Rearranging Org Charts on the Titanic State U

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During a recent executive team meeting presentation and discussion that I led, the CEO asked me an interesting question. Is there a general understanding of the severity of the university patient? This is essentially asking if institutional leadership are truly willing to rethink program offerings, student access and support, etc, to deal with the monumental changes affecting higher education.

The positive part of my response was that higher education as an industry has proven remarkably resilient through many previous crises and that colleges and universities get essentially the right of first refusal to lead the solutions to postsecondary educational challenges. The negative part of my response was to look at Chico State University in California as an example of a university recognizing existential threats but still unwilling to rethink what the school offers and how it reaches and supports students. I’ve mentioned this example at conferences, podcast episodes, and board / leadership team meetings, but I should describe this example in writing as a negative case study.

In a nutshell, Chico State is facing an enrollment crisis (17% decline since 2017) and a related financial crisis that includes expected ~8% cuts in state support, leading to a series of strategic planning exercises, yet the plans are so constrained that the Academics activity for Reimagining Chico State was centered on redrawing org charts and avoiding any tough decisions.

The University Position

Chico State is part of the California State University system, and it is located several hours north of the San Francisco Bay. Since its Fall 2017 peak, Chico State lost 23% of its full-time equivalent enrollment by 2022, but it has somewhat recovered in the past two years to a 17% decline since 2017.

Due to increasing staff costs (much of that driven by inflation and cost-of-living adjustments) and reduced enrollment, Chico State already faced a financial crisis as of last year. In a February memo to the campus:

But that was before the state of California began to face up to its budget crisis, and the governor’s proposed 2025/26 budget would cut $375 million from the Cal State system, and $12 million from Chico State in addition to the deficits stated above.

The net effect was described in the 2025 State of Chico State University president’s presentation - a $32 million structural deficit. Note that this deficit assumes a 2% increase in enrollment at the same time as a 6% increase in tuition and fees (a $7 million offset).

Chico State is facing a huge financial challenge.

Reimagining Org Charts

As part of the process of addressing these structural deficits, Chico State’s provost commissioned a new team to do some “reimagining”.

When I saw the 102-page recommendations document, I was stunned to see that the core of it was restructuring from seven to either four or five colleges and creating one shared services unit.

In terms of online education, the report noted that there was growth that should be encouraged, but the only recommendation of note was to “Create a new Online Distance Education unit to manage the growth of state-supported online programs.”

Playing with org charts and removing barriers, while valuable, do not constitute reimagining, which Chico State needs. That requires asking tough questions about which programs to shut down, how to attract students through increased access and better marketing, how to handle layoffs, and how to better serve students to increase enrollment and retention.

Once I looked deeper, I realized that the core problem was not caused by the faculty-driven SAT group. It was caused by university leadership. It turns out that the SAT group’s charge was to look at org structures.

At the university level, Provost Cornick addressed questions at a hostile town hall meeting. No cuts to programs being considered.

There were also questions about layoffs.

Full Steam Ahead

As referenced above, Chico State is increasing tuition and fees by 6% annually for the next five years (a 34% increase overall), and at the same time they are assuming enrollment increases. And I will note that we are expecting the enrollment cliff (actually a hill) starting in 2026. In other words, the huge Chico State problem all comes before the expected decade-long decline in college-ready 18 year olds.

Counter Examples

There are other universities truly trying to reimagine the future to deal with enrollment and financial challenges, even Chico’s Cal State neighbors.

I cannot say if this newly-announced initiative will deliver on cost savings, but at the very least these universities are not constraining themselves to org chart shuffling and avoiding program cuts and layoffs. Tough times require tough decisions.

You cannot address 10+% structural budget deficits while limiting the scope of changes needed. Some universities clearly do not understand the severity of the university patient.

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