Thursday, February 26, 2015

Bondholders as Stakeholders

I agree with Dean Dad that this is a really major development -- the idea that bondholders will directly be able to act as stakeholders in higher education is a very big deal.  Consider: 
Which is where a financial issue becomes a governance issue.  Suddenly, “shared” governance isn’t just shared with people on campus, or in the legislature.  Now it’s shared with bondholders, and those bondholders have different priorities and varying degrees of patience.  Unlike the other participants in shared governance, they may not have any particular obligation to the other parties at hand.  It might not be worth their while to go for the quick kill, but that’s prudence, rather than deference.  They aren’t big on deference, as a group.
It also means that institutions will become subject, even more so, to all of the economic pressures of the corporate world.  One of the few things that made higher education uniquely valuable was the ability to resist institutional change.  It seems paradoxical that this would be the case in an organization devoted to innovation, but higher education has always been focused on the long game and not the short game. 

Now this one case could well be an outlier and this could all blow over.  But it is worth thinking very carefully about how this will play out in an environment where schools are strapped for cash. 

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