cccu president’s conference structuring tough choices in tight economy times: jbu’s strategic...
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CCCU PRESIDENT’S CONFERENCEStructuring Tough Choices in Tight Economy Times: JBU’s Strategic Planning to Sustain Mission in Challenging Economic TimesDr. Chip Pollard, John Brown University
January 28, 2011
Informing Strategic Choices• Different choices for different institutions• Sustainability of traditional undergraduate “business model” is
under pressure▫ Demographic trends▫ Pricing/discount trends ▫ Marketing/communications trends▫ Fundraising potential
• Framing Strategic Choices• Leading the Institution
30.8% and above
24.4% - 30.7%
17.1% - 24.3%
25.3%
29.6%
27.1%
24.7%
24%
25.1%
21.9%
35.6%25%
23.6%
28.1%
29.1%
31.5%
29.6%
27.1%
25.1%
22%
26.9%
22.2%
30.7%
27.5%
29.9%
24.3%
25.7%
18.8%
26.1%
19.4%
31.9%
20.3%
26.3%
22.9%
24.7%
24.1%
19.7%33.7%
22.9%
25.4%
23.7%
25.8%
17.1%
Percent of Adults With a Bachelor’s or Higher Degree, 2008
27.3%
29.1%
32.1%33.3%
38.1%
30%
34.4%27.5%
35.2%
48.2%
35.6%
Source: U.S. Census Bureau, 2008 American Community Survey (Table R1502) 1-Year Estimates
Market for Advance Program
30.8 % and above
24.4 % - 30.7%
17.1%-24.3%
30% or more
15% - 29%
0% - 14%
34%
7%
30%
30%
9%
52%
25%
15%
18%
101%
25%
32%32%
15%
25%
24%
20%
24%
11%
6%
43%
14%
45%
15%
35%
26%
34%
19%
22%
23%
23%
21%
19%
53%33%
30%
21%
29%
37%
31%
Change in Undergraduate Enrollment, 1997-2007
8%
7%
16%11%9%15%
22%
12%
40%
80%
21%
Source: Center for the Study of Education Policy, Illinois State University,found in The Chronicle of Higher Education, August 28, 2009, Vol. 56 No. 1 Almanac Issue 2009-10
Market for Traditional Undergraduate
7% - 26%
0% - 6%
-32% - -1%
17%
-4%
-8%
-1%
0% 0%
24%
26%
-1%
4%
16%
1%
-1%
-2%
19%
17%
-5%
-2%
6%
18%
-6%
-1%
-3%
16%
1%
5%0%
13%-2%
-10%
-18%
-11%
-25%
-8%
-14%
-10%
-3%
15%
-10%
-8%
Projected Change in the Number of High-School Graduates 2009-10 to 2019-20
-9%
-6%
-23%-9%-10%-13%
-3%
+6%
-8%
-32%
-11%
Source: Western Interstate Commission for Higher Education, found in The Chronicle of Higher Education, August 28, 2009, Vol. 56 No. 1 Almanac Issue 2009-10
Market for Traditional Undergraduate
Demographics and Race/Ethnicity
Market for Traditional Undergraduate
Conclusions about Demographics• Growth rates for traditional undergraduates are likely to be much more limited than previous ten years
• JBU Response: strategic plan based on conservative growth projections and innovation depends on funding other than growth (endowment)
•Location matters – most students are within 300 miles of home
• JBU Response: focus recruitment efforts in six state radius
•Much of the growth in our region will be North American Hispanic students. How well are we prepared to recruit and educate those students?
• JBU Response: set up Hispanic task force to reach out to local churches and pastors and to identify and overcome barriers both externally and internally to recruitment of Hispanic faculty, staff and students
Price Trends: Parents’ perception of maximum affordable annual out of pocket expense for college
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (est.)
Actual Discount Rate 28.4 30.1 30.6 30.6 31.3 30.1 30.5 30.4 30.6 32.6 35.2
Budgeted Discount Rate 31 31 31 31 31 31 31 31 30 31 32
National Private Discount % 32.3 32.8 33.3 33.7 35.5 36.3 37.7 38.2 39.1 41 NaN
CCCU Average Discount % 25.1 26 26.6 27.2 26.5 28.1 28.6 30.9 31.5 34 NaN
24
26
28
30
32
34
36
38
40
42
Discount Percentage Fiscal Years Ended 2001-2011
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 BGT
2011 EST
2012 EST
2013 EST
2014 EST
2015 EST
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
Income and Tuition DependenceNet Tuition w/ Other Revenue
Net Tuition/FFTE w/funded aid projected at 4.94% annualized2004 Proj Net Tuition/FFTE w/funded aid projected at 6.46% annualizedOther Revenues/FFTE at 1.69% annualized growth2004 Proj Other Revenues/FFTE at 1.66% annualized growth
1994 Tuition % of revenue
= 53%
2004 Tuition % of revenue = 64%
2010 Tuition % of revenue
= 68%
2015 Tuition % of revenue
= 70%
Price Trends: Change in JBU’s Family’s Capacity to Pay
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
50000
55000
60000
65000
70000
75000
80000
85000
90000
Income
Income
20002001200220032004200520062007200820098000
9000
10000
11000
12000
13000
14000
EFC
EFC
Pricing Trends: Change in Endowed Scholarship per Student at JBU
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$426
$519
$617
$737
$842
$942
$231 $203
$288 $303 $304 $339
Average Endowed Scholarship Per Student
JBU vs. CCCU (2004-2009)
JBUCCCU
John
Bro
wn Uni
vers
ity
Univ
of A
rkan
sas
Univ
of C
entra
l Ark
ansa
s
Univ
of A
R Fort
Smith
Ar Tec
h
Oklah
oma
Stat
e U
Texa
s A&M
North
east
ern
St
Kansa
s Sta
te U
niv
Misso
uri S
outh
ern
St U
Misso
uri S
tate
U
$0$10,000$20,000$30,000$40,000
Public Universities - In-State
Tota
l C
ost
John
Bro
wn Uni
vers
ity
Ouach
ita
Sout
hwes
t Bap
tist
Oral R
ober
ts
Baylo
r
Liber
ty
Leto
urne
au
Oklah
oma
Baptis
t
Whe
aton
Col
lege
Oklah
oma
Christia
n
Dalla
s Bap
tist
$0
$10,000
$20,000
$30,000
$40,000
Private Universities
Tota
l C
ost
School Costs – Stated Tuition
John
Bro
wn Uni
vers
ity
Univ
of A
rkan
sas
Univ
of C
entra
l Ark
ansa
s
Univ
of A
R Fort
Smith
Ar Tec
h
Oklah
oma
Stat
e U
Texa
s A&M
North
east
ern
St
Kansa
s Sta
te U
niv
Misso
uri S
outh
ern
St U
Misso
uri S
tate
U
$0$10,000$20,000$30,000$40,000
Public Universities - Out-of-State
Tota
l C
ost
Conclusions about Pricing•Perception (and reality) of our sticker price as increasingly out of range
• JBU response: control tuition increases• JBU response: focus message to differentiate with public
universities, and to communicate better net price and value
•Increase discount undermining net revenue but essential to enrollment
• JBU response: hire outside help to review our strategic use of discount
•Endowment for scholarships mitigates but does not solve problem
• JBU response: prioritize raising endowment for scholarships and programs
Marketing to Students and Parents•CCCU Marketing Study
• First important factors in college decision
• Quality of the academic program or major
• Preparation for future careers
• Faculty who are excellent teachers
• Faculty who are well qualified in their fields
• Later important factors
• Christian life and community
• Integration of the Christian faith and learning
• Christian faculty
• Faith commitment of fellow students
Market to Students and Parents: Preferred Channels of Communication
Marketing to Students and Parents: Expectations when visiting campus
Marketing to Parents: Factors that cause immediate rejection of a college
Conclusions about Marketing• CCCU and Longman Studies
• JBU response: Lead with quality, and follow with Christian community
• JBU response: Focus on web page development
• Catch-22 of facilities -- essential for mission/recruitment but pressure on budget
• Debt is cheap now but often depends on enrollment growth to justify
• JBU response: maintain focus on gifts for new facilities
• Operating costs increase by 30-40% of the cost of facility• JBU response: raise goal for endowment for facilities from 20%
to 30%
• Not always able to budget for deferred maintenance • JBU response: refinance debt to fund deferred maintenance• JBU response: capitalize deferred maintenance projects in
campaign
Fundraising Potential
$10,
000,
000
Plus
Tot
al
$1,0
00,0
00 to
$9,
999,
999
Tota
l
$500
,000
to $
999,
999
Tota
l
$100
,000
to $
499,
999
Tota
l
$50,
000
to $
99,0
00 T
otal
$10,
000
to $
49,9
99
$5,0
00 to
$9,
999
0
20
40
60
80
100
120
140
160
180
200
$0.00
$10,000,000.00
$20,000,000.00
$30,000,000.00
$40,000,000.00
$50,000,000.00
$60,000,000.00 56821822.4
6
14484683.9
2077013.5
8
7343028.4
9
1423111.3
3
3025919.2
9
1123424.8
8
4 7 3
34
21
156
174
Keeping Faith Campaign Gifts
Donor CountAmount Given
Alumni Gift/Non Alumni GiftBy Dollars
Non-Alumni Gifts; $55,008,684
Alumni Gifts; $18,379,665
Non-Alumns who live within 100 miles and more than 100 miles by Dollar
Non-alumni live within 100 miles; $53,976,949
Non-alumns live more than 100 miles; $5,254,112
Conclusions about Fundraising Potential•President as the “magic money” person to solve the problems with the model
•JBU response: what is a reasonable stretch goal for the institution?
• Look to the past to set expectations
• Average length of time between first gift and seven-figure gift-8 years
• A few give the most -- $80 of $90 million came from 50 giving units
• More from non-alumni than from alumni• Non-alumni give locally
Framing Strategic Choices• What should be the capital campaign priorities/capital structure?
▫ $1 for endowment for every $1 for facilities▫ Endowment challenge for scholarships, programs, and operations▫ Capitalizing deferred maintenance projects▫ Refinance debt and use savings for deferred maintenance
• What should be the focus of marketing and recruitment efforts?▫ Focus 300 miles from campus and on families with higher capacity to pay▫ Lead with quality at top of funnel, follow up with Christ-centered education▫ Develop partnerships with key Christian schools and Hispanic churches▫ Recruitment is a university-wide effort
• How do we advance the mission in these tight times?▫ Innovation will more likely be funded by gifts rather than growth in students or tuition
revenue ▫ Trade-offs are inevitable ▫ Funding for compensation is important for mission and takes fiscal discipline in programming▫ Current mission still has great value even with slower innovation▫ Opportunities to expand mission exist even with challenges▫ Programs outside of the traditional undergraduate program increasingly important to mission
Leading the Institution
•Transparency about money and mission ▫Encourages confidence in decisions▫Generates creative responses to challenges▫Offers data-informed rationale for saying yes
and no▫Helps to align interests of students, families,
faculty, staff and board
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