By Arthur Taylor
On April 5th, Moody’s released a sharply critical evaluation of Rider’s financial health. This report included sharp criticism of management which questioned both the administration’s “credibility and track record” and noted that these factors, essentially management’s honesty and their ability to execute on their strategic plan, were two of the reasons for their downgrade.
This is both a rare and stunning condemnation of management from the reporting agency and is reflective and supportive of a series of statements which Rider’s faculty have sent directly to the board over the last seven years.
It is rare that an institution of Rider’s size arrives at such a dire financial state. The challenges of demographic trends, price competition and a global pandemic have been endured by our peer institutions and almost all have managed to remain solvent both pre- and post-pandemic.
Contrary to Rider President Gregory Dell’Omo’s frequent proclamations, the university was not in dire straits when he arrived. Fluctuations in enrollment often impact public and private universities leading to fluctuations in operating income. Rider continued to have positive cash flow throughout these fluctuations prior to Dell’Omo joining the university.
In a budget projection provided to the Board of Trustees in 2016, Dell’Omo and his chief financial officer projected revenue and expense projections through 2019. Comparing actual revenue and expenses through this time period to this budget, an exercise Moody’s has no doubt performed, demonstrates the “credibility” issue. By 2018, Dell’Omo’s administration had fallen short of their revenue projections by $5 million, and by 2019, a year only partly impacted by the pandemic, they had missed their projected revenue goal by $13 million and had overspent their expense budget by $2 million. These significant failures laid the groundwork for deep cash losses which would occur in 2021 and 2022.
The root cause of these losses can be attributed to key strategic decisions by Dell’Omo’s administration. A decision to try to sell a fully enrolled college which was generating positive cash flow and receiving generous donations was a key strategic failure which swelled expense spending and led to a dramatic loss of enrollment related revenue at the college. As this expensive failure was occurring, Dell’Omo’s administration elected to borrow heavily to build, insisting that these “investments” would improve enrollment. They did not, and Rider is now struggling to repay that debt and as Moody’s notes, they have a dismal track record on successful execution of any strategic plan and may very well be in default on their bond debt by 2025.
Unfortunately Rider’s board has had only one source of information during Dell’Omo’s tenure: Dell’Omo and his team. This is the source which Moody’s cites as both lacking in credibility and as incapable of executing a strategic plan which would improve Rider’s finances.
These significant failures and Rider’s serious financial state are compelling reasons for Rider’s board to seek out input from other sources, from other members of Rider’s community. A decision by the board to allow faculty, students and alumni to present information and speak at board meetings would provide this much-needed input.