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Business dean Doug Guthrie fired over $13 million budget gap

Updated Aug. 25 at 11:35 p.m.

The University’s top brass fired Doug Guthrie after the GW School of Business overspent by about $13 million last year – an abrupt move that shocked faculty and likely puts the brakes on the college’s ambitious agenda.

Guthrie, who led the business school for three years and penned GW’s strategy in China, oversaw a spending spree that rocketed online and executive education program costs past the college’s budget by nearly 25 percent.

In a 30-minute interview Friday, Provost Steven Lerman said he and University President Knapp asked Guthrie to step down because of a “profound disagreement” on the school budget’s for next year.

“It’s hard to imagine how a dean and a provost and president can all function if they can’t reach an agreement about what the budget should be for the next year. How do you actually function if you can’t reach a resolution?” Lerman said.

The public dispute between the top administrators is particularly surprising because Guthrie, 44, had quickly become one of GW’s most influential officials, helping to write the University-wide strategic plan and taking over as the vice president for China operations last spring. He was also one of the top-paid at GW, making $532,464 in total compensation, according to tax filings from fiscal year 2012.

Guthrie’s departure marks the third time in two years a dean has left a top role after faculty discontent or management issues. Peg Barratt stepped down as the Columbian College of Arts and Sciences’ top leader this summer after facing issues with professors in spring 2012. Paul Schiff Berman left his post as dean of the GW Law School last year to assume a role in the provost’s office after faculty tried to vote him out.

When asked outside Duques Hall last Friday, Guthrie said he “probably should not comment at this time” and did not return email requests for comment.

Lerman said the University would dip into its reserve pool to help cover the overspending, but would need to cut back next year. He said the school would not freeze employee salaries.

“In the scale of a billion-dollar-plus budget, it is, for any one school, a significant number, but it’s not an existential threat,” he said. “Obviously, this is going to force a revision of the next year’s budget and we don’t have that yet.”

A $13 million mistake
Administrators discovered $13 million in additional spending while closing the books on the school’s budget this summer, though Lerman said the school expected some overspending throughout the year.

Online and executive education programs, however, ran costs far past the University’s projections, Lerman said. “There were some investments that were much larger in things like online [education], which eventually will have more revenues, I think, but the initial investments ran high,” Lerman said.

The business school added four online graduate programs last year, partnering with the educational technology company Pearson to keep up with the growing demand for programs taught over the internet.

The school also overspent on its executive education programs, including a two-year program for athletes and celebrities that brought national attention to the business school. The school also expanded its World Executive MBA program to include catered meals and hotel rooms at the Four Seasons in Georgetown for 75 business professors.

James Bailey, the director of executive development programs, did not return a request for comment.

The school’s revenues were on target, Lerman added, and the school’s high-profile graduate program in China met its budget goals. He said he could not “point to exactly one number” that ran up costs in any of the programs, but that it was “a combination of things.”

Guthrie worked closely with the business school’s financial director, Andrew Salzman, who oversaw its budgets. Salzman is still at GW, but no longer oversees the business school’s finances, Lerman said. Salzman did not immediately return a request for comment.

Lerman would not disclose the exact size of the business school’s budget. But Pradeep Rau, a marketing professor who served as interim dean for about a month before Guthrie’s arrival, said the business school spends about $54 million annually, while bringing in about $107 million in revenue.

Lerman said the interim dean and next permanent leader of the school would need a tighter approval process for better regulating the budget throughout the year. The provost, dean and University budget office initially have to sign off on each school’s budget every year.

A stunned business school

The move shocked faculty Thursday afternoon, with many faculty members having little to say other than that they were simply stunned.

Most were unaware or had little knowledge of the severity of the school’s financial problems. Professor of international business Robert Weiner said Thursday afternoon that “almost no professors were in the know.”

A professor who asked that his name be withheld said he was worried that the lack of a permanent dean could harm a review of the school’s accreditation, which starts this fall.

“I’ve been here 20 years, I think this is the biggest thing that happened,” the professor said.

Vice Dean for Programs and Education Philip Wirtz, who will steer day-to-day operations of the school until an interim dean is appointed, said he did not know that Guthrie would be asked to step down. Lerman said an interim dean will be named “quite soon” and that he had received a handful of suggestions by Friday afternoon.

He is also taking input from faculty about whether to hold a national search for a permanent dean this year or the next. It would be the University’s third dean search this year, including the law and nursing schools.

Students, too, were surprised that the school’s top leader had been forced out. The school has seen high turnover in administrative positions in recent years that has frustrated students.

Senior Matt Scott said the dean being fired was “surreal,” and questioned the school’s stability now that its top leader is gone, along with some directors of undergraduate programs and several advisers, who left in recent years.

“They keep trying to put people in positions and then they’re gone,” Scott said. “It’s kind of like a puzzle. They’re trying to find the pieces that fit and it’s just not really working out.”

Many students, including Scott, had been excited by Guthrie’s different approach to business education, which emphasized the humanities and social studies.

The school, however, had been flailing in national and international rankings, taking a tough hit in Bloomberg Businessweek’s top undergraduate business schools. Administrative turnover also marked his tenure, with three top officials leaving their positions last summer.

Bart Kogan, an alumnus, former member of the business school’s board and longtime donor to the University, said it would survive the overspending and turnover, moving forward as other schools have in changes in leadership.

“I’m not worried, but I was certainly surprised this happened, considering the headway I thought he’d been making with the school,” he said.

– Sarah Ferris and Cory Weinberg contributed to this report.

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