Indiana Trustee Academy August 30, 2010 Rick Staisloff, Vice President for Finance And Administration, College of Notre Dame of Maryland Association of Governing Boards.
Download ReportTranscript Indiana Trustee Academy August 30, 2010 Rick Staisloff, Vice President for Finance And Administration, College of Notre Dame of Maryland Association of Governing Boards.
Indiana Trustee Academy
August 30, 2010
Rick Staisloff, Vice President for Finance And Administration, College of Notre Dame of Maryland Association of Governing Boards of Universities and Colleges. All Rights Reserved.
And as a result………
2
……….not much change
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Why Are We Here?
In the world of higher education, we must learn to live within a changed internal and external environment
– Commissions, Boards, Presidents and senior staff are uniquely positioned to help the institution operate at this juncture BUT…..
– Do we need to reevaluate our roles?
– Are we asking the right questions?
– How do we break down the divide between the mission and market sides of the house?
– What tools do we need? Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Philosophy Corner
•Bump in the road or changed landscape •No one is going to rescue us (and they don’t need to) •Focus on what we can control Association of Governing Boards of Universities and Colleges. All Rights Reserved.
What is Strategic Finance?
Strategic finance is aligning resources with the institution's mission and strategic plan .
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Magic Formula
Mission + Market + Margin = Success
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Mission, Market and Margin Mission
What are you passionate about?
Market
What can you be best at in the world?
Margin
What drives your economic engine?
7 Adopted from Good To Great, Jim Collins Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Mission, Market and Margin
Living at the Intersection of Mission, Market and Margin: Three Questions What are we good at? (Mission) What do people want? (Market) How do we bring these together in a way that is true to our mission and generates resources? (Margin) Association of Governing Boards of Universities and Colleges. All Rights Reserved.
“Tried and True” Reporting
• •
Financial
• Budget to Actual Financial Statements Audit
Metrics
• Ratio Analysis • Strategic Indicators/Dashboards Focus must be on what the numbers mean, more than on the numbers themselves Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Why Bring This Analysis to the Table?
• Importance of looking at the “scary squiggly things under the rocks” • Need data before you tackle the hard choices One of the most important jobs of a leader is to clearly define where you are.
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Is This a Strategic Finance View?
• Importance of the “Reality Check” – Where are we right now?
• However, these tools are backward looking • New tools are needed for us to look forward and to act strategically • Shift from input focus to output focus Association of Governing Boards of Universities and Colleges. All Rights Reserved.
What Drives Activity?
Top 12 programs account for 89% of credit hours
CHM HIS CST PHY PED MUS POL ART HSV
Other 9 Programs = 11% Each 2% or <
6% 7% 9% 35% 4% 4% 4% 4% 4% 4% 3% 4%
Math Psychology Philosophy Modern Foreign Language Communication Arts English Religious Studies Biology Nursing Pharmacy Business Education
667 786 798 799 813 861
Core 8 Programs = 32%
873 904 1,227 1,330
Anchor 4 Programs = 57%
1,903 6,991 12 Association of Governing Boards of Universities and Colleges. All Rights Reserved.
What Drives Net Revenue?
Net Revenue Modeling - By Division
Revenue Tuition Discounting Discounted Revenue Total Discount % Discounted Revenue Direct Costs Net Revenue Net Revenue % Percentage of Total Revenue Base Discounted Revenue Total Direct and Allocated Cost Net Revenue Net Revenue % - FY 2008 Net Revenue % - FY 2007 Net Revenue % - FY 2006
UG
15,686,486 5,656,577 10,029,909 36.06%
PT UG
2,481,446 40,026
Accelerated
3,999,994 0 2,441,420 1.61% 3,999,994 0.00%
Graduate
10,266,637 876,158
Eng Lang Inst
464,207 0 9,390,479 8.53% 464,207 0.00%
UG
10,029,909 8,284,316 1,745,593 17%
PT UG
2,441,420 1,277,669
Accelerated
3,999,994 1,554,435 1,163,751 48% 2,445,559 61%
Graduate
9,390,479 2,874,851
Eng Lang Inst
464,207 347,933 6,515,628 69% 116,274 25%
Total
32,898,770 6,572,761 26,326,009 19.98%
Total
26,326,009 14,339,204 11,986,805 46%
UG
10,029,909 9,954,583 75,326 0.8% 2.1% 5.5%
PT UG
2,441,420 2,366,828 74,592 3.1% 18.8% 23.0%
Accelerated
3,999,994 3,149,668 850,326 21.3% 28.8% 20.0%
Graduate
9,390,479 7,858,580 1,531,899 16.3% 25.0% 25.0%
Eng Lang Inst
464,207 347,933 116,274
Total
26,326,009 23,677,592 2,648,417 10.1% 16.5% 16.0% Association of Governing Boards of Universities and Colleges. All Rights Reserved.
+$ 12,000 +$10,000 + $8,000 +$6,000 +$4,000 +$2,000 -$2,000 -$4,000 -$6,000 -$8,000 -$10,000 -$12,000 14
Reducing Costs
Direct Instructional Expenditure per FTE Student Health Phy Ed
Less efficient than market standard
Bio Bus Chem Psych Comm Computer EDU English Foreign Lang Nursing History Philos Math Music Rel Study
National Norm FY 2008
More efficient than market standard
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Increasing Productivity
Student Credit Hours per FTE Faculty
+ 45 +30 +15
Nursing Edu
More efficient than market standard
-20 -50 -80 -110
Philos Chem
-140 -170
Music Math Arts Bus Comp Sci Bio Comm Foreign Lang English
Less efficient than market standard
Rel Study
National Norm FY 2008
Psych Health Phy Ed History
Association of Governing Boards of Universities and Colleges. All Rights Reserved.
How will we make decisions about the academic portfolio?
Grow Maintain/ Manage Cost We will evaluate, dialogue then organize decisions into four buckets Mission Demand Conversion Contribution Efficiency Net Revenue
Program
A B C D
Mission # Prospects Yes Yes Yes No > 5,000 < 1,000 > 1,000 < 1,000 Yield >33% < 33% < 33% < 33% Credit Hours Student Cr Hr/FTE Faculty Direct and Indirect AllocatedCost Model > 1,000 > 500 > 500 Above Benchmark At Benchmark Below Benchmark Positive Positive Negative < 500 Below Benchmark Negative
Sunset Redesign
16 Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Cost Reductions – What’s Working/What’s Not?
• Outsourcing • Strategic Sourcing • Benefit Cost Shifting • IT – Standardizing hardware and software • Consolidating course sections • Reducing high cost/low demand programs - Takes time but has big payback • Early Retirement Incentives proving difficult Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Examples of Productivity Improvements
• Increase in Student Credit Hours per Full Time Equivalent Faculty • Increase in student retention and graduation • Reduce excess credits for the degree • Increase distance-based learning programs Association of Governing Boards of Universities and Colleges. All Rights Reserved.
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Roles and Responsibilities
• State Commission
– Resource Allocation – Where should the State invest?
– Discovery and Sharing of Best Practices
• Trustees
– Oversight - Implementation of cost reductions and productivity improvements – Ensuring development of appropriate data and metrics Association of Governing Boards of Universities and Colleges. All Rights Reserved.
Asking the Right Questions
• Are state and university strategic goals – Clearly stated?
– Clearly – and frequently – communicated? • Is performance considered in the resource allocation process – Are resources targeted to mission/market/margin opportunities?
– Are faculty and staff allocated to the highest priorities?
– Are there programs or services that should be eliminated?
– Are there opportunities for collaboration that would yield better results at less cost?
• Are metrics for measuring performance and achievement of goals in place?
– SCH/FTE faculty Association of Governing Boards of Universities and Colleges. All Rights Reserved.