When Two Do the Math
Enrollment and financial goals aren't at odds when business officers and enrollment managers work from the same equation.
By Karla Hignite
Michael McGoff and Sandra Starke get it. As vice provost for strategic and fiscal planning for Binghamton University, State University of New York, McGoff is keenly aware of how Binghamton’s 14,000-plus enrollments factor into his financial planning efforts. “Enrollment management involves hiring faculty, facility planning, learning environment development, deciding where you go wired or wireless, and services for students. When enrollment managers and fiscal officers fail to talk to each other or to understand the market environment, both can make big mistakes,” says McGoff. For example, where enrollment goals are kept separate from campus housing maintenance and development concerns, the result can be a glut of residence space or woefully inadequate facilities.
Before Starke became Binghamton’s vice provost for enrollment management she sat on the financial side of the house. In her former role as assistant vice president for finance and planning, Starke began working closely with the university’s enrollment management office and deans to determine achievable recruitment goals for graduate and undergraduate students.
“While the admissions office at the university had always achieved its recruitment and enrollment targets, no one ever really brought up the ‘R’ word,” says Starke. But revenue came into focus once she helped develop models that showed potential outcomes of a greater strategic focus on enrollment goals, including better use of financial aid to maximize revenue as well as bring in a targeted class, she says. “The more we broadened the discussion on campus, the more all the links became clear.”
External factors further concentrated the university’s attention on the connection between its fiscal and enrollment functions. According to Starke, the state of New York moved to a funding model that was clearly enrollment driven, the tuition differential for in-state and out-of-state students widened, and the state’s resources began to erode. The latter spelled future decreases in Binghamton’s public funding. The drop in funding has been buffered in part by a growing out-of-state cohort, says Starke. In repositioning the university to what Fiske Guide to Colleges touts as a premier public, the institution started gaining national recognition and attracting students outside New York and internationally. “Once our admissions director was included in discussions on the importance of the enrollment mix to revenue generation and achieving the university’s strategic goals, she quickly incorporated revenue into her goals and further focused her efforts on out-of-state admissions.”
That raises another key point about good enrollment management: “Sometimes you have to help individuals see their part in the larger equation.” Sharing a common frame of reference is doubly important for those in charge of enrollment and financial matters, Starke notes. Both roles require a holistic view of the institution and the ability to maintain perspective on your fiduciary responsibilities to the institution and on your student-centered mission.
The Organizational Link
A little organizational structure can go a long way in balancing that perspective. In 2004, Binghamton’s president moved the university’s budget function under the provost, to whom enrollment management also reports. Weekly staff meetings ensure that everyone has a solid understanding of enrollment management issues, says Starke. “When student demand in a program increases, we discuss the effect of taking more students, including the revenue those students bring in and the resources needed to teach, house, and serve those students.”
|New Workshop: The Business of Enrollment Management|
Would you like to delve more deeply into the business officer’s role in enrollment management? Don’t miss NACUBO’s newest professional development offering, The Business of Enrollment Management, May 22–23 in Minneapolis. Distance learning activities prior to the event include selected readings, a webcast, online exchanges, and opportunities to identify common challenges and best practices. Coconvened with Noel-Levitz, the workshop explores what business officers need to know about enrollment management—the “why” beyond the numbers.
Topics include tuition setting, pricing strategies, underlying drivers of college costs, net revenue, and program capacity and demand. The program features demonstrations of enrollment management tools and discussion of the latest NACUBO Tuition Discounting Study. The workshop is intended for chief financial officers, budget and planning personnel, enrollment managers, and student financial services personnel from public and independent four-year colleges and universities. For more information, visit www.nacubo.org.
Rita Detwiler believes the close ties between the enrollment and business operations at Lynchburg College in Virginia play a major role in the institution’s enrollment success. When Detwiler first arrived at Lynchburg five years ago as vice president of enrollment, she was stunned at the sophistication of reporting and the willingness to work together that was already in place and that she hadn’t witnessed so strongly in her previous 20 years of college admissions. Other members of Lynchburg’s team who are focused on strategic enrollment issues include the director of admissions, the associate vice president for enrollment management, the director of financial aid, the business manager, and Vice President for Business and Finance Mitch Wesolowski.
“We meet regularly throughout the year, every summer from a planning standpoint, and from a strategic and tactical side as often as needed during the enrollment cycle, including weekly update meetings from February through August,” says Wesolowski. He is convinced that it is not only important to get your enrollment management team focused on the connection between enrollment and financial issues, it is also critical to get senior cabinet-level members to understand the link. In his budget updates in cabinet meetings, Wesolowski shares enrollment and retention projections and their bearing on faculty hirings, residential space, tuition discount rates, and projected financial aid.
During 21 years at Lynchburg, Wesolowski has witnessed enrollment highs and lows and knows their fiscal impact. Ten years ago the college was in the midst of a gradual three-year drop in enrollment. While the decline itself wasn’t alarming—only about 50 fewer than target—the financial implications were noticeable. Like many independent institutions, Lynchburg is tuition-driven. The president at the time mandated that the enrollment and business offices collaborate. That, coupled with new strategic growth goals for the institution, refocused the college’s enrollment management function. Today, with a goal of 2,500 students, current enrollment is roughly 2,400—up from 2,000, says Wesolowski.
More recently, Lynchburg’s current president mandated that the institution examine retention, appointing key members of faculty and staff along with a team of students to look at strategies and initiatives. “We came up with a concerted, collaborative effort to improve student living and learning, reviewing everything from food service and student recreation space to academic advising,” Detwiler explains.
The efforts literally paid off. When the college hit its first enrollment record in 2003, it had gained 8 percentage points in retention of its freshmen-to-sophomore students. Says Wesolowski, “By our calculations of students retained, 8 points translated into roughly $750,000 in direct net revenue.”
After record enrollments the past three years, Detwiler’s new priority is rebuilding Lynchburg’s transfer population. “When you know that every student counts, that means you look at your goal of 60 transfers and ask whether 70 or more is possible.”
|Enrollment Realities for Public Institutions|
When it comes to top enrollment management concerns, independent institutions tend to pay more attention to managing net tuition revenue while public institutions grapple with complex state financing models, says Kevin Crockett, Noel-Levitz president and chief executive officer.
Consider new tactics. Interpreting funding formulas is nothing new for public institutions. The urgency today is to exert greater control in shaping enrollment based on those formulas, says Crockett. “This was less important 20 years ago when most operating costs for a public institution were financed by the state. Now that public institutions have largely been weaned off that support and have to generate more tuition income, they must consider new enrollment management tactics,” says Crockett. Because certain states allow institutions to retain out-of-state dollars, a recent strategy for some public institutions is to pursue more out-of-state students. “This is especially evident at flagship universities, where there is a growing desire to elevate the academic quality of students.”
Retention is another enrollment management issue gaining traction among public institutions, especially as state funding models incorporate funding triggers based on successful graduation rates. While retaining students has always been something of a dilemma for community colleges because of their unique mission and open admission policies, two-year institutions are likewise becoming much more aggressive with their retention-related strategies, says Crockett. One area of emphasis includes structuring coursework to provide maximum incentive for program completion.
Community colleges eye recruitment. Community colleges are also paying closer attention to recruitment. While in many cases their mission is to serve a particular region, some two-year colleges offering specialized programs can attract students statewide and beyond. And as the quality of their programs increase, so does recruitment success. “A growing number of two-year institutions are likewise looking to attract a nucleus of higher-achieving students or honors cohort and to provide them with a high-quality educational experience,” says Crockett. And that kind of opportunity is of growing financial appeal to students seeking a more economical option for their first two years.
Running the Numbers
Technology helps Lynchburg monitor its progress. “Twenty years ago, there is no way I would have fully understood the specific roadblocks our enrollment management office was facing to bring in a class,” says Wesolowski. Today, opportunities to collect and share data make it easy to track prospective and current students to better understand the marketplace. Having access to critical data also allows early detection and the ability to engage in a flexible plan where you can make weekly or monthly refinements, he adds.
And data can help others outside the enrollment management function better understand the strategic value of a good plan, says Detwiler. She now shares data with faculty and staff that show yearly comparisons of freshmen applications and enrollment status by category, including transfers, geographic location, ethnicity, and SAT averages.
Strong historical data can also instill trust in the tactical decisions your enrollment manager must make to bring in the class you need, Wesolowski explains. “Because I know how much the enrollment office is spending and on what, and how the financial aid budget is modeled, I understand the need to offer a certain number of financial aid awards to more students than will actually enroll. As a result, I have confidence in our enrollment, financial aid, and net revenue projections.”
For Detwiler, the importance each student can have is brought to light through the better understanding she has of what business officers must manage in the larger scheme of the institution—including facilities and employee health care and salaries. “I can’t understate the value of sharing knowledge and a shared understanding of institutional goals,” she says. “As much as possible, you need to know the other person’s job.”
Not every institution has arrived at that conclusion. Enrollment management is still a relatively new field within higher education, says Starke. “It’s only been within the past 10 years or so that more institutions have started making meaningful links between enrollment management goals and their financial implications.” That was true for Binghamton. “We now have a keen understanding of our role in meeting the university’s budget and how changes in enrollment affect not only revenue but the need for faculty and space—whether classrooms, labs, or residence halls. We also have a better grasp on how financial aid, pricing, external forces, and services affect the university’s ability to maximize revenue.”
On the flip side, Starke says Binghamton’s finance staff now sees the bigger picture of how well-served students are more likely to become active and productive alumni and future donors. “You can’t lose sight of how good enrollment management equals good fiscal management and that they collectively propel the institution forward,” she says. “A stronger student body that is well served attracts more talented students; aids retention; and ultimately increases your quality, reputation, and revenue.”
Her advice to institutions that haven’t made the collaboration breakthrough: Start by recognizing that business officers and enrollment officers are out to achieve the same institutional goals. And recognize that it’s necessary to talk about strategic enrollment change and its effect on revenue.
“The focus is not always on enrollment growth. Not every institution is, or will remain, in a growth cycle,” says Starke. For instance, enrollments may still be on the rise for colleges and universities in many parts of the country, but even as a multitude of institutions size up for bigger classes during the next 10 years, certain regions have already experienced decline from population shifts. As the composition and the number of college-bound high school graduates change, institutions must be ready to respond.
Ties That Bind Your Mission
|What’s your take on the enrollment management equation? E-mail firstname.lastname@example.org with feedback.|
No matter the focus or market share of your institution, making the tie between fiscal management and enrollment management is vital to advancing your mission, says McGoff. Among the questions that leaders must ask:
- Do we plan to continue growing or to maintain our current enrollment?
- How will we reposition the institution if enrollments decline?
- Should we look to nontraditional students and delivery methods?
- How will we cope with competition?
- Will we experience heightened price sensitivity?
- Can we accommodate a more financially needy population?
- What financial aid strategies will allow us to achieve our quality and selectivity goals and still maximize revenue?
McGoff adds, “Business officers have to work hand in hand with enrollment managers to understand these issues so they can lead their institutions through what may be a future downsizing or at least a shift in focus.
KARLA HIGNITE, principal of KH Communication, Tacoma, Washington, is senior editor of Business Officer.
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