Colleges & Coronavirus - Time to Be Proactive What a College - - PowerPoint PPT Presentation

Colleges & Coronavirus - Time to Be Proactive

What a College Should NOT Do During a Recession

Virtual Discussion Series: Session #1 April 8, 2020 2:00-3:00 PM EST Supporting Analysis Slides Paul N. Friga, Ph.D. www.abc-sights.com

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Overview

Context

• The Coronavirus (COVID-19) is causing significant economic and

societal changes throughout the world

• It is likely this will lead to a US and global recession beginning in 2020
• Higher education will be forced to dramatically change its academic and

economic models

• Change in higher education is generally slow, but this is a unique
• pportunity to make overdue changes
• The Chronicle of Higher Education is dedicated to leading this

discussion through a series of articles and virtual discussions

• ABC Insights has a sole mission of improving the sustainability of

higher education by helping universities become more efficient and effective

• The purpose of this virtual discussion is to begin a dialogue on the new

economic reality and recommendations thereof – we know that many of you are dealing with immediate issues on your respective campuses, but we also realize that you need to continue your strategic financial planning

• Address the most common myths
• rganizations believe during

recessions

• Present a framework and

recommendations for immediate and strategic action on any campus

• Open the conversation with university

leaders across the world to share ideas as we deal with this crisis

Specific Objectives

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Colleges & Coronavirus, Time to Be Proactive: Virtual Discussions

What a College Should NOT Do During A Recession

We will offer a framework on myths to avoid doing during a recession and how universities should be planning for strategic changes on their campus.

Lynn Pasquerella, Ph.D.

President, AAC&U (Association of American Colleges & Universities)

Preparing Your Budget With Coronavirus in Mind

We will explore ways to develop a reasonable budget emphasizing suggestions

• n how to strategically modify academic and

administrative investments.

Laura E. Hubbard

Vice President for Finance and Administration, University at Buffalo

Lessons Learned For Higher Education From the Great Recession

We will review how the last major recession in the US affected Higher Education, how universities responded and tips for how we may want to prepare for today's crisis.

Michael Drake, M.D.

President, The Ohio State University (led UC Irvine through the last recession)

Optimizing Academic Programming in the Post Coronavirus Era

Explore the right mix of academic programs and how colleges will need to examine both student and job-market needs, while considering the latest information on the

• ngoing health emergency.

Peter Stokes

Managing Director, Huron Education Strategy & Operations (S&O) Group

Scott Carlson

Senior Writer, Chronicle

• f Higher Education

Paul Friga, Ph.D.

Clinical Assoc. Prof. UNC CH, Co-founder of ABC Insights

Each Session Hosted By:

March 26 2:00-3:00pm EST April 8 2:00-3:00pm EST April 22 2:00-3:00pm EST May 6 2:00-3:00pm EST

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Be cautious of the generic “recession mindset”

Recession Tendencies Application to Higher Education

Source: “The Crisis: Timing Strategic Moves.” The McKinsey Quarterly. April 2009.; “Learning to Love Recessions.” The McKinsey Quarterly. Special Edition 2002.; “Strategic Planning: Three tips for 2009.” The McKinsey Quarterly. April 2009; “Companies get into deal mode.” USA TODAY. April 21 2009.; “How to Market in a Downturn.” Harvard Business Review. April 2009.; “Managing IT in a downturn: Beyond cost cutting.” The McKinsey Quarterly. September 2008.; “R&D in the downturn: McKinsey Global Survey Results.” The McKinsey Quarterly. April 2009.; Source: “The Layoff.” Harvard Business Review. March 2009.; “R&D in the downturn: McKinsey Global Survey Results.” The McKinsey Quarterly. April 2009.;

Higher Ed Recommendations

• Think long-term, not short-term
• Make long overdue changes to educational and economic model
• Seek ways to further differentiate and expand value-add
• Cuts should be made in line with strategic positioning and priorities
• Use data in decision-making over anecdotal perceptions
• Make bigger cuts in certain areas to strategically invest in key areas
• Care is required in employee evaluations given education’s role as a key employer
• It takes 16-18 months to realize cost benefits from layoffs
• Focus should be on eliminating non-critical positions, especially transactional types
• Decreasing resources on important value areas such as academics is risky
• This could be a great time to invest in key faculty for growing program needs
• Again, prioritizing academic areas over other areas is an important step
• Benchmarking IT spend against comparable institutions is a good first step
• Note that higher ranked universities have higher IT needs
• Investments in IT can increase productivity and overall efficiencies

We should implement across-the-board cuts Our work goal should be to just survive Significant layoffs are necessary Cutting R&D is a good idea Decrease investment in IT Cut in the right places Seek differentiation Restructure personnel Invest in core mission Adopt continuous improvement

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Presidents’ plans for handling the crisis

75.2% 72.1% 54.7% 39.9% 13.0% Hunker Down Layoff Staff Across the Board Cuts Cut R&D Cut IT

Future Considerations in Dealing With COVID-19

• "I worry about cuts in state and

county funding. … I worry that I won't have the workforce resources to help lead the economic recovery."

• "Beyond the well-being of our

students and staff, which comes first, I am worried about the lack of sufficient relief for higher education from state and federal governments."

• "Sharply declining revenue due to loss
• f paying students and a new ‘free

college’ program in our state."

• "All income streams are under stress

— tuition, development, endowment."

Source: ABC Insights & rpk GROUP Survey of AAC&U Presidents' Trust; April 1, 2020; n=142

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Recommendations to not only survive but thrive through the recession – “Seek differentiation”

Cut in the right places Seek differentiation Restructure personnel Invest in core mission Adopt continuous improvement Recession Tendencies

We should implement across-the-board cuts Our work goal should be to just survive Significant layoffs are necessary Cutting R&D is a good idea Decrease investment in IT

Higher Ed Recommendations

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One of the most differentiated university mission statements is Arizona State University

Mission Statement

ASU is a comprehensive public research university, measured not by whom it excludes, but by whom it includes and how they succeed; advancing research and discovery of public value; and assuming fundamental responsibility for the economic, social, cultural and overall health of the communities it serves.

The number of ASU students more than doubled since 2003 from 57,000 to

• ver 119,000 in 2019

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Recommendations to not only survive but thrive through the recession – “Cut in the right places”

Cut in the right places Seek differentiation Restructure personnel Invest in core mission Adopt continuous improvement Recession Tendencies

We should implement across-the-board cuts Our work goal should be to just survive Significant layoffs are necessary Cutting R&D is a good idea Decrease investment in IT

Higher Ed Recommendations

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The starting point is to better understand your spend

Source: ABC Insights

Example: Temple University

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And then compare efficiency to other universities

SAM Spend as a % of Total Labor Spend

Source: ABC Insights

Example: Temple University

Benchmark 1 Temple University Benchmark 2 Benchmark 3 Benchmark 4 Benchmark 5 Benchmark 6 Benchmark 7 Benchmark 8 Benchmark 9 Benchmark 10 Benchmark 11

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It is also important to track results over time

32.3% 31.5% 31.0% 31.4% 31.2% 0% 10% 20% 30% 40% FY15 FY16 FY17 FY18 FY19

Administrative Intensity Measure (AIM)

SAM Spend as a % of Total Labor Spend (FY15-FY19)

AIM Linear (AIM)

Source: ABC Insights

Example: Temple University

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Recommendations to not only survive but thrive through the recession – “Restructure personnel”

Cut in the right places Seek differentiation Restructure personnel Invest in core mission Adopt continuous improvement Recession Tendencies

We should implement across-the-board cuts Our work goal should be to just survive Significant layoffs are necessary Cutting R&D is a good idea Decrease investment in IT

Higher Ed Recommendations

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Start with a clear understanding of your HR Investment FTEs Growth

FTEs Spend

274 309

FY14 FY17

17 22

FY14 FY17

+ 3 5 + 1 2 . 5 % + 5 + 2 9 %

48 87 173 $3 $7 $12

$22M

Decentralized Shared Services Centralized Decentralized Shared Services Centralized

309

Spend

(millions)

Source: ABC Insights and CUPA-HR Presentation, October 21, 2019

Example: UNC Chapel Hill

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Then compare to other universities for insights

2.5 1.6 UNC-CH Peers

More FTEs

Normalized per 100 employees and students

More Spend

Normalized percent of total labor spend

1.7% 1.4% UNC-CH Peers

Human Resources Investment

Example: UNC Chapel Hill

Source: ABC Insights and CUPA-HR Presentation, October 21, 2019

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Finally, look to grow the strategic percentage of employees

63 29 40

Transactional Supervisory Strategic

Number of Unique Titles

74 25 19

Transactional Supervisory Strategic

Number of FTEs

(Total=118)

4.1 2 2.9

Transactional Supervisory Strategic

Salary in Millions

(Total=9M)

Source: ABC Insights and CUPA-HR Presentation, October 21, 2019

Example: UNC Chapel Hill

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Recommendations to not only survive but thrive through the recession – “Invest in core mission”

Cut in the right places Seek differentiation Restructure personnel Invest in core mission Adopt continuous improvement Recession Tendencies

We should implement across-the-board cuts Our work goal should be to just survive Significant layoffs are necessary Cutting R&D is a good idea Decrease investment in IT

Higher Ed Recommendations

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UNC System set priorities for all 16 universities but allows for flexibility and differentiation in mission

Source: https://www.northcarolina.edu/strategic-planning; ABC Insights SHEEO Presentation August 7, 2019

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The strategic priorities translate to specific objectives

ACCESS AFFORDABILITY & EFFICIENCY STUDENT SUCCESS ECONOMIC IMPACT & COMMUNITY ENGAGEMENT

Increase Low-Income Enrollment Increase Completions by Low-Income Students Increase Rural Enrollment Increase Completions by Rural Students Improve Transition from K-12 to College

EXCELLENT & DIVERSE INSTITUTIONS

Increase 5-Year Graduation Rate Increase Undergraduate Degree Efficiency Close Achievement Gaps Implement a Survey of Current Students and Alumni Increase Critical Workforce Credentials Increase Research Productivity Increase Investment in Strengthening North Carolina Communities Commit to Affordable Tuition Increase Operational and Financial Flexibility Identify Academic ‘Areas of Distinction’ Focus on Human Capital

Source: https://www.northcarolina.edu/strategic-planning; ABC Insights SHEEO Presentation August 7, 2019

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Each university has unique goals based upon mission – UNC CH example for priority of “Increase Low Income Enrollment”

UNC System Dashboard

Increase Low-Income Enrollment

UNC Chapel Hill Dashboard

Increase Low-Income Enrollment

Source: https://www.northcarolina.edu/strategic-planning; ABC Insights SHEEO Presentation August 7, 2019

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UNC Chapel Hill differentiates by “innovating for public good” – leveraging its unique position as the first public university

Of the public, for the public. We will:

• Eliminate all barriers to a great education.
• Bring expertise to bear for the benefit of North

Carolina and beyond.

• Work for democracy: develop citizen-leaders and

encourage informed public discussion

Innovation made fundamental. We will:

• Value and prioritize foundational research and

creative practice

• Meet the imperative for learning that is personalized,

experiential, collaborative, and data-literate.

• Translate research into professional, commercial, and

societal uses.

• Adapt to evolving workforce and student needs.

The Pillars

Source: https://carolinanext.unc.edu/

With lux, libertas – light and liberty – as its founding principles, the University has charted a bold course of leading change to improve society and to help solve the world’s greatest problems. Carolina Next is framed around eight strategic initiatives. The strategic initiatives represent the core areas of focus across the University. We will make targeted investments that enable our community to: (1) Build Our Community Together, (2) Strengthen Student Success, (3) Enable Career Development, (4) Discover, (5) Promote Democracy, (6) Serve to Benefit Society, (7) Globalize and (8) Optimize Operations. These strategic initiatives are elaborated on later in the document.

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A description of the differentiation priorities in the UNC system

University Distinct Area 1 Distinct Area 2

Appalachian State University Envisioning a Just and Sustainable Future Global Engagement: Education Abroad East Carolina University Cultural Champion Social Mobility Elizabeth City State University Aviation Science Program Student Success Fayetteville State University Facilitating Higher Education Attainment by Military-Affiliated Students High Quality and Affordable Online Education North Carolina A&T University Minority Engineer Production COBE Accountants Production North Carolina Central University Jazz Studies Intellectual Property Legal Education North Carolina School of Science and Math Equity of Access for High School Students Statewide Increasing Participation in Research North Carolina State University Lab to Market Innovation – Partnerships with the Private Sector Engineering and Agriculture, Our Land-Grant Foundation University of North Carolina at Asheville High Impact Practices in Liberal Arts Education Co-curricular Learning Experiences University of North Carolina at Chapel Hill Creating Scientists: Learning by Connecting, Doing, and Making Undergraduate Business Education University of North Carolina at Charlotte Data Science Initiative Community Engagement University of North Carolina at Greensboro Health and Wellness Visual and Performing Arts University of North Carolina at Pembroke Regional Health Regional Economic Development University of North Carolina at Wilmington UNCW and the Marine Sciences New Academic Programs Serving Regional Needs University of North Carolina School of the Arts Expand and Enhance Filmmaking Programs Increase AP Participation Western Carolina University Cultural and Environmental Immersion Service and Outreach Winston-Salem State University Signature Liberal Education Experience Signature Graduate and Professional Programs

Source: https://www.northcarolina.edu/strategic-planning; ABC Insights SHEEO Presentation August 7, 2019

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UNC CH example of investment and growth in research

578 580 593 611 678 716 803 788 767 778 793 796 847 898 883 940

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

UNC-CH Research Awards

FY 2004 - 2019

Source: https://research.unc.edu/about/facts-rankings/funding/

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Recommendations to not only survive but thrive through the recession – “Adopt continuous improvement”

Cut in the right places Seek differentiation Restructure personnel Invest in core mission Adopt continuous improvement Recession Tendencies

We should implement across-the-board cuts Our work goal should be to just survive Significant layoffs are necessary Cutting R&D is a good idea Decrease investment in IT

Higher Ed Recommendations

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Definition of Continuous Improvement

Continuous Improvement

“Continuous improvement is a gradual never-ending change which is … focused on increasing the effectiveness and/or efficiency of an organisation to fulfill its policy and objectives. It is not limited to quality

• initiatives. Improvement in business strategy, business

results, customer, employee and supplier relationships can be subject to continual improvement. Put simply, it means ‘getting better all the time.” Institute of Quality Assurance

PDAC Kaizen Six Sigma Lean Agile

Source: ABC Insights NACUBO Budget and Planning Forum Presentation September 17, 2019

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Recommendations to do it well

• 1. Make it easy for faculty, administration and staff to suggest ideas for

improvement

• 2. Opportunities for improvement are evaluated and action plans developed
• 3. Ensure forward progress with active alerts and notifications
• 4. Create a repository of institutional knowledge and capture best practices
• 5. Simplify assessing the impact of implemented improvements
• 6. Broadcast success
• 7. Give leaders insight into the health of improvement culture across the entire

institution

Source: ABC Insights NACUBO Budget and Planning Forum Presentation September 17, 2019

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Florida State Example – over $200M that was reinvested in academic faculty and programs and led to rise in rankings

3.52 32.08 71.37 9.36 32.75 41.23 45.32

Jan-15 Jan-16 Jan-17 Jan-18

FSU Efficiency Savings ($ Millions)

Recurring Savings Series 2

Total Cost Savings > $235M Since July 2014 FSU received nine of the twelve 2019 Florida TaxWatch/Prudential Productivity Awards that were distributed to universities in the State University System

July 2018 Efficiency Savings

Highlights

Procurement Savings – Cooperatives/Consortiums $17.6M Procurement Savings – Other $7.8M FSU Take 15 Initiative $7.4M Procurement Savings – Shared Initiatives $5.1M Shared Services Energy Management Program $2.3M Bookstore Contract $1.2M Enterprise Software Licensing Agreements $1.1M

Total New Savings $45.32M

Source: ABC Insights NACUBO Budget and Planning Forum Presentation September 17, 2019

Example: Florida State University

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Recommendations to not only survive but thrive through the recession – “Make strategic moves”

Cut in the right places Seek differentiation Restructure personnel Invest in core mission Adopt continuous improvement Recession Tendencies

We should implement across-the-board cuts Our work goal should be to just survive Significant layoffs are necessary Cutting R&D is a good idea Decrease investment in IT

Higher Ed Recommendations

Appendix

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We formed ABC Insights to help higher education

Our Vision: Become the trusted partner and thought leader for analytics, benchmarking, and insights in higher ed Our Mission: Improve sustainability of higher education by helping universities become more efficient and effective

Source: ABC Insights – www.abc-insights.com

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Join our growing number of universities in North America

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Higher education needs to dramatically increase its efficiency without sacrificing quality

Efficiency Effectiveness

Grow Resources Increase Academic Program Returns Optimize Administrative Spend Improve Faculty Productivity Increase Employee Performance Drive Student Success

ABC Insights ROI = More efficient and effective universities will result in higher returns for investment

Source: ABC Insights – www.abc-insights.com

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Key areas for increasing efficiency of a university from the ABC Insights ROI framework

Grow Resources

Increase enrollments and revenue

Optimize Administrative Spend

Assess level of investment vs strategy

Increase Academic Program Returns

Rationalize academic offerings based upon demand

Potential Growth Investment Required

Mapping: Sources of Revenue Size of bubble: Current Revenue Level Mapping: Activities and Sub-Activities Size of bubble: Level of FTEs Mapping: Schools and Majors Size of bubble: Student Outcomes Pursue Sequence Consider Ignore

Annual Spend Comparable Efficiency Percentile

Reimagine Showcase Assess Maintain

Annual Net Contribution Market Demand

Reimagine Showcase Assess Maintain

High Low Low High High Low Low High High Low Low High

Source: ABC Insights – www.abc-insights.com

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Analyze administrative human capital investment by spend and FTE as compared to others

Chart Key Optimize Administrative Spend

Assess level of investment vs efficiency

Size of Bubble: Level of Admin. FTEs Facilities Student Services Information Technology General Administration Finance Communications Development Human Resources Research Administration 10 20 30 40 50 60 70 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5

Low High High Low

Annual Spend $M Comparable Efficiency Percent

ABC Insights ROI Framework Administrative Activity Analysis –University of XYZ

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Conduct the same analysis at the school level

Chart Key Optimize Administrative Spend

Assess level of investment vs efficiency

Size of Bubble: Level of Admin. FTEs Agriculture Arts and Sciences Business Dentistry Education Engineering Journalism Law Medical

Low High High Low

ABC Insights ROI Framework School Administrative Spend Analysis – University of XYZ

10 20 30 40 50 60 70 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5

Annual Spend $M Comparable Efficiency Percent

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Explore and prioritize administrative efficiency initiatives per the ABC Insights ROI Framework

Chart Key Optimize Administrative Spend

Assess level of investment vs strategy

Size of Bubble: Level of FTEs Consolidate Purchasing Cut Staff Re-engineer Processes Outsource Centralize/Shared Services Modernize Technologies Merge Multiple Locations Increase Spans of Control Decrease Energy Use 1 2 3 4 5 6 7 8 9 10 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Low High High Low

Potential Impact Level of Effort

ABC Insights ROI Framework Analysis Of Potential Initiatives – University of XYZ

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Explore and prioritize academic spend strategic initiatives per the ABC Insights ROI Framework

Increase Academic Program Returns

Rationalize academic offerings based upon demand

Chart Key

Size of Bubble: Current Revenue Level Sunset Programs Grow Existing Programs Launch New Programs Increase Teaching Loads Hire More PT Faculty Hire More NTT Faculty Freeze New Faculty Hires Decrease # of Faculty Increase Student Retention 1 2 3 4 5 6 7 8 9 10 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Low High High Low

Potential Impact Level of Effort

ABC Insights ROI Framework Analysis Of Potential Initiatives – University of XYZ

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Explore and prioritize resource growth initiatives per the ABC Insights ROI Framework

Chart Key

Size of Bubble: Student Outcomes

Grow Resources

Increase enrollments and revenue

Launch New Development Campaign Determine Unique Positioning Invest in Advertising Campaigns Collaborate with Other Universities Pursue PPPs (facilities, energy, etc.) Launch Medical Services Develop More Executive Education Increase Online Program Offerings Secure New Debt Offerings Grow Research Portfolio Sell Excess University Assets (land, etc.) 1 2 3 4 5 6 7 8 9 10 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Low High High Low

Potential Impact Level of Effort

ABC Insights ROI Framework Analysis Of Potential Initiatives – University of XYZ