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Business Officer Magazine
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Spinning Straw Into Gold

Using the raw material of programs already in place to serve students, community colleges are taking an entrepreneurial approach that generates much-needed revenue to offset state funding shortfalls and other casualties of the financial crunch.

Catalyst for Change

By Reagan Romali

Spinning Straw Into Gold“We need to diversify our revenue base. Any business that doesn't do this won't survive,” says Larry Eisenberg, executive director, facilities planning and development, for the Los Angeles Community College District (LACCD). “Fortunately, there are lots of opportunities out there that make sense, have low impact on existing resources, and are relatively lucrative.”

That's good news in this uncertain national economy, in which heightened demand at community colleges is coming at a time when educational funding is sharply decreasing in many states. In addition to the increasing number of students who look to community colleges as their affordable choice for higher education, workers are turning to the same institutions to strengthen their job skills, retrain in a new field, or gain knowledge that will help them re-enter the workforce after job loss.

Caught in the squeeze, community college leaders must seek new ways to maintain financial stability and serve student needs. Many business officers nationwide are meeting this challenge by looking to creative revenue opportunities for their colleges; some are experiencing tremendous success. Ideas range from small to large scale, with some generating thousands—others even millions—of dollars of operating revenue. Here's a snapshot of the programs that are being added or woven into existing activities to generate some gold-plated returns.

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LACCD's Eisenberg has brought millions of dollars to the district through an eclectic mix of entrepreneurial ventures, including the following:

Movie and filming opportunities. Clearly, LACCD has a home-court advantage with the movie industry, but opportunities do exist for institutions located elsewhere, says Eisenberg. With his institution's proximity to the Hollywood movie studios, Eisenberg says that capitalizing on filming revenue just makes sense. Under that umbrella are options with still photography, videos and commercials, major productions, public service announcements, and student films. 

As an incentive to participate, LACCD offers each of its nine colleges all the revenue generated from studio-related activities conducted on its particular campus. The district helps promote the idea with the various studios. This not only makes the process collaborative but allows the colleges to reap the benefits that can translate into dollars for students.

The colleges establish the rates and times of availability for each category. Generally, the movie industry follows a “30-mile rule,” explains Eisenberg, preferring to work within this designated radius to avoid additional expenses associated with union rules or permits. However, for the right location—even in another state—a production might be able to justify the necessary expense.

To market your campus, Eisenberg recommends using a professional scouting service with a track record in the industry. For example, a campus in Wyoming might have a very appealing location for a particular moviemaker, and a knowledgeable service can help you capitalize on that. According to Eisenberg, location services typically do not require an up-front fee for marketing. Payment is made only when a contract is signed with the production company, with the service's fee subtracted from the gross revenue received by the institution.

Keep in mind, too, says Eisenberg, that even parking lots and other venues can be attractive to studios for shoots or events.

Advertising options. Placement of electronic marquee signs that advertise products and services has generated more than $110,000 for one of LACCD's campuses. And, Eisenberg and his team have generated millions of dollars with other advertising opportunities, including selling advertising space on construction fencing or trashcan wraps, digital message boards, bus shelters, athletic stadiums and grandstands, and interactive kiosks. Identifying the products your target market is likely to purchase will determine the companies you will approach to gauge interest in advertising on your campus.

Typically, advertisers in the movie and video, athletics and sportswear, and food and beverage industries find campuses appealing for ad placement. For LACCD, Nike, Adidas, and Reebok have been the big players not only in placing ads but in paying for athletic uniforms, equipment, scoreboards, and other incentives.

Eisenberg notes the following caveats when working with companies on advertising projects:

  • Always retain the rights to approve advertising in advance. Your college, for example, will likely want to exclude tobacco and alcohol products as well as anything with violent or sexual connotations or themes.
  • Be aware that digital signage can be costly and may require a profit-sharing structure to avoid up-front installation costs.
  • Draft your requests for proposal carefully and recognize that you may need to hire multiple companies to fulfill your advertising plans, depending upon the type of advertising desired.
  • Recognize that getting stakeholders on the same page can be a challenge; start early.

Public-private partnership programs. LACCD's public-private partnership ventures have resulted in, among other projects, food courts that are in development at two of its campuses. Typical of many revenue-generating activities, says Ruben Rojas, deputy director for Build LACCD, which oversees the district's contract work, “The trailblazers roll the dice on a particular concept, and if it works, other campuses follow.

“We are venturing away from the cafeteria model,” he says, “because we realize that it's not always economically advantageous compared to working with strategic partners for whom food service is the core business. It's all about service to the students—and they want what they would receive at the university or college level.” Partners in the food courts include Subway, Taco Bell, McDonald's, and other national chains that have proven they can provide a business model that is cost-effective. Interestingly, says Rojas, “with many people returning to community college to retrain for other job opportunities, the busiest time for meals is often just before evening classes start, when students can stop for a quick meal.”

Typical of may revenue-generating activities, says Ruben Rojas, deputy director for Build LACCD, "the trailblazers roll the dice on a particular concept, and if it works, other campuses follow."

Explains Rojas: “The food courts and other construction projects are incorporated in our master plan that calls for one of the biggest capital construction projects in the country. We are transforming our campuses with new buildings and upgrades—financed through voter-approved funds that were approved in early November last year, right about the time that the financial crisis was beginning to take hold. Our citizens were very aware that the campuses were in need of revitalization—and many people, regardless of where they graduated, have taken classes at LACCD and have an affinity to the institution.”

LACCD's projects are governed by a competitive bid process. “We scan the industry,” says Rojas, “to find companies that are as competitive as possible. Then, we must follow certain standards. The food court model, for instance, requires certain square footage to work.”

Weaving Green Into Gold

Energy cost savings through green solutions are big business for many colleges and universities. “For us,” says Eisenberg, “the numbers are looking very positive; we're projecting multimillion-dollar savings.” LACCD is offsetting costs by initiating a three-pronged energy effort including:

Renewable energy. LACCD's utility costs range from $9 million to $11 million per year, says Eisenberg, and “by embarking upon an ambitious renewable energy program,” which includes the installation of up to 40 megawatts of photovoltaic units, he projects the district eventually will be able to offset its entire utility cost. The project is in the second year of the two- to three-year installation. Total cost will be $350 million, of which federal and state subsidies will cover about 40 percent. “After we fully exhaust our tax credits and pay for the remaining system, within about six years,” says Rojas, “we can then generate our own energy.”

Negotiated pricing. LACCD is also avoiding utility cost increases by negotiating power purchase agreements (PPAs), according to Rojas. Considering that annual utility increases range from 3 to 6 percent or more, these PPAs can lock in utility pricing for the term of the agreement to avoid rate increases.

Energy audits. The district also conducts environmental scans of all campus buildings to identify energy saving opportunities and project the return on investments that are made to improve efficiency. Rojas says, “Our program is designed as a performance-based contracting structure, in which expenditures are offset by realized energy savings; thus, we have no out-of-pocket expenses for these projects.”

Innovative Ideas

Balancing budgets means “becoming entrepreneurial in every way, while cutting costs,” says Arthur Tyler, deputy chancellor and chief operating officer of the Houston Community College System. HCC was successful in generating net savings of $4.5 million in 2007-08 and $2.3 million in 2008-09, thanks to a wide-reaching and strategic approach to finance.

“Our employees helped us find money,” says Tyler. He explains: “HCC Chancellor Mary Spangler reached out to the college community to seek suggestions on potential cost savings and revenue opportunities. She created an anonymous suggestion box inviting ideas to be submitted during a one-month period annually.” The initial effort, reports Tyler, generated 525 suggestions that eventually were boiled down to 15 cohesive projects that generated $5 million to $6 million during the first year.

This activity was repeated with similar positive results. Key to the success of the savings-generating efforts, says Spangler, was assigning administrators to take charge of certain projects, report on progress, monitor results, and return the resources to the employees in the form of salary increases. “What has occurred,” says Spangler, “is a culture of being cost aware and process sensitive so that employees feel involved and responsible for the efficient operation of the institution. Everyone is given the opportunity to be involved; everyone shares in the benefits.”

Results are showing that people have bought into the effort. A collegewide survey taken last spring showed that HCC's faculty and staff members have a generally positive attitude about the health and direction of the institution and would recommend HCC to others.

Revenue generation. Some of the high-leverage ideas, says Tyler, focused on creating new revenue sources. These include:

  • Review class size, schedule, and focus. “We've realized increased revenue of $3.4 million,” says Spangler, “by increasing average class size (from 18.6 to 19.4); improving scheduling of classes and rooms; and starting the 'Ready When You Are' schedule of student-requested two-month classes.”
  • Activate dormant space. HCC generated $585,000 by reviewing the use of its Alief Center and transforming the underutilized rental space into a workforce center to generate profit through English as a Second Language and other continuing education courses.
Cost savings. Other projects suggested by members of the college community, says Tyler, resulted in substantially reduced costs. Among proposed actions:

  • Analyze energy expenses. The college saved $624,000 in facilities through better use of classrooms and a lighting, server, and air conditioning audit that resulted in reduced utility and energy costs.
  • Reduce back office costs. More efficient postage, mailing, printing, and copying resulted in $243,000 in savings.
  • Look for IT efficiencies. Working with the information technology group, the institution saved $364,000 by eliminating unused licenses, establishing and implementing cable standards and configurations, and establishing a methodical replacement plan.

Grants for Great Ideas

In addition to the suggestion box, Tyler and Spangler realized the system needed to spend money to make money. To get things started, Spangler worked with the college's board of trustees, which initially authorized a $750,000 Chancellor's Innovation Fund Competition. The idea: to give faculty and staff the opportunity to compete for internal grants by suggesting new or enhanced programs that would improve student retention and success. Spangler, the board, and senior leadership shaped the request process by indicating that programs must be “scalable,” have “across-the-board impact,” should enhance what other colleges were already doing, and should contribute to teaching and learning.

Ideas flooded in and several grants were awarded. New concepts included the following:

To get things started, Spangler worked with the college's board of trustees, which initially authorized a $750,000 Chancellor's Innovation Fund Competition.

  • Using smart phones for classes. This project was funded to create a more efficient and innovative learning environment for the delivery of biomedical science instruction through smart phone access to all instructional materials, as a supplemental experience for students who come to campus for classes. Success of the project, explains Spangler, was determined by assessing student learning outcomes and measured through survey and student time logs. Initial findings revealed a significant impact, with students spending increased time studying complex materials, collaborating, attending class, understanding material in depth, and remaining in school. While the direct cost savings cannot be tracked in a specific way, this innovation, says Spangler, has reached beyond the initial project to multiple levels, inspiring other faculty to use iPhone pedagogy in their disciplines.
  • Creating a six-month orientation for adjunct faculty. This project directly addresses the college's first strategic goal of supporting faculty programs in pursuit of teaching and learning excellence by training full-time faculty to facilitate the part-time faculty in the Adjunct Academy program. In addition to sharing information about learner-centered teaching, the faculty model best practices, team teach, and participate in activities throughout the sessions. The newly trained full-timers, after the initial program, are prepared to return to their home colleges to develop the program for their own adjuncts. The first class graduated 18 adjuncts in 13 disciplines along with 14 full-time faculty facilitators. As the program ramps up, the plan is to graduate 140 adjuncts from 6 of HCC's colleges in the second year.
  • Developing a student chamber of commerce to help students learn how to start their own businesses. “We created a 'real' chamber of commerce,” says Spangler, “so students can experience the benefits of an organization that teaches them skills to prepare for the future and supports their entrepreneurial efforts.” Membership has grown to 60 students in a few short months. The program included a spring conference, a summer trade mission to Turkey, a business plan competition, and regular networking meetings. Current projects include developing an advisory board, creating a 501(c)(3) organization, and establishing a clearinghouse for members' use. The organization's effectiveness has also encouraged the members to begin plans to write a grant to help the group become self-sustaining.
  • Establishing a college-to-careers course. This program focuses on tips for students to be more successful in college, with some elements designed to assist students in their early professional lives. The course includes effective approaches to time management, library resources, financial aid, other resource availability, the college culture, and ethics. Plagiarism is also addressed. The initial course boasted a 71 percent retention rate versus 48 percent for those students who did not take the course. With retention so critical to student and financial success, says Spangler, a program that retains students is one that enhances finances.
  • Managing the instructional program to increase efficiency. Clearly, the higher the enrollment in each course, the more cost-effective the overall academic program. At HCC, college leaders looked at which programs were most viable and, if necessary, retrained faculty to support the resulting curriculum. Plans were made to reroute students from cancelled courses, ensure proper sequencing of courses, and take advantage of online and off-hours offerings to serve a variety of demands. By making the academic program more efficient, Houston Community College has been able to implement a two-year budget, driven by an academic schedule completed two years in advance.

Investments in these new concepts have resulted in increased enrollment and retention, which translate into student and financial success. Coupled with the natural response of students turning to community colleges for retraining in a down economy, the system's new ventures have helped generate 10.5 percent enrollment growth in fall 2008 and 11.5 percent growth in spring 2009, surpassing the 63,000 headcount mark—a first for HCC. At press time, Spangler notes that fall 2009 enrollment numbers won't be available until late September. Regardless of the totals, she says, “We are not cutting our instructional programs or reducing personnel. We are fortunate to give raises this year and be able to hire 65 full-time positions, of which 30 are faculty. So far, the economic forecast is good, and we are seeing the positive consequences of our efforts and those of our community.”

Other activities that have generated revenue, note Tyler and Spangler, include increased marketing through hiring additional counselors, facilities rental income, moving from mailed to electronic paystubs (saving $70,000 per year), and aggressive grant writing. (For more information on grant funding and other revenue-enhancing ideas, see the sidebar “Knowing Where to Go for Gains.”) The net result of these systematic changes in the way HCC does business is substantial additional revenue that can be used to help student achievement.

Meanwhile, Cycle 2 of the Chancellor's Innovation Fund Competition has once again stimulated interest, with more than 120 faculty and staff attending preproposal workshops and working collaboratively to develop creative and profitable ideas.

Engage With the Community

As in the rest of Florida, budget cuts keep Polk State College, Winter Haven, seeking solutions to counter the crunch. Peter Elliott, vice president, administration and chief financial officer, says the college has experienced a 10 percent cut in state funding since 2006. That has not discouraged the college's leaders, says Elliott. He sees “hope on a daily basis” when he walks the campus and visits with students and staff. “You have to focus on what's important and talk with people. They have good ideas,” he says.

In fact, seeking ideas from the community has helped Polk State generate substantial funds. Conversations with a local corporate training advisory board, the board of trustees, and local community groups have all yielded revenue-generating ideas. “Being engaged in the community around us has been quite productive,” says Elliott.

Further, he says, “Crisis makes you focus on the central thing your college does; it makes you focus on teaching and learning.” By doing that, Polk State College has come up with some effective ideas to expand the reach of its learning programs to its financial advantage.

Partnering in What You Do Best

“We're willing to collaborate,” says Elliott, and such arrangements with local companies and agencies, for which the college provides training, have generated revenue.

Conversations with local corporate training advisory board, the board of trustees, and local community groups have all yielded revenue-generating ideas.

Preparing local law enforcement officers. For example, Polk State teamed up with the local sheriff's department in 2004 to run a police academy that trains local sheriffs, police, and the majority of professionals in local law enforcement agencies. Courses mirror those regularly offered in a typical law enforcement academy, including emergency medical services and a number of supervisory and management courses offered in the form of law enforcement, public administration, and business tracks.

This operation generates $750,000 to $1 million per year in gross revenue alone, with annual profits of $100,000 to $150,000. The college's goal is to expand the program to offer associate and baccalaureate degrees. The sheriff has been quite supportive, since his deputies can become eligible for promotions by achieving higher-level degrees. Clearly, as deputies move up, they must become more focused on management; this program promotes the necessary skills.

“We are also looking to partner with the sheriff in another project,” says Elliott. “The county is building an administration facility for the sheriff partway between our two main campuses. Working with the sheriff's department and our Institute of Public Safety staff, we have identified a parcel on that property that could hold a building designed to leverage that proximity by incorporating state-of-the-art training technology with the needs of the sheriff's department. The building is on our state projects list, and we are also working with the sheriff to identify other sources of funding.”

Corporate training. Companies that are looking for next-generation leaders want to get their employees in the training pipeline and build relationships that lead to long-term benefits for both sides, says Elliott. Consequently, Polk State worked with potential partners to build curricula around supply-chain management and, later, added supervision and management courses based on the law enforcement training, which translated well to the corporate logistics side.

Working in collaboration with a corporate advisory board, made up of local business leaders and representatives of large local employers, such as the school board, hospital, and so forth, the college created a corporate training arm, the Corporate College, to handle business course offerings in areas that include warehousing, distribution, and management. The college is working on programs with the Mosaic Co., a large employer in Polk County that produces and markets phosphate and potash, to do training with the company's staff on safety and automation. “We're also working on a grant project with Lockheed Martin,” says Elliott, “to perform the company's quick-response training education.” Other partnerships involve Florida's Natural orange juice, for which Polk provides supervisory training; and Rooms to Go, a company that works with the college's supply-chain courses for company employees.

To begin these types of partnerships, Polk State initially offered to help businesses with safety courses, followed by supply-chain courses and courses pertaining to managing an automated production line. This strategy became so effective that it opened an opportunity for both sides to build an associate degree. The initial question for Polk State was, “How do we serve the business community, provide continuing education training, and serve the workforce needs in Polk County?” It is answering that question by establishing its various partnerships, with more than 10,000 students per year having taken part in these programs so far.

Maintaining Momentum

A mix of elements supports the training programs. Grant funds are sometimes used to get things started, with Polk receiving an administrative cost allowance from the grant. Other costs are paid by participating companies. The institution markets these opportunities through its business partners' human resources departments.

Profit on the corporate training side varies from year to year, but programs are breaking even each year with the help of grants. The key element, says Elliott, is “getting a group of people in your door you wouldn't ordinarily see, and serving them.” Once you meet the students' needs—and they see the value to their careers—they will be back and tell their friends to come as well. “It's classic customer service,” says Elliott. “One of the attractions of the corporate programs is that they give workers on the line a chance to move up and better themselves.” Enrollments in these programs were “up by double digits,” says Elliott, for summer 2009.

Many of Polk State's corporate training instructors have experience in the field, which is also true of those who teach in the law enforcement academy. For corporate training, Polk brings in experts to teach the safety courses and manufacturing professionals to teach logistics. For example, one partner installed state-of-the-art equipment at Polk State and “trained the trainers” so that the college could then teach the courses.

This year, the Corporate College broke even. As for the future, says Elliott, “We plan to build on that positive trend and put profits back into the enterprise as well as contribute to the college's general overhead in the coming years. We are always on the lookout for new clients. Working with the economic development departments of the local governments, we continually find new leads.”

As the national economy struggles with recovery, community colleges will continue to serve increasing numbers of students while simultaneously experiencing revenue declines. By thinking in an entrepreneurial manner, business officers have the potential—if not to actually spin straw into gold—to make substantial financial contributions to the operating budget.

REAGAN ROMALI is vice president of business services, Riverside Community College District, Moreno Valley, California.

Knowing Where to Go for Gains

“Colleges must manage to the basics during financially challenging times,” says Kenneth Gotsch, vice chancellor of finance and chief financial officer for the City Colleges of Chicago. With rapidly rising salary and benefit costs and little or no growth in revenues FY08 and FY09, the institution's seven colleges with an enrollment of 115,000 students have reached out to tap existing and new resources. “This became even more critical,” says Gotsch, “when the state imposed a midyear FY09 reduction of 2.5 percent of our state resources.” In addition, little or no new construction or renovation funds have been available for some years. The picture for FY10 looks even bleaker, with potential state cuts requiring further budget reductions of 6 percent.

Going After Grants

“For several years, it seemed that few new resources were coming in from Washington, D.C.,” says Gotsch, “but recently, we've had some positive results.” With the cooperation of Rep. Danny Davis (D-IL), City Colleges' Chancellor Wayne Watson assisted in acquiring a large grant from the U.S. Department of Education that targets predominantly black higher education institutions. “Three of our colleges,” explains Gotsch, “will each receive about $1 million a year for the next two years for programmatic enhancements.”

Also, Gotsch's institution is one of the few community colleges to receive National Science Foundation dollars for specific student scientific research. At the urging of several board members and the desire of Chancellor Watson to develop new ways to engage faculty and students in improving learning outcomes, the institution now provides more full-time resources to grants development, with new grants more than offsetting the cost of development. “We are learning,” says Gotsch, “to make sure that we train grant-related staff early in the academic year and that we conduct regular grant monitoring to avoid returning unspent funds. Our grants staff also makes presentations at faculty and administrative staff meetings to reinforce the benefits of applying for grants. They also stress planning ahead for the administrative logistics of hiring staff and purchasing goods and services with the resulting funds.”

Bullish on Basics

Other efforts by City Colleges have centered on improving purchasing efficiencies and looking for better pricing to reduce costs. For example, says Gotsch, “We take advantage of national and state purchasing cooperatives, capitalize on state and local government contracts, and take advantage of potential vendor-purchase discounts based on more timely payments.” Community colleges can access several national and regional purchasing cooperatives, including the National Intergovernmental Purchasing Alliance, the U.S. Communities Government Purchasing Alliance, and the National Association of Educational Procurement's E&I Cooperative. For some items such as job order contracting, furniture, and medical school supplies, the Illinois Community College Strategic Purchasing Alliance has been efficient for City Colleges.

While purchasing co-ops can save money, they do pose certain challenges, such as (1) the need to commit to a specific volume of spending, (2) the requirement to buy goods from local vendors, (3) prices that are more expensive than buying direct from the manufacturer, and (4) the lack of the specific commodity needed. For example, notes Gotsch, “We've tried to buy something as simple as copy paper, but our colleges seem to arrive at better prices when they obtain three quotes and then buy directly from a particular paper source. My colleagues across the state agree that even if we end up buying elsewhere, checking with a co-op's price helps to add more competition and better overall value to our institution in the long run.”

In addition, buying from other government contracts can pay off. “We conducted a bid process,” explains Gotsch, “to purchase two small skid steer loaders for college landscaping and snow removal needs. We received only two bids and the prices seemed inflated. Our purchasing department was able to buy the same pieces of equipment and save more than $10,000, including a few attachment extras, by participating in a State of Illinois competitively bid contract.” The institution was even able to negotiate lower health insurance rates through a joint request for proposal with Chicago's five units of local governments.

Other areas of revenue and cost control include the following:

  • Increased fees, improved collections. “We received board approval,” says Gotsch, “to increase tuition and selected fees for a three-year period.” The institution also improved the timeliness of the packaging of student financial aid and increased collection of bad debts.
  • Outsourced services. In addition, says Gotsch, “We improved collection of student receivables by outsourcing student tuition payment plan collections at most of our colleges and having our financial aid directors do a better job of actively monitoring pending aid receivables.”
  • Increased productivity. City Colleges achieved other efficiencies by increasing the faculty contract load to 15 hours—up from 12—and increasing the average class size for for-credit courses from 23 to 28 students.
  • Energy solutions. At a recent board meeting, the institution obtained approval for its second annual energy-curtailment agreement with the local electrical utility, receiving a significant rebate for agreeing to turn power consumption down during peak summer power periods. “Our building engineers,” says Gotsch, “do a terrific job of maintaining our energy-reducing technologies and staggering the use of hall lights on sunny days, fulfilling our commitment to save energy.”

“At this point,” says Gotsch, “our college leadership is grateful to Governor Quinn and members of the Illinois General Assembly for sparing Illinois community colleges from any further cuts in FY10. The 50 percent funding cut to adult education and career and technical education was at least temporarily avoided.

“Now, we are all waiting to see what takes place in this December's special legislative session,” Gotsch concludes.

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