EDUCATION

There are many challenges facing today’s educational institutions. Virtually all schools face:

Declining or variable enrollment
Uneven timing of cash receipts vs. cash outlays
The need to adjust class sizes and the number of educators
Financing difficulties
Rising operating expenses
Inefficiencies arising from different systems, expansions, and changes in demand

Furthermore, colleges, residential facilities, and other post-secondary schools must often address recruiting challenges, class size and mix of classes for enrollment, balancing the offering of majors and minors, administrative overhead, capital expenditures, and cash flow – often across multiple physical plants and campuses.

Getzler Henrich has a hands-on approach to addressing these challenges. After an initial assessment of operating and financial issues, our team works with the administration to construct a weekly cash flow, illustrating any cash shortfalls, and assisting with obtaining necessary financing, if needed. We also work with management to put together an operating budget, considering current enrollment, revenues, operating expenses, and any capital expenditures that may be required.

In addition to evaluating the financial challenges, GH brings an operational focus to bear. Lean manufacturing and Six Sigma concepts, historically applied in a manufacturing context, are now being applied in environments as diverse as hospitals, professional service firms, and schools. An initial walk-through and interviews with a range of faculty members, administrators, and support personnel can help identify often overlooked areas where process improvements can lead to significant savings.

Our Range of Services

Distressed Situations – We provide a comprehensive suite of services for institutions facing intense, short-term pressures or longer-term, existential risks:

Bondholder and Lender Advisory – Negotiating solutions to event of default situations.
Board Advisory – Working with executive leadership and boards of trustees to transition to a balance of “not-for-profit” and “for-profit” thinking.
Strategic Planning – Reviewing and/or developing long-term plans to ensure adequate liquidity to satisfy the Duty of Mission to students.
Restructuring – Advising institutions undergoing or considering transformative internal or external changes, such as mergers, combinations, etc.
School Closure Planning and Implementation – Developing and executing teach-out and wind down plans.
Asset Sales & Dispositions – Creating liquidity from fixed assets and IP assets.
Liquidity Management – Developing and implementing strategies to improve liquidity and manage cash flow.
Lease and Contract Negotiations – Reducing the cost of, or eliminating, burdensome agreements to improve financial performance and provide flexibility.

Performance Improvement Solutions – We provide a comprehensive suite of services to drive transformation in educational institutions, ensuring a stable and sustainable future:

Academic transformation – Academic program reviews to drive decisions in selecting the optimal academic programs to invest in, choosing the most effective instructional methods, and implementation.
Admissions and enrollment – Assessment of current and future student needs to drive enrollment increases and retention in a competitive environment.
Institutional review – Improve an existing operating model or build a new operating model from scratch and execute the institution’s strategy by fully utilizing faculty and staff.
Cost reduction – Selection and implementation of tactics such as shared services, zero-based budgeting, process redesign, predictive analytics insights, strategic outsourcing, procurement improvements, and organizational enhancements that lead to true cost transformation.

Clients We Work With

We work with the following organizations and their creditors:

Colleges and Universities
Private Primary and Secondary Schools
Technical/Trade Schools
Charter Schools
Student Housing

Challenges

The challenges which confront higher education institutions have increased in complexity and intensity, especially over the past three years. Some of those challenges are:

Addressing the impact of declining demographics on enrollment.
Responding to growing skepticism about the value of a college education.
Addressing shrinking operating margins due to rising costs and tuition discounting.
Removing intransigent and unprofitable academic programs.
Providing services and support required to satisfy an increasingly demanding student population.
Balancing on-line, hybrid, and in-person student learning modalities.
Balancing funding demands for capital investment and growth versus deferred maintenance, IT, and mental health services.
Defining the value proposition in a highly competitive landscape.
Surviving without Pandemic-era government support.

Case Studies

An Adult Learner Focused Non-Profit College was forecasting covenant defaults and liquidity pressures due to declining enrollment and government grant support. Getzler Henrich was retained to assist with developing a proactive communication plan with the college’s bondholders to obtain relief from certain covenants and breathing room to implement a new curriculum that will ensure its long-term viability.

A Midwestern Liberal Arts College went into technical default on its bonds at the end of the 2023 academic year and was advised by its bank lender that it no longer wanted the College as a borrower.  The President, having lost the confidence of the Board, had been terminated and replaced with the Director of Advancement two months before.  The Board, after seeing the latest projection, was deliberating about whether to close the College at the end of the academic year.  The College had not communicated with its bondholders in three years.  Getzler Henrich was retained to help stabilize the situation, develop a path forward and reestablish credibility with its bondholders.  GH developed a ground-up budget process that has taken inputs from 100 unique cost centers and 14 revenue sources; created reliable and realistic cash flow projections; opened robust communications with bondholders and its bank lender; and took the lead in negotiations with stressed vendors.

The College of New Rochelle was a non-profit, four-year college, and graduate school located in New Rochelle, NY. We were retained as Chief Restructuring Officer and successfully guided the school, its board and executive leadership through a 3,000-student teach-out and transition, total educational wind down, and Chapter 11 insolvency filing. The insolvency included the sale of real and personal property, confirmation of a Chapter 11 Plan, and management of a post-confirmation liquidation trust.

A Medical and Liberal Arts University, a non-profit higher-education institution, retained us to assist in negotiating a “stay” agreement with the institution’s secured lenders and advise management on the college’s liquidity issues. With our assistance, the institution generated lender confidence by eliminating a $20 million budget shortfall. Subsequently, GH evaluated potential acquisitions to determine the economic benefit to the institution.

Culinary Arts School, a for-profit international culinary program experienced a sudden enrollment decline due to stricter government regulations related to student grants and loans, resulting in a covenant default with its lender. We were retained as financial advisor, and immediately negotiated a forbearance agreement to buy time to improve financial performance. Subsequently, we analyzed the program’s cash flows and identified operational improvements and cost reductions that resulted in a return to profitability.

A Chain of North Carolina-Based Pre-K and Day Care Centers retained GH to prepare a 12-month budget and a 13-week cash flow to assist in managing cash. GH significantly helped the schools improve operating performance by reducing operating expenses via food vendor negotiation and corporate facilities consolidation.