Turmoil at Suffolk is an example of what not to do
Suffolk University’s leadership turmoil could jeopardize its long-term success and financial health by discouraging applicants and donors and distracting professors and staff, according to a report from an influential credit-rating agency.
Moody’s Investors Service, in its report last month, cites the troubled downtown college as one of several examples of how tumultuous relationships among university presidents, boards, and faculty can impair a school’s long-term viability and its finances.
In many ways, the report supports what many who have followed the Suffolk saga have speculated, that political upheaval at the school could damage more than just its reputation. A school’s bond rating can determine the interest rate it secures to borrow money, as well influence its appeal to large donors and its reputation among peer schools.
Suffolk has experienced unprecedented strife this year since some of the college’s trustees attempted to oust president Margaret McKenna in late January. After months of sparring and attempts at reconciliation, trustees fired McKenna in July. She was the university’s fifth president in five years, including interims.
“This kind of turmoil can really impact a college or university,” said Susan Shaffer, vice president-senior analyst at Moody’s and the lead author of the report.
The report did not threaten to lower Suffolk’s current bond rating; it is a more general examination focused on the overall climate in higher education institutions.
Suffolk spokesman Greg Gatlin downplayed the impact of the ferment. He said the school this fall welcomed its second-largest freshmen class to campus, with a preliminary number of 1,203 students. The school has maintained academic quality and has a strong team of longtime administrators, Gatlin said.
The Moody’s report cites examples of other small colleges around the country in which rapid leadership turnover has hurt their ability to focus on long-term goals.
Some situations are much worse than Suffolk’s. Dowling College, on Long Island, experienced enrollment declines of 50 percent from 2011 to 2015 and multiple presidents over the past decade. The school even appointed a chief restructuring officer but failed its attempted turnaround and closed in June after an educational accrediting agency withdrew its accreditation.
There are also success stories. Sweet Briar College in Virginia decided to close in 2015 amid financial problems. But the decision was reversed last year, at least temporarily, following legal challenges and a wave of support from alumni that included donations.
Moody’s last rated Suffolk in 2014, awarding it a moderate Baa2 rating with a stable outlook.
That year, Moody’s noted that Suffolk had suffered five straight years of flat or declining enrollment and relied almost entirely on tuition for its operating budget because its endowment is relatively small, $185 million. The school has an operating budget of about $300 million and total debt of around $350 million.
Although Moody’s hasn’t rated the school since 2014, Shaffer said the agency monitors all the entities it rates and can adjust if necessary.
Gatlin, the Suffolk spokesman, said 40 percent of the enrollment decline between 2012 and 2015 was at the law school, reflecting a national trend in falling attendance and an internal plan at Suffolk to shrink the number of law school students.
The trouble at Suffolk surfaced publicly in late January and stemmed from tension between some trustees and McKenna, who was appointed a year ago. Board members accused the president of financial mismanagement and a harsh leadership style and commissioned a report into her actions that resulted in her firing.
The Moody’s report says leadership turmoil has greater impact on small schools because larger universities have more layers to absorb enrollment declines, fund-raising dips, unexpected leadership changes, and damage from high-profile events.
It mentions a high-profile example at the University of Virginia in 2012, where the president was forced to resign but later reinstated by the board after objections by the governor, faculty, and students. But that large school, while it suffered temporarily, did not see its credit rating drop and has continued to compete nationally for top students, research funding, and philanthropy.
“At small colleges, loss of key donor support or enrollment declines in just one year can pose a material credit challenge,” the report said.
Meanwhile, the future does not look promising for many colleges.
The higher education industry as a whole is struggling, with slow growth and more public focus than ever on tuition cost and student debt. That adds pressure on college presidents to make quick changes to save their small, struggling schools. It is easier said than done, the Moody’s analysts said.
“When a university or college might be faced with some real immediate pressures . . . it just intensifies the pressure on the new leader in that situation to achieve things quickly,” Shaffer said. “And universities aren’t the most quick-changing institutions.”