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Business Officer Magazine

Future Forces

Six industry experts offer their take on the trends shaping the campus of tomorrow.

By Sandra R. Sabo

Issues pop up all over campus. You no sooner take care of one, and another emerges elsewhere. At the same time that you’re dealing with operational issues—some strategic, some mundane—your president is relying on your visionary thinking to help shape the institution’s future 10, 20, or even 50 years down the road.

While your multidimensional job doesn’t promise to get any easier, at least you have the understanding ear and expert assistance of corporate members of the higher education enterprise, as evidenced by the conversations on the pages that follow. Business Officer invited six key industry representatives to share thoughts on the trends shaping higher education and to identify possible effects on institutions. Some of their observations will no doubt sound familiar, but others may prove surprising.

Custom Curricula and Co-opetition

“We’re seeing a series of mega trends hitting higher education,” says Andy Cooley, senior vice president of marketing and business development for software and services provider SunGard Higher Education Solutions, Malvern, Pennsylvania. As an example, Cooley points to the higher level of competitiveness that’s emerging as newer institutions take a more business-oriented approach to education, such as offering a prescribed curriculum that allows a targeted audience to earn a credential on a fast track, often by taking night or online courses. Meeting this competition head on, some community colleges have begun teaming up with local corporations to create custom curricula. These relationships enable large corporations to help employees advance their skill sets by attending courses at community colleges.

May I help you? From Cooley’s perspective, another trend likely to shape campus operations for years to come involves the customer-service expectation that students—as well as faculty and staff—bring with them. Thanks to consumer Internet sites that track and respond to personal preferences, process transactions quickly, and securely store and retrieve personal information, everyone arriving on campus expects the institution to do the same.

Whether making a plane reservation, buying a book, or gathering information, this new generation of students expects to interact with every organization in the same way, says Cooley. “Once they have provided personal information, for example, they expect the organization to always know who they are.”

How the customer service trend may play out has already become evident within the University System of Georgia. As the third-largest university system in the country, comprising 34 institutions and enrolling more than 247,000 students, Georgia is well aware of a tendency among today’s students to swirl—to enroll at, take courses at, and sometimes transfer to multiple institutions. Rather than creating obstacles for transient students, the state system is now supporting students’ efforts to continue and complete their education.

Thirty-three of the institutions within the system agreed to standardize their administrative systems solutions to create one seamless experience for students. This multi-institution functionality initiative will enable students to take courses from any of the participating institutions without having to repeat the admissions, payment, and financial aid application processes. Students will receive one bill and make one tuition payment, no matter how many courses they take at multiple institutions, and the course credits automatically appear in their master student record, Cooley explains.

On the administrative side, the initiative will enable the University System of Georgia to track enrollment systemwide and thus gain cost efficiencies. Courses with low enrollment can either be cancelled or combined. The latter approach also facilitates faculty collaboration among institutions.

Common ground. “By agreeing on common processes and common ways of doing business, the institutions in Georgia will drive down administrative costs to address budgetary pressures,” Cooley says. “They are addressing the issue of constituent service by providing greater choices and by having a uniform system across the state. And they are centralizing control over how all these systems are updated and implemented, which helps with data security and integrity.”

Cooley calls the initiative a good example of co-opetition. He believes this concept of combining cooperation and competition is something that colleges and universities can naturally embrace. “Higher education is built on the philosophy of academic freedom: When you discover information or knowledge, it’s incumbent upon you to share it.”

Attention to Atmosphere

Does your institution have a top-ranked engineering school? A nationally recognized pre-med program? Faculty members who have won prestigious awards in their respective fields? It’s not enough anymore.

“Even the student who places the highest priority on the quality of the academic program and the university’s reputation now wants more,” asserts Frank J. Mendicino, president of ARAMARK Education-Facility Services, Philadelphia. ARAMARK Education provides food, facility, and other support services to approximately 600 colleges and universities.

“Students today have higher expectations for the quality of the facilities, the care of the grounds, and the customer service orientation of a campus,” says Mendicino. When students arrive on campus today, they are already educated consumers with a highly developed brand consciousness. That, in turn, shapes their expectations of the campus environment.

Brand conscious. “That brand focus relates to what they want to see in food offerings, the manner in which the dining and retail venues are designed, and even the friendliness of the campus staff,” says Mendicino. The nearly 150,000 students who responded to a recent ARAMARK survey say they want not only attractive physical facilities but also a customer-oriented culture. That finding puts the pressure on institutions to ensure that their hourly service employees interact positively and proactively with students, faculty, and staff.

As for food, a burgeoning social consciousness affects what does and doesn’t appear in the dining hall. Students want coffee to be fair-trade certified. Fruits and vegetables grown organically get a thumbs-up; even better is organic produce obtained through a farm-to-fork initiative that supports local farmers, says Mendicino. “The activity and fervor are different from campus to campus, but the social consciousness exists on all of them.”

With students so brand-conscious already, an institution must strengthen its own brand within the marketplace. That means understanding the student customer better and borrowing some traditional business strategies from the for-profit world, such as brand positioning and sophisticated marketing practices.

Survival of the finest. “The notion of a competitive advantage is not new for higher education, but it’s more intense now as institutions compete for the best students in the context of finite resources. And the areas in which they’re competing are more atmospheric or environmental,” Mendicino observes.

So do you devote more of your budget to recruiting top-notch faculty or to sprucing up dated facilities? Do you invest in upgrading technology or in training campus employees to nurture a customer service culture? While acknowledging that such tradeoffs are increasingly difficult to make, Mendicino believes that students’ rapidly rising expectations must factor into any institution’s plan for its future. “Business officers are always challenged to make decisions in the short term while understanding their long-term implications. And they have to link those decisions to the strategic plan of the institution.”

Safety and Sensible Energy

Kristy Elmore, director of higher education solutions for Johnson Controls, Inc., Milwaukee, works with colleges and universities that wish to optimize their living, learning, and research environments by reducing energy usage and improving technology and security in new and renovated buildings.

In addition to their demands for wireless access in every building and a one-card system for entry and payment options, students and faculty want to be assured that they’re safe walking around campus at any hour, says Elmore. Disaster preparedness is one issue that will continue to require campus leaders to engage in thoughtful planning and recovery strategies for a range of natural and terrorist-related scenarios.

Power pressure. Elmore also identifies energy efficiency as a trend—and not only because many chief financial officers say that their institutions’ utility bills doubled in the past year. “Several states have mandated energy reduction in state facilities by as much as 10 percent over the course of several years,” Elmore explains. That puts more pressure on institutions to replace or upgrade older, inefficient buildings that often have high levels of deferred maintenance. Likewise, the construction choices that institutional leaders make are influenced by students and faculty members who call for greater investments in environmental stewardship, such as using recycled building materials and renewable energy sources.

Elmore has had many more conversations in the past year about wind power, geothermal heat pumps, and biomass. Her company even hired a staff member specifically to assist campuses in applying for state or federal grants related to alternative sources of energy.

But renewable energy isn’t right for every institution or in every instance, she cautions. “Take wind, for example. If you’re looking for a 10-year payback when the reality is more like 20 years, it may not be good for your institution. You have to look at renewable energy for the long term.”

Brain power. Elmore identifies the University of South Carolina as a positive model. The university has a biomass plant on the drawing board that will include a learning lab. The dean of the engineering department will develop a curriculum for the lab, which will provide technology and engineering students with marketable experience. It’s the classic win-win-win: The university meets its energy needs while educating its students and protecting the environment—and reduces its reliance on imported oil in the process.

More Space, Less Waste

When Jason Wills was in college, he roomed with two other students and shared a bathroom with six. Today, as senior vice president of on-campus development for American Campus Communities (ACC), Austin, Texas, he knows that such a living arrangement is no longer acceptable to students.

“The consumer demand preferences of today’s students—the baby boom echo—are far different from what their parents were used to,” says Wills, whose company owns and manages student housing on and off campus. “When we survey students, we find that a limited number have ever slept in a twin bed. And many have had a private bathroom their whole lives—they’ve never had to share personal space.”

To address students’ desire for privacy, ACC typically develops a four-bathroom, four-bedroom residential unit for off-campus communities and has made full-size beds a standard feature. The units are also wired for technology to serve the needs of digital natives—students who have grown up using computers and cell phones.

Sustainable, but reasonable. In addition to more privacy, students want campus buildings that are efficient in their use of materials and energy. In response, ACC often employs utility or electrical allowances to encourage conservation. If students exceed the allowance, they must pay the difference.

But Wills urges business officers to use caution when evaluating potential sustainable features. “You can spend a lot of money creating a sustainable building that has many nifty and novel features but doesn’t create operational or long-term cost savings,” Wills observes. “With utility rates skyrocketing, sustainability is certainly worth exploring, but it needs to be feasible for the university. Although many students say they want to live in places with zero waste and where everything is powered by solar panels, they’re not necessarily willing to pay double the rent.”

As a model for the future, Wills points to an 800-bed residence hall under development at the University of Hawaii–Manoa. During the planning stages, students had expressed their interest in green building features but also firmly stated their desire for air conditioning. University decision makers selected potential options based on what created long-term efficiencies.

The residence hall, scheduled to open in 2008, balances both views: It will feature natural ventilation in the community areas and hallways and air conditioning in the bedroom units. “It’s a nice compromise,” Wills says. “The university’s leaders knew that the new housing had to be marketable, and they balanced that need with sustainability.”

Profitable. Wills believes the biggest challenge for business officers lies in balancing students’ increasing demands with financial feasibility, especially as government funding of education wanes. “Institutions will likely have to take a different approach to fiscal responsibility,” he predicts. “We are already seeing colleges and universities moving to a model where most departments function as independent profit centers.”

A New Stew of Students

As executive vice president of servicing, IT, and sales marketing for Sallie Mae, Reston, Virginia, June M. McCormack knows well the forces shaping higher education today. And in her volunteer role as a board member at an independent, four-year institution, she often grapples with the effects of those forces at work.

All types. On one hand, the population of nontraditional students is growing, says McCormack. “Because they’re trying to fit education in between jobs, these students often do a lot of their work online and after hours. That means the technology on campus needs to be up to date and user friendly, with rapid Internet access, instant messaging, and online coursework 24/7.”

On the other hand, she has noticed an uptick in the number of traditional students with helicopter parents. With no qualms about calling professors or participating in campus activities, these parents require a hands-on approach. “Helicopter parents are causing institutions to rethink how they recruit and work with students—even beyond the freshman year—and how they handle parents at student events,” McCormack says. She notes that the final decision on where students enroll often hinges on these parents.

More minority students. In particular, the Hispanic population going to college during the next 10 to 20 years will grow exponentially, says McCormack. “These students may be the first in their family to go to college, so they may not know how to maneuver their way through the whole process of applying for and getting financing for college. They need help from the institution itself and from service providers”—especially family members whose first language is not English, notes McCormack.

With this trend already surfacing in some parts of the United States, Sallie Mae recently developed a program that provides Spanish speakers with information about college applications and loans in their native language.

Managing costs. As for other key trends, McCormack doesn’t see an end to budget cutting by state legislatures. But even institutions that don’t receive state financing have gotten serious about identifying financial best practices, often looking to the private sector for inspiration.

“Many institutions, for example, have large receivable balances from students who have not fully paid their tuition or other fees. That’s not something they’re used to, and they’re not really set up to be collection agencies,” McCormack points out. She sees more campuses automating accounts payable functions, such as refunds and reimbursements; crafting tuition payment plans; and outsourcing collection of receivables.

Also gaining momentum are enrollment management strategies to set adequate yet competitive tuition, recruit the students most likely to enroll, and provide assistance to incoming students most likely to encounter academic or financial problems in their quest for a degree. “Predictive models can help institutions spend more time and energy courting the most appropriate students,” she notes. “Although it’s more science than art at this point, being able to accurately predict who will actually attend is extremely important—especially for smaller, private institutions, where missing an enrollment goal by 10 percent can have financial implications for years to come.”

Blended trends. These trends interact and intersect in numerous ways. While the average student takes six years to earn a four-year degree, a nontraditional or Hispanic student may take even longer if he or she also works or is the first in a family to attend college. Such delays have ramifications on the number of faculty hired, types of facilities, and campus staffing, says McCormack. “Institutions are also spending their precious dollars on remedial education because a large percentage of students can’t read, write, and do the math necessary for entry-level college work.” She sees the toughest challenges ahead for community colleges, which not only have an influx of nontraditional students coming their way but also must keep their facilities up and running in the face of state budget cuts.

Internal Controls and À La Carte Education

Before joining the accounting firm of Grant Thornton LLP in 1998, Lawrence Ladd served as director of budget and financial planning at Harvard University. The responsibilities of his former colleagues in business offices across the country have changed during that time—for the better, he believes.

“Today, the business officer has to think more strategically about the university as a whole to encourage effectiveness and efficiencies everywhere, not just in the areas he or she is responsible for,” says Ladd, national director of the higher education practice for Boston-based Grant Thornton. “Business officers have always been advocates for improved governance and accountability. Now, the insight that business officers provide in these areas is taken more seriously by institutional leaders.”

The SOX effect. Ladd traces that development to passage of the Sarbanes-Oxley Act of 2002, which has influenced the actions of colleges and universities even though it doesn’t legally apply to them. “Many institutions had most of the elements of Sarbanes-Oxley in place. Those that didn’t are adopting its best practices and becoming more systematic and comprehensive about internal controls,” he explains.

For example, Ladd serves on the board of a small college that has just created an audit committee. At other institutions, he has witnessed more interest in improving financial governance and accountability and strengthening conflict-of-interest policies. “There’s no question that boards have increased their level of responsibility for oversight. They feel more responsible and act that way,” he adds.

In Ladd’s view, curtailing tuition’s upward spiral demands the attention of board members as well as executive officers. He’s concerned about the recent proposal attached to reauthorization of the Higher Education Act that would place colleges and universities on a congressional “watch list” if they consistently raised their tuition by more than twice the rate of inflation. The proposal, which would also require a detailed disclosure of an institution’s costs and expenditures, indicates to Ladd how seriously the public takes the issue of escalating tuition.

Eyes half open. For the most part, colleges and universities are responding, albeit slowly, to concerns about tuition and financial oversight, Ladd says. But he sees “a big area of denial”—the rapid growth of for-profit education. This sector has carved out several niches, including IT and management degrees, and is now building market share in areas such as nursing.

“For-profit education institutions rent or lease space wherever they need it, rather than having the expense of building and maintaining a land-based campus. And they have lower direct costs because they hire faculty to teach the courses, not to do research and develop curriculum,” he says, ticking off several factors driving the sector’s growth—estimated at 15 to 20 percent annually.

The courses, either in classrooms or online, could be just as good or better than in traditional college settings, he continues. “The for-profits focus more on assessment—they actually measure what students have learned and make changes to the courses based on the evaluation feedback. Although it’s an exaggeration, traditional colleges and universities are like the local merchants before Wal-Mart arrived on the scene.”

Ladd certainly doesn’t rule out the possibility of students “shopping around” for the best price on a course they need to take; the availability of online education makes geography irrelevant. In fact, he foresees the development of online services that compare courses and prices at various institutions or that match individuals to the type of college or program that suits them best—think or

“The market will become more efficient as consumers have access to more information on which to make decisions about their education,” notes Ladd. “Most colleges and universities still don’t see for-profit higher education as a significant competitor. But that will change.”

SANDRA R. SABO, Mendota Heights, Minnesota, covers higher education business issues for Business Officer.