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Business Officer Magazine

Business Briefs

Short news articles based on research surveys and peers’ business experiences that can benefit institutions

Forum Focuses on Pivotal Times

Frisco Facts


The estimated square footage of meeting space at the Moscone West convention center in San Francisco, site of the NACUBO 2010 Annual Meeting.


The number of specimens and artifacts housed at the California Academy of Sciences, where the annual meeting opening night reception will take place.

9.5 MPH

The top speed of San Francisco cable cars, the only moving objects designated as national landmarks in the United States.


The number of painters needed to continuously renew the Golden Gate Bridge’s color, officially known as “International Orange.”

Sources: “Fascinating Facts about San Francisco,” (retrieved May 11, 2010); the California Academy of Sciences; and the Moscone Center

The economic downturn and subsequent nascent recovery have presented unique challenges and opportunities for small and midsize independent colleges and universities. At NACUBO’s recent forum, “The Economics of Higher Education in Pivotal Times,” in late April in Chicago, nearly 50 chief financial officers and other staff—at primarily independent institutions—learned about current financial and economic trends and issues, and shared strategies for strengthening their campuses despite the challenging environment. The conference, developed by NACUBO’s Small Institutions Council with support from KPMG, featured Larry Goldstein, founder, Campus Strategies; Kenneth Redd, director of research and policy analysis, NACUBO; and James Doti, president, Chapman University, Orange, California.

Communicate, Educate

Goldstein set the context for the forum by pointing out the greatest financial challenges facing colleges and universities: rising expenses in the face of shrinking revenues; more measures of accountability from policymakers; stiff competition for new students; and calls for improved graduation rates.

The first step in finding solutions to these challenges is communication, said Goldstein. “You and your president need to be on the same page,” he explained, “and you need to educate and inform not only the president, but other members of your campus community of the problems and possible solutions, especially if people are not financial professionals.” Goldstein advised that CFOs and other business office staff use tools such as the Composite Financial Index and Robert Dickeson’s recent work on prioritizing academic programs to recommend areas of growth and improvement to their presidents, students, faculty, and staff.

Recognize Revenue Variables

Another key challenge for all higher education institutions, particularly independent colleges and universities, has been the increasing number of students and families who are unable or unwilling to pay tuition because of their diminished finances. NACUBO’s most recent Tuition Discounting Study illustrates those trends. As Redd pointed out, after nearly 10 years of stability the tuition discount rates (i.e., the institutional grant aid to undergraduates as a percentage of tuition and fee revenue) at private colleges and universities have grown sharply. The discount rates for full-time freshmen at four-year private, nonprofit colleges and universities jumped from 39 percent in 2007 to an estimated 42 percent in 2009, and the share of full-time freshmen with an institutional grant increased from 79 percent to 82 percent.

As a result, independent institutions reported a loss of 2.5 percent in net tuition revenue from 2007 to 2008. “It is clear,” Redd concluded, “that the poor economy of 2008 and 2009, combined with increased pressure to enroll more students, has contributed to these trends.”

Predict and Plan

With these issues in mind, Doti shared the Chapman Economic Forecast, which uses national gross domestic product, housing starts, and other data to estimate economic and demographic changes at colleges and universities. Doti indicated that he believes we are in a “weak [economic] recovery” that will feature low inflation and slowly rising interest rates. The one piece of good news for higher education, he said, is that improving stock market conditions may lead to a rise in charitable giving in the future. Doti estimates that the “12 percent increase in the [New York Stock Exchange] index between July 1, 2009, and March 1, 2010, may lead to a 6 percent increase in gifts to higher education in the 2010–11 period.” (At press time, however, market volatility continued to be dramatic.)

Doti also addressed the issue of decreasing enrollments on the horizon. Higher education, he explained, is facing a demographic shift, with the number of new high school graduates expected to decline from a total of more than 3 million in 2009 to fewer than 2.9 million in 2014. “The stiff competiton for new students among colleges and universities will become even more fierce,” Doti said.

Group Takeaways

“The stiff competiton for new students among colleges and universities will become even more fierce,”

James Doti, Chapman University

The final segment of the forum allowed attendees to meet in small roundtable groups to discuss tuition discounting, institutional long-term financial health, accounting and auditing, and other issues. These sessions allowed meeting participants to share their successes and their needs for additional resources. Many participants recommended using services and outside vendors to help with refining tuition discounting and enrollment management strategies, activities that can help to better define their “markets” for students.

Institution leaders also reported that using faculty and staff brown-bag luncheons helped to improve communications during the height of the financial crisis, and that they are continuing to use these sessions to keep their communities informed of ongoing financial issues.
Roundtable groups identified several tools that would help them better manage their instituions:

  • More resources to benchmark performance against peer groups.
  • A process to prioritize academic programs.
  • The possibiity of outsourcing more auxiliary functions.
  • A way to better align current budgeting with future revenue forecasting.

NACUBO CONTACT Kenneth E. Redd, director, research and policy analysis, 202.861.2527

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Student Investors Gain Returns and Experience

READ AN ONLINE EXTRA, “In the Market for Student Investors,” in Business Officer Plus.

First impressions of the student-managed investment program at Stetson University, DeLand, Florida, can be misleading. That’s because the Roland George Investments Program is unlike most other student-managed programs in the nation. The rules are different here. Students truly manage the investments.

No one from the business office or administration approves their investments; we aren’t even consulted in the management of the portfolio, now worth almost $2.54 million. Few universities would allow such a program. That is precisely why few universities have experienced the consistent success of student-managed investments that we have here at Stetson.

Competing With Confidence

In 2009, a dreadful economic year, the George fixed income portfolio gained 12 percent in value and won first place at the Redefining Investment Strategy Education (RISE) Forum, the world’s largest competition of student-managed investments, hosted by the University of Dayton earlier this year. Even more impressive, George Program students have won eight first-place awards in the 10 years of RISE competitions.

These student managers, who are not paid, are already pros when they graduate. One student manager said he is at least two years ahead of his peers in the marketplace. Stetson’s program set him apart from other job seekers because he’s experienced and confident.

Preparing the Portfolio

A board of seven trustees, three of whom are finance department faculty, is involved in all investment decisions. The other four trustees are finance students, usually seniors, who are thoroughly screened and approved by faculty and elected by classmates. The student trustee majority controls investments. Faculty trustees argue their points, as do others, but the students ultimately decide how funds are invested.

After detailed research and analysis of financial ratios, performance, management, insider activity, and other factors, students make their choices and present their recommendations to program trustees.

Trustee meetings are held throughout the semester as part of a portfolio management class. Classmates question the presenters. Often there’s debate and sometimes sharp disagreements over wisdom and ethics, before a majority vote of trustees decides whether the investment is executed.

Endowing Education

The portfolio’s growth is proof that students make money, but Larry Belcher, director of the George Program, is candid about students losing money, too. But at Stetson, that is not a bad thing. The goal is education, which was the vision of the George family who endowed the program in 1980, when it was considered a risky concept and there were only a handful of student-managed funds in the nation.

The George endowment is part of the university’s main endowment, but conditions of the gift require absolute separation. It’s for students to manage, win or lose, no matter what Stetson does with the rest of its endowment. Because of its nature, the George endowment’s performance sparks no negative perceptions among those who oversee the university’s investments, not even when it lost ground during the worst of the economic downturn.

The Stetson model of investment education will grow as other schools catch on that the best way to teach students to be investment fiduciaries is to give them the money—and the responsibility. When the risk is real, genuine learning occurs. That’s the big difference.

The numbers bear Belcher out, both in the portfolio’s performance and in the stellar record of these students’ postgraduation performance with the nation’s most reputable financial institutions.

SUBMITTED BY George Herbst, vice president for business and CFO, Stetson University, DeLand, Florida

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Wind Project Renews Energy, Revitalizes Town

On May 4, 2007, at about 9:45 p.m., a massive tornado leveled Greensburg, Kansas, destroying 95 percent of the town and leaving a path of devastation nearly two miles wide. Today, the town is rebuilding as the “greenest town in America,” a commitment that has captured attention and support across the nation.

NACUBO is playing a role in this renewal project by helping build the new Greensburg Wind Farm. The project represents part of NACUBO’s effort to promote sustainability and was highlighted at the 2010 Smart and Sustainable Campuses Conference. (See “Energy Stewards” in the June 2010 issue of Business Officer for coverage of the conference.)

A Slice of an Eco-Strategy

The wind farm is being developed with financing from NativeEnergy, the funding of which is made possible by the collective, community support of clients and partners like NACUBO. NativeEnergy is dedicated to helping build Native American, farmer-owned, and community-based renewable projects. As the community continues to rebuild, the wind farm will create significant economic and environmental benefits. For example, the renewable attributes of about one third of the farm’s activity will generate enough energy to power 4,000 homes—more than enough for every home, business, and municipal facility in Greensburg. In addition, the farm’s wind power will displace fossil-based energy and reduce hundreds of thousands of tons of carbon pollution.

Minimizing a Meeting’s Footprint

Along with the wind farm commitment, additional steps were taken to make the conference itself as green as possible. For example, high-quality carbon offsets, made possible by a sponsorship from Ithaca College, Ithaca, New York, balanced out the pollution caused by participant travel and the venue’s energy use.

Other steps were taken to minimize the environmental footprint.

Use a LEED-certified facility. The College Park Marriott Inn & Conference Center in Maryland was the first hotel in North America to receive Leadership in Energy and Environmental Design certification from the U.S. Green Building Council. Sustainability efforts include plastic, glass, metal, and paper recycling; 100 percent compliance for paper and cardboard recycling in the executive office and kitchen; a program for composting food waste; and meeting rooms lit by natural daylight.

Keep food service close to home. The conference center sources products from the Mid-Atlantic region as much as possible, concentrating on organic fruit and vegetables and contracting with nearby fish vendors.

Reconsider conference materials. Staff printed the conference program on 100 percent postconsumer recycled paper, reused signs and displays from previous events, and distributed conference proceedings via the Web.

Tout transportation alternatives. Participants were encouraged to use public transportation because of the accessibility to both Baltimore and Washington, D.C., airports.

SUBMITTED BY Michele Madia, director of environmental leadership, and Tadu Yimam, a policy analyst, at NACUBO

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