A tale of two academias: campus chief financial officers peer into the future

What do the people in charge of campus finances think about academic sustainability?  Inside Higher Ed and Gallup surveyed CFOs again, and the results are both fascinating and sobering.

Overall, CFO opinion is split between optimism and pessimism.  Setting aside individual temperaments, this division illustrated the growing resource gap among academic institutions.  That separation seems to be widening, and now having an impact on campus planning and expectations.

Consider existential threats.  More than 1/4th of private institutions fear for their existence in coming decades, while the rest do not.  More publics are cheerful.

CFOs consider the fate of their institutions

On a broader note, just over half of these specialists (56%) agree that “media reports suggesting that higher education is in the midst of a financial crisis accurately reflect the general financial landscape of higher education in this country”, while nearly half disagree.

Similarly, almost one half think their campus hasn’t changed its business model lately, while almost another half… “Forty-five percent of business officers say their institution has significantly changed its budget model in the past four years. Another 16 percent plan to significantly change their model in the near future.”

Another split shows up in views of how much fat remains to be cut after a near-decade of recession.  “Half of business officers do not believe their institution can make additional and significant spending cuts without hurting quality.”  The other half apparently see a juicy fat layer remaining alongside muscle and bone.

A slightly more uneven split occurs when CFOs think about where new spending dollars will come from.  A majority, “61 percent agree that new spending at their institution in the coming years will come from reallocated dollars rather than an increase in net revenue.”  The other 39% apparently expect fresh monies.

Things look fairly bright for inter-campus collaboration.  62% of CFOs are “exploring collaboration opportunities for academic programs with other institutions”.  Interest in shared services is on the rise, especially among state institutions: “Those working at public institutions report using a shared services model more frequently (54 percent) than do those employed by private nonprofit”. Almost half of CFOs are increasingly interested in shared services with other institutions, but again, almost half (44%) aren’t even considering it.

A Tale of Two Towers, photo by cogdog (I’m tempted to generalize about these divisions, although the report’s presentation doesn’t really support it.  I do, nonetheless, imagine two campuses.  One is confident that they will grow their student body and receive new revenue to do so.  If they need to cut they can, but don’t think they’ll have to. They aren’t interested in collaboration.  Down the road from that happy place is a different campus, brooding about the possibility of going out of business a few presidencies from now.  They have no fat to cut, and don’t see new dollars coming in.  This school is eager to collaborate with others. )

In some areas the CFOs are more harmonious.  For example, the leading way for campuses to raise revenue today is “employing strategies of increasing overall enrollment”, according to 82% of respondents.   Next most popular is “launching new revenue-generating academic programs”, as per 70%.

In contrast, what aren’t  campuses doing?

outsourcing more academic programs (4 percent), revising tenure policies (14 percent), cutting spending for intercollegiate athletic programs (15 percent) or shifting more undergraduate teaching to senior faculty members (19 percent).

Tenured and especially senior faculty and sports are safe, in other words.

Sustainability is something CFOs get darker about the further they look ahead.  “More business officers are confident of the sustainability of their institution’s financial model over the next five years(64percent) than over the next 10 years (42 percent).”

“All of the signals are that this is a sector that is in trouble,” said Jane Wellman, a higher education finance expert with the College Futures Foundation. “Yet the kind of things that would better position institutions for the long haul probably aren’t happening. They’re still at the edges, and solving this more symptomatically than strategically.”

There’s a huge culture gap on campus about who understands the financials, according to the CFOs:

Business officers are much more likely to believe senior administrators (88 percent) and trustees (79 percent) understand the financial challenges their institution faces than to believe faculty members (32 percent) do.

Some reflections:

  • For the future of education, short term: we’re going to see competition for scarce students heat up.  Expect expanded recruitment of students abroad.  I wonder how schools will grow shared services in this increasingly competitive context: more frenemies, collators?  Will people complain about administrative bloat as we throw more resources into student recruitment and retention?
  • ” ” ” ” ” , medium term: how will this desire for more students intersect with faculty concerns about underprepared students?
  • It’s interesting to see how overwhelmingly male CFOs still are, with 71% of those responding to this survey being men.
  • Technologists: please note how shared services is on the rise.  That includes a lot of financial transactions (payroll, etc) and IT functions.  How many IT shops are ready for this?  More: when will sharing services lead to staff cuts?

(many thanks to Pumpkin Yang for the link; “A Tale of Two Towers” photo by cogdog)

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5 Responses to A tale of two academias: campus chief financial officers peer into the future

  1. A thought on shared services, after seeing the discussion ebb and flow at the Cal States: A financial crisis provides maximum motivation for implementing shared services and eliminates many of the objections, but it also leads to a low capacity for implementing change. Successful shared services requires designing and standing up NEW services, not just consolidating existing services, which seldom works. When you are in a financial crisis, and you’re cutting operating budgets and leaving positions open and even cutting them, you lack the human capital and operating resources to build new services. To put it another way, it doesn’t matter how good the ROI is when you have nothing to invest. Then when budgets get better, the capacity is there but the motivation slips. It takes a lot of leadership capital to either provide new investment funds when everything else is being cut, or to motivate people to share services – which doesn’t come naturally to most institutions – when the financial need is not right there in front of you.

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  2. Justin Kirkes says:

    I see this collaboration in areas of necessary, mandated development, new Title IX requirements for instance. Few institutions, at least in the ACS, seem to have the resources to devote to this, so there’s been collaboration across institutions: sharing of policy and shared cost on staff development. I wonder if the investigation and adjudication will be outsourced and shared as well across institutions.

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  3. Pingback: Trends to watch in 2016: education contexts | Bryan Alexander

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