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Pressure Points

Four industry experts alert campus leaders to emerging forces that require action now.

By Sandra R. Sabo

For answers she need look no further than across the table at her daughter. In a few weeks, the recent high school graduate will begin her freshman year in college. She'll bring with her a host of expectations, along with her iPod, laptop, and new bedsheets.

"My daughter and her generation have grown up with such easy access to information," says Borray, "that they expect it everywhere and all the time. They plan to go to the college's Web site and, without reading any instructions, simply know how to register, see what books to buy, or get announcements—and they'll rate the college based on those experiences and interactions with technology."

These most-recent high school graduates represent a change in student demographics, one of the four major trends shaping higher education today, as identified by NACUBO staff through interaction with members and consultants. The other three developments relate to calls for accountability, an aging workforce, and globalization of higher education.

Here's how several business partners within the industry see these trends playing out at educational institutions—and how the business officer's role is changing as a result.

More Students Want More

Bert Scott, of TIAA-CREF, a financial products and services provider headquartered in New York City, also has a child starting college this fall. Scott's son and Borray's daughter are part of the baby boom echo, making them members of one of the largest high school graduating classes in three decades. The sheer size of this group, not to mention its technology-driven preferences, will strain institutional facilities and finances.

"In this culture of consumerism, students' mind-sets toward education have shifted," notes Scott, TIAA-CREF's executive vice president of strategy, integration, and policy. "Today's students," he says, "are more likely to know that products and services can be personalized to meet their needs, delivered at their convenience, and purchased via a wide range of payment options. They want technology integrated into their personal and academic lives."

Because of this reliance on technology, "students have a 'get-it-now' mentality—even more so than in the past," adds Dean Hatton, chief executive officer of Higher One. Based in New Haven, Connecticut, the firm provides financial services and business office solutions to higher education institutions.

As an example, says Hatton, 9 out of 10 students prefer to quickly receive their refunds, financial aid, and other payments electronically, rather than engage in paper-based transactions. Students' comfort levels with technology extend to their own efforts: 93 percent of the students who contact Higher One choose the self-service option—which includes automated-response e-mail and online access to frequently asked questions—for answering their inquiries.

"These high adoption rates for electronic payments and self-service," says Hatton, "indicate what the students really want—to be efficient, fast, and productive. The more you enable students to get their coursework, refunds, or paychecks right now, the happier they will be."

This large and technology-driven undergraduate population is also more culturally and economically diverse. It includes many students who may have the desire, but not necessarily the resources, to attend college.

"The change in student demographics will put more pressure on institutions to find financial aid resources to augment federal government funds," observes John A. Mattie, the higher education practice leader for PricewaterhouseCoopers, headquartered in New York City.

At the same time, he adds, "There will be more pressure on institutions to come up with an appropriate level of services, including housing, dining, mentoring, and other amenities necessary in competing for and supporting these highly selective, technologically sophisticated undergraduates. And services always come with a cost."

Results Matter

A college education, too, has a cost—one that legislators and their constituents increasingly question. Congress has already scrutinized preferred lending, study abroad programs, and college affordability in general, always making the point that people need to know what their educational dollars are buying. This trend toward accountability calls not only for determining outcomes but also for openly sharing them.

"Colleges and universities need to move to more outcomes-based measurements that really show a parent or public official that [the institutions] are delivering a high-quality education," says Scott. Such information needs to go beyond the statistics typically provided, such as the annual number of applicants and the acceptance (or rejection) rate. Scott explains, "If you want to retain public funding—and certainly if you want to compete for the best students—you need to measure and report outcomes such as freshman attrition rates, overall graduation rates, and employment placement rates."

Before making her college decision, for example, Ana Borray's daughter looked at the outcomes measures provided by her leading contenders. The number of books in the library or the percentage of Ph.D.'s on the faculty meant little to her compared to an institution's student retention rate or its percentage of students accepted into graduate school.

"Outcomes data are much harder for institutions to produce," says Borray, "but such transparency is becoming more relevant, because it's what students, their parents, and even society as a whole demand."

She points to Richland College in Dallas as an example of an educational institution with an outcomes orientation. Leaders of the community college, a winner of a Baldrige Award in 2002, base nearly all their decisions on a methodical application of measurements, outcomes, and key performance indicators.

Borray explains, "Richland uses data and analytics for just about everything—designing curriculum, deciding whether to build something, choosing whether and to whom to outsource. Then they track whether the actions they've taken are producing the results they were expecting."

Going Gray

As with calculating outcomes, determining the number of faculty needed to teach the booming, yet mobile, student population gets complicated. One institution may need to encourage retirement, especially among tenured faculty nearing or past the traditional retirement age. Another might need baby boomer professors to stick around and share their expertise for a few more years.

At whatever point an institution finds itself on that spectrum, Bert Scott believes a dialogue about retirement is in order. He cites the results of a recent survey conducted by the TIAA-CREF Institute, which indicate that one third of faculty want to retire at or before the age of 65. Approximately one third want to retire at 70 or older—based mainly on the belief that they can't afford to retire. And the rest have no idea what they'll do about retirement.

"Higher education has been dealing with the aging workforce for some time," says Scott. "But the issue is coming to a head, because of all the baby boomers about to retire over the next 10 to 15 years. What came through loud and clear from the survey," he says, "was the need for retirement advice throughout a faculty member's career."

That support might take the form of financial counseling or seminars on containing health-care costs—whatever helps faculty overcome their fear of not having enough money to retire. Scott also recommends devising phased retirement options—favored by 70 percent of respondents to the TIAA-CREF survey—that formally extend the options of the collegiate community.

"Can you set aside office space in an academic building so retired faculty can still come to campus and have a network of colleagues nearby?" asks Scott. "Can you build convenient housing just for retired faculty?" Such actions would enable instructors to retain the camaraderie that is so much a part of their professional lives. In fact, he says, the potential loss of community often holds people back from retiring.

"Even though they may not want to teach every day, faculty love being on campus," says Scott. "Finding ways to retain that sense of community after retirement, particularly in areas where the university is the community, requires both flexibility and creativity."

Around the World

Finding faculty to replace the retiring baby boomers won't be easy either, cautions Scott. He notes, "Foreign faculty who historically would have come to the United States to teach and do research have more options. The competition is increasing, because more people around the world now have access to higher education."

In particular, China and India have begun expanding and enhancing their higher education systems. China alone plans to build an estimated 800 colleges and universities. Those institutions are likely to attract students who would otherwise have headed to the United States to complete their undergraduate education or to teach while completing an advanced degree.

Other facets of the globalization trend include competition for U.S. students from European universities offering three-year undergraduate programs; a ramp-up in study abroad programs, as institutions vie for global-minded yet highly selective U.S. students; and greater investments in physical facilities or online presences in countries that value an American degree. Even if it's a smaller player, an educational institution has no choice but to appear on the world stage.

Globalization raises a number of strategic issues that an institution needs to continually address, says John Mattie. For example:

  • What is our global strategy? How does it complement or enhance our current academic and research strategies?
  • What do we expect the return on investment in international efforts to be? How will we measure ROI?
  • How will our strategy affect our expense and revenue streams (including recruitment, tuition, salaries, benefits, and so forth)?

In addition, globalization brings its own set of operational and financial challenges to the business office. You need to consider, for example, how to price tuition (considering U.S. and foreign currency fluctuations); how to comply with myriad tax and regulatory requirements in other countries; and what additional people and processes are necessary to support global education delivery structures.

Mattie observes: "Educational institutions may need to develop administrative structures and processes that are similar to those of large, decentralized global public companies, such as a formalized global operations team or dedicated individuals focused on international operations."

Those administrative positions could report to the business officer but focus exclu-sively on implementing and supporting the institution's global strategy. (For a more comprehensive look at how international dynamics are affecting higher education, see "Making It as a Multinational University" in this issue.)

Added to the List

Given the wide-ranging implications of these four trends, industry partners say the role of business officers will certainly evolve. Based on their perspective, you can expect to:

Rethink financial models. "Financial forecasts and scenarios will need to be refined because of the broad impact of current economic conditions as well as the rising cost of financial aid and how it will be funded," says Mattie. "Tuition-dependent institutions, in particular, may not have the financial flexibility to increase payouts from their endowments, yet will need to address how to fund increasing levels of financial aid going forward."

Expand matriculation agreements. Undergraduates, especially those with fewer financial resources, don't always stay at the same institution to complete a four-year degree. Bert Scott speculates that this dynamic will increase among families of first-generation college students. "Based on student mobility patterns," he notes, "institutions will need to determine the requirements that would allow students to complete their educations, but not necessarily in one place."

Respond to calls for increased accountability. The public's demand for financial transparency and good fiduciary conduct may intensify over the next 12 to 24 months, predicts Mattie. "In addition, government officials, federal agencies, and donors all want to know that institutions are operating responsibly, both fiscally and operationally. They will continue to hold business officers and others to a higher standard of reporting and compliance responsibility."

Mattie stops short of predicting that educational institutions will need to meet the rigid control regulations that now apply to public companies. Still, he foresees that standard setters and regulators will continue to focus on financial-reporting transparency and control and compliance accountability.

Reassess strategic approaches. What has worked in the past may no longer apply in an environment of increased costs and competition coupled with decreased financial aid and staffing.

"Higher education has been somewhat protected," says Scott. "But with competitive and economic cycles coming together at the same time, there's a chance higher education will go through the same type of shakeout that private industry has experienced. Basically, we need to rethink how higher education is delivered in this country, becoming more selective and strategic about how we spend money." That may mean, for example, that not every university within a statewide system needs to focus on research. Perhaps one would be better served developing world-class medical facilities, while another builds its effectiveness in the arts.

Enter into more relationships with outside vendors. "Business officers are already busy, and implementing change on a campus is not always easy—but their customers, the students, want change," says Dean Hatton. "Hiring someone to help you solve a problem, whether with customer interaction, course delivery, or information fulfillment, can improve productivity as well as the level of service."

Develop and consistently employ a framework for gathering and analyzing operational data. For example, rather than relying on faculty to decide which classes to offer at what time, consider other factors. Look at which time slots draw the most students, how many students in a department require a certain course to graduate, and the number of students who don't need a physical classroom because they take the course online.

"For years, higher education has used systems for administrative purposes, such as registering students, coordinating HR, and managing financial aid," says Borray. "With the call for outcomes, these systems need to be used for analytics, for business intelligence."

As Borray sees it, business officers have always adopted the attitude of "show me the numbers and explain why we're doing this." In contrast, their colleagues in other areas have often invoked "mission" as the only underpinning for a decision or undertaking. Now, she says, "the chief financial officers will soon have their kingdom because more people will understand the importance of using information and data to make their case."

But with that kingdom comes a host of people and areas clamoring for the business officer's attention and acumen. Should you spend your day on financial issues? On strategic or policy decisions having long-range implications for the institution? On operational decisions related to plant management, productivity, or infrastructure? On responding to demands for greater transparency and accountability?

"All of the above" seems to be the correct answer, as the business office is where all these issues converge. In other words: Keep juggling.  

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

Four industry experts alert campus leaders to emerging forces that require action now.

What demographic, economic, and societal pressures are bearing down most forcefully on higher education? Ana Borray grapples with that question every day in her role as director of marketing for executive programs at Datatel, a technology services and solutions company based in Fairfax, Virginia.

For answers she need look no further than across the table at her daughter. In a few weeks, the recent high school graduate will begin her freshman year in college. She'll bring with her a host of expectations, along with her iPod, laptop, and new bedsheets.

"My daughter and her generation have grown up with such easy access to information," says Borray, "that they expect it everywhere and all the time. They plan to go to the college's Web site and, without reading any instructions, simply know how to register, see what books to buy, or get announcements—and they'll rate the college based on those experiences and interactions with technology."

These most-recent high school graduates represent a change in student demographics, one of the four major trends shaping higher education today, as identified by NACUBO staff through interaction with members and consultants. The other three developments relate to calls for accountability, an aging workforce, and globalization of higher education.

Here's how several business partners within the industry see these trends playing out at educational institutions—and how the business officer's role is changing as a result.

More Students Want More

Bert Scott, of TIAA-CREF, a financial products and services provider headquartered in New York City, also has a child starting college this fall. Scott's son and Borray's daughter are part of the baby boom echo, making them members of one of the largest high school graduating classes in three decades. The sheer size of this group, not to mention its technology-driven preferences, will strain institutional facilities and finances.

"In this culture of consumerism, students' mind-sets toward education have shifted," notes Scott, TIAA-CREF's executive vice president of strategy, integration, and policy. "Today's students," he says, "are more likely to know that products and services can be personalized to meet their needs, delivered at their convenience, and purchased via a wide range of payment options. They want technology integrated into their personal and academic lives."

Because of this reliance on technology, "students have a 'get-it-now' mentality—even more so than in the past," adds Dean Hatton, chief executive officer of Higher One. Based in New Haven, Connecticut, the firm provides financial services and business office solutions to higher education institutions.

As an example, says Hatton, 9 out of 10 students prefer to quickly receive their refunds, financial aid, and other payments electronically, rather than engage in paper-based transactions. Students' comfort levels with technology extend to their own efforts: 93 percent of the students who contact Higher One choose the self-service option—which includes automated-response e-mail and online access to frequently asked questions—for answering their inquiries.

"These high adoption rates for electronic payments and self-service," says Hatton, "indicate what the students really want—to be efficient, fast, and productive. The more you enable students to get their coursework, refunds, or paychecks right now, the happier they will be."

This large and technology-driven undergraduate population is also more culturally and economically diverse. It includes many students who may have the desire, but not necessarily the resources, to attend college.

"The change in student demographics will put more pressure on institutions to find financial aid resources to augment federal government funds," observes John A. Mattie, the higher education practice leader for PricewaterhouseCoopers, headquartered in New York City.

At the same time, he adds, "There will be more pressure on institutions to come up with an appropriate level of services, including housing, dining, mentoring, and other amenities necessary in competing for and supporting these highly selective, technologically sophisticated undergraduates. And services always come with a cost."

Results Matter

A college education, too, has a cost—one that legislators and their constituents increasingly question. Congress has already scrutinized preferred lending, study abroad programs, and college affordability in general, always making the point that people need to know what their educational dollars are buying. This trend toward accountability calls not only for determining outcomes but also for openly sharing them.

"Colleges and universities need to move to more outcomes-based measurements that really show a parent or public official that [the institutions] are delivering a high-quality education," says Scott. Such information needs to go beyond the statistics typically provided, such as the annual number of applicants and the acceptance (or rejection) rate. Scott explains, "If you want to retain public funding—and certainly if you want to compete for the best students—you need to measure and report outcomes such as freshman attrition rates, overall graduation rates, and employment placement rates."

Before making her college decision, for example, Ana Borray's daughter looked at the outcomes measures provided by her leading contenders. The number of books in the library or the percentage of Ph.D.'s on the faculty meant little to her compared to an institution's student retention rate or its percentage of students accepted into graduate school.

"Outcomes data are much harder for institutions to produce," says Borray, "but such transparency is becoming more relevant, because it's what students, their parents, and even society as a whole demand."

She points to Richland College in Dallas as an example of an educational institution with an outcomes orientation. Leaders of the community college, a winner of a Baldrige Award in 2002, base nearly all their decisions on a methodical application of measurements, outcomes, and key performance indicators.

Borray explains, "Richland uses data and analytics for just about everything—designing curriculum, deciding whether to build something, choosing whether and to whom to outsource. Then they track whether the actions they've taken are producing the results they were expecting."

Going Gray

As with calculating outcomes, determining the number of faculty needed to teach the booming, yet mobile, student population gets complicated. One institution may need to encourage retirement, especially among tenured faculty nearing or past the traditional retirement age. Another might need baby boomer professors to stick around and share their expertise for a few more years.

At whatever point an institution finds itself on that spectrum, Bert Scott believes a dialogue about retirement is in order. He cites the results of a recent survey conducted by the TIAA-CREF Institute, which indicate that one third of faculty want to retire at or before the age of 65. Approximately one third want to retire at 70 or older—based mainly on the belief that they can't afford to retire. And the rest have no idea what they'll do about retirement.

"Higher education has been dealing with the aging workforce for some time," says Scott. "But the issue is coming to a head, because of all the baby boomers about to retire over the next 10 to 15 years. What came through loud and clear from the survey," he says, "was the need for retirement advice throughout a faculty member's career."

That support might take the form of financial counseling or seminars on containing health-care costs—whatever helps faculty overcome their fear of not having enough money to retire. Scott also recommends devising phased retirement options—favored by 70 percent of respondents to the TIAA-CREF survey—that formally extend the options of the collegiate community.

"Can you set aside office space in an academic building so retired faculty can still come to campus and have a network of colleagues nearby?" asks Scott. "Can you build convenient housing just for retired faculty?" Such actions would enable instructors to retain the camaraderie that is so much a part of their professional lives. In fact, he says, the potential loss of community often holds people back from retiring.

"Even though they may not want to teach every day, faculty love being on campus," says Scott. "Finding ways to retain that sense of community after retirement, particularly in areas where the university is the community, requires both flexibility and creativity."

Around the World

Finding faculty to replace the retiring baby boomers won't be easy either, cautions Scott. He notes, "Foreign faculty who historically would have come to the United States to teach and do research have more options. The competition is increasing, because more people around the world now have access to higher education."

In particular, China and India have begun expanding and enhancing their higher education systems. China alone plans to build an estimated 800 colleges and universities. Those institutions are likely to attract students who would otherwise have headed to the United States to complete their undergraduate education or to teach while completing an advanced degree.

Other facets of the globalization trend include competition for U.S. students from European universities offering three-year undergraduate programs; a ramp-up in study abroad programs, as institutions vie for global-minded yet highly selective U.S. students; and greater investments in physical facilities or online presences in countries that value an American degree. Even if it's a smaller player, an educational institution has no choice but to appear on the world stage.

Globalization raises a number of strategic issues that an institution needs to continually address, says John Mattie. For example:

  • What is our global strategy? How does it complement or enhance our current academic and research strategies?
  • What do we expect the return on investment in international efforts to be? How will we measure ROI?
  • How will our strategy affect our expense and revenue streams (including recruitment, tuition, salaries, benefits, and so forth)?

In addition, globalization brings its own set of operational and financial challenges to the business office. You need to consider, for example, how to price tuition (considering U.S. and foreign currency fluctuations); how to comply with myriad tax and regulatory requirements in other countries; and what additional people and processes are necessary to support global education delivery structures.

Mattie observes: "Educational institutions may need to develop administrative structures and processes that are similar to those of large, decentralized global public companies, such as a formalized global operations team or dedicated individuals focused on international operations."

Those administrative positions could report to the business officer but focus exclu-sively on implementing and supporting the institution's global strategy. (For a more comprehensive look at how international dynamics are affecting higher education, see "Making It as a Multinational University" in this issue.)

Added to the List

Given the wide-ranging implications of these four trends, industry partners say the role of business officers will certainly evolve. Based on their perspective, you can expect to:

Rethink financial models. "Financial forecasts and scenarios will need to be refined because of the broad impact of current economic conditions as well as the rising cost of financial aid and how it will be funded," says Mattie. "Tuition-dependent institutions, in particular, may not have the financial flexibility to increase payouts from their endowments, yet will need to address how to fund increasing levels of financial aid going forward."

Expand matriculation agreements. Undergraduates, especially those with fewer financial resources, don't always stay at the same institution to complete a four-year degree. Bert Scott speculates that this dynamic will increase among families of first-generation college students. "Based on student mobility patterns," he notes, "institutions will need to determine the requirements that would allow students to complete their educations, but not necessarily in one place."

Respond to calls for increased accountability. The public's demand for financial transparency and good fiduciary conduct may intensify over the next 12 to 24 months, predicts Mattie. "In addition, government officials, federal agencies, and donors all want to know that institutions are operating responsibly, both fiscally and operationally. They will continue to hold business officers and others to a higher standard of reporting and compliance responsibility."

Mattie stops short of predicting that educational institutions will need to meet the rigid control regulations that now apply to public companies. Still, he foresees that standard setters and regulators will continue to focus on financial-reporting transparency and control and compliance accountability.

Reassess strategic approaches. What has worked in the past may no longer apply in an environment of increased costs and competition coupled with decreased financial aid and staffing.

"Higher education has been somewhat protected," says Scott. "But with competitive and economic cycles coming together at the same time, there's a chance higher education will go through the same type of shakeout that private industry has experienced. Basically, we need to rethink how higher education is delivered in this country, becoming more selective and strategic about how we spend money." That may mean, for example, that not every university within a statewide system needs to focus on research. Perhaps one would be better served developing world-class medical facilities, while another builds its effectiveness in the arts.

Enter into more relationships with outside vendors. "Business officers are already busy, and implementing change on a campus is not always easy—but their customers, the students, want change," says Dean Hatton. "Hiring someone to help you solve a problem, whether with customer interaction, course delivery, or information fulfillment, can improve productivity as well as the level of service."

Develop and consistently employ a framework for gathering and analyzing operational data. For example, rather than relying on faculty to decide which classes to offer at what time, consider other factors. Look at which time slots draw the most students, how many students in a department require a certain course to graduate, and the number of students who don't need a physical classroom because they take the course online.

"For years, higher education has used systems for administrative purposes, such as registering students, coordinating HR, and managing financial aid," says Borray. "With the call for outcomes, these systems need to be used for analytics, for business intelligence."

As Borray sees it, business officers have always adopted the attitude of "show me the numbers and explain why we're doing this." In contrast, their colleagues in other areas have often invoked "mission" as the only underpinning for a decision or undertaking. Now, she says, "the chief financial officers will soon have their kingdom because more people will understand the importance of using information and data to make their case."

But with that kingdom comes a host of people and areas clamoring for the business officer's attention and acumen. Should you spend your day on financial issues? On strategic or policy decisions having long-range implications for the institution? On operational decisions related to plant management, productivity, or infrastructure? On responding to demands for greater transparency and accountability?

"All of the above" seems to be the correct answer, as the business office is where all these issues converge. In other words: Keep juggling.  

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