Golden Gate facing financial challenges, faculty cutbacks

Less than two years after it embarked on a bold strategy to reinvent itself, Golden Gate University School of Law, in San Francisco, is facing financial challenges that will likely force it to terminate faculty and staff, and could lead to its eventual closure. 

Sources close to the situation are questioning how the university was able to give assurances to the American Bar Association just a year ago that it had the financial resources to execute a plan that called for full scholarships to all full-time students. 

“The university committed to three years of deficit financing, but it appears they did not have the reserves to cover it,” said one source close to the situation who questioned whether the plan was built on a house of cards. 

The ABA granted GGU Law a three-year extension in March 2022 to reach 75% bar passage based on assurances from the university that it had the resources to carry out its plan to reduce enrollment and offer scholarships. The plan cost the school an estimated $5 million in tuition fees in the first year, and could cost as much as $15 million by year three — the 2024-25 academic year.

The university passed its plan in January 2022 and now says that it fell apart when the San Francisco commercial real estate market took a beating in late 2022. It apparently had plans to sell real estate if necessary. But the San Francisco office vacancy rate rose from 19% to 24% in the fourth quarter of 2022. Valuations are 43% below pre-pandemic levels.

But sources say the university should have had reserves set aside and not relied on a risky real estate market before announcing such a bold strategy. The law school is now expected to make significant faculty cutbacks in one year. 

“To ensure the University’s ability to reduce the number of law school faculty beginning in FY25, notices of discontinuation of tenured and multi-year appointments were issued … because faculty members are entitled to have at least one year’s notice if their appointment will not be renewed.,” the university said in a statement. 

Students and faculty at the 122-year-old law school had been concerned that the university board might vote in June to close it. Instead, the board voted to keep it open for the 2023-24 academic year while it assessed the long-term viability of the school. If the board then decides to close GGU Law, it would offer classes for two to three more years to allow current students to complete their education. 

“We also want to let you know, in the clearest possible terms — no matter what course is chosen for our Law School — that GGU Law will continue to operate during the academic year 2023-24 and beyond as necessary to ensure at a minimum that all currently enrolled and entering students will continue to receive their scholarships and be able to receive an ABA-accredited degree,” the university said in a statement attributed to both David Fike, GGU president, and Mark Yates, who became dean on July 1.

Golden Gate first ran into problems when the American Bar Association passed a new rule that required law schools to attain a 75% bar passage rate within two years of graduation. That rule, which took effect in 2019, has already contributed to the closure of three law schools and led two others to drop ABA accreditation to avoid a similar fate. 

The ABA rule has been controversial because it primarily impacts law schools with large minority student bodies. Golden Gate ranks No. 5 on preLaw’s list of most diverse law schools. 

Golden Gate’s Class of 2018 had a bar passage rate of 57.5%. In 2019, the number improved to 67%, but still fell below the required 75% mark, leading the ABA to find the school out of compliance. 

Facing the risk of losing accreditation, the school drastically reduced the size of its entering class — from an average of 183 in the three prior years to 43 in 2022-23. It also provided all full-time students and half of the part-time students with full scholarships.