From The Chronicle of Higher Education

How Colleges Can Keep Strategic Plans On Course in a Stormy Economy


No campus leader could have predicted the full effect of the financial turmoil of recent weeks. But colleges with solid strategic plans are likelier to remain on track and perhaps even spot opportunities, planning experts say.

"If you're really strategic in your thinking," says Thomas C. Longin, an independent consultant for colleges, "a crisis like this doesn't throw you."

But many institutions, focusing mostly on short-term budget needs, do not adequately grasp strategic finance, Mr. Longin and other planners say. And most strategic plans, they argue, take too long to prepare and are not nimble enough to respond to serious challenges.

A welcome shake-up in college planning is in the works, says Sal D. Rinella, a strategic consultant and former university president who is president of the governing board of the Society for College and University Planning.

"Strategic planning is really going to need to change," says Mr. Rinella, who once led Austin Peay State University, in Tennessee. A tight economy, he adds, "forces an institution to focus on what is most important."

Colleges will need to shorten their time horizons, with strategic plans lasting no more than three to five years. They must revisit the plans often, experts say, and make difficult choices quickly, to stick to their stated priorities.

The credit crunch and bank meltdown that are roiling markets will test any strategic plan. And colleges will soon learn whether they have done their homework.

Philadelphia University has devised a new strategic plan in the year since Stephen Spinelli Jr. was hired as president. Mr. Spinelli, an economist who has consulted for major corporations, feels confident despite the problems in the financial markets, which have taken a chunk out of the university's $30-million endowment.

A period of financial crisis, in fact, may be the best time to introduce a plan. "It should help you get focused and not get distracted by abundance," Mr. Spinelli says.

For Philadelphia, key goals will not change, but their pacing may be adjusted. And the president, citing a new sense of urgency, says he is thinking: "You better do this right."

Tips From the Experts

Here are suggestions from planning experts on how colleges can be more strategic in coping with uncertain finances:

Move quickly. The machinery of higher education is sometimes ponderous, and colleges are slow to react to economic developments. Developing a strong plan typically takes a full academic year. Mr. Rinella says institutions can be much more efficient and should be able to compress the process to four to six months. The resulting documents should be both realistic and action-oriented, he says.

Develop contingencies. Strategic plans should require colleges to keep a rainy-day fund. For small private colleges, Mr. Longin says, an amount in the neighborhood of $750,000 should be set aside to replace the "furnace that blows up" or cover other surprise expenses. For example, having that type of money in a liquid reserve could have helped some of the nearly 1,000 colleges that recently had short-term accounts managed by Wachovia Bank frozen, cutting them off from funds used for salaries and debt.

Be flexible. A good plan is revisited on at least an annual basis. It should be a road map that is constantly refined while retaining a commitment to core principles, says Donald M. Norris, president of Strategic Initiatives Inc., a management-consulting firm, and an author of a forthcoming book, A Guide to Planning for Change.

Make hard choices. Budget cuts are looming for many institutions, particularly public universities in states with struggling economies. The blow can be lessened by making precautionary cuts. "High-performing institutions are perpetually culling people who are not high performers," Mr. Norris says. "You've got to bite the bullet."

Thanks to a tanking state budget, Florida's public universities know a great deal about tough choices. The state's contribution to the University of Central Florida, for example, has been cut by $40-million, or about 15 percent, over the past 15 months.

Terry L. Hickey, the provost, says Central Florida has used strategic planning to cope with both the good times and the bad.

Many of the university's accomplishments flow from a recently concluded five-year plan. The university has grown rapidly, to more than 50,000 students, while winning plaudits for working closely with local industry and governments.

It has tried to stay ahead of further state cuts by stripping out an additional $4.5-million in spending. Administrators also sought to "downsize by attrition," Mr. Hickey says, eliminating 150 faculty positions without any financially motivated layoffs.

Recognize opportunities. "Planners are spenders," says Anthony W. Morgan, a member of the Utah State Board of Regents. But while most plans are generous with money, he says, an approach that is selective can capitalize on tight budgets.

Mr. Morgan, a former vice president for budget and planning at the University of Utah, says campus leaders can take advantage of the political winds in a crisis to shift resources to high-priority areas. "Sometimes you can take deeper cuts than necessary" in areas that are being de-emphasized, he says.

Antioch University is undertaking its first systemwide strategic-planning process. The core of the effort will be the formation of governing boards on each of its six campuses.

Tullisse A. (Toni) Murdock, the chancellor, says the worsening economy has helped stakeholders, including faculty members, grasp the urgency behind the overhaul of governance. It has also bolstered her recent request that the system's presidents sock away some discretionary money each year.

"This has jolted the campuses," she says.