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Budgeting to Strategy in Higher Education – A Recorded Webinar

We ran a webinar last week that drew a lot of attention in higher education. If you work for a college (or if you’re planning on sending your children to college) you want to watch this. As one person attending the event commented afterward, “We’ve been struggling with financial issues since 2008, and this is the most important webinar I’ve been to since. My only regret is we should have put these ideas to work for us three years ago. Better late than never.”


Let me provide some perspective here. I know this is rubbing salt in the wound of every financial professional in higher ed, so forgive me.

As the financial crisis has festered, colleges and universities are feeling the pain of cratering state budgets, the collapse of the private student loan market, and declining endowments — all in a period where Parents are tapped out – their houses and stock holdings may no longer be able to pay for a college education.

It is estimated that across the country, endowments will drop as much as 30% over the coming year. Endowments account for a portion of college income — but for many schools State Funding is a much more important factor. In 1984 4.1% of state spending went to higher education; in 2008 that figure had dropped to just 1.8%. Yikes.

But wait, there’s more! The Georgetown Center on Education and the Workforce tells us that by 2018, 66% of new jobs will require a college degree. But today, only 40% of adults have completed college. This means that the U.S. needs to produce roughly one million more graduates per year to ensure that the US has the skilled workers it needs. According to a report published by McKinsey, to achieve this increase in degree production at the current cost per student, the U.S would need to increase educational funding by $52 billion a year… or increase productivity by 23%. Really? How are we going to do that?

Now you might not be feeling the full brunt of the crisis in higher ed in your particular college. But nonetheless you want to get out in front of this, and fast, because this has become a National issue – one that has drawn the attention of Washington. In fact, there was a US Senate hearing on college affordability in February this year.

So how are most colleges responding to these pressures? With spending cuts. That’s probably both a wise and necessary thing to do – but it’s going to take more than budget cuts to address this crisis.

Back at that senate hearing in February, secretary of education Arne Duncan said something I think really captures the mindset we all need to adopt, “Farsighted leaders in higher education and the states are helping to point the way to challenging the status quo… they are demonstrating how to do more with less.”

I interpret this to mean that “same old thinking” is not going to provide the answers. We need to think different. We need to find a way where we can build an institutional capability to do more with less. And not just as a once off, but as an ongoing capability.

But here’s the most important point — you can’t do it alone.

I believe that to meet these challenges you need to actively engage faculty and staff in the solution. And by engaging them I don’t mean in a two day offsite retreat to think great thoughts that never get executed. I mean engaging them in finding the right solutions and making sure they’re properly resourced as an integral part of the budget process. Because let’s face it, if it ain’t in the budget it ain’t getting’ done. The budget is where the rubber meets the road, and the way out of this crisis is to make sure the right ideas are the ones that get funded.

The webinar focused on how MS University – a composite of many of the colleges we’ve worked with — engaged faculty and set up a process to budget to strategy as opposed to history or politics. And in doing so, optimized the allocation of scarce resources and delivered the maximum value to their students.

At this point, I’m well over what all the experts say is the maximum word count in a blog (smile) so I’ll let the video do the talking and show you what MS University did.


As always, your thoughts and comments are welcomed.

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