“A college’s greatest enemies are complacency and nostalgia,” according to Larry Ladd, director in Grant Thornton’s National Higher Education & Not-for-Profit Practices.
The higher education professional’s words were taken to heart at a recently held visioning exercise that included a cross section of about 50 campus representatives who make up the Administrative Council, along with academic department chairs.
“The purpose of the session was to have some broad discussion about our financial future and to understand that every decision we make about resource allocation determines that sustainability,” said Mississippi University for Women President Nora Miller Miller added, “I attended the annual SACUBO (Southern Association of College and University Business Officers) meeting and saw a presentation about the Economic Models Project. The presenters said that they were looking for institutions to pilot what they were doing, and I volunteered us.”
The campus session held in October was titled “Leading Institutional Transformation with NACUBO’s Economic Models Framework” was led by Jackie Askin, senior fellow of finance and campus management, and Randy Roberson, director of strategic initiatives, at the National Association of College and University Business Officers (NACUBO).
Participants were posed with the question: “Why Economically Stable?”
Askin explained that an institution’s economic model is about so much more than just setting a price to ensure maximum demand.
“Economics includes all decisions about production, consumption and investment of resources. Is there anyone on your campus who is not engaged in producing services or/and consuming or investing resources?” she asked. “Understanding an institution’s economic model calls for a wider inspection of the institution’s activity, including its enrollments, programs, decision-making processes, and so forth.”
Factors such as question of access and affordability, increasing tuition, declining public support/philanthropy, changing expectations for outcomes, changing delivery modalities, changing costs, globalization, new competition and losing the strategic conversation debate all impact why institutions should adopt new models.
A 2018 survey of college and university presidents and business officers, showed that only 53 percent were confident in the 10-year financial outlook of their institution. The poll included 618 presidents, representing 340 public institutions, 262 private institutions and 16 institutions from the for- profit sector. Community colleges represented 177 of the public respondents.
More sobering statistics were shared with the group, including the fact that operating revenues for four-year colleges and universities would not keep the pace with expense growth, causing more revenue strains for public universities. Also, only 40 percent of the presidents surveyed believe the business models of non-flagships publics are viable over the next 10-year period.
Additionally, 33 states face revenue shortfalls in fiscal years 2017 and 2018, and the majority of states spend less on higher education than before the recession. Only a few states are predicted to see an increase in the number of students attending regional four-year colleges universities between 2012-2029, with Mississippi and other states predicted to see a drop of more than 15 percent by 2025.
The economic framework of a college or university and its financial sustainability is the culmination of decisions made about its mission, structure, strengths and resources.
“It doesn’t matter which dimension of the framework you choose to explore after mission, but begin with mission,” Askin said.
Faculty and staff participants were asked to ponder the following questions:
- What is our college’s purpose, and what should it be five, 10, or 20 years from now?
- What individuals and communities do (will) we serve?
- What outcomes do (will) we produce – for example, certificates, badges, degrees – and in what fields and disciplines?
Participants then assembled into smaller groups to deeper explore questions related to the four dimensions of the economic framework. The questions focused on areas such as culture, policies and processes, decision making, leadership, governance, market factors, collaboration and innovation. Each group shared its assessment and came to a consensus on three to five agreed to be the most important. A spokesperson for each group shared his or answers with the entire group.
The final report-outs touched on numerous topics, including funding, competition with other colleges, facilities infrastructure, technology demands, the name, changing demographics and loss of faculty/staff. In order to implement change, the session wrapped up and emphasized the need to trust constituents, align leadership with vision, share brutal facts, focus on strategy and innovation, utilize data, learn from peers and celebrate the wins.
Miller said, “I came away energized from the sessions and thankful for the lively participation and discussion. I think in many ways this was similar to the visioning exercise that we participated in several years ago – we came away with a shared sense of our future, and with a realization of how passionate we all feel about The W.
“The next steps are to focus on each of these dimensions, and to continue discussions in Administrative Council and across campus. The more we reflect on these dimensions, the better we can weave these into our decision-making process.”