obvious, and it has occurred.

[mad_doctor]

I sense that you have much to teach us, retired_at_last.

[madhatter]

When economic woes face a public institution, there are several stages in approaching potential demise.

That was a pretty specific list. What public institutions have followed that model?

[retired_at_last]

Carl Rogers school went under.

Univ of Wyoming used that process, not because of economic problems but loose lips, closed an entire department.

A community college in north San Diego County went through full stage 3.

[retired_at_last]

Ah, San Diego..full stage 2.

A CC in IL moved from qurters to semesters. Faculty research said that would drop enrollment by 1/3. Of course, that is waht admin wanted. Thier income from property taxes became fixed, and they could not afford to serve "everyone who comes to the door". Indeed, there was a 1/3 rollback in enrollment followed by a 1/3 rollback in faculty.

[mad_doctor]

I just came from a place that is somewhere between Stage 1 and Stage 2.  I think the administration is going to play the Stage 2 card to get rid of select faculty and programs they hold some long-standing grudges with. 

The irony of breaking tenure is that in many states, including two I have worked in, government employees (includes university administrators and staff) earn tenure after 90 days on the job.  For state government administrative and professional employees, their jobs can be cut, but the state still has an obligation to find something else for the person.  As you observe, tenure can be revoked for faculty for reasons determined by the institution - usually financial exigency.  However, the term "financial exigency" isn't very well-defined, and the admins have enough wiggle room to pretty much do whatever they want to do.  The long and short of it is that in states with such policy, faculty are at risk but administrators and professional employees are the only true lifetime employees.

[_ampersand_]

USF-Sarasota/Manatee: Stage three. It's just (allegedly) gone up for separate accreditation.