Restructuring a University

How one institution is staying viable

The following challenges may sound familiar: Financial obligations and liabilities begin to outgrow revenue from students — who are increasingly difficult to attract and keep. But cutting staff, canceling renovations and maintenance projects, delaying payments to vendors, and laying off adjunct faculty don’t turn things around. Then things get even worse.

This is an in-depth case study of an institution, Henderson State University, that faced such a predicament and realized it could no longer avoid difficult decisions. It outlines the missteps made and warnings ignored. And it’s a detailed account of how, in 2022, the institution declared financial exigency, a mechanism colleges can use to engage in a transparent and orderly process to restructure. While this case study focuses on one institution’s experience, it offers insight into the factors and tradeoffs that any leader contemplating a large-scale restructuring should anticipate.

This report is based on interviews with state officials, university leaders, and faculty members, along with extensive documents that shed light on years of poor decision making. It also includes perspectives from more than two dozen experts in college finance, faculty affairs, legal issues, accreditation, and other relevant areas.

Purchase this report to learn how to:

• Recognize red flags that tend to predict the kind of financial distress that can lead to a restructuring or an exigency declaration.
• Plan for and conduct analyses before attempting a restructuring process that involves cuts to academic departments and core functions.
• Approach key considerations — like engaging with faculty, anticipating legal and communications issues, and working with accreditors and bond ratings agencies — that are likely to be implicated during a restructuring process.
• Understand the risks and possible benefits of an exigency or restructuring process.

Date: April 2023
Pages: 50
Digital file size: 3.19 MB

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