Association of Governing Boards of Universities and Colleges. All Rights R The Higher Education Dilemma: In Search of Long Term Sustainability [Major Corporation} Mid-Atlantic Regional Meeting February 23, 2011 Ellen Chaffee, AGB Senior Fellow and President Emerita, Valley City State University
Universities and colleges must develop new business models to deal with scarce resources, increased demand for productivity and lower tuition, and changing demographics. This presentation to leaders in a major corporation outlines the pressures and the actions that a national higher education association is recommending to the institutions.
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Association of Governing Boards of Universities and Colleges. All Rights Reserved.
The Higher Education Dilemma: In Search of Long Term Sustainability
All data are in 2008 dollars. Source: Delta Cost Project IPEDS Database, 1987-2008, 11-year matched set.
Spending Within Education & Related (E&R)
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008 2000 2004 2007 2008Public Research Public Master's Community Colleges Private Research Private Master's Private Bachelor's
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000Total operating expenses per FTE student by category (in 2008 $)
Education and related expensesSponsored research, public service, and net scholarships & fellowshipsAuxiliary enterprises, hospitals, independent operations, and other expenses
3. Monitor your progress and exercise self-discipline
- Scorecard, strategic governance
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Association of Governing Boards of Universities and Colleges. All Rights Reserved.29
“The best way to predict the future is to create it.”
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Old Way New Way
• Improve today
• Iron Triangle
• Inputs, actions
• Program benefit
• Continuity
• Achieve tomorrow
• Reduce U & student costs
• Outcomes, outputs, results
• Program cost-benefit
• Innovation and continuous improvement
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Checklist for Reverse Engineering the Future
• Define the desired long-term future state and understand the gap between here and there.– Will the university’s clients’ costs-benefits be in balance?– Will the university’s institutional costs-benefits be in balance?– What will be the evidence that you’ve arrived?
• Do less of what won’t get you there – off track, inefficient• Do more of what will get you there – cost/benefit and INNOVATION focus• LEARN and exercise DISCIPLINE over time
– Test options for impact on metrics and cost-benefit, learn– Test progress on metrics, recalibrate, re-strategize
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Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Changing the value proposition
Value = more money
• Quality = $$• Belief in the inevitability
of spending increases• Cost reduction equated
with loss of quality• Doing new things requires
new money
Value = cost effectiveness
• Revenue is finite• How the money is spent is
more important than $$ alone
• Pay attention to cost reductions and performance
improvements
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Strategic Planning by SWOT is not enough
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Strengths
Weaknesses
Opportunities Threats
Of the university
Of the environment
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Strategic Planning by SWOT is not enough
34
Strengths Weaknesses
Opportunities Threats
Typical Plan
We will:• Do more of this• Do that better• Get more money• Make people happier• Get more famous
Future
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Strategic Thinking: Reverse Engineering the Future
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Sample Scorecard – Top Level Target
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
How Could [Your Company] Support Such Strategies?
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Primary institutional decision authority
Efficiency Reinvest in value
Administration Consolidate administrative functionsRestructure debtReduce administrative costsTackle “automatic” cost increases in benefitsPartner, pool, outsource
Cross-sector sharing including public/private partnershipsExpand/condense course schedulingBuy capacity from alternative providersIncrease opportunities for workplace-learningDifferential pricing by programReduce cross-subsidies unless essential to results Create/preserve low-price options
Academic leadership Degree productivityIncrease retention/graduation ratesIncrease credit-by-examEncourage test-out optionsAcademic course redesignMinimize ‘rework’ Reduce credits and time to the degree
Academic program streamliningEliminate/consolidate programsTrim non-productive research Consolidate high cost programs in fewer locations
Savings to students Reduced time and credits to the degreeTextbooks/course materials