TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, August 30, 2014

Suffolk Law School Offers Buyouts to All Of Its Tenured Faculty

Following up on last month's post, Boston Law Schools Shrink Enrollments, Faculties:  Boston Globe, Suffolk University Abruptly Replaces President:

Sufolk Law SchoolJust days before the start of the new school year, Suffolk University Wednesday abruptly replaced president James McCarthy with a year remaining on his contract, and tapped a veteran educator with a reputation for turning around struggling colleges to serve as interim leader. At an afternoon meeting, the university’s board of trustees voted unanimously to appoint Norman R. Smith, 68, who is best known for his tenure at Wagner College in New York City, where he led a small school on the brink of closing to new prominence.. ...

Given the general decline in law school enrollment, Smith said he would expect to take a “quality over quantity” approach in assembling new classes. “I don’t think there’s growth there,” he said, referring to enrollment. ...

The unexpected change in leadership comes as Suffolk seeks to stabilize its finances and attract students in the college-dense region. Facing a decline in enrollment and revenue, the university announced in June it would freeze employee salaries for the next fiscal year.

It also offered buyouts to all law school faculty members with tenure or renewable long-term contracts.

This spring, the university came under fire for requiring tenured faculty to undergo performance reviews, a shift that critics said would undermine academic freedom....

University officials, however, defended the school’s financial standing Wednesday, noting that the endowment has grown by 52 percent since 2011, and its operating surplus has increased. ... Meyer said Suffolk is on solid financial footing, but that Smith keenly understands the difficulties facing tuition-dependent schools with modest endowments.

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Cross-posting from Inside Higher Education:

"Not really a surprise. Suffolk came very late to the GW-ization party (i.e. charge. Ivy prices for an average regional college experience, pay the president $2 million per year) and was caught flatfooted. The university has long been subsidized by its law school, one of the largest and least-selective institutions in the country. Now that word has gotten out about the job outcomes for law school graduates, enrollment plunged, people balked at the tuition, and Suffolk ended up offering buyouts to ALL of the tenured law faculty. IIRC, Suffolk has also been on a building tear of late in downtown Boston, for which they almost certainly floated enormous bond obligations. I rather suspect Suffolk is in a fairly grave financial position at the moment; time will tell.

In fact, a quick search reveals that as of last September, Fitch rated Suffolk's bonds at a dismal BBB, just above "non-investment grade" ratings in the Fitch scale. The outlook reading is fairly wincing:
Annual debt servicing is 12.2% of the operating budget and student-generated revenues (read: student loans & tuition payments) provide ALMOST 95% of the operating revenues, which obviously makes a downturn in enrollment devastating."

Posted by: Unemployed Northeastern | Aug 30, 2014 8:02:41 AM