Elite Schools "Among the Most Vulnerable" to Environmental Factors

(from Christensen Institute) Neither an established reputation nor a healthy endowment can necessarily protect a beloved small liberal arts college or independent school against changing market and business conditions, according to an analysis of the financial situation at Ohio's Oberlin College. The 184-year-old liberal-arts college fell short of its 2017-18 enrollment goal by 2.8 percent, leading to a $5 million budget gap, two years of salary freezes and a campus-wide search for more ways to cut fat, according to Alana Dunagan, writing for the Christensen Institute.

Despite an endowment of nearly $800 million, residential colleges are unable to press on many of the "levers" that many organizations can push in attempting to match supply to demand, such as raising or lowering prices or adjusting production or supply. "For starters, the residential, people-intensive nature of the experience means that supply — the number of seats in the class — is relatively fixed. These colleges can’t build more dorms on a moment's notice. And they will be dinged in the rankings for expanding number of students in an average classroom." Budget cuts can provide a short-term solution, but they can exacerbate financial woes long-term.

"The imperative for increasing revenues — and spending — is so unbelievably strong that schools like Oberlin are beginning to price themselves out of the market," Dunagan wrote. "And the value proposition isn’t holding up against the massive costs families are being asked to pay."

Much more at Christensen Institute

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