the race to financial sustainability...– jack canfield, the success principles the race is on the...

The Race to Financial

SustainabilityMarch 12, 2020

The Race is On

2020 Higher Education Outlook

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Presenters

Nick Wallace

David Armstrong

Directornwallace@bkd.com

Directordarmstrong@bkd.com

The Race to Financial

SustainabilityMarch 12, 2020

The Race is On

2020 Higher Education Outlook

Introduction“Successful people maintain a positive focus in life no matter what is going on around them. They stay focused on their past successes rather than their past failures, and on the next action steps they need to take to get them closer to the fulfillment of their goals rather than all the other distractions that life presents to them”

– Jack Canfield, The Success Principles

The Race Is On

The Survey

Outliers & Successful Innovators

Mindset of Institutional Leaders

Outlook & Observations

“Without change there is no innovation,

creativity, or incentive for improvement.

Those who initiate change will have a

better opportunity to manage the change that is inevitable.”

W i l l i a m P o l l a r d

Polling Question 1› Which area of innovation are you most interested in?

• Revenue enhancement• Enrollment• Leveraging assets & collaboration• Expense management • Unsure

The Survey

The Survey

Survey Results

Growth Initiatives

Academic Programs

Key Questions› Where is your institution investing resources to address financial

sustainability?

› In addressing the changing environment of higher education, select how the listed actions have affected your institution’s overall financial sustainability

› What do you anticipate will have the most significant positive impact on financial sustainability over the next five to 10 years?

› What are the most & least preferred actions to support financial sustainability?

The Survey Population

The Survey Population

Survey Results

84.34% 62.65% 57.83% 45.78%

28.92%46.99%

Where is your institution investing resources to

address financial sustainability?

Survey Results

Survey Results

The Results

Growth Initiative Examples› A public university in the South launches a data analytics program

to augment their school of accountancy in partnership with an international CPA firm

› A small private university in the Midwest launches an osteopathic medical college (the second medical school in the state)

› A private school in the Upper Midwest launches innovation labs to support innovation in the classroom for several programs

› A West Coast private university launches aviation science & starts an online degree completion program

› A large public university builds an 80-seat e-Sports arena & launches an e-Sports program

As summarized from data on the National Center for Education Statistics website

What Programs Are Growing?

As summarized from data at the National Center for Education Statistics website

Polling Question 2› Is your institution actively pursuing growth initiatives to

generate revenue or reduce costs?• Yes• No• I don’t know

FutureMindset

Openness to Collaborative Efforts

Culture of Change

Mindset of Institutional Leaders

Stay Focused

“Successful people … stay focused on their past successes rather than their past failures, and on the next action steps they need to take to get them closer to the fulfillment of their goals rather than all the other distractions that life presents to them.”

Crisis of Confidence – Culture of Insecurity

Crisis of Confidence – Culture of Insecurity

Mindset of Institutional Leaders

Source: AGB Trustee Report; Affordability and Value, the Governance Lens 2018

Mindset of Institutional Leaders

Source: AGB Trustee Report; Affordability and Value, the Governance Lens 2018

What Are Your Top Three Concerns About the Future of Higher Education, by Sector?

Public Independent not-for-profit Private for-profit

Price of higher education for students & their families (53%)

Price of higher education for students & their families (58%)

Price of higher education for students & their families (63%)

Decrease in state funding for higher education (40%)

Financial sustainability of higher education (54%)

Financial sustainability of higher education (45%)

Financial sustainability of higher education institutions (33%) Student debt (34%) Student debt (40%)

Mindset of Institutional Leaders› How does this happen?

• Concordia University, Portland, Oregon• Mount Ida College, Massachusetts• Green Mountain College, Vermont• Memphis College of Art, Tennessee• Southern Vermont College, Vermont• Saint Joseph’s College, Indiana

Mindset of Institutional LeadersThere is a big difference between “late” & “too late”– Small College Guide to Financial Health: Weathering

Turbulent Times, Michael K. Townsley, Ph.D. (2009)

Our Iceberg Is MeltingA story about managing change & succeeding under any condition

Eight-Step Kotter Model of Change

Create a Sense of Urgency

Communicate the Vision for Understanding & Buy-In

Pull Together the Guiding Team

Develop the Change Vision & Strategy

Empower Others to Act

Produce Short-Term Wins

Don’t Let Up

Create a New Culture

Creating a Climate for

Change

Engaging & Enabling the Whole

Organization

Implementing & Sustaining

Change

Outliers or Successful Innovators

Innovative Ideas & Action

Positive Financial Results

Polling Question 3› Which of the following is your institution most focused on

to improve financial sustainability?• Revenue enhancement • Cost reduction• Both • I don’t know

Outliers or Successful Innovators“In contrast to the lack of confidence and the culture of insecurity, there are pockets of hope for some colleges. This list even includes a good number of smaller private universities.”

– Chronicle of Higher Education’s list of the fastest-growing colleges from 2007 to 2017, published August 2019

Outliers or Successful Innovators› Half the institutions that cracked this year’s Chronicle of Higher Education

list of the 20 fastest-growing private nonprofit colleges with at least 5,000 students in 2017 identify as faith-based campuses. The total list of schools ranked by growth were 349

› A review of the list of fastest-growing public colleges shows the presence of a significant number (two-thirds) of small public colleges (2007 enrollment below 10,000). These small public universities grew at rates from 49 percent to 666 percent

Average Growth Rates for the Top 35 Schools

Source: Chronicle of Higher Education Almanac, August 2019

Fastest-Growing Colleges – 2007 to 2017

Public Top Public Avg % Enrollment Change

Private Top Private Avg % Enrollment Change

Doctoral 15 of 211 78.5% 15 of 180 105.1%

Master’s 10 of 245 94.3% 10 of 349 418.3%

Baccalaureate 5 of 87 99.6% 5 of 338 203.8%

Associate’s 5 of 952 376.7% 5 of 34 43.1%

Growth Is Good, but Margin Is …

Source: Chronicle of Higher Education Almanac, August 2019

Fastest Growing Colleges – 2007 to 2017

ClassificationPrivate, Faith-Based, Fastest-Growing

Growth Rate Over Ten Years

Average Loss in High-Growth Schools – Latest Year (2017)

Doctoral 1 of 7 130.6% (16.1%)

Master’s 5 of 16 114.7% (5.7%)

Baccalaureate 1 of 5 57.8% (6.1%)

Finishing the Financial Sustainability Race› New academic programs

• Adults• Alternative students• Credential programs

› Location changes› Athletic team additions› Tuition resets› Relationships with secondary schools

Finishing the Financial Sustainability Race

Arizona State University President Michael Crow recently called the shortage of prospective students “a fallacy.” He elaborated saying, “In fact, we estimate that there are nearly 100 million working-age adults in America who don’t have a college degree, nearly 44 million of whom are not earning a living wage of $35,000 annually or in a family with at least $70,000 of income. Compared to the 20 million undergraduates American colleges and universities enroll each year, there is plenty of room for growth.”

Polling Question 4› Has your institution considered using data visualization to

evaluate programs?• Yes, we are actively pursuing this• Yes, but we aren’t sure where to start • No• I don’t know

Outlook & Observations

WorkerShortages

Collaborative Efforts

Academic Collaboration

Create a senseof urgency

Pull together the guiding team

Develop the change vision & strategy

Communicate for understanding & buy-in

Empower othersto act

Produce short-termwins

Don’t let up

Create a new culture

Questions?

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