Market downturn forces adjustments to strategic plan acceleration

What a difference a year makes. Almost exactly one year ago today, CU Connections reported that administration had shared with the Board of Regents a plan to take advantage of strong financial markets that would allow the university to accelerate some facets of its systemwide strategic plan using one-time funds. 

The markets’ sharp turn in the opposite direction over the past several months means that some of the accelerations will have to be delayed or will have a longer time horizon. Still others will be scaled back, and some will likely be stopped for the time being. However, the university also realized some gains before the downturn that allowed a number of the accelerated measures to be completed.

The effects do not impact core university or campus budgets, only strategic plan accelerations.

Compounding the market downturn challenge, there was a disconnect between information the CU treasurer provided the system administration that inhibited the university’s ability to respond to the market downturn and intervene in a timely way. When the administration investigated and determined the nature of the problem, mitigation efforts began. The treasurer has resigned from the university. On Wednesday, the Board of Regents unanimously named Dan Wilson as interim treasurer and chief investment officer. Wilson served as CU’s treasurer from 2015-21 before he retired. The board will determine steps about a search in the near future.

“The substantial drop in market returns means we will have to slow down in some cases and reassess our plans in others,” said system Vice President and Chief Financial Officer Chad Marturano. “The bottom line is that we have less money to spend on accelerating the strategic plan than we were planning on a year ago.”

CU President Todd Saliman said the strategic plan remains a roadmap for CU’s present and future.

“It’s important to note that the strategic plan articulates our priorities, and none of those have changed,” Saliman said. “What has changed is that the one-time market gains we were planning to put toward accelerating them have gone down significantly. This is disappointing, since the strategic plan priorities are critical to our future. That said, I expect us to continue to lean into these areas to make progress.

“Our resolve remains and our priorities have not changed,” he said.

A team comprising the campus and system CFOs, financial executives and the treasury is working to determine how to address the changes that will be needed. Their work will help inform campus plans. A number of variables (including daily fluctuations in the market) make it difficult to arrive at a precise amount of adjustments, Marturano said.

“While we remain committed to the success of the strategic plan, we have to be sure we don’t make investments in the plan that we can’t currently fund,” Marturano said.  “Our treasury is secure and can meet and sustain the normal, ongoing budgets of the campuses. Unfortunately, the losses incurred impacted our gains and our ability to make new investments at the system level, just like it did other entities, businesses and individuals.”

The effects on accelerated implementation of the strategic plan will vary by campus. Campuses will communicate in more detail with any program affected once the finance team, along with the treasury, has more complete information on moving forward. Given the due diligence required, it may take some time, Marturano said.