How to Execute a Debt-Free Higher Education Turnaround Through Real Estate and Risk Planning:

Changing Higher Ed podcast 280 with host Dr. Drumm McNaughton and guest Dr. Beth Martin

Transcript: Changing Higher Ed podcast  – with host Dr. Drumm McNaughton and guest

Introduction to Changing Higher Ed^®

Welcome to Changing Higher Ed^®, a podcast dedicated to helping higher education leaders improve their institutions. With your host, Dr. Drumm McNaughton, CEO of The Change Leader, a consultancy that helps higher ed leaders holistically transform their institutions. Learn more at changinghighered.com. And now, here’s your host, Drumm McNaughton.

[00:00:20] Introduction and Welcome

 Drumm McNaughton: Thank you, David. My guest today is Beth Martin. President of Notre Dame Demure University. Beth’s had a career in higher ed for many years, but she got her start in for-profit industry.

This is why you’re going to hear terms like business plan and risk planning, something that Beth brought over from her career before higher ed, and something that all higher ed leaders need to understand, especially those who are planning on doing a turnaround.

Beth’s very strong educational professional who’s skilled in systems theory, change management, fundraising.

She joins me today to talk about how to execute a turnaround, especially one where there’s real estate involved.

Drumm McNaughton: Beth, welcome to the show.

Beth Martin: Thank you very much, Drumm. I’m glad to be here.

Drumm McNaughton: I’m looking forward to a great conversation. You have had some great news in the last few weeks. You’ve managed, I’m not going to let the cat out of the bag. I’m going to let you do that.

Beth Martin: Okay.

Drumm McNaughton: But, it’s something that is going to transform your university.

[00:00:42] Beth’s Background and Journey to Presidency

Drumm McNaughton: Before we get there, give us a little background on you and how you got to be the president there at Notre Dame de Namur.

Beth Martin: Oh, well, that’s a long story actually. After my doctorate in a postdoc, I did consulting for a while and it was a while before I tried to get back into traditional faculty work and Notre Dame de Namur hired me as a faculty member.

So I was here, many years ago, for five years as faculty, and then five years as Dean before leaving and being a chief academic officer and provost. So, when I got the call about whether or not I’d throw my hat into the ring for this, I was really pretty surprised.

Drumm McNaughton: Mm-hmm.

Beth Martin: I was actually retired at the time, so when they called it was a surprise, but I was delighted to, come back.

I’d always admired the sister’s mission and admired the fact that the Foundress was determined to offer education to those who might not otherwise receive it to marginalized populations. So I was very honored to be offered the job.

Drumm McNaughton: Well, yes, and it’s an incredible mission that you all have from that.

[00:01:55] Consulting Work and Transition to Academia

Drumm McNaughton: When you did consulting work, what kind of work did you do?

Beth Martin: Actually I wrote new drug applications for several for pharmaceutical companies.

Drumm McNaughton: Okay. Did that experience help you in higher ed?

Beth Martin: Oh, I think so. It was like, I was very glad to end that after several years because it was like writing one dissertation after another. That was enough.

Drumm McNaughton: Oh, one is enough for sure. But yeah, I would assume doing what you did the attention to detail, the being able to see the big picture of what’s going on would’ve lent itself nicely and given you skills that many academicians don’t have, as you’re moving up the ranks.

Beth Martin: Well, it was, it really was a very good experience. Although I had a lot of background in physiology during my doctoral program, I really had to self-teach myself pharmacokinetics. And that was interesting. And then I moved into teaching.

Drumm McNaughton: Yeah. What I’m seeing so many people in your position have quote non-traditional careers. They haven’t always been in academics, and I’m always curious is how those skills play into the academic career, and especially someone, yourself, who’s been such a successful president.

Beth Martin: Oh, well thank you for saying that.

[00:03:17] The Scientific Method and Leadership

Beth Martin: I actually do believe, even before I went back to graduate school I worked for four years in a physiology laboratory, and so I think the scientific method has been something I carried with me my whole life. So it’s a matter of making sure you have the correct data and the correct procedures and the correct process, the right people in place. So I think you’re right. I think early on, spending years in that mindset, has helped.

Drumm McNaughton: You sound like someone who would be a natural fit for a presidency of an accreditor. No, I don’t want, don’t want to bite off that carrot.

Beth Martin: Actually, I was invited to apply for one and I said, “oh, I don’t think so. Thank you”.

Drumm McNaughton: Yeah. Yeah. It’s that, that to me, especially in today’s era, is probably one of the most thankless jobs you could have.

Beth Martin: It’ll be a very difficult road for several years, for sure.

Drumm McNaughton: Yeah, I can see that. Let’s swap horses a little bit.

[00:04:19] Notre Dame de Namur’s History and Mission

Drumm McNaughton: Give me a little background on Notre Dame de Namur. I’m fascinated by your story about the founder.

Beth Martin: Sister, well, well, she’s now St. Julie Billiard, founded the order basically during the French Revolution and young women weren’t allowed to be educated, so that was one of her goals.

And, over time, she left France and the order grew in Belgium and she sent sisters to the US in 1848, I believe. I should know that. But 1851 is when the teaching really started. So we’re celebrating 175th year next year, in ’26.

Drumm McNaughton: Wow.

Beth Martin: One of the things that really motivates me was one of the principles she lived by, which was, for students, teach them what they need to know for life. So you can imagine what they were teaching during the French Revolution was nothing like we’re teaching today. So I feel like we’re going from “lace making to AI”.

Drumm McNaughton: Yeah. Now you really think that higher ed has changed what it teaches. If you listen to some people out there, higher ed’s never changed in 400 years.

Beth Martin: Well, I was, she didn’t start with higher ed, but she eventually got to higher ed. Oh, yeah. It’s, we all know it’s changed pretty dramatically.

Drumm McNaughton: Yeah.

Beth Martin: Well, when you think Harvard was founded as a seminary.

Drumm McNaughton: This is true, and it wasn’t the first university ever founded.

Beth Martin: That’s all.

[00:05:53] Challenges and Changes at Notre Dame de Namur

Drumm McNaughton: So you’ve got some major news for your institution, but to set the stage for that, you were in a turnaround situation, were you not?

Beth Martin: Yes, most assuredly. The sisters purchased this property 102 years ago, and so we actually were here before the city of Belmont was incorporated.

Drumm McNaughton: Wow.

Beth Martin: There’s a tremendous amount of history here, starting with the local native American population, and then Ralston. The builder was originally Cipriani and then Ralston, who was a silver magnet and founded one of the major banks in the country.

And then it became a sanitarium. It went through a lot of changes, and then when the sisters purchased it, the Ralston Mansion was the entire University of the Sisters. The students lived there, all the classrooms were there.

And then over time it expanded enormously and the sisters chose over time to separate parcels. So the high school is on its own parcel with its own board. The elementary school is on its own parcel with its own board. The sisters have their own province center on their own parcel. And so the university has a separate footprint, a separate 46 acres.

I got here in ’21. In 2020, the board and the sisters leadership team decided that because of the demographic cliff and the fact that for 10 years the traditional population of our students, the residential, first time freshmen students, had declined, that they would end the traditional, undergraduate school and concentrate on our graduate programs.

Drumm McNaughton: Mm-hmm.

Beth Martin: Some degree completion, but no, first time, full-time freshmen. And so when I got here they had already graduated the last class and we started to build up the graduate programs. So that was a huge change. But, I have to give tremendous credit to the board and the sisters leadership team for thinking that far ahead because, the sale of the campus land has really given us, actually, a new lease on life, entirely new lease on life.

Drumm McNaughton: Mm-hmm.

[00:08:06] Managing Institution Debt: The Sale of Campus Land

Drumm McNaughton: And you had significant debt based on a new residential hall It was put in over 20 years ago, right?

Beth Martin: We did, and the sisters were good enough to give us bridge loans until we were able to sell the land. And so Friday when it closed, we became debt free. We paid the sisters back. And we are looking to a very bright future.

Drumm McNaughton: I would say so. So the big news that I kind of teed up at the beginning is the sale has closed.

Beth Martin: The sale has closed on the University of California Investment arm.

Drumm McNaughton: Very nice. Well, congratulations on that. It was a challenging time getting it to the finish line though, wasn’t it?

Beth Martin: Well, it was particularly challenging because when I got here, there was already an agreement and a contract in place with Stanford University. It was an option, it wasn’t a purchase agreement, it was an option to purchase agreement.

Drumm McNaughton: Mm-hmm.

Beth Martin: Stanford had approximately four years to exercise the option while they did their environmental impact report. And while they did all their due diligence and depending on what they wanted to do with the land, seeing what kind of permissions they could get from the city.

So they spent three and a half years doing that and then decided not to take the option, so, we expected that it would’ve been exercised sooner, but when that happened, of course we had a very short time given the fact that our bridge loans weren’t going to last forever, to find another, purchaser.

And fortunately, interestingly enough, when Stanford announced that they were not going to purchase the property that hit all the local papers, and it was our best advertising that we could have imagined, because the phone started ringing off the hook. And, UCI contacted us very quickly, very quickly, and then we just moved on from there.

Drumm McNaughton: Well, Belmont is in the heart of Silicon Valley. It is such a prime location. And that advertising obviously helped because, this deal closed in a, frankly, for a sale like this, it closed in a relatively short period of time.

Beth Martin: Yes, it actually did. We actually could have closed sooner, but most people are not familiar with, Canon law and we had to go through many steps, getting permission from the sisters, the leadership team, their congregational order, the archbishop, and actually the Vatican. That took a while.

Drumm McNaughton: Yeah, it certainly would.

[00:10:38] Turnaround Strategic Planning and Business Plan

Drumm McNaughton: So let’s back out and look at it from a transformation and a big picture perspective.

You had debt. And obviously in a turnaround situation, selling assets is a viable solution, but it needs to be done in the right way. So you have the debt, you’re transitioning from being on the ground, undergraduates, to graduate school, and mostly, if not all, online, distance learning. This gives you, the sale of the property is done very strategically to give you 1. Debt free, but 2. to give you the cash that you need to make significant transitions. Do I have that summed up, right?

Beth Martin: That’s correct. That’s correct.

[00:11:29] Online Education and Technological Advancements

Beth Martin: I think I mentioned before that in addition to a strategic plan, we created a business plan to be able to show the sisters who gave us the bridge loans, why we needed the bridge loans so that we could develop online courses.

We built a center for excellence in teaching and learning with five instructional designers, and they actually brought every one of our programs online in three years, which is just phenomenal. They’re just amazing. They’re so skilled. And, we’ve given our students the option of taking fully online or hybrid or on the ground.

So, for example, in our school of clinical psych, we have licensure programs. So many of those students choose to come and have their classes in person. But because you have the opportunity to do hybrid and on ground and fully online, I think it makes the students feel like if they run into difficulties and can’t be in person, they know that they can go into a hybrid classroom.

And we do the same in our school of education because, of course, they have to go through state certification as well. So of course, they are placed in student teaching assignments, but other than that, if they choose to, their coursework can be fully online. But when we surveyed who was doing what, who was choosing what, 80% of our students had chosen fully online. So that’s a major change for us. But we still, we’re trying, one of the main values of the Sisters and NDNU is to build community.

So we’re trying very hard to use different techniques to build community at a distance. We have created, over the last few years, a 3D campus through BRX. And so we’re in the process of trying to set up virtual meeting spaces for students. Of course they have those in their LMS and Canvas, but this would be strictly for meeting and getting to know each other and networking.

Drumm McNaughton: Mm-hmm. I was just speaking with someone, within the last couple of days who, in trying to get people to buy into virtual classrooms, especially the board of directors, they sent them all VR headsets and showed them the options that could be done. For a biology class, for example, and it was like, it just blew people away.

Beth Martin: It’s amazing. The way we’ve done it, that is also, that’s the high end use. But I know many students are not going to have headsets, so they can still use it in 2D on their computers. So, if they have a headset that will enhance it, but otherwise they can come in, Even on their phones.

Drumm McNaughton: Yep. So let’s back up again in just a little bit. You said there was a strategic plan and you did a business plan on this. You came to the university about what, four years ago? Somewhere in there.

Beth Martin: Four years.

Drumm McNaughton: Okay. Was that strategic plan in place?

Beth Martin: No.

Drumm McNaughton: No, not. But they knew they wanted to sell the campus, or…

Beth Martin: Oh, yes. Yeah. They had made that decision. The board had made that decision. And, my understanding is that, before I got here, the thought was they knew I was coming in and wanted to let me work on a strategic plan. I’m. I’m not sure I wouldn’t have liked to have one in place when I got here, because we had, WASC coming the following month, so

Drumm McNaughton: Oh, joy.

Beth Martin: Oh, joy. Yeah. It was, so, it was a bit of a scramble after that to try and put a reasonable strategic plan in place by the next spring.

Drumm McNaughton: Sure. So you did the planning. As it should happen, the board set the direction. Yes. And then you developed the plan plus a business plan. Now, many institutions don’t do business plans, but for what you were doing, it was absolutely critical that you had a business plan to be able to show, profits, losses, costing, et cetera.

Yes. And to explain why some major purchases or expenditures were directly related to the success of the institution. For example, the hiring of instructional designers, why that was needed if you were going to make the transformation to a largely online institution. And it’s worked for you. Your growth over the last three years has been phenomenal.

Beth Martin: It has. It’s been terrific, and it looks like it’s going to continue. We have a really excellent model for predicting future enrollments and future terms, and so far it’s worked out really well. And we hope to be certainly at 500 by next fall. And then the hope is to just continue to grow as we put more and more things in place.

We have a new CRM that we really like, Element 451, it’s AI driven. Lots of options to respond very quickly to any applicant because, as you probably know, what we call the post-traditional student, the student who’s average, our students are average age 35, they’ve got families, they’ve got work life, they’re very busy, they want to be responded to almost immediately, if not immediately, and they would like a decision on their application quickly. So this has helped us to speed up that process enormously.

Drumm McNaughton: Very nice. Very nice. So what other nuggets of knowledge can you share with our listeners?  What can you share with them about the process that you’ve gone through?

Beth Martin: I think, there are a lot of things that really contributed to the success. I have to say that the staff and the faculty were quite remarkable. These are folks who’d been through the wars.

They saw their colleagues laid off because when the traditional undergraduate school was closed, 60% of the faculty were laid off and 60% of the staff. Wow. So these folks are really only here because of the mission.

They’ve stuck it out, through tough times. And, without that kind of belief in what we do, what our mission is, on the part of the faculty and the staff, it would’ve been much more difficult. And the board was very involved, always, trying to understand the best way forward. And even in tough times there was support from the Sisters because we would not have made it without those bridge loans.

Drumm McNaughton: Oh, absolutely.

[00:18:06] Board Support and Governance

Drumm McNaughton: Now if you don’t mind, let’s talk a little bit about your board. They set the direction for going for, they supported you through the process, but did the makeup of your board, was that important in this process?

Like one of the things we’ll do is we’ll do a skills matrix based on, the direction that the board says it’s going. We want to make sure that you’ve got the right skills there to help the president. Was that an issue? Did you have the right people on the board to help?

Beth Martin: We do have a skills matrix and we look at it every year. Before I got here, the board was deliberately shrunk because they had so many difficult decisions to make the decision was that they would be able to do it more quickly with a smaller board. So when I got here, we started to build the board back.

So we’re still small. We could be as high as 21 trustees, but we’re at about 16 right now. So I have to say that, it was actually in flux the whole time because we’d add folks and other folks would drop off. But the basic, the core of the board was the same, and the core of the board is largely the Sisters. So that, that didn’t change.

Drumm McNaughton: That’s very helpful.

[00:19:21] Board Chair Relationship

Drumm McNaughton: And your relationship with your board chair in pretty much every institution that I know, that is one of, if not the most critical piece to have in place.

Beth Martin: Yeah, I’m glad you mentioned that. I’m exceptionally lucky because my board chair has always been incredibly supportive and I’ve been able to work with her for the full four years. So in other words, there was no change on the board chair the whole time I was here. So that has made, we work together really well. She really goes to bat for us all the time, and she’s just, she’s remarkable and it’s really been a huge help.

Drumm McNaughton: Was she the board chair before you came in?

Beth Martin: Yes, she was. Sister Jean Stoner was, she was the board chair as I came in.

Drumm McNaughton: So she has, over time, she has learned a tremendous amount about higher education, the institution. It wasn’t like she was just thrown in and, tell me what to do. She becomes a true, trusted partner.

Beth Martin: Absolutely. And she also always does her homework. I mean, she’s on top of everything. She’s had a lot of very relevant experience. She spent six years at the United Nations heading the Sisters NGO. So, she’s had a great deal of very relevant experience that she’s taught at, not at the college level, but she’s been a teacher. She’s done a variety of things, so all of it has helped her to be an excellent board chair.

Drumm McNaughton: I would wish that all folks have a board chair as well educated and savvy as yours.

Beth Martin: She’s very remarkable. She actually knows all of Robert’s rules.

Drumm McNaughton: Wow.

Beth Martin: So she runs very good meeting.

Drumm McNaughton: I do a lot of board work and I don’t know all of Robert’s rules.

Well, that’s great.

[00:21:10] Success Story and Future Outlook

Drumm McNaughton: Well, Beth, it is so good to be able to hear a success story. I hear so many about people selling land and it pays off the debt and they just don’t have a good direction and it’s just really staving off the inevitable. Yours is not that, so thank you for sharing.

Beth Martin: Oh, sure. Well, we actually have been here 175 years and now we say, ” 175 years down, 175 to go”.

Drumm McNaughton: Excellent. That’s a great attitude.

[00:21:39] Three Key Takeaways for Presidents and Boards

Drumm McNaughton: As we always do, three takeaways for presidents and boards. You’ve done it the way it’s supposed to be. So someone coming up, what would you tell them?

Beth Martin: Well, I would tell them to take advantage of monetizing their land if they can. I know that people in rural areas are not usually able to do that.

I would say that a business plan is absolutely critical to make it clear exactly what you need. And I would say don’t lose faith, don’t become pessimistic. You have to remain optimistic to be able to support your faculty and staff and the board.

Drumm McNaughton: Absolutely. And I’ll add one more to that. Take care of your people.

Beth Martin: Yes, absolutely. Absolutely.

Drumm McNaughton: So great takeaways. Thank you. What’s next for you?

[00:22:29] Beth’s Retirement Plans

Beth Martin: Well, I’ll be here until the end of June and then I will be in retirement.

Drumm McNaughton: Wow. Well, you’re one of the first presidents I’ve ever spoken to who’s actually said on the podcast, “I’m going to Retire”. Good for you.

Beth Martin: Yes , at least that’s my plan because I retired maybe two or three times before. But this time, this time I think it’ll stick.

Drumm McNaughton: Yeah. I know a lot of people who failed in retirement. When I get to that point, I don’t think I’m going to be one of them.

Drumm McNaughton: Beth, thank you so much for being on the show. Greatly appreciate your time you’re sharing with us, and I wish you all the best going forward. Thanks so much.

You too. It’s been a pleasure. Thank you.