The Comeback Campus
Dwindling enrollments, leadership churn, and failing finances prompted Edinboro University’s recovery efforts. A major focus on the way the budget links to planning, assessment, and decision making jump-started an institutional turnaround.
By Guilbert Brown
NEW SERIES INTRODUCTION: Adaptation Strategies
Leaders often talk about the power of crises to drive change, and many of us have heard the saying, "Don't let a good crisis go to waste." For a public, regional, comprehensive university with financial and enrollment challenges, an accreditation warning creates a situation very close to a crisis.
In 2014, a team from the Middle States Commission on Higher Education (MSCHE) visited Pennsylvania's Edinboro University as part of our decennial accreditation review. During that visit, the team accurately identified both short- and long-term financial challenges that we faced as an institution, and the commission ultimately issued a warning that the university did not meet the standard for adequate institutional resources. Though the university met or exceeded every other accreditation standard, including those related to academic quality, the warning was a wake-up call that the status quo simply wasn't going to be good enough.
Like many public universities today, Edinboro University depends primarily on tuition and fees for its annual operating revenues, resulting in a financial position that is closely linked to enrollment outcomes. Located in northwestern Pennsylvania, home of a heavily unionized workforce, Edinboro has a large population of first-generation and Pell Grant–eligible students. Consistent with high school demographic realities across the state, enrollment peaked in 2010 and since then has declined each year. Currently, the university has 4,800 undergraduates and 1,300 graduate students.
At the same time enrollment numbers were declining, state financial support dropped significantly, from 70 percent of revenues to about 25 percent today, including an 18 percent reduction in state appropriations in 2011, with only a two-month notice. (In the past year, the state has increased appropriations by 5 percent, but we remain at 1987 funding levels.) During roughly the same period, Edinboro experienced ongoing turnover in leadership positions, with four presidents in five years, six chief enrollment officers in six years, and three CFOs in three years.
The interconnected issues of lower enrollment, decreased state support, and revolving leadership left Edinboro in a precarious financial position. When the accrediting agency issued its warning, the university took it as a wake-up call. Our goal was not to find one-time money, which is not a solution to the problem, but to ensure that what we are doing provides for long-term financial sustainability.
Assessing the Challenges
At the time of the MSCHE site visit, Edinboro faced a nearly $8 million deficit for fiscal year 2015, which represented almost 10 percent of the university's total revenues. It was crucial to take some short-term actions to reduce costs and increase revenues. Facing the fiscal crisis as a community, every area of the institution cut back on spending. Ultimately, we finished the fiscal year with an operating surplus of about $500,000.
While asking every department to cut back allowed us to avoid a deficit in 2015, it wasn't a viable long-term strategy—and it addressed only one component of the requirements to comply with the financial resources accreditation standard. In addition to the financial component, we were required to document evidence of:
- Development and implementation of strategies to measure and assess the sufficiency of institutional resources to support the institution's mission and goals.
- Review of the enrollment management plan to assess optimal enrollment.
- Steps taken to improve the institution's long-term financial viability and sustainability.
Building sustainable financial viability required (1) creating infrastructure to monitor and manage finances throughout the fiscal year, (2) making adjustments and management interventions to meet budget targets, and (3) developing and implementing successful enrollment management strategies to attract and retain students. In turn, long-term enrollment and student success require that we allocate resources in a way that will support changes to our academic program plans informed by ongoing assessment activities. Our long-term approach to sustainability was to introduce new processes and practices to ensure that these things happened.
To improve our enrollment planning process, we created a strategic enrollment management team. The team is co-chaired by the provost and CFO and includes the chief enrollment officer, all academic deans, a faculty representative, budget officer, institutional research staffer, student retention officer, and admissions staff. We charged this group with developing enrollment projections and advancing strategies to realize student recruitment and retention goals.
Edinboro's mission as a public, regional, comprehensive university guides our program offerings and our role in fostering economic growth in the northwestern Pennsylvania region. To serve a large population of lower-income households and homes with no college graduates, we strive to provide a high-quality education at an affordable price to students and their families. Consequently, our institutional financial models and strategies place an emphasis on providing adequate funding to mission-critical program areas, including instruction and student services, and linking program funding in these areas to enrollments. That emphasis maintains quality and scales program spending to enrollment increases or decreases.
With no community college in the region to serve as a feeder institution, Edinboro leaders took the initiative to launch Porreco College, a division of the university that offers associate degrees and workforce development training at community college prices. Located on a former farm that was provided by a donor, Porreco College opened in the fall of 2014 and has become an important source of new enrollees. The college has partnerships with some local employers to provide workforce training programs and offers an easily accessible, affordable option for new students.
Rethinking Budget Processes
In addition to enrollment challenges, another issue for Edinboro was its legacy financial reporting process, which was heavily focused on spending controls rather than active financial management throughout the fiscal year. To modernize our processes and prepare for the future, the university established a new budget and planning team. The team is co-chaired by the provost and CFO and includes the president of the faculty union, another faculty representative, and nonacademic vice presidents. This group reviews budget issues throughout the calendar year and, during the annual budget development process, develops recommendations for the president's final approval. The provost and CFO jointly committed to clearly and openly communicating the full range of institutional financial information to all constituencies, which was crucial for establishing the credibility of our plans and commitments to moving forward together.
The university improved monitoring and reporting to include developing monthly financial statements to guide strategy during the year. We share these reports with our council of trustees and the faculty. We also improved financial and enrollment reporting at the department level with business intelligence and data warehouse tools.
Using data—in new ways, especially student enrollment and retention data—was and remains critical to our program and budget planning processes. We instituted a five-year budget model, which includes projected enrollments and revenues as well as program and support costs. As a regional public institution, we draw most of our students from our surrounding counties and, therefore, use high school graduation projections to inform our long-range enrollment projections. When we first developed a detailed financial planning model, it came as a surprise to many that our growing graduate programs were contributing so significantly to our revenue stream. This, in turn, helped to inform program strategies going forward.
When Edinboro received the warning from our accreditor, we were already deep into a long-term energy efficiency project that affects facilities across campus. While some of the individual components involved significant investment, university officials believed that the long-term payoff would be more important fiscally than scrapping the projects to save money in the short term.
Since 2012, Edinboro has installed geothermal heat pump systems in 10 campus buildings. These systems heat and cool buildings much more efficiently than traditional electric heating and cooling systems. For example, the university pays about $311 per bed to heat and cool a dormitory with traditional systems, compared to about $143 per bed with geothermal systems. Over 20 years, these systems are projected to save the university about $4.2 million in energy costs.
In addition, Edinboro constructed a passive solar pedestrian walkway that connects the east and west sides of campus. A state-funded project, the walkway utilizes high-efficiency boilers for in-floor heat, ventilation fans for summer, and solar shading to optimize solar energy. Another solar project on campus, a solar array installed near the field house, features 732 solar panels with a useful life span of 27 years. Throughout the campus, Edinboro has retrofitted light fixtures with LED lighting, which costs less and improves performance; set lighting controls based on occupancy; and used native vegetation and natural stone to decrease landscaping costs.
In the first two years, the university saw a 22 percent reduction in electricity costs, 13 percent reduction in water and sewer costs, and 20 percent reduction in overall utility costs, even though the campus' physical plant grew by 9 percent. Edinboro began saving $825,000 per year after the first two years of these projects.
On an ongoing basis, the university's scheduled maintenance includes upgrades to higher efficiency heating and cooling equipment. As a result, the savings continue to increase. In the past three years, we have reduced energy expenses by one-third through conservation and modernization strategies, and the annual savings are more than $1 million. Energy efficiency is important in all areas of the university, but especially so for support program areas, including plant operations and maintenance and institutional support. While we are spending more on maintenance for specific buildings as we complete energy-efficiency projects, we are spending less overall for campus operations and maintenance. We are continually looking at best practices to realize efficiency and service improvement opportunities across the institution.
Throughout the process of planning and reallocating resources to meet accreditation standards and establish long-term sustainability, Edinboro leaders worked to involve trustees and faculty to an unprecedented degree. The provost and I held joint town hall meetings to discuss financial analyses and plans with students and faculty. We made regular reports to the faculty, council of trustees, dean's council, president's executive council, affiliate groups, and other university stakeholders.
These meetings and reports were highly interactive, two-way exchanges in public settings that provided opportunities for all stakeholders to offer their input into the process. In fact, at the conclusion of one town hall meeting in which we had described some of our financial challenges, a faculty member remarked, "This is too much transparency."
To the contrary, we believed transparency was vital to making the right changes in the right way. Ultimately, a university is a community that achieves its greatest successes through shared vision and commitment. In our institutional leadership roles, the provost and I strongly believe in modeling collegial and collaborative approaches to problem solving for the community. Our plans and actions would ultimately owe their success to developing and implementing shared commitments across the institution.
In communicating with faculty, staff, trustees, and other stakeholders, we were utterly open in sharing our strengths and weaknesses as well as the successes and failures that had landed us where we found ourselves, and the prospects and obstacles for moving forward. We did not begin this process with any magical answers to our institutional challenges, and while we had strategies to propose, we truly engaged the community to discuss and ultimately share ownership in our institutional responses to the crisis.
For business officers, challenges to our business models in higher education are complex and pervasive—but nothing new. In more than three decades of working in higher education, I cannot remember a time when we were not managing through or preparing for significant financial challenges driven by demographics, public policy changes, or economic conditions. And, as in most crises, the approach of assembling the team, communicating well, collaborating, and focusing on the long term served us well through our accreditation crisis.
While overcoming an accreditation warning was certainly a hurdle, Edinboro used it as an opportunity to build a plan for a better, stronger future. In the process, our team was reassured that our American system of voluntary, nongovernmental, regional membership compliance organizations really works. That system maintains and contributes to the great diversity of high-quality higher education institutions we have in the United States.
In our case, the visiting team was made up of colleagues from other institutions who, in the course of their review, recognized and communicated serious issues facing the university. These peer reviewers can act like a close friend who tells you something you need to hear whether you want to hear it or not, and that is a great benefit to improvement in our institutions.
In higher education, we are continually examining and re-examining our programs and operations, and so sometimes I have seen leaders react defensively to accreditation critiques. However, I think that is a mistake: Accreditors serve a critical role in ensuring the vitality and quality of our institutions, and an important part of their work is to provide insights into where we can improve.
Edinboro is proud that in most areas of our accreditation review, including every measure of our academic program quality, we met or exceeded every accreditation standard. The fact that we had failed even one standard, relating to having adequate financial resources, was jarring to the institution. We consciously set out to attempt to resolve the accreditation issue as quickly as possible, and we succeeded in that goal, quickly returning to a state of normalcy. The accreditation team found Edinboro to be "a model of transformation."
As all of us in higher education continue to face ongoing challenges in enrollments, state support levels, and personnel costs, we could benefit from functioning in crisis mode more often. When we're faced with a crisis, it's natural to put differences aside and put the community first. One of our leadership challenges in higher education is to bring that ethos to our organizations even when we're not in a state of imminent crisis.
At Edinboro, our entire community recognizes the close relationship between having successful graduates and a solid financial foundation for the institution and our regional economy. As we move forward, we will continue to measure our financial success in many of the traditional ways: realizing operational budget goals, continuing to invest in both new programs and infrastructure, and developing prudent short- and long-term plans for ongoing institutional renewal.
Ultimately, our institution is focused on investing in people and helping everyone in the university community realize their full human potential. To be successful in that mission will mean sustaining our financial vitality through changing conditions and circumstances. We've set in place the infrastructure to ensure such success going forward, together as a community.
GUILBERT BROWN is vice president, finance and administration, Edinboro University, Edinboro, Pa.