Saturday, December 22, 2012

Financial Storm Clouds on the Horizon

So now Moody’s has downgraded the credit rating of the eight public universities in Illinois. It cited

"The problems there include lawmakers’ inability to pay for an estimated $96-billion in future pension commitments as well as $9-billion in unpaid obligations to state agencies. The extra cost of borrowing brought on by a downgrade could be a double whammy if the universities are forced to borrow money to cover the state’s delinquent payments."

For those who follow the public universities and their tenuous relationship with the legislature, it is well known that some of the public universities struggle mightily with keeping the doors open when the state withholds money appropriated for higher education. What concerns your humble narrator is the continued absence of fund raising at this institution. The amount of the endowment is decreasing and there appears to be no credible, strategic plan for a capital development campaign. In the face of higher borrowing costs, the potential for sequestration at the federal level and declining student enrollments, projected to be flat for 2013-14, it appears the university has been positioned for a catastrophic financial collapse. I would imagine pro-active leadership would make an announcement to allay fears of students, staff and faculty. A robust, innovative and ambitious capital campaign would be announced for the New Year after all of the ground work was laid by those expert in capital development and the most senior university officials would then spend a significant amount of their time engaged in reaching the target goal. I would imagine that the Provost would continue managing the core activity of the institution as the Chief Academic Officer, the Vice President for Administration and Finance would continue working toward more financial controls and increased accountability while the President and other various and sundry non academic administrators would work toward realizing the university’s capital campaign goal. I would refer you to a post I made here on April 15th, 2012 where I referred to Stanford University and its multi-year campaign which succeeded in raising $6.23 billion. It is possible in an unstable economy to raise a significant amount of money if the will is there, the plan is sound and those able to execute are empowered. If any of those three are absent the project is doomed to failure and the institution will suffer as well from that failure. 

Is this institution up to the task of protecting its 145 year existence for another 150 years? That is what legacy is about, not constructing more buildings or starting more programs. Legacy is about ensuring the institution does more than survive. It is about ensuring it thrives.

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