by Will Wootton
I’ve been encouraged over the past few weeks to further explain what “retrenchment” means, not in higher education generally, which I tried to do, but at Marlboro specifically. I resisted because retrenchment is on the first level an exercise in financial planning. But because the original Challenge met with refusal, the institutional data were unavailable. Now, I thought I’d try to explain something of how the process works, in the form of a primer, sans financials. This is something of a challenge itself: I was introduced to the concept of retrenchment in colleges at the Harvard Seminar for New Presidents in 2006, and it took a whole day and three instructors to examine the process in relative detail.
The strategic aim of retrenchment is to first stabilize a college’s financial operations and fiscal profile, while engaging the institution’s established constituencies and supporting communities. The goal of retrenchment is to establish a program of financial stabilization and incremental rebuilding of the institution, using a set of emerging financial and institutional models aimed at growing the college to its physical capacity.
The economics of retrenchment are relatively straightforward and traditional: You start by modeling on a series of assumptions created using institutional data regularly employed by departments and managers.
Step 1: Income
How many students will we have enrolled in September 2020? Run two (or as many as needed) scenarios: one for 100 students and another at 50 students: what is our projected student-based income?
What is our projected endowment income?
What is our projected income from fund-raising?
What is our projected rental and other business income?
Step 2. Expenses
What are the College’s major expenses?
Faculty wages and benefits?
Staff wages and benefits?
Plant and operations?
With these figures agreed upon, now you have an outline of the problem: its dimensions, breadth, depth and seriousness. Wrestling it all into submission at this moment appears impossible, insurmountable. Now you are ready to start the hard part.
The hard part is actually two parts, simultaneously engaged. It is at once a finance-heavy exercise in remodeling – reprioritizing – the institution’s current unsustainable financial profile and practices, while simultaneously seeking opportunity and systems to build strength, attract students, and identify beneficial associations and collaborations wherein both parties are enhanced.
Step 3a: Finance
Without the current financial data of Step 1 at our fingertips, retrenchment modelling can be anything one wants because the numbers are imaginary, and can be made to do anything one desires. So in this primer it may be more informative to look at the sorts of questions a retrenchment team would pose in seeking a workable, downsized institutional model. For example:
Where – not how – do we reduce the plant and operations budget to reflect the new reality dictated by the number of projected students?
What are the cost savings, and what are the effects on campus of shutting down underused spaces?
Are there rental or lease opportunities?
What are the contractual commitments to the College’s food service? How much can we save by operating our own?
What is the income ratio between real tuition income and room & board income?
We learn the plow truck is beyond inspection: do we need a new one, a used one, or contract out that service?
How many faculty positions can we afford for the students we have?
Do we employ adjuncts?
Do we retain more faculty at reduced wages?
Are there areas of the curriculum we cannot afford at all?
Are there areas of the curriculum that need serious attention and investment?
Is the faculty workload reflective of student numbers and areas of study?
Are we missing areas of study that would attract students?
How lean an administration can we design?
What are the issues limiting success in admissions? Is it staffing, curricular, messaging, all of the above?
And over and over…question after question…projection after projection…model after model. Until we find an operational model to build upon.
Step 3b: Opportunity
If downsizing is the savior of small colleges, what happened to Green Mountain College, St. Joseph’s College, Southern Vermont College, and Burlington College?
They waited too long. Their board leadership fell apart. They, like Marlboro, blamed demographics. There was infighting. They mistook growth for strength, then growth crashed. They literally ran out of money. They, like Marlboro, applied short term fixes to deep structural, institutional problems. They refused to change. They ran out of ideas. And they ran out of time.
Why is Marlboro any different? How can retrenchment work at Marlboro?
Marlboro is different from those four other Vermont College in a number of important ways that make retrenchment a positive alternative to closure.
A college’s student-to- endowment ration is one of the four or five basic matrices consultancy firms use to determine the fragility of a college – and thus the potential for merger (euphemistically or not) and thus the potential for consultancy engagement and fees. A small endowment indicates little financial back up and maneuverability, and is thus a marked weakness.
Marlboro does not belong to this group; relatively, Marlboro is a wealthy institution. Those other four Vermont colleges had very low ratios.
Sweet Briar ($70+million) and Hampshire ($50+ million) are successfully engaged in downsizing and restructuring right now. Depending on how and when an institution creates the ratio, Marlboro’s student-to-endowment ratio equals or exceeds those of Hampshire and Sweet Briar. Our endowment is one of a number of tools that convinces me Marlboro can survive retrenchment.
Marlboro has another critical component that could be employed in retrenchment – its accreditation to conduct graduate level studies and offer Master’s Degrees. Maintaining that level of accreditation could be vital in transitioning to a new financial model. There is opportunity here.
In rebuilding, I’d suggest Marlboro begin the process of becoming a federally recognized Work-Learning-Service college, where all students work 10 hours a week and are paid for their work, whether on campus or service work in the community. There are nine others, Beria College in Kentucky is the Work College mothership. Sterling and Warren Wilson are longtime members. There is opportunity here.
I recently saw a proposal from Bob Johnson, owner of Omega Optical in Brattleboro, Marlboro alumnus, scholarship maker, and recipient of a Marlboro Honorary Doctorate with a wonderful proposal regarding liberal arts education and a program for new employees. More opportunity.
The College has a steady high-status partner in the Festival: one should be anxious to find further opportunity in that relationship.
We have an engaged body of alumni eager to help – and there are model alumni admissions programs we could begin…at home, and further afield. And, unlike less fortunate Vermont Colleges, Marlboro has a degree of status in the higher education community that can be exploited in numerous ways, in admissions marketing, foundation relations, and fundraising.
Marlboro exists in a rural town without a country store…what can the College do to help rectify that, and see opportunities emerge from there?
Marlboro has a remarkable track record in major gift fundraising and, at least in the past, high percentages of alumni giving, once reaching 60 percent of graduates. Marlboro has always relied on philanthropy and it will have to in the future, as well. But major donors don’t pay for operations year after year and remain engaged. And Alumni don’t respond when they’re left out, when their classmates start dropping from the published lists. Everyone wants to see and understand the results of their
giving…so I see opportunity there, again.
Indeed, one of the challenges of retrenchment and rebuilding are the opportunities that come running at you – which to pursue, which to reject, what is short-term and what is long-term? These are good problems to have. We should seek them out. And grow with them, not ahead of them.
Step 4: Outreach
Retrenchment involves every constituency of the College: the board of trustees, faculty, students, staff, and the Marlboro community in its entirety, all alumni, parents, and friends. It includes Brattleboro, Windham County, the State of Vermont, New England and as far afield as our story will carry in marketing and outreach that attempts always to show, to demonstrate, to prove, to challenge, and never to just tell.
Step 5: Risk
How do we know a rebuilding program will save the College?
Well, we don’t. But it stands to reason that attempting to down-size Marlboro with the tools and resources already in place is smarter, more conservative, and stands a far better chance at revitalization than giving away the endowment and selling the campus. It is of course more challenging than closure, but the rewards are greater.
If there is irony here, it is in this: let’s assume retrenchment fails after a two or three year period of attempting all the rebuilding ideas and initiatives we can think of. The campus will still be worth $10 million. The endowment would still be intact. And deals like Emerson will be easy to find…maybe even in Vermont.
The point is, there is little to lose in trying to save Marlboro. The current board has chosen the most extreme solution of Marlboro’s predicament. There are others who wish to attempt retrenchment as a means of rebuilding the College – finding the New Marlboro, if you will.
For the Board of Trustees to deny their college that opportunity is, to many, counter intuitive when compared to the results of premature institutional shutdown.