Top Questions for Campus Leaders
Attendees in these sessions heard how to incorporate integrated planning, financial modeling, performance measurement, and other innovative strategies into their institutions.
Sound Fiscal Footing for Small Colleges
Declining student demographics. An all-time high in tuition discounting. Competition from public and online institutions. Dysfunctional debt portfolios. Liquidity and cash flow issues. Given these factors, if small private colleges take no action, up to 25 percent are at very high risk for closing or merging, said Linda Eremita of M&T Investment Banking in the session “Keys to Survival at Small Private Colleges.” Also participating in the session were Jessica Matsumori of Standard & Poor's and Sue Gaylor, vice president for administration and planning, Lycoming College, Williamsport, Pennsylvania.
With 1,400 students—many of whom who are first-generation or receive Pell Grants—Lycoming College must pay close attention to its fiscal health. That includes its “A” rating by Standard & Poor's, a sound debt portfolio structure, and net tuition revenue. “We feel our endowment growth is the best source of revenue for us,” said Gaylor.
In a discussion of financial survival realities for small colleges, Eremita noted 10 questions that boards, presidents, and CFOs should be asking. Among them:
- What level of unrestricted cash and investments would be needed to operate for six months?
- Are we too leveraged?
- What percentage of our variable rate debt is offset by unrestricted, liquid assets?
- Do we budget for an operating surplus?
- Is our strategic plan relevant? Is our debt policy relevant?
Connecting Strategic Planning and Budgeting
The relationship between the strategic plan and the budget at Boise State University, Idaho, was featured in the session “Building Bridges: The Link Between Strategic Planning and Budgeting.” Stacy Pearson, vice president for finance and administration, and Sona Andrews, provost and vice president for academic affairs, described how all campus units are involved in the budgeting process, which in turn is driven by the institution's strategic plan. The units must annually list progress made on the strategic plan and the way in which reallocations, new initiatives, and requests for new funds support progress toward meeting strategic goals.
Andrews and Pearson then described how the finance and academic affairs divisions have teamed together at Boise State to create budget guidelines and templates that provide clear data, which can then be used in the decision-making process. Boise State's process works both in years where growth is desired and in those that require budget reductions.
The budget planning documents also provide information used in the university's annual report card. The card measures progress on the strategic plan, as Boise State achieves its goals through the budget.
As a result of the economic downturn, all institutions—including community colleges—have faced budget reductions. In the case of community colleges, most of these cuts are coming from the state level, leaving two-year institutions with the lowest state support they have experienced in years.
Because of this, many institutions now consider themselves simply “state-located” rather than “state-supported,” all the while recognizing that many aspects of their operations are still state-regulated. This predicament is forcing community colleges to consider new ways to become financially sustainable.
In the session “Building a Sustainable Future in the Face of Declining Public Support,” Ronald Rhames Sr., vice president for business affairs, Midlands Technical College, and Teresa Smith, vice president for administrative services and CFO, Tallahassee Community College, highlighted key principles of financial sustainability and methods of increasing it.
Rhames and Smith discussed surveying the institution and its constituents to determine possibilities for program enhancements, additions, or elimination. They also considered ways to review and more strategically enhance other areas, such as expense management, private support, government support, pricing models for tuition and fees, and “living and learning” environments on campus.
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