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STL Business Journal Article - A Crisis Coming at SLU


Box and Won

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Without big changes, Saint Louis University is in big trouble.

The private Jesuit school in Midtown is projecting annual deficits of $10 million to $20 million through 2018 and beyond. Revenue declined 4 percent from 2012 to a 2015 total of $410 million, while costs increased 7 percent to $415 million in 2015. Full-time-equivalent enrollment is falling and stood at 11,500 in 2015, 743 fewer than in 2012. The scholarships and grants it gives to students have increased to 34 percent of tuition and fees, up from 27 percent in 2010. Federal research grants have dropped to $29 million from $40 million in 2012. Twenty percent of full-time faculty teach fewer than 100 credit hours per year. About 25 percent of academic departments don’t cover their costs.

[snip]

SLU hired consulting firm Bain & Co. to look at everything except the SLUCare medical practice and formed an 18-member steering committee. Eventually, the 100-member President’s Advisory Council will review options, and ProvostNancy Brickhouse and CFO David Heimburger will make recommendations to Pestello, who will make the final decisions. The execution of the changes will be ongoing over the next two to three years.

[snip]

Although specific decisions are distant, a lot of what is on the table is spelled out in the 80-page Magis report, including [abridged]:

• A push for more alumni giving.

• Higher student fees.

• Stiffer on-campus residency requirements.

• Less financial aid for majors that are in high job-market demand.

• A reduction in undergraduate majors and graduate degree programs.

• Lower expenses in the academic programs that remain.

• Increased hourly teaching requirements for faculty.

• Elimination of undergraduate courses with low enrollment. Forty percent of undergraduate sections and 70 percent of graduate sections enroll fewer than 10 students.

• A flatter management structure. 

• Higher ticket prices and dynamic pricing — higher prices when demand is higher — for Billiken games and other events. (“Down the road, look for discussion about the cost of athletics,” McClellan said.) (Yeah, good luck with that. Italics mine.) 

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There are other options that can be considered as well, of course, let's say that they decide to sell a whole School or Department to someone else (like the medical school, B School, or law school), that would bring in cash and eliminate expenses. This type of review of options and possibilities may come up with lots of options. One I did not mention was to sell any overseas campuses, like the one in Madrid, again for  the same kind of result: cash plus decreased expenses. They really cannot squeeze the rock (students and donors) to get a lot more blood out of it than what they are doing currently without facing consequences. Also, the courses with small numbers of students may be grad seminars and this is exactly what gives a University its reputation of being good or special, not the undergrad courses, eliminating these things and increasing fees to the students plus demanding more from donors while keeping the same size footprint may not be an effective way to do what they need to do. As far as I know Bain & Co is more of a management consulting firm doing things like streamlining procedures, motivating people and getting management to work better. They might be better off looking at a restructuring firm like Moelis & Co to shrink up a bit and retain a viable and vibrant university core.

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I can add one - get the redesign of the mascot right the first time and save the cost of a re-redesign.

Increasing faculty teaching hours is a short term fix with disastrous consequences. The best of the faculty will feel unloved, overworked and will move on. Consequently, incoming grant money further sinks and esteem/reputation with it.

[disclosure-I'm an academic, not at SLU, and with a pretty sweet teaching deal...]

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16 hours ago, Old guy said:

There are other options that can be considered as well, of course, let's say that they decide to sell a whole School or Department to someone else (like the medical school, B School, or law school), that would bring in cash and eliminate expenses. This type of review of options and possibilities may come up with lots of options. One I did not mention was to sell any overseas campuses, like the one in Madrid, again for  the same kind of result: cash plus decreased expenses. They really cannot squeeze the rock (students and donors) to get a lot more blood out of it than what they are doing currently without facing consequences. Also, the courses with small numbers of students may be grad seminars and this is exactly what gives a University its reputation of being good or special, not the undergrad courses, eliminating these things and increasing fees to the students plus demanding more from donors while keeping the same size footprint may not be an effective way to do what they need to do. As far as I know Bain & Co is more of a management consulting firm doing things like streamlining procedures, motivating people and getting management to work better. They might be better off looking at a restructuring firm like Moelis & Co to shrink up a bit and retain a viable and vibrant university core.

Yeah, I was surprised none of those options were mentioned in the article. It's not like publicly admitting you're considering those things sounds any worse than hiking student fees even higher or begging for even more from alumni.

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3 hours ago, hsmith19 said:

Yeah, I was surprised none of those options were mentioned in the article. It's not like publicly admitting you're considering those things sounds any worse than hiking student fees even higher or begging for even more from alumni.

Note the [snips]s in my quote to conform to fair use. There were other suggestions made that I cut out to shorten the amount that I quoted.

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3 hours ago, Old guy said:

Must be quite some cars, those.

My friend Box is merely alluding to the fact that I once had cars for my wife and me, all five of my children and one leftover that we kept around to haul things. :)

(My son-in-law is currently restoring a Shelby, however, which might could be used to restore at least one or two liberal arts classes.) 

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I took a quick look at the report and was quite surprised to see how many graduate programs SLU has and how small their average size was.   I am sure some small programs can make SLU better but surely some of those can be rethought (I just looked at a list and noticed  a few suspect graduate degrees).

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This is where the honeymoon will be over for Pestello. He has done a great job at building bridges and establishing relationships with the faculty, staff, and students. However, now he is going to have to think and act like the CEO of a major business, not a friendly academic, and make difficult program and cost-cutting decisions that will certainly have vocal opponents. One thing will be certain in this process -- there will be significant losers among programs, faculty, and staff. You are going to have professors shouting to the masses about the great injustice of their obscure middle-age theory of poetry major being eliminated. In simple terms, the university needs SKU rationalization of its underperforming offerings.

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I know in some of the obscure grad programs they've already had to get rid of a bunch of the adjuncts so the full time professors could maintain full courseloads. Seemed like a shame to me since adjuncts taught some of my favorite classes and got paid a lot less to do it.

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1 hour ago, hsmith19 said:

I know in some of the obscure grad programs they've already had to get rid of a bunch of the adjuncts so the full time professors could maintain full courseloads. Seemed like a shame to me since adjuncts taught some of my favorite classes and got paid a lot less to do it.

From a biz school perspective, some of my best teachers were those adjunct who were working at AB, Boeing, and various other major companies. It was nice to get a real world perspective instead of an academic. 

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15 hours ago, JMM28 said:

From a biz school perspective, some of my best teachers were those adjunct who were working at AB, Boeing, and various other major companies. It was nice to get a real world perspective instead of an academic. 

This. Great point, JMM28. I think the Flying Guilliams Bros. come to mind when I think about some of the better Cook School instructors I had from my limited time in the B-School. If memory serves me, both had IT stints at A-B before coming to teach at the U.

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16 hours ago, WestCoastBilliken said:

Didn't we just change all the adjunct professors to full time professors and/or give them a union?

 

I thought I read that somewhere... that can't help our budget problems. 

This misstates the case. SEIU is organizing adjuncts across the country. And one doesn't give someone a union -- the potential members vote for it. 

The goal isn't to make anyone a full-time professor. Main bargaining points right now are compensation if the class gets canceled at the last minute, priority for seniority and a few other technical items. The union made lots of noise about raising compensation, but that ain't exactly happening yet. And for full disclosure, I'm a member of the SEIU local at WashU (as is every adjunct now). 

I would guess that part of the long-term cost-cutting plan is to replace full-time profs with adjuncts, primarily through attrition. 

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There are a lot of options and angles in a plan like the one they are in the process of crafting. Let us hope that they are knowledgeable enough and have good enough advise to come up with a plan that both cuts costs down and leaves the University free of internal conflict and improves it overall.

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1 hour ago, bonwich said:

This misstates the case. SEIU is organizing adjuncts across the country. And one doesn't give someone a union -- the potential members vote for it. 

The goal isn't to make anyone a full-time professor. Main bargaining points right now are compensation if the class gets canceled at the last minute, priority for seniority and a few other technical items. The union made lots of noise about raising compensation, but that ain't exactly happening yet. And for full disclosure, I'm a member of the SEIU local at WashU (as is every adjunct now). 

I would guess that part of the long-term cost-cutting plan is to replace full-time profs with adjuncts, primarily through attrition. 

The small grad programs are the easiest targets for cuts, but those only have one or two full-time professors and have already had to ditch almost all their adjuncts. In those cases, eliminating a full-time professor basically means eliminating the program entirely, which may be what we're coming to. You can't have a degree program with adjuncts only, even though I agree with the posts above that they offer a really valuable perspective.

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I'll probably take a lot of heat from the Biondi haters, but wasn't Biondi run out of town by the faculty and students over an issue that was intended to save on costs.  I like Pestello, but it seems like in that move we traded financial stability for a great guy that everyone likes.

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1 hour ago, Old guy said:

Again, the important thing is not the cuts themselves but the issues they may engender, and the condition of the University as a whole after the cuts have taken place.

?

This is like saying the important thing is not making a shot from beyond the arc but rather the fact that three points go on the board after the shot is made. I guess I can't argue with that...

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Let me clarify my meaning in my prior post. If cuts are done in a manner that infuriates the faculty, causes a loss of academic standards and recognition, partially because of faculty leaving or being too busy being mad at the administration, alienates students, and donors, it will not be a good thing. On the other hand if the University is carefully pruned leaving all other faculty untouched and reassured, and producing a vibrant academically better University (whatever is left of it), with happy students and donors then we will be in fine shape. Most likely we will wind up somewhere between the two extremes of this range.

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When you have to cut programs - ie. positions, nobody is every happy when their bull is gourded.  Having had to make these kinds of decisions the best you can be is wrong.  I would assume that they will do some committee activities involving instructors in the decision making process.  This would be their best approach but of course it is not full proof.  Normally, in a situation like this you should look to make cuts that impact the overall school the least and to increase revenues in areas that make reasonable sense - for example raising tix prices for basketball games or parking fees while not popular they at least impact the overall school the least.  It also puts the onus on the coaches and AD to produce a winner to warrant the price increases.  This is just a small example.  You would be surprised were money can be found and generated if you start thinking out of the box.  It will be interesting to see their long term plan.

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