Rating Action: Moody's downgrades Valparaiso University's (IN) to Baa2; outlook revised to stable
27 Feb 2023
New York, February 27, 2023 -- Moody's Investors Service has downgraded Valparaiso University, IN's issuer and revenue bond ratings to Baa2 from Baa1. As of June 30, 2022, Valparaiso had $96.2 million of outstanding revenue bond debt. The outlook has been revised to stable from negative.
RATINGS RATIONALE
The downgrade to Baa2 reflects a large structural budget imbalance, with weak operating performance and debt service coverage likely over the next several years. Liquidity is already very thin, inclusive of draws under a working capital line, and will erode further, with the pace of decline dependent on the ability to successfully implement in a timely way initiatives to realign its program and expense structure with enrollment amid a difficult regional student market. The university generated a nearly 8% operating deficit in fiscal 2022 and the deficit for fiscal 2023 is forecast to be substantially worse, with below 1.0x debt service coverage from regular operations.
Despite these challenges, Valparaiso University's Baa2 remains supported by its very good total wealth, good levels of spendable cash and investments, and a recognized regional brand bolstering a still good strategic position. Philanthropic support is relatively good with three-year gift revenue averaging over $15 million. Despite a use of some liquid reserves, spendable cash and investments continues to provide solid debt coverage at nearly 1.4x. An operating base of over $112 million provides some expense flexibility and potential for operating performance improvement through expense reductions. Additionally, the university has gained some traction in graduate programs, including nursing and information technology.
RATING OUTLOOK
The outlook is currently stable incorporating the university's identified budget initiatives, which have some prospects for success on both the revenue and expense side. The stable outlook also incorporates broader wealth levels that provide some financial flexibility to implement plans. The university's management team is relatively new without a yet established track record of reversing the university's multi-year enrollment and financial challenges. Inability to make clear progress in fiscal 2024, including meeting enrollment targets in Fall 2023 would have either rating or outlook implications.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Notable strengthening of brand and strategic position, reflected in growing enrollment and net tuition revenue and further growth in philanthropy
- Significant improvement in annual operating performance driven by net tuition revenue growth and expense reductions
- Material growth in total wealth and financial reserves with significantly stronger liquidity
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Failure to make progress towards stabilizing enrollment in fall 2023 with growth in net student revenue
- Inability to make substantial progress towards narrowing operating imbalances in fiscal 2024 and beyond, with consistent debt service coverage above 1.2x.
- Further reduction in unrestricted liquidity or broader wealth levels
LEGAL SECURITY
Outstanding debt is all unsecured general obligations of the university. The J.P. Morgan Chase line of credit includes a financial covenant that unrestricted cash and investments to debt be at least 1.0x. The covenanted ratio stood at 1.5x in fiscal 2022. There are no debt reserve fund requirements.
If only the university had some kind of crazy valuable asset that they could sell and shore up the financial stability and, by extenstion, future of the institution?
If only, if we did though people rather hold on to it then provide the university with the working capital needed
Valpo's "Forbes Financial Grades"
2019 C
2020 B-
2021 C
2022 C-
• Approximately 900 private universities graded
• D is the lowest possible grade
• Grade range: A, A-, B+, B, B-, C+, C, C-, D
• Valpo has plenty of company. At a glance, it appears that 30-40% of the 900 schools are at C- or D.
All evidence points to tough times ahead. I think Valpo has the ability to weather it but it may require some slimming down or prioritizing investments aimed to slow the bleed.
There are a lot of schools out there in way worse positions that survive on 1,000 students or less that most likely won't be able to make it
https://julieroys.com/trinity-international-university-announces-closure-residential-program-camp/
Stories like this are going to keep coming and while most of the "bigger" fish will survive or seem to thrive a lot will have less to do with something they're doing and more with options seeming to decrease across the board.
In calmer moments I think we all know that Valpo is not on the brink yet. Even though they gave us a downgrade, they cite a high reserve of campus property value and a good regional reputation.
The race is on to improve enrollment in fall 2023, 2024 and 2025 before the demographic cliff hits. How fast can you build a dorm? That's why they need cash quick and the art sale can drive that cash injection.
Hiring Roger Powell might put us on the map more in Chicago. How fast can he go into the admissions material with his pro and Illini credentials?
A public financial report from 2020 shows that the university experienced a 6.5%/$12M loss. This marked the beginning of consecutive annual losses Moody projects will continue through 2023, and possibly beyond. From the Moody report, "...the university generated a nearly 8% operating deficit in fiscal 2022 and the deficit for fiscal 2023 is forecast to be substantially worse." Interpolating this limited data, it appears that the university will have lost roughly $54M for the 4-year period 2020-23.
I was involved in a somewhat similar situation in the past. It seemed that no matter what we did internally, nothing would stop the bleeding. Market rates bottomed out and reserves depleted over time. Ultimately, the business was sold to a venture capitalist, who reshaped it to complement their other business interests, including gutting the workforce, among other painful measures.
Unquestionably, the university is in serious financial distress, as defined by its inability to generate sufficient revenues or income, making it unable to meet or pay its financial obligations. Financial distress is generally due to high fixed costs, a large degree of illiquid assets, or revenues sensitive to economic downturns. Auctioning off millions of dollars in treasured paintings (illiquid assets) is testimony to it. The very idea that a group of educators thinks that the current situation appropriately calls for this-for-that bargaining with the administration demonstrates that they fail to comprehend the severity of the situation. If they honestly have ideas for reducing expenses, they, along with everyone else, should be offering them up freely and unconditionally.
Very clear story articulated by wh with financial data to back it up. I would add, however, that shoring up the cost side is only part of the necessary revitalization for Valpo. Investing in key infrastructure (dorms, key academic buildings) is only part of fixing the revenue side - there also needs to be an "all-in" effort to attract students via personal meetings with prospective students and their families. The macro-oriented approach from the university (i.e. selling the university) is only a part of this, as they need faculty in each college to be meeting with prospective students and their families that are interested in their programs - selling them on how the personal touch from individual faculty will increase their likelihood of succeeding and will provide them with a rich experience in their chosen field.
Quote from: wh on April 23, 2023, 08:46:26 PMThe very idea that a group of educators thinks that the current situation appropriately calls for this-for-that bargaining with the administration demonstrates that they fail to comprehend the severity of the situation. If they honestly have ideas for reducing expenses, they, along with everyone else, should be offering them up freely and unconditionally.
I've raised this point before. Crickets...
Quote from: vu72 on April 24, 2023, 02:31:36 PM
Quote from: wh on April 23, 2023, 08:46:26 PMThe very idea that a group of educators thinks that the current situation appropriately calls for this-for-that bargaining with the administration demonstrates that they fail to comprehend the severity of the situation. If they honestly have ideas for reducing expenses, they, along with everyone else, should be offering them up freely and unconditionally.
I've raised this point before. Crickets...
This assumes that faculty are provided with sufficient access to budget and financial figures, which, in turn, enables informed participation in a genuine shared governance spirit and practice. Private universities are not obliged to disclose $$$ data beyond the meta-level stuff in their non-profit 990 tax filings, and many do not.
The annual losses accrued by VU are troubling but not unique among peer schools during these past few years. That absence of uniqueness does not counsel in favor of assuming the University will simply muddle through, but rather points to the fact that many, if not most, regional, private universities are struggling right now. It's not altogether clear how many of them will survive the coming demographic downturn in 18-year-olds ready for college and the ongoing trends of folks in that age bracket (especially young men) opting to pass on college, at least for now.
In addition to the recent Bradley news of a $12M, add the large deficit of $56M faced by DePaul, a very large urban university.
CoVID was a black swan event. But the whole country overreacted to the risks. Data was exaggerated and dissenters shamed. Higher education (largely an esoteric idealistic and fearful group) reacted just as badly as the teachers' unions. CoVID led to the discovery that remote learning was viable even if less desirable and it led to government coddling of universities financially at a point in 2020-2021 in a way that masked their business model flaws.
You could not pay me 20% more than I earn to move to the financial hell hole that is Illinois.
Quote from: crusadermoe on August 17, 2023, 12:24:45 PM
In addition to the recent Bradley news of a $12M, add the large deficit of $56M faced by DePaul, a very large urban university.
CoVID was a black swan event. But the whole country overreacted to the risks. Data was exaggerated and dissenters shamed. Higher education (largely an esoteric idealistic and fearful group) reacted just as badly as the teachers' unions. CoVID led to the discovery that remote learning was viable even if less desirable and it led to government coddling of universities financially at a point in 2020-2021 in a way that masked their business model flaws.
You could not pay me 20% more than I earn to move to the financial hell hole that is Illinois.
And now, back to basketball! ;)
(from Moody's last bond rating)
"The university's management team is relatively new without a yet established track record of reversing the university's multi-year enrollment and financial challenges. Inability to make clear progress in fiscal 2024, including meeting enrollment targets in Fall 2023 would have either rating or outlook implications."
Net tuition income is the critical number, not enrollment.
The enrollment question now shifts to aggregate income from students. The campus might have a feel for that after the board meets again. Income for Moody's purpose is driven by not just tuition, but also by room and board.
Well let's enjoy the holiday season and the start of basketball! I will see everybody in January.
Hopefully the New Year will ring in (or have rung in) good news on two topics:
1) Tuition income (rather than just the of students) came in better than hoped in fall 2023. The # of students only half the story.
2) Paintings get sold for a high price, and that the dorm can be built to get on-line by July 2025. But with some detective work, smart buyer agents will have the leverage because the school needs to sell on that timeline.
Quote from: crusadermoe on November 10, 2023, 03:37:24 PM
Well let's enjoy the holiday season and the start of basketball!
Hopefully the New Year will ring in (or have rung in) good news:
Tuition income (rather than just the of students) came in better than hoped in fall 2023. The # of students only half the story.
I can verify this. Merry Christmas!
Quote from: crusadermoe on November 10, 2023, 03:37:24 PM
Well let's enjoy the holiday season and the start of basketball! I will see everybody in January.
Hopefully the New Year will ring in (or have rung in) good news on two topics:
1) Tuition income (rather than just the of students) came in better than hoped in fall 2023. The # of students only half the story.
2) Paintings get sold for a high price, and that the dorm can be built to get on-line by July 2025. But with some detective work, smart buyer agents will have the leverage because the school needs to sell on that timeline.
Lawyer in VU artwork lawsuit now looking to pressure AG's office to block saleVU declined to comment, but a spokesperson for the university said no final decision has been made on the sale of the artwork.
https://www.nwitimes.com/news/local/education/lawyer-in-vu-artwork-lawsuit-pressuring-ag-to-block-sale/article_b09bb098-8978-11ee-b00c-8b274114822b.html
Are you kidding here? To President Padilla. In all due respect, stop dragging your feet. Let's get those paintings sold and get on with construction.
Quote from: wh on November 25, 2023, 12:30:26 AM
In all due respect, stop dragging your feet. Let's get those paintings sold
I believe the Indiana AG still needs to weigh in, if he's not too busy facing professional misconduct charges in his own state.
I thought the ruling said that the Brauer and the law prof had no standing to sue. In that case they strategic planning rationale had nothing to do with it.
Selling immediately would not be a great move just because 1. people will assume they can low ball us out of desperation and 2. You've probably already missed your deadline to get it done when you wanted so you should take your time and both try to sell it for the most and to the most ethical seller. I'd imagine a lot of museum are wary to be the one to immediately buy it and will want a deal if they anticipate a black mark for doing it. Leaves you with private collectors who will definitely want to low ball you. Odds are we will not get what they were valued at prior to the debacle until some time passes.
Quote from: crusader05 on November 27, 2023, 09:17:38 AM
Selling immediately would not be a great move just because 1. people will assume they can low ball us out of desperation and 2. You've probably already missed your deadline to get it done when you wanted so you should take your time and both try to sell it for the most and to the most ethical seller. I'd imagine a lot of museum are wary to be the one to immediately buy it and will want a deal if they anticipate a black mark for doing it. Leaves you with private collectors who will definitely want to low ball you. Odds are we will not get what they were valued at prior to the debacle until some time passes.
I have shared details of my compromise proposal, briefly and generally outlined here a while ago, with various principal participants on all sides of this controversy, including President Padilla and the Attorney General, for consideration. I have no idea what will happen, but I still believe a compromise avoids further divisiveness among VU constituents and maintains respect from the outside art world with its innovative solution.
valpopal - With all due respect, your compromise plan would reduce revenues from the art by millions - which is not acceptable for the university. In some cases, a compromise makes no sense and this is one of them.
crusader05 - While I agree with your points about waiting for the right time to get the right price for the art, I do not believe that Valpo should be evaluating buyers by who is the most ethical. If someone offers a million dollars more than other prospective buyers or the estimated market price and they want to hang it in their house where almost no one can see it, that is not Valpo's problem. Valpo's mission does not include preserving or maintaining societal value for art.
Quote from: vu84v2 on November 28, 2023, 12:53:21 AM
I do not believe that Valpo should be evaluating buyers by who is the most ethical. If someone offers a million dollars more than other prospective buyers or the estimated market price and they want to hang it in their house where almost no one can see it, that is not Valpo's problem. Valpo's mission does not include preserving or maintaining societal value for art.
From the Valparaiso University "Commitment to Ethical Behavior": "Valparaiso University believes fair and ethical practices are fundamental to a sound academic environment and appropriate business practices. In order to be successful, the University must achieve and maintain a high level of public trust and respect. This trust can be sustained only if the University's directors and employees model the highest standard of ethical behavior."
Ethical or "most" ethical? Shouldn't this be a simple pass/fail?
Is it unethical for a respected private collector to purchase a work of art for their personal enjoyment or to display it only to a limited audience?
Or is it unethical if a potential buyer uses ill-gotten gains (say, real estate fraud or drug dealing) to make the purchase?
Quote from: VULB#62 on November 28, 2023, 10:56:18 AM
Ethical or "most" ethical? Shouldn't this be a simple pass/fail?
Is it unethical for a respected private collector to purchase a work of art for their personal enjoyment or to display it only to a limited audience?
This would not be unethical for the buyer, who establishes a personal set of standards. However, Valparaiso University in its mission is publicly committed to "the highest standard of ethical behavior." As well, "the University must achieve and maintain a high level of public trust and respect." Therefore, by VU's own established criteria, for the Brauer Museum to sell a famous artwork that had been purchased specifically for the public good to a buyer who will withdraw the painting from public view would be unethical, even if the private buyer was offering $1-million more than a reputable museum for the purchase.
valpopal - I think you are confusing ethical behavior with a perspective that all stakeholders must be satisfied/happy for an action to be ethical. Valpo is doing something that you, some others in the university, and a group of art associations (the latter of whom should have no consideration in decisions made by Valpo) disagree with. That does not make it unethical. Further, I ,as an alum and donor, would argue that not applying resources that are clearly not within the mission of the university to advance the mission of the university is unethical.
Quote from: vu84v2 on November 28, 2023, 06:05:22 PM
valpopal - I think you are confusing ethical behavior with a perspective that all stakeholders must be satisfied/happy for an action to be ethical. Valpo is doing something that you, some others in the university, and a group of art associations (the latter of whom should have no consideration in decisions made by Valpo) disagree with. That does not make it unethical. Further, I ,as an alum and donor, would argue that not applying resources that are clearly not within the mission of the university to advance the mission of the university is unethical.
I believe you are the one who is undermining ethical behavior to justify your viewpoint. According to your logic in a previous comment ("If someone offers a million dollars more than other prospective buyers or the estimated market price and they want to hang it in their house where almost no one can see it, that is not Valpo's problem"), you conclude Valparaiso University would not be in violation of its commitment to "the highest standard of ethical behavior" and has no obligation to its donors who purchased the paintings specifically for the public good by displaying it in a museum, nor would you see that as a betrayal of Valparaiso University's stated mission to "maintain a high level of public trust and respect." Therefore, by your same logic, it also would be all right for Valpo to sell a world renown painting for the highest price to a prospective buyer who has indicated a desire to deface, damage, or destroy the artwork upon purchase because that "is not Valpo's problem."
valpopal - While that is not a realistic scenario, we can agree that selling paintings to someone who would destroy them would be unethical.
The problem with statements like "highest standard of ethical behavior" and "maintain a high level of public trust" is that those phrases have wildly differing definitions across the range of stakeholders. Indeed, people who feel wronged choose aspirational, but fairly ambiguous, statements like these to justify their cause. One could make darn near any argument and use those phrases as justification.
Your arguments regarding ethical behavior don't hold a lot of water when you bring in the perspective of donors. What you are effectively arguing is that donors should donate more money for capital projects because the university should not sell the paintings or should sell the paintings at a lower price to someone whom the art community approves. Since the amount of money needed is the same regardless, the net effect would be (since the art can be sold) that the donors for capital projects (i.e., dorms) are expected to fund the art.
Quote from: vu84v2 on November 28, 2023, 06:47:31 PM
valpopal - While that is not a realistic scenario, we can agree that selling the painting to someone who would destroy it would be unethical.
The problem with statements like "highest standard of ethical behavior" and "maintain a high level of public trust" is that those phrases have wildly differing definitions across the range of stakeholders. Indeed, people who feel wronged choose aspirational, but fairly ambiguous, statements like these to justify their cause. One could make darn near any argument and use those phrases as justification.
So selling the painting to a prospective buyer with intent to deface or destroy the artwork would be unethical. But selling a world renown painting donors hoped would be used for the public good to an individual intending to permanently prevent public viewing would be ethical. Seems to me you have an inconsistency here. Ethics are principles based upon fundamental truths and not so pliable. That is why upholding "the highest standards of ethical behavior" can be damned inconvenient at times. As for the problem with those phrases: they are from Valparaiso University's "Mission and Values Statement on a Commitment to Ethical Behavior." I think you might want to address VU with your criticism: "One could make darn near any argument and use those phrases as justification."
valpopal - An organization looking to hold itself to the "highest standards of ethical behavior" is a worthy vision. The problem in universities (and some other types of organizations) is that when a hard business decision needs to be made the stakeholders who disagree with the decision just run and point to that statement and say "you're not being consistent with that statement." I do think that Valpo is an ethnical organization...I just recognize that there are hard business-oriented decisions that must be made and that there are many other stakeholders besides those who place nearly infinite value in art that is not associated with the university mission.
Quote from: vu84v2 on November 29, 2023, 08:18:37 AM
art that is not associated with the university mission.
This notion that "art is not associated with the university mission" is countered by the very history of Valparaiso University. Numerous presidents of the university have praised art as a core resource in the education of students. You can look up the words and actions, including budgetary, of Kretzmann, Huegli, Schnabel, Harre, and Heckler, among others. Only Pres. Padilla has thought otherwise. Huegli initiated an official "Director of Art Galleries and Collections" and a "Visual Arts Council" in 1972 and in 1974 renamed the Sloan Committee overseeing acquisitions to the "University Museum Council." Not only did those presidents support the establishment of a collection of art for the university, but they also saw to the construction of the museum in the 1990s as an anchor for the Arts Center located on campus directly across from the chapel and viewed as a hub of liberal arts education. As well, an ongoing VU Cultural Arts Committee, created in 1974 and continuing today, has funded arts annually specifically to advance the education mission. Prior to the building of the museum, exhibits of the art collection were held in all of the educational centers for assistance in the instruction of students: including Moellering Library, Christ College, Neils Science Center, Lebien School of Nursing, as well as the Chapel, the Union, and the Law School.
Indeed, the original Sloan endowment that gave birth to the university's art collection was established "to expand and use the Collection educationally," according to a brief history authored and published in 1995 upon the museum's dedication by professor emeritus of Geography and one-time (1973-1979) Vice President of Academic Affairs John Strietelmeier. As he wrote: "Music, the theatre, painting, sculpture—these are not merely the ornaments of life; they are the marks of our humanity. the carriers of civilization. The new Center for the Arts, which we are formally dedicating this weekend, is a bold, strong assertion of this University's continuing commitment to these arts. And the inclusion in that building of gallery space for the Valparaiso University Museum of Art is for many of us a special joy, for it is the fulfillment of a promise made almost half a century ago when the University was given the nucleus of its present extensive collection of works by American artists." He also included in his opening sentences a purpose for compiling that history of the role art has played in education at Valparaiso University: "Colleges and universities have notoriously short memories. A student generation passes through in somewhat less than four years: and, at least in my day, there was a turnover of thirty or more faculty members every year. How, then, can we be expected to remember...."
Anyone who believes "art is not associated with the university mission" is an outlier in the history of Valparaiso University and speaks contrary to the facts included within it.
Quote from: valpopal on November 29, 2023, 11:26:13 AMThis notion that "art is not associated with the university mission" is countered by the very history of Valparaiso University. Numerous presidents of the university have praised art as a core resource in the education of students. You can look up the words and actions, including budgetary, of Kretzmann, Huegli, Schnabel, Harre, and Heckler, among others. Only Pres. Padilla has thought otherwise
The Brauer Museum boasts a collection of more than 5,000 works of art from the mid-19th century to the present. Also included are world religious art and Midwestern regional art. The collection comprises paintings, sculptures, drawings, prints, and photographs.
Somehow the sale of three pieces out of over 5000, will somehow make "art as a core resource in the education of students", reduced to an unrecognizable shadow of its former status on campus.
valpopal - nothing truly unethical is going on with the sale. The sale is going through hearing, the sale will happen and we can move on to keep Valparaiso University afloat.
Besides, this O'Keefe painting honestly looks like something from a South park episode...
Quote from: vu72 on November 29, 2023, 12:48:38 PM
Somehow the sale of three pieces out of over 5000, will somehow make "art as a core resource in the education of students", reduced to an unrecognizable shadow of its former status on campus.
Of course, why didn't I think of this. After all, I remember how the Chicago Bulls had enough other players to field a team after Michael Jordan left.
Quote from: usc4valpo on November 29, 2023, 04:49:01 PM
valpopal - nothing truly unethical is going on with the sale. The sale is going through hearing, the sale will happen and we can move on to keep Valparaiso University afloat.
Besides, this O'Keefe painting honestly looks like something from a South park episode...
Thanks so much for the assurance. Whew! And here I was foolishly listening to the multitude of experts in the field and those specializing in ethics at the university when I could have gotten a guarantee "nothing truly unethical is going on" from someone whose art knowledge extends to misspelling the painter's name and comparing a world-renowned masterpiece modern work to a South Park episode. I'm convinced now. ;)
The artwork and masterpieces of Matt Stone and Trey Parker, including producing one of the greatest broadway musicals ever produced, have had a larger global cultural influence than the artwork being sold at Valparaiso University.
Quote from: valpo22 on November 30, 2023, 05:50:15 AMI am leaving at the end of the year for a better job.
I'm sure you will be much happier and perhaps the University will be better off with a faculty member proud to be part of a prestigious institution like Valpo.
Quote from: usc4valpo on November 30, 2023, 08:18:41 AM
The artwork and masterpieces of Matt Stone and Trey Parker, including producing one of the greatest broadway musicals ever produced, have had a larger global cultural influence than the artwork being sold at Valparaiso University.
Yes, and they rightfully have created a $1-billion empire for their wonderful popular work, which I enjoy as well. However, as Valpo students have been taught every semester during the university's history, one should be able to distinguish between different types of art—popular, fine, applied, etc. Danielle Steel was the most popular novelist of the 20th century and #1 on the all-time
New York Times bestseller lists top 50, selling nearly a billion copies of her books. Hemingway doesn't appear until #32 and Faulkner doesn't appear at all. Yet, both Hemingway and Faulkner are the Nobel Prize winners.
wow, some cold statement here from 22 and 72. valpo22, I hope all goes well with you and appreciated the discussions.
Quote from: valpo22 on November 30, 2023, 05:50:15 AM
I haven't checked in here in a while. I think this particular vein of bickering over the art sale is a pointless red herring debate at this point. Surely the art is kind of a null issue, since nobody has any illusions that the university cares or can afford anybody or anything of quality. The paintings should be sold to a more worthy institution.
The bigger conversation is that the uni adminstrators hired a consulting firm (the RPK Group which did the cuts at West Virginia University: https: //www.thenation.com/article/society/wvu-cuts-higher-education/ "The Evisceration of a PUblic Unviersity"), so everybody awaits their report in the early Spring to see what the university will probably hack away next. If the RPK's track record in destroying universities and their reputations is anything to go by, then VU Board and Administration is probably going to use these (expensive) 'consultants' as the third-party justification to keep raising teaching loads, paying dirt, cutting programs and offerings, lowering standards and student experience, and generally hollowing out the value of the Valparaiso name and degree. The university is circling round the toilet bowl, and I am leaving at the end of the year for a better job.
Although I am unhappy about the planned sale of the art, I agree with valpo22's characterization of the retention of this particular consultant as a much bigger deal. Anger and turmoil are the norm at West Virginia University, and what remains when the smoke clears will be a sharply diminished flagship university in a state that sorely needs to up its educational game. West Virginia is experiencing a brain drain of talented young people who seek brighter futures elsewhere, and stripping down WVU will only exacerbate that problem.
As applied to a private university like VU, the danger is that VU will follow advice that ultimately diminishes the qualitative value of a VU degree, robs the university of its unique qualities, and makes it a Plan C or D destination for talented new faculty (the bloodletting during the pandemic already made it a Plan B destination, I'm afraid).
I have long observed that if a university needs a big consulting firm to help it engage in big-picture assessments of its mission and future, then it really doesn't know what its mission is and thus has little sense of what its future should be. This is not a problem unique to VU. Rather, we're just the latest to spend gobs of money on what we should already know and understand on our own.
Even though we've had our disagreements on this board over what the University should be doing, collectively we have a much better sense of the school's strengths and weaknesses than a bunch of consultants coming in with their canned predispositions and templated views of higher education. Furthermore, while VU pleads poverty in terms of faculty salaries, pillages its own art museum of its most valuable and distinct works to build dorms, etc., be assured that these consultants will be paid s**tloads of money, the kind of cash that most faculty would drool to earn.
This decision does not reflect positively on VU's Central Administration and Board of Trustees.
The discussion here about VU's morals, ethics, and situation has been a fascinating read. As a former graduate student at IU, I figured I would jump in with my admitted jaded opinion. Other than the enrollment problem, VU is hardly unique with regards to the other issues in higher education such as faculty treatment and pay, the gutting of programs, and the diminishing the value of a degree. Higher ed as a whole is rotting from the inside out for a variety of reasons. The things that I saw at IU are very similar to a lot of the issues people have discussed in this thread, so I've described my experience below to put some things in perspective about how this is not just a valpo problem but a higher ed problem at its core.
I got to IU after the graduate student strikes. The atmosphere was one of chaos due to the university scrambling to defeat a graduate student unionization effort and to cope with a graduate student shortage because of the strike and lack of domestic students attending graduate school. Unlike at valpo, graduate students do the majority of the teaching at big 10's like IU, so dealing with the grad student shortage and threat of strikes was quite a dire issue for the core function of the university. Instead of addressing the root causes of the problem (an overreliance on graduate students to teach undergraduates, awful treatment and pay), the university decided to recruit undergraduates to teach the other undergraduates in exchange for tuition remission! So now, students take out loans and pay ever increasing amounts of money to sit in 500 person lecture halls, and then be taught recitation and have their work graded by other people in the exact same boat. Speaking of the 500 person lecture hall classes, you would think that at least the lecture component would be taught by a professor, right? WRONG! These classes are taught in many cases by lecturers, since the university can pay them less and more easily replace them. There has been a concerted push to reduce the amount of professors and replace them with lecturers for the above reasons.
Okay, so if you are a student at one of these large institutions and get past the first two years of introductory classes with the lecturers and undergraduates/graduates teaching you, at least you will finally receive a great education from well renowned experts in your field of study, right? Maybe. Because universities like IU are R1 institutions, the faculty members are more focused on their research than they are on teaching students. Bad behavior among tenured faculty at these R1 schools goes completely unpunished. I had a professor in one of my graduate chemistry courses show up to teach class completely plastered, unable to speak coherently or stand up straight. He would also go missing for weeks at a time, and wouldn't show up to work at all. Other faculty members had to step up and teach both the graduate class I was in, and the class of undergraduates he was teaching. The students in his research lab were left without a mentor, and several of his students dropped out of grad school. Nothing was done about it, and when grad students complained about it, they were just told to deal with it. He is still a faculty member at IU. The combination of removing faculty for lecturers, continuing to retain bad faculty, undergraduates holding the office hours and recitation, and the overall attitude at the university mean that students are getting a worse education for the money they put forth. I left the Ph.D program at IU this May after one year, and it was one of the best decisions I have ever made in my life.
This same thing is happening at a lot of the schools across the country, and I think that Valpo has a problem with trying to emulate what these other schools are doing because they believe it will help them stay competitive in the tough higher ed market. The administration is in danger of losing sight about what makes valpo special: The small size, classes taught by professors who want to be there and want to teach, and the positive connection with faculty. While I am a Padilla fan and do think that some of the faculty complaints, especially about the art sale, are overblown, I think that the VU administration has adopted an arrogant and dismissive attitude toward the faculty that is uncalled for. Yes, a lot of other schools have that attitude, but it doesn't make it right and makes the existing problems so much worse. Its the same idea with the solutions the consultants have previously put forth and will likely give valpo. They will point to other schools that are doing "better" since they cut faculty pay, eliminated majors, increased their reliance on lecturers, increased teaching loads, and increased class sizes. But is the grass really greener at those schools, and is that what success should look like? I think not, and I think adapting all those measures, especially at a small school with enrollment problems like valpo, will do a lot of damage. The solution Valpo needs is quite obvious and simple: Heavily emphasize recruitment to get bodies in the seats. All of the less obvious and hard decisions such as eliminating some majors have already been done, so I really don't know why we are paying consultants when the only other answers they will give are awful for the reasons above. This post ended up a lot longer than I thought it would be, but I feel that it all needs to be said and I hope I didn't bore you all with a wall of text.
Valpo22, I wish you the best of luck at your new institution, and I hope wherever it is you are ending up at will respect you and treat you well.
My simplistic view: Generally, I characterize Valpo as a private, liberal arts with some additional schools of focus, 2,500-3,000 student institution that heavily attracts students from the central and upper midwest, but also, because of its religious association, also attracts students nationally as well as internationally. It's endowment falls within the $200M-$400M window. Its sticker price is kinda on the high end for where it is located. Is that fair?
At least according to postings on this board, Valpo is in trouble and is looking for a remedy. One strategy is hire a high-powered consultant that has dealt with large schools like WVU. As David has mentioned, these guys come with templates and canned predispositions.
But there's gotta be institutions that parallel, within reason, the Valpo profile I characterized above and are kicking butt. Who are they? Why are they swimming successfully against the current? Can we pick their minds directly rather than through a consultant's filter? Is that something that can occur in higher education?
For smirks and giggles let's assume, say, Davidson is one of those excelling schools. Why not do formal visits to Davidson as well as BLANK and BLANK colleges and explore with them their strategies that have resulted in resilience in the face of current trends? All institutions are at risk. Cooperation benefits all - the rising tide floats all boats idea.
My parallel rationale: I coached HS football in another life (actually a few lives ago). When I thought I needed to adopt a new offense or defense to better compete, I researched college programs that were very successful under similar circumstances (e.g., smallest school in the league, lower talent level) at their level, and I visited with those programs in the spring in order to learn how they did it, and I learned a helluva lot in those visits and was able to make positive changes as a result.
IMO, no matter how much experience one has, there are people who have done it better. Those sources need to be sought out and tapped. Directly. Personally. Not blindly through a third party.
In my39 years in industry, for the most part hiring a consultant is a lazy and ineffective way to solve problems, not to mention you tend to lose trust and lower morality of your employees. If Valpo has a competent board and a president, they can figure this out.
Regarding 22's comments and frustration, this certainly is happening beyond Valparaiso, as Drake faculty are taking pay cut and dealing with a lower enrollment.
This art sale needed to be solve to compete gang.
It would be wise to dial back the outrage, and look at the facts as we know them.
1) We DO NOT know how much the consultants are getting paid, so it is wrong to speculate that they are unnecessarily costly. I'm sure they are expensive, yet VU is and has been in very difficult financial circumstances. VU has been operating under a structural deficit for many years. The Moody bond rating report says it in black and white.
2) The faculty and administration (whatever their expertise) has not yet been able to turn the corner on this. So, it seems reasonable to me to consult with experts who might be able to offer assistance.
3) West Virginia Univ. is a trainwreck for many reasons. I have a former student of mine who is a department chair there, and recently got some additional insight. There is a Wall Street Journal article from this summer that details some of their problems. Some interesting parallels: One of the big issues is their president (Gordon Gee) planned on big growth which did not occur. In 2014, Gee said their enrollment of full-time and part time students (which was 33,000) should grow to 40,000 and spent something like $800M on upgraded facilities between 2012 and 2018. As of the fall of 2022, they had 27,500 full-time and part-time students - basically WVU spent money it didn't have, and now the bill is due. This happened in West Virginia, a state where high school graduate numbers have been in a long-term decline. Mark Heckler could similarly forecast growth and spending at VU under similar circumstances, and the student numbers at VU have been in similar decline.
4) I have no personal experience with rpk Group. However, they have worked with Gallaudet, St. John's, St. Thomas, UVA, Kansas, St. Bonaventure, Missouri, Texas, George Washington and many others. Seems like they might have some insights worth hearing about. Naturally, it is up to the VU administration and board to decide what to do with those recommendations.
Okay I could not stay away until Christmas. Davidson had a $700+ million endowment already several years ago. That size is over twice ours. And they have a very wealthy "old money" consistency of parents and alumni that has been solid for a long time. Probably some tobacco money.
The much closer parallels to Valpo are Bradley, Drake and Evansville in terms of endowment, midwestern location, and risks of deep discounting of tuition. The structural problems at Bradley and Drake are very similar, especially at Bradley. I have posted Bradley budget links and you can google those two words easily. The threats are high in our size category.
Like Bradley and Drake, Butler is an obvious comp in size and midwest location, but maybe the pharmacy school injects strong cash and maybe butler has a stronger parent/alumni base in terms of wealth. They are also in a dynamic growing city, located well for student life off campus.
valpo22, I agree consulting groups to solve problems is usually unnecessary and a lazy solution, but your response regarding the education of the personnel of the consulting group was incredibly pompous. The attitude that someone with a doctorate is required to solve a university issues is crapola. I have worked with some Ph. D's who were effective in their work, and some that have no reason to be in the workforce. Several years ago I was training graduate students and a post doctorate engineering students at a university in the midwest, and I can why the post doc student is a post doc student - there is no way he could contribute or lead properly in industry.
Also, there are faculty at Valpo that will have more self-centered views beyond the overall good of the university. This has been addressed before on this board. So far, nothing has been fixed, so unfortuately and likely with little success they have to take an alternative strategy and get outside help.
I will say this - sometimes having someone external to the situation brings fresh ideas.
Quote from: crusadermoe on December 01, 2023, 10:27:30 AM
Okay I could not stay away until Christmas. Davidson had a $700+ million endowment already several years ago. That size is over twice ours. And they have a very wealthy "old money" consistency of parents and alumni that has been solid for a long time. Probably some tobacco money.
The much closer parallels to Valpo are Bradley, Drake and Evansville in terms of endowment, midwestern location, and risks of deep discounting of tuition. The structural problems at Bradley and Drake are very similar, especially at Bradley. I have posted Bradley budget links and you can google those two words easily. The threats are high in our size category.
Like Bradley and Drake, Butler is an obvious comp in size and midwest location, but maybe the pharmacy school injects strong cash and maybe butler has a stronger parent/alumni base in terms of wealth. They are also in a dynamic growing city, located well for student life off campus.
Moe, I threw Davidson out there although I knew their endowment exceeded my general Valpo profile, but in all other respects it met, in my mind, the characteristics of a similar-sized, private school that is successfully "swimming against current." I am not interested in schools that are, like Valpo, being pulled along by the current. From what I have been reading, Bradley, Drake and E'ville are in the same boat as Valpo — you don't learn how to reverse your course from schools who are struggling just as much as yours in the same direction. TBH, I don't know any other specific schools who are successfully swimming against the current, so I added BLANK and BLANK — that would be up to the Valpo administration to research and contact.
Naturally RPK will be charged with financial recommendations and only secondarily at product nuances. But to have any credibility, they certainly use some consultants whose careers were educators.
If you plan to stay in your historic mission of a residential bachelors degree that offers both arts and science emphases, you need to cut a major emphasis or add a LOT of revenue. Hopefully one charge to RPK is to evaluate assets which could be sold and the recommend investments from new sustained revenue. You can't keep owning a lake house if you are underwater every year in your family budget. or maybe you can if your credit cards have high limits?
How fast does it need to be sold? They have to consolidate in terms of land. Could we convert the cavernous library or union into high rent apartments and/or turn a large section of the huge campus into a retirement complex? That's where the growth is.
Quote from: valpo22 on December 01, 2023, 02:22:31 PM
I'm not saying that BAs in biology or MAs in marketing are bad or dumb people as suchy - but by definition you are choosing as your consultants people who do not know the processes of the very thing they have been hired to analyzing. It is like deciding to hire in 'consultants' to streamline a bakery's operations, but hiring a dentist whose only familiarity with it is having once eaten some of the type of the baked goods it produces.
I would have thought PhDs would be better with analogies. RPK seems to be more like someone who went to dental school but has been advising bakeries for many years.
https://rpkgroup.com/clients/
Not saying these are good consultants or bad consultants, but they were hired by the Gates Foundation. I don't think the Gates Foundation is hiring dental school dropouts.
I certainly don't have an opinion of the consultants chosen one way or another. The proposed ideas, including talking to other similar institutions about how they have faced their challenges, assumes we have a President and Board who, as suggested by the analysis of the backgrounds of some of the consultant's principals, don't have any managerial experience, let alone in higher education. Without digging too deep into the Board members experiences, let me just post part of President Padilla's bio:
President Padilla joined Valpo as the culmination of a long and successful career in higher education. He served as vice president, university counsel, and secretary of the University of Colorado System. Previously he served 15 years in senior leadership roles at DePaul University in Chicago, the most recent as vice president, general counsel, and secretary.
So a guy with this background wouldn't think to check around with the loads of people he knows and respects but rather, in some sort of panic mode, goes directly to a consulting firm who will rip Valpo off and provide cookie cutter answers? I think not.
While it's not surely necessary for an effective higher education consultant (though not sure however one defines "effective"....) to have a doctoral degree, it is necessary that they have a depth of understanding about the world of higher education. To some extent, degrees can be a proxy for that depth, with no guarantee that a Phd = wisdom in this realm.
A few years back, I proposed a new degree program at my university and was told that every such proposal had to be vetted by a market viability study conducted by a consultant. Without going into details, despite extensive briefing of said consultant (who was associated with a supposedly legitimate higher ed consulting firm), this person came back with a market study that, in essence, compared apples and oranges in a way that rendered the entire study worthless. This person's knowledge of this particular degree realm was so limited that he literally didn't understand that he was comparing two separate markets that had little to do with one another. But a maddening reliance on a fundamentally flawed market study was enough to sink a legitimate, revenue-earning proposed degree program.
My experience cannot be a complete outlier. I get the sense that too many higher ed consultants are beset by the Dunning-Kruger effect, which, according to one definition, "occurs when a person's lack of knowledge and skills in a certain area cause them to overestimate their own competence."
At the risk of sounding snarky, why are we paying top university administrators so much money if they have to retain higher ed consultants to assess the campus climate and to make the hard recommendations? Isn't that their job?
22 - regarding your story about getting and keeping a job, I have to be blunt. As Colin Powell once said, "Get mad and get over it." Your experiences are analogous to what is seen in many professions in industry. If I interview for a position, I have to have experiences, resumes, credibility, references - you name it. I also have to perform well and get reviewed based on feedback from cohorts and managers. Also, you made a decision to leave and I wish you all the best, and it is good you made a decision that will be better for you. You gotta take care of yourself, because these days the company or institutions base their decisions on the market or profit goals - not based on employee needs.
I can empathize with your frustration, but getting the right consultant firm provides a broader method and level of expertise to solve a holistic problem that has not been solved adequately internally by Valparaiso University leadership and employees.
Also, we need to quit being penny wise and dollar foolish. These problems require a big picture mindset where spending six figures is crumbs if it provides a better direction for the university. Last spring, you were whining about buying out Lottich's contract and hiring a new coach because of the cost. Well, basketball is the once proud and flagship sport of Valparaiso University, and it is D1 program and it needed help. Valpo needed to react like they cared to be successful, and fortunately they did.
No worries dude. Trust me, I've had bad moment in my career, and there are instances where I wished I moved on earlier than I did. But you to have a period to be pissed off because it meant something to you, then you move on.
Sounds like you are onto bigger and better places, and I'm happy for you. Now let's talk about more important things South Park providing more to the arts than Georgia O'Keefe.
There's seems to be an awful lot of speculation here with no real knowledge. Just my 2 cents. An awful, awful lot of speculation.
While I see historyman's points about lots of speculation with no knowledge and uscvalpo's points regarding the value of an outside perspective, I do have some general concerns about hiring an outside consultant:
-I will return to points from some posters about Valpo not using its own resources. I mention using people from the colleges to gain acceptance and foster involvement in implementation later in my comments, but is the university actively seeking involvement from alums? All I see, as an alum who cares greatly and tries to engage more than the average alum, are requests for money (which is fine and appropriate) and garbage requests looking for people to share their Valpo memories. There are a lot of alums with successful professional histories, yet I have not seen requests to be actively involved in more than a decade.
-When any organization, including a university hires an outside consultant, the consultant often tells the leadership that hired the consultant what they want to hear. In a basic sense, the consultant is trying to justify their pay and create further business with the organization - so the best way to make the customer happy is to confirm rather than offer alternative perspectives. Thus, the value of a consultant can be minimal.
-Building on historyman's point, we don't know what the consultant was hired to do. For instance, they might be hired only to provide external data on trends...in this case, there could be a lot of value.
-However, a university hiring a consultant will often only have direct engagement with the consultant from a small group that is mostly or completely from the administration. This is very problematic, since any tactics or strategic directions need buyin and active participation from faculty and staff in all colleges. "Coming down from on high" and telling everyone that "we met with the consultant and have decided to pursue these directions and we now need your involvement" will get minimal involvement...but lots of pushback.
-While I see the value of outside, unbiased perspectives, I do not think that a consultant can be effective without having people who have worked and managed in the context for which they are consulting.
Some other points related to the prior discussion:
-Valpo22: I really hope that things work out well for you in your new direction. I, of course, do not know the circumstances of where you worked at Valpo...but I must admit that I am concerned if you can get 2.25x the pay for the same responsibilities. Nothing against you at all...who wouldn't do the same thing? But Valpo has real problems with sustainability if it is underpaying people that much.
-usc4valpo mentions making major investments. I generally agree with this statement, but that means selecting the right places to invest which often requires a much harder action - choosing where to reduce or discontinue investment (or have solid real commitments for additional funds). The university did make the choice to buyout Matt Lottich, but let's not forget that the athletic department also had a major windfall from the New Mexico State buy game.
Quote from: vu84v2 on December 03, 2023, 03:03:52 PM
All I see, as an alum who cares greatly and tries to engage more than the average alum, are requests for money (which is fine and appropriate) and garbage requests looking for people to share their Valpo memories.
I have gotten those same requests and thought I would check in on the page: https://alumni.valpo.edu/s/1347/21/1col.aspx?sid=1347&gid=1&pgid=3367
Half the links are broken, and the only highlighted quotations are from people who (according to LinkedIn) work at the Valpo fundraising office.
The video from Rev. Dr. Beckstrom was nice, though.
I have varying reviews on consulting:
Regarding consulting, I would presume Valpo made sure they are hiring the right people to give them a perspective that will be beneficial to find or fine tune their identity. I would assume Valpo leadership is being a good consumer identifying the proper consultation to support them.
Valpo also needs to be open regarding suggestions resulting from the consultation. I have seen instances where a company culture remains the same despite consultation suggestions. Change is hard for some.
I have seen seen the situation where money is just thrown at consultation to fix a problem, which only results in the same behavior and a nice document a process they should follow. All this does is piss off employees and halts any progress.
I will say this to valpo22: in the exit interview if there is one, be honest yet objective as the university could benefit from a reality check of the market. It takes more than Valpo pride to keep talent. A 2.25x increase in salary for a position perhaps similar in responsibilities should be noted.
I attended a meeting at Homecoming maybe 3-4 years ago and listened to a presentation from a consulting group the university had hired. Nothing but platitudes like "VU prepares its students to succeed" - stuff anyone could come up with, slogans that could apply to any university in the country. Not impressive in the least and for sure not worth whatever VU was paying.
Why is this so hard? Is the university being run by academics who are lacking in the common sense department? Go back to basics that, after all, worked for many years. Here are a few -
Recruit traditional places where VU has name recognition and support - Chicago suburbs, Wisconsin, Michigan, Ohio. Spend extra effort recruiting students of Christian faith whose parents would appreciate VU's culture and size. Don't just talk about being a different place - act like it. Emphasize the opportunity for spiritual growth. For Pete's sake, don't neglect Lutheran high schools. Tout VU's impressive array of academic programs not usually found in schools our size. Point out that classes are taught by professors, not teaching assistants. Casually mention you won't be in classes of 200 kids and won't have to take a bus to go from your dorm to class. Take full advantage of the opportunity to play D1 sports.
Paul
Agreed on all points. Those are the basics!
But as shown by the dire title of this thread and 2025 enrollment cliff, I think they are trying to stop the bleeding and save the patient. Once the patient is stabilized, then he can learn better behavior.
My general assumption is that this consultant is being brought in to do a full scale assessment of academic programs and what they bring to the university as well as a general audit of the way departments are run. Some of this will be a passing the buck: ie they get to say X program is continuing to show diminishing returns etc vs administration, but I also think that some of it is because asking faculty and Admin(many of whom were probably faculty somewhere) to do the cutting is going to be hard because everyone will argue about the intangibles and want to protect all programs.
Also, if I remember from other posts from past members: one of the biggest issues after the last blood letting was that the cuts seemed arbitrary, didn't factor in things like Grant money and didn't think about the future and where growth could also occur. I doubt there'd be any more trust for the administrations making these decisions over a consultant company just based on what some faculty/staff have said on here.
The major dollar impacts are not achieved by cutting and slicing faculty departments. You're picking on easy targets that don't add up to that much.
To get real, what is the 10-year trend in total dollars spent on administrators' salaries vs.total dollars spent on total faculty salaries?
This piece in The Atlantic examines the situation at West Virginia, which used the consultants now retained by Valpo. Given The Atlantic's lean, not surprisingly it emphasizes losses in the humanities, a widespread trend. But it also makes the case for the humanities in a state with a lot of folks who don't have or come from much money: https://www.theatlantic.com/ideas/archive/2023/12/class-war-west-virignia-university/676152/ (https://www.theatlantic.com/ideas/archive/2023/12/class-war-west-virignia-university/676152/).
But it's not only the humanities getting hit. The math department is also on the list, as The New Yorker examines:
https://www.newyorker.com/news/us-journal/an-academic-transformation-takes-on-the-math-department (https://www.newyorker.com/news/us-journal/an-academic-transformation-takes-on-the-math-department)
As these articles suggest, the West Virginia president, Gordon Gee, is a piece of work, a legend in his own mind who has been around.
Quote from: crusader05 on December 04, 2023, 03:00:22 PM
My general assumption is that this consultant is being brought in to do a full scale assessment of academic programs and what they bring to the university as well as a general audit of the way departments are run.
This is a good general description about the metrics involved and the scope of inquiry. I have seen the abundance of completed data compiled by the consulting firm, which is providing their details to all faculty as part of the process. Without getting too specific or trying to summarize the multitude of statistics, tables, charts, and findings, I will just say that to me nothing in the analyses appears surprising or even unexpected; therefore, the factual findings, somewhat predictable, are hard to argue against. The next phase of the process will take place in January or early February and possibly be more contentious when the administration decides what moves to make using the consulting materials as justification and interpreting them into actions impacting academic programs beginning with the fall semester.
valpopal - Thanks for the post. It is a positive if all information from the consultant is being shared with all faculty (can't say that is common across most universities - so kudos to the administration). Also agree that the greater challenge is developing strategies and subsequent moves from that data.
Indeed that's encouraging. It sounds like there are steady hands at this wheel.
This Moody's thread is much more pertinent to Valpo than the current congressional hearings & Ivy League debacle. I think there is a modicum of common sense left in university leadership when you journey away from the coasts. I trust Padilla to be pragmatic in the face of any crisis.