Many of you have read about the projected University of Denver budget shortfall published in an by The Denver Post. The bold headline read, University of Denver braces for up to a $30 million budget shortfall next year. The brash headline was quickly modified in the opening sentence to $20 to $30 million for the next full fiscal year.

Two paragraphs later, the author, Elizabeth Hernandez, cites a memo from DU Provost and Executive Vice Chancellor Elizabeth Loboa and Mark DeLorenzo, Senior Vice Chancellor of Business and Financial Affairs. In the memo, actions are discussed to mitigate spending at the University for the current fiscal year, ending June 30th.

“Through prudent and thoughtful expense measures, the ($6 million) deficit has been narrowed by another $4 million, with plans to be closed by the end of the fiscal year,” the memo stated. Concerning, of course. However, far from the drama generated by the headline.

The bigger risk rests in 2027, per the article, assuming a ‘do nothing’ scenario,’ where DU’s projected debt would triple based on historical enrollment projections. Fortunately, according to University sources, that scenario was never realistically considered as a viable option by DU based on declining DU admissions. Instead, Denver is proactively reviewing ‘academic and non-academic’ cuts for 2027 while holding employee information sessions and forums in preparation for potential future cuts.

Like many private enterprises, the University of Denver must reshape and right-size its business to align with market demand and the scope of its business. We have detailed a number of times the demographic cliff on LetsGoDU. This cliff has been coming for a long time and is far from a surprise to anyone who has studied this issue, including many at DU. We can appreciate the career uncertainty that is directly impacting dedicated administrators, staff, and educators. However, all educational institutions (including elementary, middle, and high schools) must adjust and adapt to survive and, ultimately, thrive while the rigid institutions that resist the inevitable cliff will shutter for good.

All private universities and many public universities are heavily dependent on tuition for operating revenue from both undergraduate and graduate students. Both of these segments are currently in decline. The cliff impacting college-age students includes the decline of foreign student enrollment and the perceived value proposition offered by higher education. Ultimately, DU must change and adapt in the marketplace to capture its share of available, qualified incoming students by offering an appealing value proposition to students and their parents.

These challenges are not unique to DU. While the University of Denver is far from the 1970’s malaise that saw the University on the fiscal ropes with a failing infrastructure and a fragile endowment on life support, there is still work to be done. Chancellor Haefner acknowledged that in his recently presented DU Forward vision, which is effectively DU’s five-year plan, “Higher education faces significant challenges, including financial pressures, lower trust, the impending enrollment cliff, and a higher percentage of college-age people choosing not to pursue a four-year degree. DU must adapt to remain relevant, competitive, and financially strong.”

In an article by The College Fix, Brandeis University President Arthur Levine predicts that 20-25% of U.S. Colleges may close soon. In his opinion, smaller colleges (3,000 or fewer students) will face the biggest challenges. Levine is working on the ‘Brandeis Plan to Reinvent the Liberal Arts,’ aiming to revamp the curriculum, enhance career readiness, and implement competency-based assessments. For its part, the University of Denver is emphasizing STEM and research as a renewed campus focus among a host of initiatives cited in DU Forward. Shakeouts are not a bad thing for over-saturated markets. The ‘survivors’ of the market chaos often emerge healthier and more resilient.

Going forward, DU administrators will need to sharpen their pencils, leverage the DU value proposition, innovate, and weather the changing marketplace. The universities that respond to the changes and adapt will emerge from the shakeout stronger and better fit to pursue their missions. We believe DU can be one of those winners as long as it is laser-focused on value delivery for its students and their parents.

For all of the criticism they’ve received, both valid and not,  in recent years, Chancellor Haefner and the Board of Trustees are acting on their fiduciary responsibilities on behalf of the University – acknowledging the future and adjusting quickly, rather than ignoring the emerging demographic cliff. And believe us when we tell you that if they weren’t, we would be ringing the alarm bells as loud as we could.

Don’t let the alarming headlines fool you. DU faces the same headwinds all of higher education faces, and make no mistake, there is a storm coming, but DU is as prepared as it can be to weather it.