For the last couple of days, I’ve been writing about WCC’s lack of risk management capabilities. Managing risk is absolutely essential in for-profit ventures. WCC is not a for-profit entity. But increasingly, it engages in inherently risky activities that generate cash but have only a tenuous relationship to WCC’s mission. The Health and Fitness Center is one of these operations. The summer trades programs are another.
In the current Master Plan, the WCC Administration proposes to build another for-profit venture in the form of a hotel and convention center, with some retail development thrown in. Of course, the success of any profit-making venture depends heavily on risk management, which WCC apparently doesn’t do.
And when I say that, I mean that it is apparent that WCC does not manage risk. The Administration does not make contingent plans to cover the possibility that something will go wrong. They do not fully consider the long-term financial risks to the community of their actions. They do not look out for the taxpayers’ interests in whatever grand venture they put forth.
You could (rightly) argue that the Board of Trustees should be looking out for the taxpayers’ interests in any such venture where the taxpayers bear the financial risk of failure. They should , but they do not. One trustee has literally stated that she believes Washtenaw County voters elected her to give the College president advice.
(Note to the WCC Trustees: we DID NOT elect you to provide “advice” to the College president. To be clear, we elected you to manage our multi-billion-dollar investment in Washtenaw Community College.)
Managing risk is essential
In the real world, managing risk is essential to remain operational. At WCC, the executives are not risking their own money, and the Trustees do not hold them accountable for their failures. In this environment, no harm comes to them when their asinine plans produce no fruit. Without adequate focus on managing risk, it is unlikely that they can recognize (much less address) red-flag circumstances that would lead a for-profit business to failure.
In the case of the Health and Fitness Center, no one managed the risk of shoddy construction during a recession. No one managed the risk of rising bond costs over time. According to plan, the HFC’s operation would pay for itself, but no one ever thought about a Plan B, just in case it could not pay its own way. Nobody planned for the building’s exorbitant maintenance costs. And certainly no one planned for a pandemic that would require the building to cease operations for long periods of time. Or the resulting market shift that may mean the building never operates at full capacity again.
A private-sector investor would have thought of all these things and more. Mainly because the private investor stands to lose his or her own money. The public sector pseudo-investor thinks of none of these things because bankruptcy and personal financial losses are not realistic consequences.
We cannot afford willfully ignorant Trustees
When the WCC administration starts talking about building hotels and running conference centers, the public should be extremely worried. First, the plan is risky. WCC has no particular expertise in managing risk in general, much less running a hotel or working with a hotel operator. Second, there is a really good reason that no entity has built a convention center in Washtenaw County. (And it’s not because no one has thought about it.) Third, the people we have elected to provide oversight on our behalf refuse to exercise these responsibilities.
The public does not have whatever measure of control it may think it has at WCC. The current Board of Trustees is “anchors up” for better or worse. They are no more accountable to the voters than the WCC administration is accountable to them. You can be certain that none of them will be around to accept responsibility for their poor decisions when things go wrong, and the money we provided for education has been irretrievably spent on unrelated nonsense.
A long time ago, I read something about spending money that’s stuck with me. “When you spend a dollar, you lose not only its value, but also its potential.” If the current WCC administration wastes our educational dollars on a hotel, Washtenaw County will lose a lot more than the potential of money. We will lose the potential of thousands of Washtenaw County residents for decades.
Photo Credit: blogdnd , via Flickr
