Presidents Need Not Face Financial Crises Alone

Larry Edward Penley

December 1, 2021

When the Board hired me as President of Thunderbird School of Global Management in October 2012, I still had hope that this historic school could retain its independence.  Soon I understood.  There were many challenges – unmet loan provisions, dwindling cash, insufficient capital for new programs, and a steady enrollment decline from reduced competitiveness.  A dim future for Thunderbird was evident.  And it was a future that could have meant the end of Thunderbird’s nearly 75-year history.  This was not unlike the situation faced by many college presidents today as their institutions emerge from the pandemic and face a future with fewer students but without federal relief funds. 

Yet, Thunderbird was fortunate.  Precisely at midnight on December 31, 2014, Thunderbird became a unit of Arizona State University.  It now had a future – just not as an independent, free-standing business school.  Working with Thunderbird’s Board, its faculty, staff and alumni, Thunderbird had survived.  Thunderbird would serve many more future students with a lifeline of cash, a core of its faculty and staff, and the capital for new programs within its mission.  And it will dedicate a new stand-alone building in a vibrant urban area in early 2022.

The years of 2013 and 2014 had seen Thunderbird seriously consider 4 potential partners.  Some, including the very public consideration of the Thunderbird-Laurate joint venture, would have left the School independent but with a joint venture that some believed would change the School forever.  Unnamed other suitors would have meant absorption without any clear distinction for Thunderbird’s mission going forward.  The selected partnership with Arizona State left the school whole as a unit of Arizona State. 

Before my presidency of Thunderbird, I had served as President of Colorado State University and Chancellor of the System. The University faced financial challenges as well, including a statewide restriction on growth in revenue.  However, Colorado State had something that many schools lack.  It had working capital, which meant that we could invest in strategic academic imperatives like the Supercluster in Infectious Disease for which Colorado State was well positioned.  It also had sufficient working capital for the formation of an online campus – Colorado State University Global.  CSU Global has now served Colorado’s working adults with online learning for the better part of a decade, and it has returned substantial revenue to the System. 

What Colorado State achieved is far more challenging today.  Many colleges and universities have already used their reserves in order to maintain operations.  And online programs are at a very different state of technological development and a much higher expense today.  Schools’ declining enrollments from competition are now exacerbated by fewer students who graduate from high school with the continuing Generation Z demographic trough.   

Yet, the health of higher education is essential to US competitiveness and the demanding New Economy.  We need our varied, mission-driven small and larger colleges to survive.  But challenges grow.  The early 21st century pandemic has reduced college enrollments with still lower revenue forecasts.  Shifting tastes of students for online and hybrid programs are already here.  And past financial decisions and dwindling endowments place many schools and their leaders in unenviable situations.  Those with less working capital than we had at Colorado State find it difficult to set up state-of-the art online programs.  Schools with less determined boards and interested alumni may find it harder than Thunderbird did to confront their predicaments. 

ELM2Advisors was created just for these reasons and for presidents of threatened colleges and universities.  My colleagues and I have decades of higher education experience along with expertise in finding partners, making acquisitions and completing mergers.  We’ve been on the ground in meeting the challenges of higher education, something we had to do mostly alone.  But presidents should not have to face the challenges alone and without experienced advice.  ELM2Advisors can be the support that I lacked in my own career as president. 

Larry Edward Penley is a partner in ELM2 Advisors and, previously, was the president of Colorado State Univeristy and Thunderbird School of International Management. Additionally, he is a current member and previous chair of the Arizona Board of Regents.

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