To:                  The St. Lawrence Community
From:             William L. Fox, President
Date:              August 30, 2010
Re :                 Moving to the Next Stage of Recession Response Planning—Phase 2 (2010-11)

Rethinking Structure, Programs, and Organization at St. Lawrence University

For both a university and its new president, the first year in office is much like formative experiences in everyone’s life, such as reliving the freshman experience or going on a blind date. Every day brought new discoveries, certainly to me and doubtless also to those I met and worked with—the process was textbook quality in its community and off-campus dimensions: smooth, instructive, and fruitful. Right in the heart of tough economic times, 2009-10 tested us unlike any other challenges most of us have known. We accomplished a very great deal together in the past year, accomplishments recognized by our Board of Trustees at its year-end retreat as a job well done, notable for its order, decency, and positive direction. We demonstrated to ourselves the strength and resilience of a community under stress. One of our colleagues remarked, “The bad times didn’t drive us apart, as they could have, but made us recognize and appreciate the closeness of community here.”

But while a critical year in St. Lawrence’s institutional history for these and other reasons, 2009-10 needs to be understood as the beginning of an ongoing process, one crucial to the future of the University in many ways. My intention in this paper is to point up what are to me the most pressing challenges as we move together as a community into the next phase of response to our present circumstances.

While we continue to adjust ourselves to a different order of pressures and economic values, there is also in this next stage of strategic thinking the tremendous potential to release the impulses of creativity, the splendor of new ideas and forms. Our greatest advantage is the nature, character, and goodness of this place. What we have in the finer qualities of our community is not a common staple at other universities and colleges. We need to remember well that particular indelible mark; and we should even be aggressive at using it to better expedience and benefit. It is what has and will set us apart.

Background:

The grip of a two-year-old recession has not yet yielded to a friendlier, steadier hand of economic recovery. This extremely long recession (or its snail’s pace recovery) remains a strangely unfamiliar phenomenon to all but the children of the Great Depression who came of age in the 1930s. No recession since World War II has had the characteristics of the current conditions, and that one persisted throughout the decade, only ending once the war had begun and industries responded.  Now, as Robert J. Samuelson wrote this summer in The Washington Post (July 12, 2010) “The Great Recession (as it is widely called) has changed America psychologically, politically, economically, and socially. Just how will be examined and debated for years.”

In organizations as disparate as manufacturing and universities, ambiguity, urgency, and high stakes summarize the state of mind found today.  Like it or not, in this slow-motion crisis we are probably not returning to the decade of small savings and big spending; there will emerge, however, a “new normal” requiring adaptation and a different way of doing our fundamental work. Now is the time to move as quickly as possible in the direction of this “new normal.” Samuelson is an optimist, but soberly says, “one legacy of the Great Recession is that insecurity and uncertainty have gone upscale. People feel more exposed.”

As in other recessions, the job losses, income reductions, and falling home values have mostly, and certainly disproportionately, affected young people and hourly wage-earners. No one has an exemption or special protection in the present climate. This reality, of course, includes well-established universities and the families who send their children to them. Although New York may track slightly ahead, almost all of the mid-Atlantic and New England states, according to economists at Moody’s Investment Services, should not expect a recovery (“when expansion resumes”) until 2013.

In its summer (2010) report on higher education, Moody’s continues its overall “negative outlook,” particularly for smaller, private, tuition-dependent institutions. The general response tactics used by colleges and universities during the recession, which were applied in a variety of combinations, have helped immensely. The actions taken on campuses have included a variety of forms:  comprehensive budget reductions, capital project suspensions, increased resources for financial aid, enrollment growth or decrease, salary and hiring freezes, furloughs, position eliminations, early retirement incentives, and adjustments to retirement contributions.  But in the view of analysts at Moody’s “they all seem fairly short-lived solutions.”  Rather, Moody’s is making the strongest possible argument for American higher education to implement significant structural changes in operations, budgets, and programs. Business as usual, they maintain, is now an irrelevant concept.

Meanwhile, St. Lawrence’s Middle States Accreditation Report of April 2008 (Institutional Resources—Standard 3) unequivocally stated the belief that the University is “in serious need of a ‘Plan B’ for its finances.” In developing the operating and annual capital budget for the academic year 2010-11, the first part of an institutional reaction to the economy’s affect on all sources of revenue, St. Lawrence enters the first stage of the “Plan B” moment. And there is much more work to be done in our calculations and changes as we adapt to our financial circumstances. Among the relatively few recommendations in the extremely positive Middle States final report, the one that is most striking for its prescience argued for “specific actions to lower risk exposure to market dislocations.” Here we should take “market” to mean not only matters pertaining to the University’s investment portfolio, but also the all-important landscape of recruitment.

St. Lawrence must now possess laser-like focus on protecting the success, quality, and energies of the last decade. It must create a form of itself that it can confidently afford and still maintain its excellence and high reputation. While innovation is a constant thread in St. Lawrence’s long history, and will be a large factor in its thriving future, the risk of loose threads in the base fabric must be well understood. Put directly, we have finite resources and, consequently, it is fair to ask whether we can afford all our current program commitments. Certainly, we must live within our means. Further, we dare not become optimists without contingency plans.

We have an abundance of gifted teachers in our midst at St. Lawrence, but we will not educate our students as effectively as we are able unless we can also confidently assure ourselves that our faculty has ample time to do their best work. Beyond the riches of talent and the advantage of experience in the classroom, the best work of teachers must be framed in a healthy institutional structure that maximizes efficiency and clears the way for excellence in learning.

How to organize time, space, and people in proper equilibrium is a challenge as ancient as Plato’s Republic. And yet, that is generally the next order of business on the agenda for the academic year, 2010-11. A continuation of a campus conversation on several fronts is timely and necessary. While it may take several years for new models of the liberal arts college to emerge, St. Lawrence has the perfect opportunity now to become a national leader in how things—calendar, content, and facilities—will be better, more wisely shaped, combined, reduced, consolidated, or grown. Until then, the University would be foolish to begin too soon the updating of its 1997 campus master plan. Once we are fully confident in the organization, structure, and financial support of it all, the time for a new master plan will be ripe. Thus, we begin the second phase of the St. Lawrence Recession Response.

Situation:

What St. Lawrence has already accomplished—

1. Reduced expenses by $5 million in FY11 (see RRPTG report and recommendations 01/10)
2. Reduced total staff positions by 50 through early retirement, attrition, and 8 involuntary separations
3. Commissioned major market research project (Hardwick-Day) to help re-position St. Lawrence in competition for top students—will lead to new territory exploration and communications plan
4. Because the last two classes have yielded at a higher cost in financial aid, the current award matrix and predictive model will be evaluated and adjusted as necessary
5. Ground work studies done recently by faculty committees for remodeling curriculum, core liberal arts education, first-year program, and other academic services
6. Joined the planning of a pilot consortium called the New York Six (NY6) in an endeavor of collaboration aimed at sharing resources and reducing individual costs at each campus
7. Reworked the institutional debt into lower, fixed rates, which have, in turn, reduced annual interest expenses
8. Applied for and received a special grant from the Mellon Foundation to engage in a planning process that will define the “new norm” for a successful liberal arts college

What St. Lawrence must do next—

1. Reduce and, ultimately, eliminate the current deficit projections over the next several years (annually $3 million to $5 million)
2. Create a new plan that will build a positive salary and compensation trend line for faculty and staff
3. Review and arrange the priorities of the annual capital schedules in order to guard against the damaging subtleties of deferred maintenance
4. Consider possible options for further debt restructuring
5. Use the knowledge gained by the market research project to expand with fresh strategies the recruiting reach of St. Lawrence
6. Conduct a thorough review of how to tell the Laurentian story better and more widely—we are not seeking to create a new image, but rather a more effective way to communicate who we are and what the power of the St. Lawrence “brand” is; among numerous recommendations made in the Hardwick-Day report is one also heartily endorsed by the Board of Trustees: that the critical leadership position in University Communications needs to be filled immediately; more specific tasks will include a website update, expanding the scope of “outcomes” research about recent graduates, and developing a new enrollment marketing plan
7. Complete the Momentum comprehensive campaign on December 31, 2010; then begin to design the preliminary “architecture” of the next fundraising campaign

In order to devise a plan that will address these goals, the president, in wide consultation with others on campus, will appoint a second 12-14 member task group to lead the community discussion on structure, organization, and programs. The task group will produce a report with concrete recommendations and possible schedules of implementation that will center on making the quality and reputation of
St. Lawrence’s numerous programs financially sustainable; this group (an approximate equal number of faculty and administrative staff members) will be the ad hoc “steering committee” of
St. Lawrence’s Recession Response—Phase 2 (RR-P2). It may, by its own determination and as needed, consult and collaborate with the Faculty Council and other committees, such as Academic Affairs, Budget & Finance, and the Institutional Strategic Assessment Committee (ISAC).

Expectations:

The overarching question that must be thoroughly addressed by the RR-P2 task group is: what will be the optimal structure, administrative organization, and academic program, both appropriate and feasible, for St. Lawrence to meet all the obligations of its mission over the next decade? The
St. Lawrence mission is not under consideration, but is actually reaffirmed by the premise and scope of the challenge.

The RR-P2 task group will follow the same lines and spirit of the charge given to the 2009 team a year ago that framed a set of assumptions, working guidelines, and a process for reporting to the president, senior staff, and campus community. The final report will be submitted to the president by February 28, 2011. Once the president accepts the report, it will subsequently be made available by him to University constituencies.

Similar to the method and organization of the Middle States Self-Study, the RR-P2 task group will subdivide into at least 2, but no more than 5 study groups. Each of the study groups will invite other faculty and staff participation, thus widening the depth of discussion. Among topics to be examined will be the University's curriculum, its academic calendar, and its major or graduation requirements. A large body of knowledge has been gathered in recent years by the faculty’s Academic Affairs Committee, which will serve as a valuable resource and starting place. Visits to non-peer campuses by members of the task group and possibly members of the Academic Affairs Committee (we already know a good deal about our official comparison and competition groups) are encouraged, expected, and will be sufficiently budgeted. We were awarded a special planning grant by the Andrew W. Mellon Foundation for this purpose.

The catalyst for rethinking the academic programs and structures may be the heat of urgency owing to the economy, but the discussion should not allow financial concerns to be singular or overbearing. Times of constraint breed creativity; they provide an impetus for in-depth assessment of what we are best at doing. And yet, as the Middle States report advises (Standard 11), “the planning process [should] consider whether it is wise to continue introduction of new programs and which ones” before measuring our “ability to allocate or reallocate resources.” In other words, our new investments will require an even sharper pencil than before because the financial safety margins are narrower than they have been in two generations.

New programs or recombined existing programs (or departments) with new identities remain possible and desirable at St. Lawrence, even expected, but the community must also recognize in the exchange that some things may be discontinued for curricular as well as  financial reasons. Again, the Middle States report offers wise counsel about the importance and timing of an open planning endeavor (Standard 10): “Frank discussions about trade-offs in class size, compensation levels, faculty size, curriculum shape and size, and investment in other areas of the University will be required” to ensure well balanced faculty careers at St. Lawrence in terms of professional development, salaries, and overall satisfaction.

Here are examples of very pointed, but necessary “assessment” questions leading to new ways and means of doing our work: Where are the potential, inefficient redundancies that give good occasion for a different, more flexible organization? Where in the spectrum of liberal arts colleges are the most relevant learning models being developed and practiced? After more than two decades, what would make the first-year program better and also more affordable? Where are there departmental synergies that add value if merged? Are there upside opportunities for online education or new graduate programs with limited residency in the summer?

Other topics that bear on the University’s optimal operating structure ought to include non-academic programs (such as athletics), year-round campus usage (with all meanings of sustainability in mind), and administrative functions.  How much time could be garnered and recovered if governance structures were modified further than they were a few years ago?

As a result of the campus discussions, distilled by the task group as findings and recommendations, the final report will reflect the strategic priorities of the University’s financial planning. We have stated in prior communications five strategic touchstones that must also be embedded and integrated into the task of Phase 2:

1. Financial Equilibrium—operating budgets that align expenses with realistic revenue projections
2. Debt Reduction—the continuing discipline of paying both interest and principal with specific targets for debt balance must remain a priority
3. Endowment Growth—will take a long time, but it must figure into any plans for program innovation or facility enhancement
4. Contingency Reserve Plan—a new “Plan B”  should consider managing risk in an environment that favors the best prepared and most nimble in the face of  the unexpected, such as an enrollment shortfall or unscheduled mission-critical expenses
5. Annual Capital Investments—maintained with greater analysis of risk and reward, cost and benefit as the basis of decisions

Coda:

In January of this year, the task group (RRPTG), assigned to develop findings and recommendations about the University’s annual operating budget, submitted a comprehensive report that gave impetus to St. Lawrence’s first major response to the recession. Its opening section remains a useful afterword in framing the process for St. Lawrence’s next sequence of plans and actions:

The present moment at St. Lawrence University represents an intersection of institutional imperatives and external realities. In many ways, our University has never been stronger. While assessments of individual offerings vary, certainly, the academic programs we now maintain are flourishing... The quality of our students is at an all-time high and those students are well-satisfied by all that the University offers them... At the same time, St. Lawrence has nearly completed a period of growth and renovation of the physical plant, a period of construction that has resulted in greatly improved campus infrastructure and environment… Even in the best of times, the arrival of a new president offers a chance for introspection and a call for a new direction. But these are not the best of times. Like every other institution of higher learning in America, the current recession—arguably the worst downturn in the economy since the Great Depression—has presented St. Lawrence with the unanticipated challenge of a significant and undeniable shortfall in revenue…[And] we are still facing a significant gap in our operating budget, with a projected deficit of approximately $5 million per year for the next several years.

If the first phase of our recession response was a matter of beginning to bridge the operating budget gap (with cost discipline, sharper efficiencies, and expense reductions), principally a financial matter, then the second phase, while still driven by financial concerns, is slightly less than that, but is actually much more visionary and long-range in its aim: How do we keep doing what we do extremely well, yet with close, pointed focus balance actual revenues with actual costs? What continues to make sense, what no longer seems to fit? What roads lead to the necessary structural overhaul that will ensure St. Lawrence’s financial security and academic prosperity?

While the last quarter century may become known by historians as an academic flush time of prosperity, the current economy creates its own auspicious opportunity for St. Lawrence to build an even stronger future than it might otherwise have had in the old “arms race” of material growth. It may not become the best of times soon, but there is no excuse for St. Lawrence not to become the best of places. The good of this place is its best endowment. The morale, confidence, and resiliency of St. Lawrence make it resource rich in tradition and people.  Rather, our moment to translate the things we are excellent at doing into a more efficient, compact, and powerful form will never be any better than now. One of our most immediate and most hazardous perils would be to wait things out, thus missing an extraordinary opportunity to be innovative with what we already have at hand—a beautiful setting, superb spaces, substantial intellectual capital, and many, many good people.