As American colleges and universities continue to face uphill challenges to their efforts to become more sustainable, it’s clear that some hard questions must be addressed quickly.
Clearly college and university leaders find themselves in a different set of circumstances than they did only a decade ago. But almost all now face a seminal moment when they must figure out how to pay for the people, programs, and facilities that intersect on a modern campus.
Balancing the books is further complicated by leadership’s lack of flexibility to create discretionary revenue when financial aid, debt repayment, compensation, and depreciation costs consume much of an institution’s annual budget.
It’s folly at most institutions to imagine that they can fundraise or cut their way to sustainability. In fact, most will need to re-imagine first how they produce a strategic vision.
The best will produce a vision that links to a realistic assessment of where they are and what’s possible. This vision must be tied explicitly to brand — effectively a statement of the core values, mission, academic program, and outcomes that creates a value proposition by which an institution moves forward.
Incremental Changes Cannot Solve College’s Financial Problems
And yet there is an escalating problem for which there is no coherent solution. Colleges look to expand program revenue, cut some costs, and take a variety of other approaches that can most charitably be characterized as incremental.
College and university leaders tweak their budgets, often to increase the financial aid discount so they can enroll a new first-year and transfer class. This tactic partly explains why net tuition revenue is flat or declining at many colleges. The problems worsen if the admissions officers fail to meet their enrollment targets despite the increase in financial aid offered.
With no easy solution in sight, it’s time for colleges and universities to take some harsh medicine.
Incremental efforts to tweak discount rates or move to online programming to shore up the academic program offer band-aid, mid-term solutions at best.
U.S. Colleges Must Face Harsh Reality of Their Situation
What must happen instead is an institution-wide reckoning moment in which key stakeholders examine the health of the underpinnings upon which U.S. colleges and universities rest.
The policy choice is stark. If tuition-driven colleges and universities collectively become the targets of closures, mergers, and acquisitions, then the structural damage sweeping over higher education will not offset the efficiencies created by any new institutional structure.
America will become a country dominated by public higher education without the willingness or resources of government leaders to fund the new alignment. Indeed, in some parts of the country, the impact will be broader since colleges are both academic centers and economic engines that support regional economies, whether rural or urban.
Territorialism Hinders Bold Decision-making
Individual institutions face equally difficult choices. They operate under a system of shared governance in which trustees, administrators, and faculty weigh in to affect an institution’s direction.
Shared governance is often bogged down in process. When the institution’s budget becomes a rationing pie under deepening stress. Territorialism sets in, making sweeping changes next to impossible.
The faculty appropriately control the academic program. They often see additional programs as the best revenue solution, rather than call for a clear examination of whether and how the quality of a program is linked to the special features that define it, the way that admissions officials advocate for it, and the outcomes that emerge when students graduate from it.
That’s when the arm wrestling begins. Back when tuition could be raised to meet expenses — whatever they might be — there was no special need to differentiate an academic program at a college. How the Department of English programs differed from those at other institutions mattered little, especially if the purpose was to contribute to the broader goal of a liberal arts education.
If professional programs existed, the question was more how they fit into an academic curriculum than whether they contributed to a series of differentiated offerings that set the campus apart from other institutions.
But the hard facts are that many higher education institutions are not meeting their enrollment targets, and if they do, they fail to increase the net tuition revenue that pays the bills.
Failure to Plan May Lead to Failure
Colleges and universities are notoriously bad planners. It’s hard to move quickly when process rules. Long-term planning is also difficult when enrollment remains more an art than a science, creating a level of uncertainty among institutional leaders who want to make, in the words of Daniel Burnham, “no little plans.”
At most institutions, there is no agreed upon template by which planning may occur. It’s a Mom and Pop approach to strategy that can have lasting, deleterious effects on a campus.
Let’s keep it simple. Colleges and universities must professionalize their planning and lay out the case for why they matter — especially before market forces seize their destiny from them.