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Business Officer Magazine

Business and Pleasure in Baltimore

The NACUBO 2005 Annual Meeting brought business officers together for a mix of learning and networking opportunities.

The following NACUBO staff members contributed to this report: Jane Rooney, Mary Bachinger, Tracy Berman, Marta Perez Drake, Anne Gross, Charlie Jones, Donna Klinger, Michele Madia, Sue Menditto, Robert Rhea, Gerry Romano, David Rupp, Jessica Shedd, and Maryann Terrana. Additional reporting by Karla Hignite.

Photographs by Bill Perry

A scene from the end of NACUBO’s annual meeting in Baltimore captures the tone that permeated the event: A packed audience listened and laughed as general session speaker Marcus Buckingham closed out the conference with his insights. Even with Buckingham’s remarks running a little over the allotted time late in the afternoon on that final day, attendees stayed to soak up the knowledge. Their eagerness to learn—not only from speakers but from peers as well—was evident throughout the four-day meeting. And there were plenty of people to learn from: At 1,536 registrants, Baltimore represented the highest attendance in NACUBO’s annual meeting history. In addition to educational sessions and networking events, the July conference included a golf tournament, a reception at the Maryland Science Center, a 5K fun run, and Hawaiian entertainment as a preview of next year’s event in Honolulu.

“Building Organizational Capacity,” this year’s theme, resonated throughout the annual meeting, including the poster sessions, new this year. Community Day sessions addressed areas of specific interest to the four constituencies: research universities; community colleges; small institutions; and comprehensive and doctoral institutions. Attendees explored the latest offerings from vendors in the expo hall, which featured 235 corporate exhibitors. At NACUBO Central—an interactive exhibit area designed to engage participants in new technologies as well as maximize the value of membership—visitors enjoyed meeting staff and experiencing hands-on learning via computer kiosks. For staff it presented the chance to observe firsthand member response and feedback. Featured products and services included NACUBO Knowledge Networks, e-FARM, and the enhanced member portal, My NACUBO.

New CBOs Hit the Ground Running

For the first time since the program’s inception, more than half of the participants at the New Business Officers program came into their roles from outside of higher education, demonstrating the trend of chief business and financial officers coming from the corporate sector rather than within the higher education community. Facilitators Larry Goldstein, president of Campus Strategies, and Pat Sanaghan, president of the Sanaghan Group, led participants in exercises designed to encourage thinking about leadership and management skills and the future of higher education. Workshop participants were asked to identify and agree on issues that are likely to become prominent over the next decade and beyond. The impact of distance learning; the changing demographics of the typical college student; rising student expectations; an institution’s ability to adapt to changing economic conditions; and the cost of technology were among the issues mentioned most frequently.

Guest speakers including E. Lander Medlin, executive vice president of APPA, Harold Hewitt, vice president for finance and administration and CFO at Occidental College, and Carol Campbell, executive vice president and CFO of Arizona State University, focused on topics such as board relationships, risk management, facilities and master plans, public policy, and budgets. A new addition to the program was an exercise involving case studies (at the fictitious “ Incredible University”) detailing potential situations that CBOs may find themselves in at their institutions. Groups discussed the cases and ways to manage the specific challenges. Cases ranged from campuses having extensive technology needs and a capital campaign fallen short, to accepting gifts with tight restrictions and heavy demands, to dealing with poor endowment performance and its consequences specifically in terms of board relationships.

It Takes a Community

“Kuali: A Community Source Project,” was one of the preconference workshops. The name kuali, meaning a humble utensil that plays an important role in the successful kitchen, serves as a metaphor for the community source project, which is a financial system built and maintained by a community of users. David Lyons, vice president and treasurer emeritus of Rockefeller University, outlined the project’s origins and development up to this point. Representatives from some of the founding partners demonstrated how the system works and highlighted its various capabilities. Afterwards, panelists from the founding institutions discussed their reasons for becoming involved with the Kuali initiative.

The core modules of the system, which institutions of all types would need, are a chart of accounts, general ledger, transaction processing, workflow, and basic decision support/reporting. Additional modules include accounts payable, budgeting, endowment, and purchasing. The group is committed to having a base system in place by April 2006. The full system is expected to be operational in 2007. There will be an ongoing commitment from the development team and an organization in place to maintain the system. Kuali reports will support both Governmental Accounting Standards Board and Financial Accounting Standards Board accounting. Some of the reasons given for using the Kuali system include the flexibility and control afforded by workflow, a desire to have control over software functionality and support, and the ability to share development and management costs.

Play It Safe

“Pretend it’s Wednesday and the London attacks haven’t happened yet. How many of you would say that your No. 1 concern Wednesday night was a terrorist attack on campus?” Two days after the July 7 transit bombings in London, business officers were considering Jeff Allison’s question at the preconference workshop on homeland security. As only 1 of the 25 participants raised a hand, Allison, Department of Homeland Security special adviser at the FBI Office of Law Enforcement Coordination, acknowledged the many, more common public safety challenges with which campus leaders grapple. Still, he urged participants, don’t toss the possibility of terrorism aside while dealing with drug problems, robberies, and other serious campus issues.

Steven Healy, director of public safety and chief of police at Princeton University, concurred. “Learn to imagine the unimaginable. …it can happen anywhere, at any time.” Even if you can’t see yourself planning for a terrorist attack, he said, create an all-hazards response plan.

An overview of the National Response Plan—an all-hazards plan for managing domestic incidents—was provided by Floyd Russell, director of the VMC training organization and homeland security programs at West Virginia University. He discussed the benefit of campuses working systematically with government officials charged with planning for—and responding to—terrorist acts and disasters. Russell emphasized the need for campus leaders to become familiar with the National Incident Management System, which helps the government, the private sector, and nongovernmental organizations work together during domestic incidents.

These points underscored a key theme throughout the workshop: collaboration. Reach out to local, state, and federal officials, Allison advised. “You’ve got to link with people beyond your campus…you do not have all the resources you need to protect your institution…you may not have a hazmat team of your own, but you need to have access to a local hazmat team.” Overall, he said, evaluate your capabilities and build mutual aid agreements with community groups.

And don’t forget to reach out to students and their families, Allison added. Develop a crisis communication plan, share information, and build trust. “You need to start gauging now the level of trust that students have that, during a crisis, campus officials will make decisions in their best interest,” he said. “Do they trust you? The middle of a catastrophe is not the time to build that relationship. Don’t wait until a catastrophe happens to find out whether you have the trust of your students and their parents.”

The Future of Learning

Do you know how your students look at the world, how they use technology, and how they prefer to learn? Understanding students’ perspectives and practices will have a major impact on how competitive your institution will be, according to general session speaker Diana Oblinger, vice president, EDUCAUSE. Today’s learners, the “Net Generation,” are digital, connected, experiential, immediate, and social. They like teams, like engagement and experience, are highly visual, and choose to work on things that matter. Blogs and cell phones have become primary sources of information, raising concerns for educators about source quality, respect for intellectual property, and technical sophistication versus maturity.

Despite this generation’s heavy reliance on technology, Oblinger said, today’s students don’t want too much technology in the classroom. The top expectation is expert faculty. In some instances, however, students learn better by doing, which virtual labs allow. Using technology to augment the physical setting—in a role-playing game, for instance—allows students to get emotionally engaged. Reconfiguring activities and space permit sharing and observation. Informal spaces where students hang out are an expansion of the classroom where learning continues, Oblinger pointed out. Other groups to watch: time-constraint learners, who want convenience and flexibility, and the next generation of students, who won’t have much understanding of how technology functions despite their media-saturated lives.

The business officer has to think about incentives for faculty and staff engagement; renewal and replacement costs for hardware; and policy around intellectual property and privacy issues. Oblinger recommended five steps to take:

  1. Define the principles that matter for your institution.
  2. Involve students.
  3. Balance different perspectives.
  4. Integrate and align.
  5. Evaluate and modify.

Sustaining High-Quality Organizations

Flying Off the Shelves

Did you stop and shop at the NACUBO Bookstore/Cybercafe? Your purchases helped make these books the top sellers:

  1. College and University Budgeting: An Introduction for Faculty and Academic Administrators, 3rd edition, by Larry Goldstein
  2. Excellence in Higher Education: An Integrated Approach to Assessment, Planning, and Improvement in Colleges and Universities, by Brent D. Ruben
  3. Strategic Planning in Higher Education, by Brent D. Ruben
  4. Planned Giving Administration: The Business Officer’s Guide, by Forrest C. Brostrom
  5. Presentation and Analysis of Financial Management Information, by Jay Kenton

Colleges and universities face unprecedented economic, political, and technological challenges. What are the key institutional dynamics that a senior leader must be mindful of and master? This was the primary question addressed by Jay Morley, NACUBO president and CEO, as he explained the concept and importance of the Building Organizational Capacity project. BOC is a NACUBO research and development effort supported in part by a grant from The Fund for the Improvement of Postsecondary Education. BOC describes the executive role of senior leaders to create and sustain organizations that perform consistently with high-quality results.

BOC provides a conceptual framework and strategies for successful implementation and problem solving of high-value initiatives. At BOC’s center is a framework of eight elements. Each element describes an important organizational consideration that supports a leader’s environment as a complex social system. These elements are purpose, governance, policies, processes, structure, information, infrastructure, and culture.

Morley defined these elements, explained their interrelationship with one another, and presented questions that leaders should ask related to each element. Douglas Toma, associate professor at the University of Georgia, spoke about the seven campus case studies that have been developed to reinforce the BOC framework. He explained the key role that each of the eight elements played in a particular campus initiative discussed in the case studies.

In another session, Morley and Phillip L. Doolittle, senior vice president and CFO of the University of Redlands, and Mernoy Harrison, vice president and provost at Arizona State University, discussed the application of the BOC framework to specific initiatives. Doolittle described enrollment management and tuition discounting at his campus and how the BOC framework was used to study and refine these critical activities. For Redlands, tuition discounting was a cross-functional endeavor, involving admissions, financial aid, business and finance, institutional research, and IT. It required significant coordination as well as buy-in from key campus constituents. Using the eight-element framework to think systematically about the initiative, Redlands was able to achieve a more predictable discount rate, a positive increase from year to year in net tuition revenue, and a significant increase in both enrollment numbers and ethnic diversity.

Harrison outlined a dramatically different endeavor showcasing the application of BOC. He is overseeing the development and implementation of a new campus in downtown Phoenix that has a mission to meet the demand of a rapidly growing population in the area. With the project still in its early stages, the BOC framework has provided Harrison with a checklist of critical elements for success.

Budget Overhauls

“Achieving Budget Reductions in Academic Programs” and “Linking Strategic Planning and Resource Allocation” explored the financial strategies of two institutions.

Writing on the wall at Smith. Pursuing financial equilibrium for your institution is about much more than balancing its budget. For Smith College, it also has been an exercise in recalibrating endowment spending and deferred maintenance rates to get them where they should be, discussing budget cuts in concert with spending for new initiatives, and trimming the fat from academic programs as well as from operations. In discussing how Smith College achieved significant budget reductions in academic programs, Richard Myers, director of budget and financial planning, suggested that the method Smith employed is largely what allowed the final cuts to go down without a faculty revolt. Roughly one-third of the institution’s recent $11 million in budget cuts were directly related to academic programs and support.

While Smith College was by no means in a budgetary crisis, it saw the writing on the wall: steadily rising deficits; retreating or stagnating core revenue streams; and little wiggle room to cover compensation increases, growing demands for utilities, or reinvestment in the physical plant—much less for funding new programs. Several years ago Smith’s new president delivered a mandate to develop and implement a financial equilibrium plan within one year. Despite the short time frame, the intention from the outset was not to introduce across-the-board cuts, but rather to invite a serious campuswide discussion of budgetary challenges and funding priorities, said Myers.

According to co-presenter Larry Ladd, national director of Grant Thornton’s higher education practice, that’s a budget road that not many institutions venture down. Most institutions engage in incremental budgeting where they take an existing budget and make modest adjustments. As a compromise among competing interests, incremental budgeting is viewed by many as a successful approach, but in reality it’s not often effective, says Ladd. Instead, budgets should move an institution toward its priorities and values and wherever needed should incorporate substitution—that is, deciding not to do a major program or task in order to fund a higher priority.

After an initial scrubbing of the budget, preliminary discussions with senior staff, and feedback from committees and working groups, Smith presented the first iteration of its comprehensive planning document to the entire campus. “That was the riskiest thing we did by far,” Myers said. Despite ample blowback from various stakeholders, putting everything on the table for all to see alleviated ugly turf battles. Ultimately the final plan varied little from the original document.

Key to Smith’s success in fulfilling its mandate was making it a planning process—not a budget-cutting exercise—and bringing together early in the process the various discussion threads to solicit feedback on potential funding tradeoffs, Myers noted. These give-and-take conversations can be especially important in light of significant cuts proposed to academic programs. “The only way we could engage faculty in a difficult discussion about program cuts was to also take a hard look at curricula,” he said. Likewise, resolving cuts in faculty positions required talking in broader terms about faculty compensation.

Necessary cuts at Wesley. Like Smith, Wesley College implemented dramatic changes to its faculty size and compensation as part of a campuswide financial realignment. Wesley President Scott Miller named several strategies that have yielded a significant payoff for his institution. Those include increasing teaching loads from 12 to 15 hours and increasing class-size ratios to 15:1 or in some cases 30:1 with no adverse impact. The resulting reduction in faculty size is countered by a combination of pay raises and merit compensation for the faculty who remain.

The cost-cutting measures implemented by Wesley College were in response to an urgent need to shift financial direction. In 1997, Wesley was in decline with a negative cash flow, $14 million in deferred maintenance, low alumni giving, and dramatic losses in head count from declining enrollment and high student attrition. Since then, Wesley has increased its budget and programs from $10.5 million to $37 million, increased annual fund participation by alumni from 5 percent in 1997 to 29 percent in 2004, and tripled full-time enrollment from 617 to 1,860. The college has also increased funding for student scholarships by $6.5 million, improved student retention to a six-year average of 89.5 percent, and introduced a slew of new academic, student life, and technology initiatives—including reducing the institution’s student to computer ratio from 30:1 to 8:1.

Such an impressive turnaround can’t be credited solely to cuts made to academic programs and faculty, however. According to Miller, Wesley reduced administrative overhead by consolidating administrative functions, decreasing the institutional allocation in financial aid, and outsourcing operations such as payroll, portions of IT, campus security, and financial aid services. Clamping down on faculty and staff travel can also stack up savings, Miller said. “If you learn how to work the phone and Web hard, admissions travel costs can be cut significantly without sacrificing enrollments.”

Preserving the Planet

Colleges and universities interested in reducing their environmental footprint and generating cost savings are purchasing more green power. Green power is environmentally differentiated electricity significantly generated by solar, biomass, geothermal, or wind energy. Environmental benefits of purchasing renewable energy include reducing greenhouse gas emissions, reducing the cost of compliance, and conserving water. Through the Environmental Protection Agency’s Green Power Partnership, a voluntary program that supports organizations interested in buying green power, several colleges and universities have committed to using green power for a portion of their electricity needs.

Two institutions that have made the commitment to green-power purchasing are the University of Wisconsin–Oshkosh and Harvard University. At UWO, Wisconsin’s largest purchaser of green power, an institutionwide commitment to greening is incorporated into the university’s strategic plan. UWO’s annual environmental benefits of purchasing green power are equivalent to filling five railroad cars with coal, planting 249 acres of trees, and reducing car travel by 53 trips around the world. The students and community also benefit from the extended green campus commitment through newly created educational opportunities, improved regional air quality, and direct support to local renewable energy businesses.

Harvard University is the nation’s second-largest university purchaser of green power. The demand for purchasing renewable energy came from several avenues including a supportive state regulatory policy, faculty and administrative initiatives, student pressure, and strong support from the president’s office. Particularly noteworthy is the success of Harvard’s Green Campus Initiative, which had a goal of reducing greenhouse gas emissions by addressing behavioral change, building design, and energy purchase choices. All of these influences and successes have allowed Harvard to adopt sustainable principles for the campus, establish a Green Building Loan fund in excess of $6 million, and establish a $100,000 annual Renewable Energy Fund.

A Healthy Outlook

Keynote speaker and economist Allen Sinai kicked things off with his financial forecast, noting that the U.S. economy is in pretty good shape. “We’re downshifting from robust growth to solid growth,” he noted. There is a risk of mild stagflation—a combination of sluggish growth and inflation. He sees no reason to be too concerned about oil and energy costs and doesn’t expect real estate prices to deflate sharply. The rest of the world tends to follow the contours of U.S. results, he pointed out. The global economy is slowing down, but the emerging Asian countries are seeing robust growth. “ China’s economy continues to cook,” Sinai said. He marveled at China’s ability to move into such a position of power and secure a stake in oil. Regarding the Federal Reserve, Sinai predicted that short-term rates will keep going up. “Price stability is the big goal for the Federal Reserve,” he noted.

Addressing the higher education community more specifically, Sinai said, “Demand for educational services has been growing massively and will continue to grow. It’s a global demand and one of our biggest exports.” He predicted that the trend toward colleges and universities becoming commercial will intensify and urged institutions to get ahead of that trend so they don’t have to sacrifice integrity.

“Higher education is one of our strongest sectors,” he said, noting that state tax revenues are rebounding. “You should be hitting the states for more money if you’re state-supported. The utilities cost you’ll have over the next year will show up and you will raise tuitions. The labor side is going to get more costly as the labor market gets tighter.” Sinai also recommended that institutions do a better job of selecting investment managers as technology transfer and R&D become even more prevalent on campuses.

Trying SOX On for Size

Using NACUBO’s 2004 survey results and 2003 advisory report as a backdrop, “Leading Practices: A Three-Year Retrospective of Sarbanes-Oxley” provided an overview of current thinking and practice on issues raised by the Sarbanes-Oxley Act of 2002. Frank Bossle, executive director, internal audits, Johns Hopkins University, explained that early fears and predictions concerning aspects of the act that might affect public and independent institutions have not materialized. Certification and internal control requirements are often the focal point of discussions about the substance of the act’s requirements. In fact, these requirements have proven to be expensive and burdensome for publicly traded companies. States with Nonprofit Sarbanes-Oxley provisions and the Panel on the Nonprofit Sector recommendations to the U.S. Senate Finance Committee have treaded lightly regarding financial statement certifications and internal control review requirements.

NACUBO survey results show that certifications and internal control review practices lag behind strong governance practices put in place by a majority of institutions. Bossle noted that several follow-up conversations with survey respondents indicate that institutions are employing practices that “make sense” rather than considering the letter of the law per the act.

Panelists revealed a variety of approaches to issues raised by the act. All panelists reported that their boards are taking accountability and transparency issues seriously. In all cases, the NACUBO Advisory Report or guidance from the Association of Community College Trustees were used to assess strengths and weaknesses. Trepidation continues around the certification of financial results. Panelists and attendees felt that fiscal training programs and perhaps expensive processes would be needed. Many relayed that the merits of financial certification by those with fiscal accountability is hard to dispute, but because higher education does not have the profit motive of publicly traded companies, greater risk areas are campus operations and federal compliance. The most comprehensive example of financial certifications was given by Charles Chaffin at the University of Texas System, which has a goal of 2,000 departments certifying financial results. Chaffin acknowledged that the cost benefit is still to be determined. The general consensus was that higher education should work within its strong governance structures to devise an approach that makes sense.

Regarding governance, the panel addressed confidential complaint mechanisms and audit partner rotation. Many boards hesitate to embrace whistleblowing and feel more comfortable dealing with external auditors. Several attendees said that the generally lower financial risk level in higher education did not support an edict of audit firm partner rotation. Large decentralized research institutions, especially those with hospitals, might have greater financial risk and choose partner rotation. Johns Hopkins discovered that its audit firm was willing to rotate the lead audit partner, but the university chose not to implement internal control requirements per the act. Panelists agreed that a process that prioritizes risk and trains employees on controls mitigates an environment of too many burdensome controls.

What a President Wants

Calm, trustworthy, ethical, good at negotiating, sensitive to public opinion and internal pressure, knowledgeable about the academy and sound business practices—these were some traits that three presidents, all from different institution types, described as essential for a chief financial officer.

Presidents Karen Holbrook from Ohio State University, Stephen Pannill from Cecil Community College, and William Trout from Rhodes College gave candid remarks regarding CFO roles and expectations. Topics ranged from how the CFO fits in with the rest of a presidential staff to how CFO responsibilities are changing.

Their comments made clear that the CFO is a key staff member with a broad range of responsibilities that requires adaptability and flexibility. In addition, presidents are relying on their CFOs to guide them through difficult financial issues, be innovative in matching resources with strategic plans, and work with a variety of constituents including trustees, the campus community, and representatives from local and state governments. CFOs need to be reflective, customer-focused, and nimble. As one panelist put it, CFOs are “no longer the firefighters, but the architects.” Another noted that aspects most critical to the CFO role are “the artful management of resources, the ability to interpret and translate information to a number of different groups, and flexibility.”

The presenters commented on how to prepare and continue to advance CFOs in these roles. Broaden your exposure and experiences—not only will this make you more effective, it will broaden your appeal. Be a good teacher—teach a class or take the time to train others in your area; select committee assignments that are not typical; visibly and publicly show your range to avoid stereotypes; foster creativity; and increase your forecasting skills. Panelists noted the growing trend of CFOs being recruited from outside of higher education. Business practices are close to what higher education is now doing, but an understanding of faculty thinking is extremely important.

Investigate Before You Renovate

Students who live in campus residence halls tend to participate on campus more, are more likely to be satisfied, and are more likely to graduate. Armed with that information, Luther College in Decorah, Iowa, performed a facilities audit and surveyed students to find out how the institution could improve its residence halls. Working with an architectural firm, the college assessed needs through focus groups and interactive programs. Session attendees simulated this process by brainstorming in small groups to pinpoint areas that they thought students would want to see upgraded.

Some of the results of that brainstorming were wireless technology, security, air conditioning, bathrooms, and cell phone service. What administrators at Luther found when they collected students’ input was that student priorities were different from what the administration had anticipated. Whereas administrators expected the list to include IT, bathrooms, and laundry rooms, students actually cited private rooms, corridors, and social spaces as needing the most attention. Laundry facilities were last on the list and bathrooms were not even mentioned. Getting student input was critical to the success of the renovation projects. In addition, the level of institutional commitment to creating spaces that are welcoming needs to be high.

Take the Lead on IT Security

Thanks to Platinum Sponsors

NACUBO gratefully acknowledges the support of the annual meeting’s Platinum Sponsors:

American Campus Communities
ARAMARK Education
Follett Higher Education Group
Office Depot
Sodexho Campus Services
SunGard SCT

The imperative for IT security is clear: More than a dozen universities have already had data disclosures this year. Strategies must be developed for protecting data, detecting security breaches, and responding. Establishing effective strategies requires hands and minds beyond the IT department. Those were the key messages during a presentation delivered by Robert Clark, director of internal auditing, Georgia Institute of Technology; Mohammad Qayoumi, vice president for administration and finance and CFO, California State University, Northridge; and Jack Suess, chief information officer, University of Maryland, Baltimore County.

The need for collaboration across campus was evident from all of the IT security organizational challenges cited by the speakers:

  • Tension between the academy and the enterprise.
  • Lack of adequate knowledge about the nature of IT issues.
  • Over-reliance on techno-centric solutions.
  • IT security not recognized as a shared responsibility.
  • Security viewed as counter to organizational productivity.
  • Reactive responses versus a systemic framework for sustainable solutions.

IT security is not an IT issue, it’s a management issue, the speakers emphasized. Responsibility for IT security needs to be shared and addressed throughout the institution, not delegated to the IT staff. Clark, Qayoumi, and Suess encouraged CBOs to become actively engaged in IT issues regardless of their technology knowledge level—and to go a step further and take the lead on a campuswide IT security initiative. Partner with the provost, CIO, and chief auditor, they urged CBOs, to make IT security a campus priority; and have a strong voice on the team. Regularly review risks on campus, and adjust security policies and procedures as needed. Integrate effective security practices into the institutional culture.

Be Clear

See You in Hawaii
Join NACUBO, APPA, and SCUP for The Campus of the Future: A Meeting of the Minds, July 8–11, 2006, in Honolulu. Find information and updates at

“Make each employee believe his or her success is your starting point.” That’s how keynote speaker Marcus Buckingham described the hallmark of a good manager. “The best managers have a natural ability to see very small increments of growth in someone else. Great managers see people as an end unto themselves,” he explained. Thus, the key thing good managers know is that they must find out what is unique about each person and capitalize on it. “Don’t ignore weaknesses,” he advised, “but know that productivity comes out of a person’s strengths.”

A leader’s role, on the other hand, is to rally people to a better future, Buckingham said. This requires deep optimism. Good leaders “find out what is universal and capitalize on it,” he said. “You have to cut through our differences and tap into the things we all share.” For higher education, the most relevant thing is the shared fear of the unknown. Buckingham said a leader must use clarity to take that fear and turn it into confidence. He outlined the questions that get at the points of clarity:

  • Who do we serve? Identify the one core group you want to serve. He used the example of Best Buy, which targets the “smart but confused” consumer.
  • What is our core strength? Figure out what your institution has that will enable you to overcome obstacles. “People” is too vague—you need to be specific.
  • What is our core score? Pick one metric—and only one—to track your progress into the future.
  • What actions can we take today? Cut through vague words like “priorities” and “strategies” when presenting actions you want people to take.

Buckingham offered three ways to achieve this clarity:

  1. Muse. Take time out to reflect. Great leaders spend time thinking about excellence. “Studying failure doesn’t make you achieve excellence,” he pointed out. For instance, studies reveal that in most failed marriages, partners weren’t honest with each other. If we took that premise and concluded that successful marriages hinge on spouses being brutally honest with each other, he joked, that could lead to trouble for many husbands!
  2. Pick your heroes with great care. Use heroes as a strategic clarifying weapon; hold someone up as an example.
  3. Practice. Repeat the words, delivery, and so forth you want to use to state where you’re going. Don’t worry about being repetitious—that’s how your message will get through.

Coming Together for Community Day

Research Universities

Maintaining the Innovation Edge

Research universities have an increasingly important role to play in today’s global economy. Competition in higher education is increasing as other countries work to improve their institutions and attract talent that used to gravitate to American universities, just as the U.S. economy and the world are becoming more interdependent and centers for innovation are developing across the globe. Research universities need to anticipate and perhaps provoke change, not just react to it, according to G. Wayne Clough, president of the Georgia Institute of Technology, who opened the Research Universities Community Day with a heartfelt call for universities to “stand and be counted.”

In laying out an agenda for universities to keep America at the forefront of innovation, Clough drew on his work as co-chair of the National Innovation Initiative of the Council on Competitiveness and chair of the Committee on the Engineer of 2020 for the National Academy of Engineering. Nationally, we need to rebuild an atmosphere of trust among the federal government, corporations, and universities, he said, and focus on three areas—talent, investment, and infrastructure—that are necessary to foster innovation. Universities have a role in all three areas.

How can business officers make their institutions more adaptable and encourage innovation? Clough had several suggestions:

  • Increase the use of technology to improve student services, which saves money and increases efficiency.
  • Increase opportunities for research and study abroad for students.
  • Support interdisciplinary studies, because collaboration is at the heart of innovation.
  • Set an example by modeling sustainable facilities.
  • Transform the physical environment to encourage interdisciplinary collaboration by clustering buildings around topics, not disciplines.
  • Act as a business incubator.
  • Contribute meaningfully to economic development, which will build public support for the university.

Chief financial officers are integral to the success of these endeavors, said Clough. The institution will need to broaden and diversify its income stream, requiring greater financial acumen on the CFO’s part. The business officer will also need to be more outgoing and willing to get involved as greater interaction between the administrative and academic sides becomes imperative.

Small Institutions

The Price Is Right

In “Managing Price Levels to Increase Net Tuition Revenue,” a small institutions Community Day session, representatives from three colleges with relatively high tuition and discount rates outlined strategies for implementing price reduction. Albertson College of Idaho, Caldwell, suffered from the perception that the college was not affordable, despite having a discount rate of around 54 percent. Muskingum College, New Concord, Ohio, had excess capacity but was experiencing enrollment decline. At Wells College, Aurora, New York, low enrollment and retention led the board to believe that the institution was a good candidate for a tuition reduction strategy.

Goals of the strategy included improving net tuition revenue, increasing name recognition, and narrowing the gap between prices of independent colleges and state-funded institutions. Panelists noted the need to be consistent and to promote the message of affordability.

Muskingum’s enrollment grew by 31 percent in the five years subsequent to reducing tuition from $13,850 to $9,850. Net tuition revenue increased by an average of 13.4 percent annually during that time. James Wilson, vice president and chief financial officer, emphasized the importance of getting community support and buy-in from faculty and staff.

Wells hired marketing and enrollment management consultants for assistance through the process. In the year after Wells decreased tuition by 30 percent, the number of first-year students increased 44 percent. A big part of the strategy was to position Wells with competitors without lowering the price so much that it raised perceived quality issues.

Two years after decreasing the tuition price level by 30 percent, Albertson hasn’t achieved the enrollment growth that was hoped for. In retrospect, said Chief Financial Officer Chris Anton, the pricing was communicated to prospective students late in the game.

Panelists offered these key pieces of advice:

  • “Know what the marketplace thinks of you,” said Diane Hutchinson, vice president and treasurer at Wells. Develop detailed analyses and stick with the format you decide to use.
  • Make sure the admissions staff understands what’s going on, said Wilson; develop a data-driven plan. “If you do have the capacity and can bring on additional students without incurring additional expense, this is a good strategy to consider.”
  • “Communicate with various constituencies in a timely fashion,” Anton emphasized. When price decreases, there is a perception of lesser quality, so media messages need to be crafted carefully.

Comprehensive and Doctoral Institutions

An Even Playing Field

“Athletics is not a business. You’d never run a business like this,” asserted Doug Fullerton, commissioner of the Big Sky Conference, in a comprehensive and doctoral institution session focused on athletics. “[Athletics] might be business-like, but if anything, it’s a regulated business, one that you cannot close down before it runs its course.”

The panel discussion—in which Fullerton was joined by Daniel Fulks, faculty researcher, Transylvania University, Tom Schelhardt, CFO, University of Northern Iowa, and Debbie Yow, athletic director, University of Maryland—highlighted four points for CFOs to keep in mind in cooperating and communicating with athletic directors.

First, athletic directors need to understand what their budgets are, which includes understanding how much they are spending and the sources of earned and unearned revenue. Ideally, athletic directors and chief financial officers walk through budget scenarios together. Second, athletic directors must understand what total costs and net costs are to the athletic department, which requires an understanding of unearned income and money that the athletic department gives back to the university. Third, CFOs and athletic directors need to agree on what kind of athletic program they are trying to run, which includes determining peer groups, recruitment strategies, and types of scholarships. Finally, once these discussions occur, athletic directors and CFOs need to outline their goals and commit to the athletic program and the related costs. Athletic departments won’t run efficiently otherwise.

One theme panelists reiterated was the necessity of providing realistic numbers and expectations to athletic directors and recognizing that, good or bad, athletics become part of an institution’s brand and image. Having the appropriate conversations is the only way to ensure that the image of athletics is consistent with that of the university as a whole.

Community Colleges

Catering to an On-the-Go Crowd

Following the strong programming for community colleges on Community Day, NACUBO and SodexhoUSA hosted a forum to better understand the commuter college market, which most large food service and facility providers have yet to penetrate. More than 20 participants representing commuter colleges, four-year institutions, and service industries gathered to discuss these questions: How is outsourcing perceived at commuter colleges versus four-year institutions? Will a campus card work, allowing students to eat at locations both on and off campus? What are the biggest challenges for commuter colleges five years ahead? What keeps your president up at night?

Participants emphasized that commuter colleges are selective about undertaking service-provider contracts because they cannot afford to lose money on them. Students come and go daily. As a result, it appears that food-service companies looking for a reasonable profit tend not to be seriously interested in the two-year college market. General session speaker Diana Oblinger’s remarks about Net Generation characteristics were mentioned frequently in conjunction with the demand for socializing and computing. For instance, students want the convenience of brand name grab-and-go food instead of hot, plated meals, and Internet access simultaneously. Some students want to avoid traffic congestion or don’t want to lose their parking spot so they prefer to stay on campus all day. A stored-value card wouldn’t necessarily be beneficial given the parking difficulty in most cases and limited availability of nearby restaurants in others.

Participants surmised that five years from now, the average age of commuter college students will likely be lower. Employers will seek workers with associate degrees for positions that once required bachelor degrees. Reduced state support will prompt commuter colleges to consider outsourcing mail, food, and other services to survive. Students can and should be hired inexpensively to suggest creative solutions for improving the cafeteria, parking, and other operations.

Among the challenges keeping presidents—and perhaps some business officers—awake are renovating aging facilities to serve the Net Generation population, establishing and funding new programs, finding qualified faculty, providing child care economically, retaining students who have time conflicts, and growing strategically.