Next Gen Finance for Higher Education

When it comes to finances, what should colleges and universities focus on? In today’s climate, what’s the right way to plan for a sustainable future?

The concern over institutional closure has grown recently, with the announcement and then reversal of Sweet Briar College’s decision to shut down. A recent Gallup and Inside Higher Ed survey of chief business officers asked financial leaders about their institutions’ sustainability and the likelihood that their institutions may also shut down in the foreseeable future.

The survey gathered responses on the use of different strategies to maintain the financial health of colleges in the coming year. These were the strategies rated most likely to be implemented:

  • Increasing overall enrollment
  • Launching new revenue-generating academic programs
  • Exploring collaboration opportunities for academic programs with other institutions
  • Enrolling more full-pay students
  • Exploring collaboration opportunities for administrative services with other institutions
  • Eliminating underperforming academic programs
  • Reducing administrative positions

According to an Inside Higher Ed article, experts believe that the chief business officers who participated in the survey are not responding to their financial challenges adequately: “Colleges will have to look beyond enrollment increases if they plan to solve deep-rooted financial issues in the sector.”

One of those experts is Rick Staisloff of rpkGROUP, a firm that has provided expert services to NGLC higher ed initiatives, which included conducting a financial study of the Higher Ed Breakthrough Model grant recipients and providing technical assistance to institutions participating in the Breakthrough Models Incubator program. He was quoted in the article as saying:

“I still don’t see the urgency that I would think should be there around the business model in higher education…. We have to push toward more innovation and return on investment, and that doesn’t seem to be evident in the responses.”

Programmatically, NGLC supports innovation in business models alongside new academic models that enable better outcomes at higher quality. But I wondered if the higher ed institutions involved in the Breakthrough Models Incubator (BMI) have that sense of urgency and are putting in place plans that are genuinely sustainable.

So I asked Rick Staisloff what he thought. Here’s what we talked about:

Kristen: The survey results showed that business officers weren’t confident that faculty knew enough about the financial health of their institutions.

Rick: One of the hallmarks of the Breakthrough Models Incubator (BMI) is bringing the right stakeholders together to reimagine the business model. Unlike other reform initiatives that focus on cutting or preserving the existing model, NGLC offers a safe space to reimagine.

Through BMI, institutions are bringing people together who rarely converse let alone act together. At BMI, business and academic leaders engage and think in a holistic way. Their goal is to figure out the “job to be done,” the best response to the job, and how they might change in order to respond. That includes reallocating resources, not just dollars but also people and time. That kind of change will happen in a way that will stick.

Kristen: The IHE article pointed to financial strategies such as increasing enrollment to drive revenue over “unpopular” cost-cutting measures. Why aren’t these strategies sustainable and how can colleges move from “band-aids” to long-lasting solutions?

Rick: The challenge of the current business model is that we fell in love with the buffet model of higher education where more is better. But we’re finding that’s not so good for student success. And it’s also created resource requirements that aren’t sustainable. We need to recognize that the future will be about giving more to less. Institutions will need to consider the match between student demand, what the college can do well, and what produces a sustainable model. That match will drive the mission and financial health of an institution. But we have to decide what that match is.

It’s not easy to change and we have to respect that it’s human nature to preserve what you know. That’s why we have to start with the creation of a shared vision of the future. Once everyone is clear on that, then we can talk about how to get there.

Kristen: One BMI participant, James Koelbl of the University of New England, just wrote The Brink of Closure about a prior experience as a faculty member at a different institution, where his college, which was part of a large private university, was given a year to change or it would be closed. His experience ties right into this conversation because that threat of closure wasn’t enough to motivate the college to change and the university president shut it down. A lack of vision about how the college could become better by doing things differently stymied any half-hearted attempts from taking root or making a difference.

Rick: That vision is essential for change. Reinvention of breakthrough models is a change process. It’s very personal and emotional. But that doesn’t let us off the hook.

Kristen: And that’s what BMI is about—bringing people together to create that vision, and then building an academic model and a business model around it. Are the BMI institutions on the right track?

Rick: The BMI projects are more of a pilot, set up to demonstrate what good looks like. They aren’t hitting any of the roadblocks brought up in the survey. At scale, across an entire institution, is when those roadblocks come into play. The projects are modeling what they ultimately believe is needed at the institution. BMI creates space and gives them support and expertise to do that.

Success for higher ed depends on linking things together that we’ve kept separate, namely the business model with student success, the chief academic officer with the chief financial officer, by growing the circle at the table and being holistic about what a university is.

After reflecting on my conversation with Rick and the lessons from James Koelbl’s experience with closure, it seems to me that there are a few critical conditions necessary for a sustainable plan for the future, and these conditions have little to do with money:

  • A positive, shared vision of the future
  • Strong institutional leadership to build that vision
  • Business leaders and academic leaders working together to identify solutions that align with that vision
  • Attention to the human, emotional aspects of change, from the personal goals and fears of students, faculty, and administrators, to the prevailing institutional culture and orientation toward change


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