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This guide does not propose any one solution nor a simple checklist for institutions. Rather, we believe that the unique attributes of colleges and universities in the United States are one of the industry’s strengths.

Each institution must examine for itself its mission, structure, strengths, and resources and assure the necessary alignment across these dimensions. Questions, provided by NACUBO members from across the industry, are intended to facilitate discussion. Not all will apply to every institution, and each college or university will need to judge for itself which domains and questions are most useful in exploring current and future options.

The journey is intended for use by college and university leaders—chief business officers, presidents, board members, chief academic officers and others in academe, as well as policymakers who are interested in understanding the operational aspects of higher education’s economic models—to spark and guide critical conversations about their institution’s economic model and the changes necessary to sustain it.

As colleges and universities undertake these self-assessments, institutional leaders will play critical roles in facilitating difficult conversations. We intend that the focus of conversations be on the institutional level. While similar processes might be used to contemplate the future of an academic department or unit, a research center, or even a college within a university, resources found in this guide will center on institutional strategies and futures.


How to Begin?

One way to start the journey is to print out the sets of questions by beginning with the questions about mission. Then distribute copies to constituents and ask them to rank the questions as “Critical,” “Important,” or “Irrelevant.”

Those ranked “Critical” should be the ones that need to be answered for the institution to move forward. They may be hot button issues that have previously been avoided, or they may reflect aspects of the institution have been taken for granted and, hence, assumed to be unchangeable or immovable.

Questions assessed as “Important” should include those whose answers will impact specific directions and may reflect activities already underway.

“Irrelevant” include both those that touch on parameters such as religious affiliation that may not apply to the institution, as well as those whose answers will have little bearing on the actions to be taken.

Ensuing discussion should focus on sharing of constituent rankings and perspectives to gain consensus on the questions to be explored further within the group and with other stakeholders in the college or university’s future.

At the end of the Journey, the institution should have identified the dimensions of its economic model that are non-negotiable and those that it will focus on to transform itself, having answered the “What Are We?” and “What Should We Be?” questions. Then the critical work of development and implementation of strategy begin.

Ideally, this work will be integrated with other assessment and planning work the institution is engaged in such as program review, strategic planning and accreditation self-study. As depicted, the process will be iterative; given the rapid pace of change in the environment external to higher education, colleges and universities will need to regularly review their economic model and adjust to current and pending changes.


Taking the Next Steps

We’ve identified key strategic questions related to our college or university’s economic model, now what? Take the Next Steps


Facilitating Change

  • Plan Ahead – understand and examine your institution’s economic model whether the college or university is thriving, surviving or diving
  • Focus on and create clarity about institutional mission and purpose
  • Develop an aligned leadership team with shared vision to guide, coordinate and communicate the process
  • Establish trust and engage with constituents; focus on the majority – the champions and supporters – while respecting the resisters
  • Share the brutal facts to foster transparency and activate a sense of urgency
  • Intentionally support and utilize the elements of institutional culture that encourage thoughtful examination and critique of the institution’s economic framework and development of creative, effective responses
  • Focus on strategy and innovation; incentivize bold action and remove barriers, tangible and intangible
  • Utilize data and evidence in decision-making
  • Look holistically at the institution, planning for the long-term and mitigating unintended consequences
  • Celebrate short-term wins as steps toward institutionalizing new processes, programs, structures and behaviors
  • Learn from peers – look at others’ successes for inspiration and others’ challenges for learning; share your experiences and solutions for the betterment of the industry


Assessing Sustainability

Metrics abound for measuring college and university performance. With few exceptions, there is widespread agreement that metrics are important. They are routinely used to evaluate finances, budget, space utilization, physical plant, academics, development and other functional areas within institutions.

What matters most is that the organization identifies metrics that are meaningful to its situation and that it nurtures a culture that shares and values data and analytics for strategic decision-making.

Historically much of the data was used simply to describe institutional activities: how many students were enrolled? How efficiently were classrooms utilized? What was the return on investment of endowments? Today colleges and universities are engaging with analytics to predict outcomes to better understand the impact of initiatives and to better inform strategy, particularly that related to institutional outcomes and student success.

Institutional sustainability is the outcome focus of the NACUBO Economic Models Project (EMP). Consequently, metrics used to monitor the institution were culled from a range of sources including rating agencies, accounting firm publications, higher education and accreditation organizations, EAB’s Metrics Compendium, NACUBO research and academic studies.

As can be seen from the array of measures cited in those reference, there is no one metric nor even one set of metrics deemed useful by all. The metrics or dashboards that work for one organization may or may not work for another. And, no single institution has the time or resources to monitor all of the suggested metrics.

What matters most is that the organization identifies metrics that are meaningful to its situation and that it nurtures a culture that shares and values data and analytics for strategic decision-making.

While individual institutions should evaluate those that are most pertinent to their decision-making, a survey by NACUBO of Chief Business Officers participating in EMP focus groups and meetings suggests the following metrics are most useful:

  • Student to Faculty Ratio
  • Facility Utilization Rate
  • Net Tuition and Fees Contribution Ratio
  • Net Tuition Per Student
  • Primary Reserve Ratio
  • Tuition Discount Rate
  • Debt Service as a Percent of Operating Budget

Decreases in any of the first five or increases in the last two may indicate problems and certainly require investigation, particularly when accompanied by other negative indicators, when benchmarked against peers or when part of a trend. Most of this data focuses on hindsight, yielding descriptive analysis; some will generate further insight as they are used to populate predictive models.

In Inside Higher Ed’s 2018 Survey of College and University Business Officers, over half of the respondents – and 65 percent or more of business officers are private, nonprofit institutions – found the following to be “very important” measures of financial health:

  • Net Operating Revenue
  • Change in Unrestricted Net Assets
  • Rate of Net Tuition Growth

Related Content

The Economic Models Project Journey

The Economic Models Project Journey is a tool to assist chief business officers and other college and university leaders in engaging in the critical, and sometimes difficult, discussions at their institutions about their current and future economic models.

Four Key Areas of Business Model

The Journey focuses on four topics that colleges and universities must discuss; it does not provide solutions, as the solutions will be as unique as the institution and must reflect its collective thinking about how best to serve its students and community.

Resource Library

Explore selection of articles, books, podcasts, reports, research papers, and toolkits.