2017 HIGHER EDUCATION OUTLOOK Leadership, Labor Cost, External - - PDF document

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2017 HIGHER EDUCATION OUTLOOK Leadership, Labor Cost, External - - PDF document

Feb 18, 2023 335 likes •548 views

4/18/2017 @BKDHigherEd 2017 HIGHER EDUCATION OUTLOOK Leadership, Labor Cost, External Environment & Resources April 18, 2017 @BKDHigherEd 1 4/18/2017 TO RECEIVE CPE CREDIT Participate in entire webinar Answer polls when they are

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@BKDHigherEd @BKDHigherEd

2017 HIGHER EDUCATION OUTLOOK

Leadership, Labor Cost, External Environment & Resources

April 18, 2017

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@BKDHigherEd

  • Participate in entire webinar
  • Answer polls when they are provided
  • If you are viewing this webinar in a group
  • Complete group attendance form with
  • Title & date of live webinar
  • Your company name
  • Your printed name, signature & email address
  • All group attendance sheets must be submitted to training@bkd.com within 24 hours of live

webinar

  • Answer polls when they are provided
  • If all eligibility requirements are met, each participant will be emailed their CPE

certificates within 15 business days of live webinar

TO RECEIVE CPE CREDIT

Nick Wallace, CPA

Director nwallace@bkd.com

Adam Smith

Director asmith@bkd.com

Kimberly Marshall, CPA

Senior Manager kjmarshall@bkd.com

Makayla Matheson, CPA

Senior Manager mmatheson@bkd.com

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@BKDHigherEd

  • Review survey results & insights on the following areas surveyed
  • Leadership
  • Labor cost
  • External environment
  • Resources & allocation

AGENDA

@BKDHigherEd

  • More than 230 respondents
  • 50/50 split of private vs. public schools
  • Four surveys sent throughout year
  • About 10 questions each

ABOUT THE SURVEY

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@BKDHigherEd

LEADERSHIP

Address Tough Decisions

@BKDHigherEd

LEADERSHIP – EXPECTED CHANGES & DESTABILIZATION

  • 62% of those surveyed

agreed or strongly agreed they were going to face a period

  • f time where

significant, hard to replace faculty & staff were going to require replacement

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@BKDHigherEd

  • Key question – what will you do to sustain leadership needed to

navigate destabilization ahead amid expected leadership changes?

  • One helpful scenario for navigating disruption due to key leadership

changes is having great leaders who communicate & manage well together

SHARED GOVERNANCE

Level of satisfaction with Shared Governance System

@BKDHigherEd

  • Private universities were more likely (60%) to

have satisfactory systems of shared governance than public universities who agreed they had satisfactory systems at only 55% of the schools

  • But what about the other 40% – which camp is

your institution in? How can you impact this issue by helping maintain a good system or getting a bad system on track?

SHARED GOVERNANCE

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@BKDHigherEd

Reinvigorating Shared Governance*

  • Questions for CFOs & their advisors
  • What is the tone of meetings when financial information is shared & faculty are

present or represented?

  • Does timing of distribution of financial information allow time for

deliberation/consultation with faculty (especially when the news isn’t so good)?

  • Do the financial reports speak the language of the faculty? Are they

understandable?

  • Is the CFO accessible to faculty to promote good relationships & collegiality?
  • Has the feedback mechanism for faculty giving voice to issues or concerns been

thought through & tested as a successful system?

SHARED GOVERNANCE

* From AGB Webinar (October 7, 2016) on CFO contribution to shared governance

@BKDHigherEd

  • Most believe strong boards & equally strong board committees are

essential to institutional success

  • Results of the survey shown below demonstrate that almost half (49%)

felt their board committee performance needed improvement

HOW STRONG IS YOUR BOARD?

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@BKDHigherEd

  • Table demonstrates the

survey responses regarding board selection, evaluation & retention

  • Key question – who will

take steps necessary to improve board committee performance & board member selection, evaluation & retention efforts?

HOW STRONG IS YOUR BOARD?

@BKDHigherEd

LABOR COSTS

Managing Your Largest Cost

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@BKDHigherEd

  • Pressures to control costs

are at very high levels

  • Vast majority of

institutions (72%) are intensifying efforts to reduce labor costs

LABOR COST – MANAGING YOUR LARGEST COST

@BKDHigherEd

  • Higher education has many obstacles & hurdles to control or reduce labor costs
  • One of the basic hurdles is having insufficient cost information
  • 63% haven’t analyzed academic costs
  • Nearly two-thirds of respondents have yet to analyze their academic costs & review

corresponding revenues & margins, i.e., specific data by course, professor, program & department

LABOR COST – MANAGING YOUR LARGEST COST

Key Questions:

Who will take the steps to analyze academic program revenues, costs & margins? Once analyzed, what steps will you take to make changes?

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@BKDHigherEd

LABOR COST – MANAGING YOUR LARGEST COST

  • Various strategies being employed by institutions to reduce labor costs
  • Salary freezes were used least to reduce labor costs
  • Cost & price structure of higher education is under scrutiny
  • Calls for greater transparency between cost & price
  • Significant cost differences between programs

Key Question:

As you reduce labor costs, how will you track the effect on academic quality?

@BKDHigherEd

  • Of the institutions surveyed,

73% increased 2017 faculty wages by no more than 2%. No increase was given by 23% of the schools surveyed

  • Compensation increases

have been marginal for several years & in many cases not keeping up with inflation

LABOR COST – MANAGING YOUR LARGEST COST

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@BKDHigherEd

EXTERNAL ENVIRONMENT

Thriving Amid Many Challenges

@BKDHigherEd

  • Job demand
  • Cost containment
  • Revenue enhancements
  • Negative publicity

EXTERNAL ENVIRONMENT – SURVEY FOCUS AREAS

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@BKDHigherEd

  • 53% surveyed said the

industry could do a better job providing academic programs that meet needs of today’s economy

JOB DEMAND – SURVEY RESULTS

Work skills

@BKDHigherEd

  • 95% said that the

industry was either average or needed to do better with cost containment

COST CONTAINMENT – SURVEY RESULTS

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@BKDHigherEd

  • Understand true costs & revenues at various levels
  • School
  • Department
  • Major
  • Class
  • Faculty member
  • Help leaders identify underperforming programs as well as successful

programs

  • Key resource in helping to determine academic offerings, develop

enrollment strategies & assist in resource allocation

COST CONTAINMENT – MARGIN ANALYSIS

@BKDHigherEd

REVENUE ENHANCEMENTS – SURVEY RESULTS FROM ANNUAL OUTLOOK PROJECT

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@BKDHigherEd

  • Analyzing trends – ClientLink
  • Traditional budget-cutting strategies may not be best option
  • New strategies
  • Mission shifts – graduate programs (private universities)
  • Expand – branch campuses
  • Mergers
  • Restructuring/sharing resources

REVENUE ENHANCEMENTS – COPING STRATEGIES

@BKDHigherEd

  • 44% experienced negative publicity in the last 24 months
  • Top two areas
  • Athletics
  • Administration
  • Mitigate risk
  • Ensure comprehensive risk assessment process in place

NEGATIVE PUBLICITY – SURVEY RESULTS

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@BKDHigherEd

RESOURCES & ALLOCATION

Finding Balance Between Financial Sustainability & Mission

@BKDHigherEd

  • Does your financial model achieve

financial sustainability?

  • 42% of respondents to our survey

agree they’re confident about the sustainability of their institution’s financial model through the next 10 years

RESOURCES & ALLOCATION – FINANCIAL MODELING

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@BKDHigherEd

  • Are you fulfilling your

responsibility to lead an intergenerational institution?

  • Many institutions are seeking

new revenue streams. Our survey shows 59% of institutions have engaged in a search for new revenues

  • utside of academic programs

RESOURCES & ALLOCATION – NEW REVENUE

@BKDHigherEd

  • Approximately 12% of

institutions haven’t considered revenue side strategies in their business model

  • How will you organize

& discover new revenue streams?

RESOURCES & ALLOCATION – REVENUE SIDE STRATEGIES

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@BKDHigherEd

  • Key questions
  • Have you reviewed your

programs or prioritized your academic programs to manage program cost?

  • How should program

prioritization be adapted on your campus for maximum positive impact?

RESOURCES & ALLOCATION – PROGRAM PRIORITIZATION PROCESS (PPP)

@BKDHigherEd

  • Institutions are looking for

ways to reallocate their resources & creatively cut

  • costs. If spending cuts aren’t

the answer, what is?

  • Of those surveyed, 90% were

looking for new resources for program budgets

  • 72% were gaining those

resources from reallocated program budgets or from increased program revenues

RESOURCES & ALLOCATION – PROGRAM RESOURCES & ALLOCATING FUNDS

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@BKDHigherEd

  • Institutions have

acknowledged the need to fund capital improvements to stay competitive

  • Of the institutions surveyed,

68% said they have adequate debt capacity for facilities if needed

  • 30% anticipate the capital

funding focus for the next five to 10 years will be on new construction, remodeling existing facilities & deferred maintenance

RESOURCES & ALLOCATION – CAPITAL FUNDING FOCUS

QUESTIONS?

HigherEducation@bkd.com @BKDHigherEd

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The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered BKD, LLP is registered with the National Association of State Boards

  • f Accountancy (NASBA) as a sponsor of continuing professional

education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org

@BKDHigherEd

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  • For questions, concerns or comments regarding CPE credit,

please email the BKD Learning & Development Department at training@bkd.com

CPE CREDIT

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THANK YOU!

FOR MORE INFORMATION

Nick Wallace | 317.383.4000 | nwallace@bkd.com Adam Smith | 260.460.4000 | asmith@bkd.com Makayla Matheson | 210.341.9400 | mmatheson@bkd.com Kimberly Marshall | 630.282.9500 | kjmarshall@bkd.com

THANK YOU!

FOR MORE INFORMATION

HigherEducation@bkd.com @BKDHigherEd