Higher Education's Top 5 Business Issues of 2023

For the second year in a row, NACUBO surveyed its members on the top business issues facing colleges and universities now.

With input from business officers from public and private colleges and universities across the country, NACUBO has identified the following as the most-pressing business issues in 2023:

1. Supporting and Maintaining the Workforce
2. Ensuring Successful Student Outcomes
3. Securing and Modernizing Technology Systems
4. Navigating Affordability and Enrollment Management
5. Meeting Physical Infrastructure Needs

A multitude of political and economic pressures have created headwinds that make complex business office challenges even more difficult to solve. Business officers underscored that they are seeking solutions to each of these issues in a climate of economic uncertainty: Has inflation been tamed? Will interest rates continue to rise? Is wage growth still headed up?

The nation’s political climate also has added to the challenges. In some states, public institutions are responding to new laws or scrutiny related to diversity, equity, and inclusion; socially responsible investing; and more. These economic challenges and political concerns add layers of complexity to already difficult questions.

As the voice of higher education business and finance, NACUBO is dedicated to helping our members understand and navigate these top challenges.

Hear More on NACUBO In Brief

NACUBO’s 2023 Rising Star Award recipient, Katie Walker, assistant vice president for finance at the University of Virginia, joins Liz Clark, vice president for policy and research at NACUBO, to discuss these challenges—and how colleges are strategizing to respond. 

Listen here

Supporting and Maintaining the Workforce

Colleges and universities, which employ nearly four million individuals in the United States, continue to grapple with how to support and retain their workforce. NACUBO members identified two critical issues impacting higher education’s current workforce challenges:

• Providing competitive pay and benefits, including the ability to offer remote and hybrid work opportunities 
• Maintaining a strong workforce (reducing turnover, developing talent)

NACUBO members cited a combination of financial and demographic pressures affecting this area—shrinking budgets, fluctuating student enrollment numbers, and rising costs—that can strain an institution’s capacity to offer competitive compensation packages and adequate support for faculty and staff. The shift to remote and hybrid work models has affected staffing levels and retention policies. These constraints also can make it difficult to attract and retain talented individuals, which can lead to skill gaps within the workforce.

As a result, colleges and universities are deploying new strategies focused on workforce development. These include cultivating collaborative networks, implementing flexible work arrangements when possible, and championing an innovative and resilient culture. Institutions also remain focused on hiring and retaining staff from diverse backgrounds and fostering an inclusive environment.

Ensuring Successful Student Outcomes

Ensuring successful student outcomes is a key pillar of any college or university’s mission. At some institutions, data-informed solutions are being implemented to consider how institutional policies and practices can help more students succeed. Guided pathway initiatives also can help institutions identify problem points and deploy interventions.

These efforts and others can be complicated by the changing needs and expectations of today’s students. Many students are balancing jobs, family commitments, and food and housing needs with their higher education objectives. Ensuring students leave institutions with a degree, credential, or certificate requires higher education leaders to understand the backgrounds of students—especially those from low-income backgrounds—and their strengths and goals, what barriers they face, and what they need to overcome those barriers.

For business officers, the need for these services to support students inside and outside the classroom is driving them to seek new resources for investments in students, faculty, staff, and support structures. In addition to traditional academic advising, tutoring, and career services, institutions are now designing mental health services, veterans’ services, and programs to help manage food and housing insecurity. Further, students increasingly expect institutions to provide greater flexibility in course schedules, more availability of support staff, and more accessible technology and tools.

Securing and Modernizing Technology Systems

Securing and modernizing technology systems continues to be a concern in 2023. Without a technology infrastructure that can evolve and remain secure from threats, institutions are challenged to meet compliance and reporting requirements, protect data, make informed decisions, mitigate reputational risk, and effectively allocate resources.  

The challenges and opportunities to securing and modernizing technology systems include—

Managing cybersecurity and data privacy. In addition to challenges with compromised data and lost revenue, attacks can interrupt operations and impact an institution’s reputation—which can have profound consequences on institutional sustainability and financial stability. Guarding against cyberattacks is expensive, requiring competent staff, daily monitoring, top-of-the-line systems, specialized insurance, new communication channels, and training across the institution.

Revamping legacy systems. Over time, decentralized organizational units supporting distinct research interests and academic disciplines have evolved. Decentralization coupled with the proliferation of customized technology and data use has created silos that impede work. Modernizing infrastructures has resulted in business process redesign challenges. Change efforts must be thorough, but constrained resources impact an institution’s ability to transform.

Artificial intelligence (AI). The use of AI has the potential to expedite certain work tasks, draft certain work products, aid in brainstorming and data use, and more. However, in order to take advantage of these opportunities, leaders will need to ensure appropriate investments in structure and governance for effective and appropriate use.

Navigating Affordability and Enrollment Management

Many NACUBO member institutions continue to aim to increase their enrollments while simultaneously addressing families’ concerns about rising costs of attendance and increasing competition for new students. These issues have become particularly acute as concerns about the “enrollment cliff”—the expected decline in the number of high school graduates entering college—begins to affect campuses. 

Most public and private colleges have addressed concerns about student affordability and competition by increasing their spending on institutional grants, scholarships, and other types of financial aid, particularly for first-time, first-year undergraduates. NACUBO’s 2022 Tuition Discounting Study shows that nearly 90 percent of entering first-time students at private colleges received an institutionally funded grant or scholarship in 2022-23, which covered an average of 60% of the listed tuition and fee price. A separate NACUBO study found that public universities essentially doubled their funding for institutional scholarships and grants to first-time first-year students from FY09 to FY18, and these institutions likely have continued to increase their financial aid budgets in the years since.

Despite these practices, many colleges have seen enrollments stagnate. Meanwhile, some resource-constricted institutions may find it difficult to continue to increase aid budgets. This leads to questions such as—

• What strategies, besides increasing financial aid, might help address student enrollment declines?
• What other revenue sources could be generated to help fund expenses related to navigating enrollment challenges?
• What new retention strategies and other options might be incorporated into financial aid and other efforts to help strengthen enrollment?

Meeting Physical Infrastructure Needs

There are numerous challenges to consider as higher education leaders weigh infrastructure investments in their campuses, whether they are addressing a backlog of deferred capital renewals, planning new construction, or simply keeping up with repairs.

Leaders are striving to ensure that facilities investments are future-focused and deliver on the institution’s mission. Existing challenges like aligning available space with enrollment and strategically allocating resources are further complicated by post-pandemic questions about learning and working modalities. Employees seek flexible workplaces and students today are more open to nontraditional learning modalities such as online or self-paced engagement. The approaching demographic cliff and continued skepticism about the value of a college degree add ambiguity to long-term planning.

Further compounding the decision-making necessary to determine space utilization are the financial implications of continuing to operate a large brick-and-mortar footprint. Faced with competing fiscal priorities and lower enrollments, many institutions made short-term decisions to defer funds from capital to operating budgets. Meanwhile, inflation has soared and the price to repair or replace physical structures in need of revamp or reallocation has increased by 29% in the past year alone, according to Gordian’s “State of Facilities in Higher Education” report.

There also are new challenges related to funding and completing facilities projects. For example, the Biden administration has made historic commitments to incentivize energy efficiency and infrastructure revitalization. However, many of the new benefits are accompanied by labor requirements that may prove especially challenging. Together with high inflation, fluctuating interest rates, and lingering supply chain disruptions, maintaining the physical plant has become more complicated and expensive.

Looking Ahead

In addition to these top concerns, NACUBO members cited other challenges they are navigating. For example, some members report they also are worried about trends in charitable giving and state appropriations for higher education, as well as new and evolving regulatory and reporting requirements.

How will higher education professionals respond to these challenges? Given that no two institutions are exactly alike, business office leaders will need to focus on mission, values, institutional culture, and data to solve them. Ultimately, the solutions will be as diverse as the institutions themselves.

Resources

NACUBO offers the following:

Supporting and Maintaining the Workforce

• This March 2023 NACUBO in Brief podcast episode explores the current “a recruitment and retention crisis” in higher education and the need for flexibility, innovation, and compassion, with a special focus on the CUPA-HR Higher Education Employee Retention Survey.
• 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 offers leadership development opportunities through its NACUBO Fellows program and Emerging Leaders Program.

Ensuring Successful Student Outcomes

• This April 2023 podcast episode looks at the most pressing challenges facing students and what organizations such as TICAS, NASPA, and others are doing to help create positive change.
• This April 2023 webcast shares trends and best practices in reducing the financial, institutional, and emotional risks of declining student mental health.
• This NACUBO brief, Using a Diversity, Equity, and Inclusion Lens With Data, part of our Accelerating Analytics series, is designed to help business officers view institutional data through a diversity, equity, and inclusion lens in areas not previously considered.
• Bold Action Required: How to More Effectively Support Students From Low-Income Backgrounds, a 2021 NACUBO project,considers higher education access and opportunities for students from low-income backgrounds, exploring colleges and universities as engines of social mobility, and calling on leaders and policymakers to understand who these students are and what barriers they face.

Securing and Modernizing Technology Systems

• This February 2023 NACUBO in Brief podcast episode with José Rodriguez, vice president and chief information officer at Pomona College take a close look at José’s “holistic approach” to cybersecurity, opportunities and threats of new AI platforms, and the importance of the human element in information technology.
• This 2023 paper explores why the use of data in decision-making has not become widespread and includes tactical recommendations for higher education leaders who are working to break down data silos and advance the use of data and analytics.

Navigating Affordability and Enrollment Management

• The annual NACUBO Tuition Discounting Study (TDS) measures institutional tuition discount rates and other indicators of institutionally funded scholarships awarded to undergraduates attending private, nonprofit (independent) colleges and universities. An accompanying benchmarking tool provides survey participants with additional TDS data analyses that can help set institutional goals and relevant strategies.
• An October 2023 webcast will examine the strategies chief business officers, chief enrollment officers, trustees, and other campus leaders are implementing to solve the revenue challenges being brought on by changes in enrollment and financial aid expenses. Learn more here.
• NACUBO Advisory Report 2023-01 provides estimation and measurement methodologies that more accurately reflect how financial aid is provided to students at public colleges and universities.

Meeting Physical Infrastructure Needs

• Data-Informed Space Utilization: Cultivating Partnerships, part of NACUBO’s Accelerating Analytics series is designed to support business officers and other institutional leaders in developing data-informed space utilization practices.
• NACUBO's Facilities Management self-paced online microlearning course is designed to offer foundational knowledge and insight into one of the largest administrative units and largest assets operated by colleges and universities.
• The Facilities Stewardship Series, available on demand, provides insights on tools and techniques to understand, reimagine, and reinvest in the physical campus for the greatest benefit to the communities they serve.
• The Facilities Management chapter of College and University Business Administration offers guidance on managing an institution's physical assets and explores the broad array of responsibilities, ranging from planning to construction administration to ongoing maintenance and sustainability.

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.