Understanding strategic finance and strategies for dealing with scarce resources, presentations for an all-day workshop. Audience is executive officers of a university system
2. Agenda
Introductions • Introductions
Strategic Finance
Strategic Finance • Strategic Finance
Strategic Finance
Most Important
Lunch • What is Most Important?
Discussion
• Lunch
L h
Strategic Change
Hard Work • Continue discussion
Lessons Learned
Lessons Learned
• Options f Strategic Change
for h
• Doing the Hard Work
• Lessons Learned
3. Ground Rules
Introductions • It’s your show
Strategic Finance
Strategic Finance
Most Important • Everyone is equal
Lunch • No relevant topic is excluded
Discussion
Strategic Change • No discussion is ended
Hard Work
• Respect each other and the time
Lessons Learned
Lessons Learned
• Have fun
4. Goals for the Day
Introductions • Understand strategic finance
Strategic Finance
Strategic Finance
Most Important
as a context for Task Force
f T kF
Lunch work
Discussion • D l
Develop an action plan for
ti l f
Strategic Change
Hard Work
the Task Force
Lessons Learned
Lessons Learned
5. USC Task Force Goals
Introductions • More students, especially
Strategic Finance
Strategic Finance
Most Important
South Carolinians
S h C li i
Lunch • Better affordability
Discussion
Strategic Change
• Better accessibility
Hard Work • Better efficiency
Lessons Learned
Lessons Learned
• Better effectiveness
9. And there’s consensus on that
Introductions To increase the percentage of
Strategic Finance
Strategic Finance
Most Important
Americans with high‐quality
A i i h hi h li
Lunch degrees and credentials to 60
Discussion percent by the year 2025
percent by the year 2025
Strategic Change
Hard Work
Currently: 39%
Lessons Learned
Lessons Learned Lumina Foundation for Education
Lumina Foundation for Education
“More students, especially South Carolinians”
10. Knowledge‐Economy Work Force
Introductions
Strategic Finance
Strategic Finance
Most Important
Lunch
Discussion
Strategic Change
Hard Work
Lessons Learned
Lessons Learned
12. State Financials: Gaps could approach 7% of spending
‐ “The Lost Decade” of state funding
The Lost Decade of state funding
Introductions
Strategic Finance
Strategic Finance
Most Important
Lunch
Discussion
Strategic Change
Hard Work
Lessons Learned
Lessons Learned
Source: Don Boyd (Rockefeller Institute of Government), 2009 *
13. Recent Revenue/Expense Trends
Introductions • State funding: 3%
Strategic Finance
Strategic Finance
Most Important • Tuition: 3% above CPI
Lunch • Student aid: 4%
Discussion
Strategic Change
Hard Work
Lessons Learned
Lessons Learned
• Expenditure per student :
p p
1‐2% above CPI
14. Our Business Model is Not Sustainable
Our Business Model is Not Sustainable
20 Years of Trends
3
2.5
AFFORDABILITY GAP
2
Tuition
Expend/FTE STATE FUNDS GAP
1.5
State Approp
CPI
1
0.5
0
Start Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20
15. We cannot go on this way
Introductions
Strategic Finance
Strategic Finance
Most Important
Lunch
Discussion
Strategic Change
Hard Work
Lessons Learned
Lessons Learned
ome,
Hitting Ho
Reindl
16. What is Strategic Finance?
Introductions Strategic finance is aligning
Strategic Finance
Strategic Finance financial decisions—regarding
financial decisions regarding
Most Important
Lunch revenues, creating and
Discussion maintaining institutional
maintaining institutional
Strategic Change
Hard Work assets, and using those
Lessons Learned
Lessons Learned assets—with the institution s
assets with the institution's
mission and strategic plan.
In USC Task Force terms: Creating a system that can serve more
students as well or better at an affordable price through increased
p g
efficiency and effectiveness.
18. In other “words” . . .
More graduates,
especially from SC
Introductions
Strategic Finance
Strategic Finance
Most Important
Accessible
Lunch
Discussion Efficient
Affordable
Strategic Change
Hard Work Effective
Lessons Learned
Lessons Learned
19. The New Bottom Lines
Core Issue Balanced Scorecard Good to Great
Kaplan and Norton/et al Collins/Staisloff/et al
Is the organization doing Quality, effectiveness, Mission
the right things and doing customer satisfaction
them well? What s the cost/benefit of improvement in this?
What’s the cost/benefit of improvement in this?
Does the environment Financial stability and Market
want/need what the strength
organization does? YES
Is the organization Operating efficiency, Margin
ensuring that revenues
i th t internal processes
i t l
exceed costs? What’s the cost/benefit of improvement in this?
Is the organization Learning and growth Momentum
investing in its own future?
What’s the cost/benefit of improvement in this?
20. Task Force Charge/Bottom Lines
(which elements of our charge are most relevant/powerful?)
( h h l f h l / f l?)
Introductions Mission/Quality
Strategic Finance
Strategic Finance Programs and their locations
Programs and their locations
Most Important Distance education
Lunch Accreditation and regulation
Demand analysis
Discussion
Market
Strategic Change
Efficiency
Hard Work Student capacity by campus, by program
Lessons Learned
Lessons Learned Ease of transfer
Ease of transfer
Tuition rates; tuition/state revenue mix
Data consistency
True cost of attendance
Learning
Faculty and staff workforce
Campus contribution to economic value
Faculty governance
F lt
21. Importance of ALIGNMENT and Tracking Progress
p g g
Strategic Strategic
Finance Goals
(Momentum, (Mission,
Margin) Market)
Strategic
St t i
Communication Indicators
Information
Analysis
Course Correction
Actions
22. Task Force Strategic Indicators
(examples)
( )
Introductions • More students
Strategic Finance
Strategic Finance – Enrollment growth by in/out of state
Enrollment growth by in/out of state
Most Important • Affordability
Lunch – Net tuition/median household income
Discussion – Total financial aid/Total tuition revenue
l fi i l id/ l ii
Strategic Change
• Accessibility
Hard Work
– Enrollment growth by race, income, transfer
Lessons Learned
Lessons Learned status
• Efficiency
– Cost per SCH by program, by site, by delivery
• Effectiveness
– Retention and graduation rates
23. From Steve Jobs to YOUR Job
Introductions
Strategic Finance
Strategic Finance • 20th Century was one of
Century was one of
Most Important
Lunch technological innovation
Discussion
Strategic Change
Hard Work
Lessons Learned
Lessons Learned • 21st Century must be one of
Century must be one of
institutional innovation
David Wiley, BYU, http://davidwiley.org/
28. Current Institutional Responses
Current Institutional Responses
Introductions
• Increase efficiency
Increase efficiency
Strategic Finance • Increase administrative productivity
Most Important
Lunch • Leverage stimulus money
Leverage stimulus money
Discussion
Strategic Change
Hard Work • APLU survey just out: “The survey
Lessons Learned
results indicate that "universities are
striving to protect th
t i i t protect the core education
t t d ti
mission of their institutions.”
29. Missing in Action?
g
Introductions • Progress to strategic goals
Strategic Finance
Strategic Finance
Most Important • Growth
Lunch
Discussion • Quality improvement
Quality improvement
Strategic Change
Hard Work
• Academic productivity
Lessons Learned
Lessons Learned
• Innovation
I ti
• Development of a sustainable
business model
David Wiley, BYU, http://davidwiley.org/
30. What do institutions need?
Introductions • Growth by substitution
Strategic Finance
Strategic Finance
Most Important • Greater cost containment
Lunch
Discussion • Greater productivity
Greater productivity
Strategic Change
Hard Work
• Clear expectations
Lessons Learned
Lessons Learned
• Innovation
I ti
• LEADERSHIP
32. Cost Effective Cost Reductions Productivity
Cost Effective = Cost Reductions + Productivity
Productivity
Cost reductions = improvements
improvements =
p
Increase in output
Permanent structural (learning, research, jobs),
( g, , j ),
reductions in spending
d ti i di without changing
admissions or spending
32
*
33. Examples of Cost Reductions
Examples of Cost Reductions
• Reduce high cost/low demand programs
g / p g
• Address retirement eligibility
• Reduce growth in health care cost
• Consolidate administrative functions
• Reduce spending on non‐revenue producing
athletics
thl ti
• Restructure debt
• Restructure faculty compensation and rewards
Restructure faculty compensation and rewards
(use turnover to substitute teaching faculty for
research faculty)
33
*
34. Examples of Productivity Improvements
p y p
• Increase in student retention and graduation
Increase in student retention and graduation
• Reduce excess credits for the degree
• Increase credit‐by‐exam
di b
• Increase distance‐based learning programs
• Increase proportion of graduates who meet
g
goals for critical learning
g
• Increase proportion of students who remain –
and are employed in state
and are employed – in state
34
*
35. Building Cost Effective Institutions
Building Cost‐Effective Institutions
Introductions
• Reduce administrative costs
Reduce administrative costs
Strategic Finance
• Tackle ‘automatic’ cost
Most Important
Lunch increases
Discussion
Strategic Change
• Reengineer curricula
Hard Work
Lessons Learned
• Reengineer course delivery
• Eliminate, innovate, or
, ,
consolidate high cost/low
demand programs
p g
slide 35
*
36. Learning Productivity
Learning Productivity
• Students come to college fully
g y
Introductions
Strategic Finance
prepared (no remediation)
Most Important • Accelerated learning
Lunch • Minimize “rework” and reduce credits
Discussion
Strategic Change
to degree
Hard Work • I
Improve rates of course completion
t f l ti
Lessons Learned • Encourage use of assessment/”test
out options
out” options
• Learning in the workplace/credit for
experience
p
slide 36
*
37. Improving Affordability & Choices
Improving Affordability & Choices
• Commit to average undergraduate
Commit to average undergraduate
Introductions
Strategic Finance tuition growth no more than CPI, with
Most Important increased need‐based aid
Lunch
Discussion
• Allow differential tuitions for high
Strategic Change cost/demand programs
Hard Work
• Experiment with low priced options
Lessons Learned
• Greater on‐campus employment
opportunities for students
• Reduce time to degree
37
*
38. Implications for Leaders
Implications for Leaders
Introductions
• Re‐imagine your business model
Re imagine your business model
Strategic Finance to create long‐term sustainability
Most Important
Lunch
• Support change in approach to
Support change in approach to
Discussion budget building
Strategic Change – Examine old habits and conventional
Hard Work
wisdom about costs
Lessons Learned
– Focus on big picture, and progress
on achieving strategic goals
hi i i l
– Commit to institutional innovation
38
*
39. Where are you headed, and how will you get there?
y , y g
Strategic Strategic
Finance Goals
(Momentum, (Mission,
Margin) Market)
Strategic
St t i
Communication Indicators
Information
Analysis
Course Correction
Actions
40. “It is not necessary to
Introductions
Strategic Finance
change. Survival is not
h S i li t
Most Important
Lunch
mandatory.” y
Discussion
Strategic Change
Hard Work W. Edwards Deming
W Ed d D i
Lessons Learned
David Wiley, BYU, http://davidwiley.org/
44. Resources
• HITTING HOME: Quality, Cost, and Access Challenges Confronting Higher Education
Today, Travis Reindl, www.makingopportunityaffordable.org
• Strategies for Tough Times, Dennis Jones and Jane Wellman, November 19, 2009
45. CAUSES of Strategic Indicators
(brainstorm on flip chart)
( )
Introductions
• Enrollment growth by in/out of state
Strategic Finance
Strategic Finance
Goals/Charge • Net tuition/median household income
Most Important
Lunch
• Total financial aid/Total tuition revenue
Discussion • Enrollment growth by race, income,
Strategic Change
transfer status
Hard Work
Hard Work
Lessons Learned • Cost per SCH by program, by site, by
delivery
• Retention and graduation rates