Since retiring in 2011, I have been on four Registry assignments as a Chief Financial Officer totaling 7.5 years of service. This after 42 years of working in a number of positions in higher education. I worked at schools with multi-billion dollar endowments and those whose lack of finances ended up forcing them to close this past year. My Registry assignments ran the gamut of public universities dependent upon state support and small private institutions that relied almost exclusively on tuition and auxiliary enterprise revenues. The lessons learned from these environments in many ways provided a foundation of knowledge and experience that serves me well during this time of the pandemic. In three of my four Registry assignments, my services were extended in order to complete a goal or provide stability while the school was in transition.
When I started my most current assignment at Oklahoma City University, it was to provide leadership for six months while the university conducted its search for a permanent CFO. The search did not provide a strong applicant pool and so I was asked to extend through the end of the calendar year and two weeks later would I stay the entire fiscal year. This came as we recognized a significant financial challenge and at the same time we started a recapitalization of the institution’s debt. We successfully weathered the financial crisis, received an investment grade rating on our credit worthiness, consolidated our debt into a $90 million instrument, covenant free, that reduced our annual debt service by $2 million. Things were looking good when Covid-19 hit and the world as we knew it was turned upside down.
COVID-19 exposed how thin our liquidity position was and how fragile we were with respect to meeting the fixed obligations of the University. What follows are three summary lessons learned that in hindsight should have been more front and center even before the pandemic:
The real challenge for all of us is to be nimble and to foster a solutions mentality as we navigate our way through a COVID-19 world. It is likely to be with us for several years and to think otherwise may keep you from making tough decisions early on. We as CFOs cannot afford to spend down reserves as if this event will pass quickly and things will return to normal just as quickly.