Higher Education's Top 5 Business Issues
As COVID-19 becomes endemic, colleges and universities continue to grapple with myriad challenges—some due to the pandemic and others that have been developing over an even longer time period. Through focus groups and a survey, NACUBO members identified the top five business issues facing colleges and universities in 2022:
- Supporting and Maintaining the Workforce
- Meeting Students’ Evolving Needs
- Providing a Secure and Modern Technology Infrastructure
- Managing an Uncertain Economic Climate
- Navigating Resource Constraints
These issues—listed in no particular order—demonstrate the current financial and planning challenges confronting higher education and shed light on how college and university leaders can guide their institutions through necessary transformation.
Tune in to Hear More
Listen as experts in each of these areas delve deeper into the issues on the NACUBO In Brief podcast:
- Managing an Uncertain Economic Climate
- Navigating Resource Constraints
- Providing Secure & Modern Technology Infrastructure
- Supporting and Maintaining the Workforce
- Meeting Students' Evolving Needs (Coming Soon)
1. Supporting and Maintaining the Workforce
Higher education is reliant on people to accomplish its mission, and, as a sector, it employs around four million individuals in the United States. Employment represents approximately 60 percent of institutions’ annual spend.
College and university faculty and staff fulfill diverse institutional needs. Front-line service employees, resident assistants, mental health counselors, and faculty meet students’ needs daily. Researchers make new discoveries, and administrators work to deliver effective and compliant operations. For institutions with medical centers, doctors, nurses, and hospital staff meet patients’ needs and train medical students.
Higher education is unable to function without these professionals, yet institutions are struggling to maintain full staffing. NACUBO members identified four distinct and critical issues impacting higher education’s current workforce challenges.
Competitive pay and benefits. Many NACUBO members—in focus groups, the survey, and at association conferences—cited challenges with being able to offer competitive compensation to meet staffing needs. One explained, “We struggle to be competitive. We have asked more from our staff because we can’t always afford to fill open positions, and we have administrative assistant positions receiving significantly less than they could earn at a fast-food restaurant.”
As that member comment alludes, the compensation challenge is not limited to high-prestige faculty or senior administrative positions. Lack of compensation competitiveness for childcare center teachers, bus drivers, police officers, and custodians leads to vacancies that often cannot be filled without paying more. As key services slow due to vacancies, other areas of the institution suffer. For example, when childcare centers cannot remain open, staff and faculty who are parents of young children may take time off work or even resign; when buses run on reduced schedules, students, especially commuters, do not arrive to class on time; and so forth.
Increased turnover and talent drain. Colleges and universities need a consistent workforce to maintain operations and quality of service. Yet, as the job market and increased availability of remote work has prompted some staff to seek other opportunities, institutions have faced retention issues and increased turnover. In a recent survey of higher education professionals, over a third of respondents indicated they were likely or very likely to look for new employment opportunities within the next year. There seem to be costs at every turn: Either increase compensation, potentially at a pace beyond that of revenue growth, or risk the institution’s ability to operate and meet its mission.
This increased turnover, in addition to other national employment trends, is contributing to talent drain. Colleges and universities rely on highly skilled personnel, whether faculty, financial experts, or technically skilled staff who support operations, and as individuals leave institutions and it becomes more difficult to attract new qualified personnel, institutions lose talent.
This loss of talent means it may be more difficult to achieve institutional objectives. A NACUBO member explained, “Due to the ever-increasingly competitive job market, there are fewer young individuals willing to assume the challenges of state employment.”
Telework and hybrid work policies. The pivot to remote work provided increased flexibility for most higher education employees, but now that operations are returning to normal, institutions are dealing with the equity, recruitment, retention, and operational impacts of preserving remote and hybrid work options. One NACUBO member lamented the lack of a telework policy at their institution: “We don’t have one and we are bleeding employees. People want a flexible schedule.” In some states, public institutions have limited remote work options due to state-mandated rules governing state employees, which can further affect those institutions’ ability to recruit and retain staff.
Even at institutions that aren’t impacted by limitations on remote work, leaders are navigating process and cultural challenges related to telework and hybrid work polices. “The shift to remote work during the pandemic created pressure from employee groups to continue with remote work policies permanently. This is a paradigm shift for our institution, and we are uncertain what the short- and long-term impacts will be on service delivery to our students, let alone the work culture at our institution,” one member explained.
Employee morale and well-being. Some NACUBO members expressed concern about how the pandemic and consequent move to remote work impacted institutional culture and employee well-being. One stated, “The stress caused by having to be apart in order to comply with COVID protocols is significant. We lost a sense of community and are working to restore that idea.”
Further, the COVID-19 pandemic and subsequent trends within the national workforce have exacerbated concerns with higher education employee morale and well-being. NACUBO members discussed the difficulty of having to ask some staff to take on more responsibilities due to vacancies because they know it can drain morale and diminish well-being. One said, “Due to the increased turnover in staff, there is some animosity among departments about workloads.”
2. Meeting Students’ Evolving Needs
Although the U.S. higher education sector is diverse, one unifying mission across all institutions is educating students. A primary challenge for university leaders is to continually assess how and how well students are served and how to fund that mission. From a business perspective, two main challenges were cited regarding meeting student needs: being able to enroll more students and meeting students’ essential needs so they can complete their credentials.
Enrollment. When asked what was impacting their enrollment outlook, one NACUBO member cited “a decrease in graduating high school seniors and people moving away from the rural parts of the country.” Projections of high school graduates validate this concern.
Certain geographic regions are experiencing the impacts of these trends more than others. These projections present challenges for institutions that are dependent on tuition revenue to operate and fulfill their missions—especially for institutions that focus recruiting efforts on traditional-aged students. Further, trends show that although more students from low-income backgrounds are enrolling in postsecondary education, college affordability remains a concern for students and their families, as well as for institutional leaders.
Meeting students’ essential needs. Issues with paying tuition are not the only student need business officers cited. One NACUBO member explained, “The majority of students attending our college are from the most underserved populations in higher education. They face challenges each day meeting their essential needs, such as food and housing, thereby creating significant barriers to successful completion of their educational goals.”
Some students entering college today require more supports outside of the classroom to succeed. These services, from mental health counseling to facilitating the growth and maturation of students’ social and professional networks to preparation for life after graduation, ultimately undergird our goal of graduating the next generation of educated citizens. Without these services, students persist and graduate at lower rates, potentially leaving them with the costs of a college education without the benefits of a degree. Institutions need to consistently evaluate priorities and the funding behind them in order to invest in crucial non-instructional services. For example, college presidents consistently rank student mental health services as a top issue, but many institutions have not consistently ensured the funding models to create stronger support for them.
3. Providing A Secure and Modern Technology Infrastructure
Another top issue cited by business officers is the efficacy of the campus technology infrastructure. NACUBO members identified cybersecurity concerns and the cost of investing in and implementing new technologies as top business priorities—both of which have been heightened due to the evolving needs of students and the dynamic workforce challenges.
Cybersecurity. As more institutions experience data breaches, cybersecurity is on the minds of IT and non-IT professionals alike because, as one respondent wrote, technology “continues to evolve and has the ability to shut down operations and erode confidence in the institution.” Yet, risk management and the prevention of and response to cybersecurity attacks come at significant cost to institutions (e.g., cyber insurance, technology and data security personnel).
New technology costs. The move toward greater use of online and hybrid instruction models will necessitate investment in new technologies to ensure high-quality educational experiences for students. In addition, NACUBO members cited the importance of data-informed decision-making—to “reduce the risk of bad decisions,” to be in a “financial position to be equitable” in supporting student success efforts, and to effectively and efficiently allocate limited resources. Members explained they are currently using only “slivers of data,” but that leveraging analytics would require investments in new technologies and personnel with data skills, many of whom are looking for positions at other institutions or outside of higher education.
4. Managing an Uncertain Economic Climate
Colleges and universities are facing rising costs due to inflation, supply chain constraints, rising interest rates (which can make debt-funded projects costlier), and increasingly complicated compliance burdens. “The cost of operating goods and services is increasing at alarming rates, not to mention the costs associated with our facility construction projects,” lamented one NACUBO member.
Both the Consumer Price Index and the Higher Education Price Index are at their highest levels in 30 years, and inflation is top of mind for NACUBO members. One member described this challenge as a “hidden tax” on operations and another explained that, combined with revenue growth limitations (e.g., state restrictions on tuition and fee increases, and challenges with philanthropic donations), there is “a reduction in buying power” and units have been forced “to do even more with less.”
Business officers are working to navigate this new economic climate. For example, when discussing the high cost of food, one explained that they are “leveraging being in a farming community and are sourcing many food items locally—preparing it for freezing to use all year.” Others felt hamstrung; one noted that families also are impacted by rising costs, recognizing the hardship of continuing to increase tuition and fees to make up for increased institutional costs. Another shared, “We are discussing what services we currently provide can be eliminated in order to reduce costs, but this is a very difficult conversation.”
5. Navigating Resource Constraints
Across the diverse higher education sector, resource constraints vary widely. Community colleges, Historically Black Colleges and Universities (HBCUs), Minority Serving Institutions (MSIs), private liberal arts institutions, career or technical colleges, regional public institutions, and research universities may face different resource concerns and constraints due to their funding models and student populations served. Students from historically underserved populations tend to attend institution types most affected by funding disparities.
Although stimulus monies awarded to help institutions navigate the COVID-19 pandemic served as a temporary support for higher education, many public institutions are challenged with historic state funding constraints. Tuition-dependent institutions (the vast majority of higher education institutions) face ever-present cost increases that must be passed to payers in the absence of other revenue sources, but risk pricing out students and families. Institutions with academic medical centers, athletics, and student housing and dining services faced large losses during the COVID-19 pandemic that were not always offset by federal and state aid. Private support for higher education is often being cited as an alternative funding option, but it disproportionately benefits some institutions over others.
Research funding, also concentrated within a small number of institutions, is often restricted and may come at an additional cost to the institution. This leaves institutional leaders in a tight spot—the “easiest” form of unrestricted revenue to support the mission is student tuition and fees, but it comes at the cost of affordability and may run counter to the institutional mission.
Setting a Path Forward
So how should higher education professionals respond to these challenges? Given the diversity of higher education institutions, there is no one-size-fits-all playbook. Although each institution will need to have a unique plan customized to their culture and needs, higher education can move forward with a clear focus on mission, values, and institutional culture, buoyed by data and agility.
Colleges and university leaders should embrace data tools and analysis, potentially in partnership with other institutions and supportive national associations, to continually evaluate their portfolios, the associated revenues and costs, and their connection to institutional mission. Data alone should not determine the course of action but instead should serve as a valuable component of decision-making, as colleges and universities maintain human- and mission-centered work. Higher education is a people-focused business—the people institutions serve and the people who provide the services—and decisions and priorities should reflect this. As champions of data-enhanced decision-making, board members, presidents and chancellors, and other administrators, faculty, and staff can help institutions to thrive and achieve their missions: preparing students, generating new knowledge, serving communities, and more.
Ultimately, the solutions to the top business issues challenging the sector are likely as complex and diverse as institutions themselves, but by focusing on higher education’s core ideals, working together within and across institutions, and embracing change, we will ensure the sector thrives.
Download the Handout
Share Higher Education's Top Five Business Issues of 2022 with this printable handout.
In addition to keeping our annual projects and programs attuned to these challenges, NACUBO is helping colleges and universities tackle them in myriad new ways:
With support from Ascendium Education Group, NACUBO has made available six complimentary student-success training resources to help campus employees understand the challenges that students face tied to socioeconomics, status, race, gender, religion, or other factors, so they are better prepared to respond and support students.
- Module 1: Understanding and Overcoming Implicit Bias
- Module 2: Understanding and Addressing Systemic Racism
- Module 3: Barriers Facing Today's Students
- Module 4: Pathways to Support Student Success
- Module 5: Preparing Today for the Students of Tomorrow
- Module 6: Words of Wisdom—Practical Approaches to Improving Equity in Higher Education
Rethinking the Higher Education Workplace in an Era of Transformation, NACUBO's January 2022 State of Higher Education Series project, provides a brief and slides to help members lead conversations on campus and to put the national data and insights into context.
NACUBO is collaborating with several other associations:
- Together with EDUCAUSE, we will explore the concept of institutional resilience to ensure colleges and universities are ready and capable to meet the challenges of future crises.
- Together with AASCU, we are convening chief academic officers and chief business officers to help them build practical tools to achieve equitable student success while acknowledging the unique economic challenges and opportunities for regional public universities.
- Together with AACRAO and CIC, we are offering the 2022 Institute for Chief Academic Officers with Chief Financial and Chief Enrollment Officers to promote effective teamwork in order to align academic programs, business models, and student goals for sustainable and mission-centered excellence at small, private institutions.
Additionally, $3.8 million in grant funding is supporting a NACUBO study with 26 institutions that enroll high percentages of typically underserved students, including community colleges, small, rural institutions, and small- to mid-size regional public institutions, with a goal to develop strategic finance models that prioritize and sustain student equity, success, and completion initiatives.
Coming in Fall 2022, a new NACUBO Strategic Higher Education Finance and Planning self-paced online course will help college administrators build strategic finance knowledge and skills with modules focused on—
- The Finance Leadership Role in Strategic Planning
- Making Data-Informed Decisions to Support Institutional Mission and Strategy
- Revenue and Resource Allocation in Support of Mission and Strategic Goals
- Strategic Financial Leadership and Institutional Success
This brief is a part of NACUBO's State of Higher Education series, which asks stakeholders to consider some of the higher education sector’s more pressing issues and to take actions to preserve and enhance the value of a postsecondary degree.
NACUBO thanks Katie Walker, executive director of financial planning and analysis at the University of Virginia, for her work in compiling this piece, as well as the many members whose responses informed this work.
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