http://stevensstrategy.com/blog/ en Copyright 2008 Sun, 20 Jul 2008 18:11:03 -0500 http://www.sixapart.com/movabletype/ http://blogs.law.harvard.edu/tech/rss

A rapidly changing demography,

Intensifying recruitment pressures,

A burgeoning population of students poorly prepared for higher education,

A worsening imbalance between male and female enrollments,

Expanding threats for a variety of government efforts toward price controls,

Swelling student financial need, and

Relentless pressure to provide more and more extensive student service programming.

Between now and 2015, we'll see a slow decline in the traditional college-aged student market. The student market in the northeast and mid-west will decline at least until 2022 while the west will experience a modest increase and the south will experience a significant increase. A smaller market in the northeast and mid-west will create more competition for students in these regions. The likely result will be lower prices, and pressure on institutional costs in the northeast and mid-west. But these institutions will likely make forays for students into the south and west, where markets are growing, creating a more competitive environment for institutions in those regions. The result will be lower prices and cost pressures in these regions as well. White high school graduates will decline by 13% nationally by 2022 and African American high school graduates will grow slightly, then they will flatten to no growth status around 2020. Growth in the Asian American and Hispanic American markets, primarily the Hispanic, will effectively replace the loss of white students. Hispanic high school graduates have been outpacing all other ethnic groups since 2004, and the cumulative growth for this market will be 90% by 2022. Growth in the smaller Asian American market begins to outpace that of white and African American high school graduates in 2009 and increases by a total of 63% by 2022. Increases in minority, particularly Hispanic, students will exacerbate quality, programming and cost issues already extant at colleges and universities because a larger proportion of them will be first generation students, having little family experience with college going skills, and these students will have less financial capacity than the average student of today. Thus in the future, a larger proportion of our students than today will lack sufficient preparation for higher education and have higher financial aid needs. So, on the one hand, increasing competition resulting from regional demographic trends will be placing pressures on institutions to reduce price and cost, while on the other hand, increased demand from a higher proportion of minority students for student services and financial aid will place more pressure on institutions to increase expenses. A storm is gathering. Today, young women are taking more leadership positions in high schools and colleges than men, and women account for nearly 60% of undergraduate enrollment and a majority of enrollment in most graduate programs. Maybe it's not a big problem now, but this problem with men's educational attainment will be exacerbated by increasing minority enrollment. There are lots of reasons, but this frightening statistic explains a lot: In US urban populations, 30% of white boys have a fatherless family, 50% of Hispanic boys live in such a family and 70% of African American boys do. Without male role models, how will these boys recognize the importance of education, never mind gain effective preparation for college? They won't! If colleges and universities wish to maintain their enrollments and maintain any kind of gender balance in their enrollments, they are going to have to spend significant resources on outreach to male students in early grades and remedial education when they arrive as freshmen. There's an unusual stillness in the air, an ominous pressure change. And there's more. Published private sector tuition and fees increased about 32% over the last ten years, 52% in the public sector. In the minds of the public and most of their elected officials, private colleges get most of the blame for this because their book price is so much higher and the public doesn't understand the pricing structure of higher education well enough to look to net price after institutional aid. They don't see that the bulk of these tuition increases are in the public sector and are the result of reductions in direct state appropriations to those public institutions. They don't see that the net affect of higher tuition in the public sector is good public policy unintentionally made: mediating the price differential between public and private colleges, causing them to compete more equally on quality, and reducing the subsidy to low need students who receive a free ride in the public sector. The thunder from Washington persists however, and is noticeable to all: Congressional hearings aghast at the cost of higher education, the Spellings commission report demanding a lowering of cost and price, reauthorization legislation suggesting price controls or at the very least procedures to humiliate institutions who raise their prices beyond a certain percent, no matter what the reason. All this adds additional pressure to lower cost and price. The biggest cost drivers in private higher education are student service programming and institutional financial aid. The combined affect of these two expense areas has caused a reduction in the overall proportion of expense that instruction accounts for from about 40% to about 20% over the last couple of decades. The increases in student service programming are a result of direct competition between institutions with special programs to attract students, a decline in preparation for college attendance requiring more remedial programming and greater demand from the general student population for institutionally provided medical and psychological services. The increase in institutional financial aid is also a result of competition between institutions on price, but it has a nasty affect on all but the 100 most selective colleges and universities if they have any desire to maintain quality. These institutions must look at the need/ability matrix when they determine financial aid. The unfortunate fact is that high student ability (as indicated by measures like SAT/ACT scores and high school GPA) is most likely associated with low financial need, and high financial need is most likely associated with low ability. The most selective colleges can fund student need regardless of their ability and still get students with the highest ability at all need levels, because just about everyone who applies is of high ability. This forces less selective colleges (almost all the rest) to provide merit aid in addition to need based aid to maintain a quality entering class. That increases pressure to provide more discounts, and yes, places even more a burden on costs. Another factor that colleges and universities will need to deal with in the next decade or so will be the coming revolution in instructional delivery systems. The nature of the educational process at most colleges is likely to change dramatically. We'll be moving from instruction processes to learning processes, from teaching students to coaching students, from in-sourced and scheduled instruction to out-sourced and unscheduled instruction, from individual learning styles to collaborative learning styles, from physical instructional delivery to virtual/technological instructional delivery, and from in-class/in-lab instruction to the use of courseware, internet based instruction and gaming software already heavily used by the US military. Those who move in this direction most quickly and most competently may find shelter from the coming storms. Finally, as we've warned before, the sub-prime credit crunch will hit higher education this fall. Students with highest need tend to have less family financial equity and thus tend to use private alternative loans, which are usually sub-prime, for their education. These loans, once widely available, are less so now as increasing numbers of lenders leave the marketplace. Less selective colleges (most colleges) have a higher number of more needy students and students with more sub-prime loans. These institutions will need to find new loans for these students or suffer enrollment declines. Enrollment declines mean less income for these tuition dependent institutions, and even more pressures to reduce costs--or close. If your college has not yet done so, it should:

1. Determine how many of its students will be affected by the sub-prime credit crunch
2. Find alternative lending sources for those students
3. Walk those students through the application process as it will be confusing for them, because they are more likely to be first generation college students and won't have much parental support

So in the not so distant future we'll see changing demographics, intensifying recruitment pressures, a burgeoning population of students poorly prepared for higher education, a worsening imbalance between male and female enrollments, expanding threats from a variety of government efforts toward price controls, swelling student financial need, and relentless pressure to provide more and more extensive student service programming. Simultaneous pressures will be unleashed on colleges and universities to both increase expenses and reduce price, the perfect storm. The best course to a safe harbor will be a challenging yet essential one. It will likely be found in the re-visioning of the way we deliver student services and instruction. The eventual melding of these two processes, which are collaborative at the best institutions and nearly distinct enterprises at the rest, will result in a radical change in the way we think about and deliver the educational process. On the academic side, maybe our faculty will move from their traditional roles as instructors to new roles as advisors and learning coaches who guide students through a curriculum delivered mostly by out-sourcing via the internet, computer course-ware and gaming software. Maybe some faculty will focus exclusively on the design of internet based curricula or curricula software. On the student affairs side, maybe our faculty will take on many of the roles normally played by student services staff like remedial education, student counseling and residential life, for instance. Imagine the enormous task of encouraging, supporting, leading and cajoling our faculties to take ownership of this extraordinary change. Imagine if institutions wait until the crisis is upon them and boards and presidents and provosts implement these changes without faculty ownership. That's change management hell! Forward thinking institutions will begin work with their faculty now to redesign their learning and co-curricular services into one seamless process. This will start most likely with task forces of interested and future-oriented faculty charged with integrating student and instructional services and thinking about the use of new instructional paradigms that rely on technology; to improve quality and reduce costs. Well charged and well supported faculty task forces will break through on some big issues and recruit more faculty to a new way of thinking about the academy. We believe a few institutions will chart this course to a safe harbor for all of higher education. What do you think?]]> http://stevensstrategy.com/blog/2008/07/the_challenging_strategic_envi.php http://stevensstrategy.com/blog/2008/07/the_challenging_strategic_envi.php General Sun, 20 Jul 2008 18:11:03 -0500

Our high school dropout rate is unacceptable.

Our academic standards and expectations are unacceptable

Of those students that remain in high school, fewer and fewer are taking Science, Technology, Engineering and Math prep courses.

Colleges and universities have to spend more and more time on remedial work for incoming students.

We do not have the academic capacity to offer needed programs either in secondary or post secondary schools. Notable examples would be math, nursing, engineering, pharmacy and others.

Due to the lack of interest Community Colleges have dropped many courses in areas where serious shortages now exist, for example, Advanced welding, high tech milling and machining, many construction trade courses, etc.

Federal and State funding for education has been reduced.

Considering these factors and many others, our country must change course now. We must regain the edge we had for 200 years in invention, creativity, ingenuity, technology, and entrepreneurial leadership. If we do so, we will create new industries with associated higher technology jobs to replace those jobs and industries that will become obsolete. Protecting the status quo will result in sure economic decline. Our leadership, government, education and industry must find ways to work together collaboratively toward this end. No single entity can do it alone. Government needs to set a very high, yet achievable, goal for our national focus; something akin to President Kennedy's goal to put a man on the moon. Such a goal might be eliminating our dependence on non-renewable fuels. While our government should set the goal and create incentives and rewards for its achievement, the private sector must compete to develop products or processes to achieve those significant accomplishments. Education must adjust in the variety of course offerings, and insure that we have the capacity to educate our future workforce, including the educators, that will be needed. To educate our workforce based on future needs and not on past trends, we must develop better forecasting practices and swifter program development time-lines. That will require real collaboration between government, industry and education. We think that successful collaboration is achievable for one very sound reason: We've helped clients who saw the need make it happen before. What do you think?]]> http://stevensstrategy.com/blog/2008/07/workforce_shortages_do_we_or_d.php http://stevensstrategy.com/blog/2008/07/workforce_shortages_do_we_or_d.php General Sun, 20 Jul 2008 18:02:51 -0500 Should colleges and universities even care? Yes! The reason is that many institutions are vulnerable because most non-governmental loans are sub-prime. If students are unable to find some means of borrowing money, they may have to either forsake college or find a cheaper alternative such as community college. This could prove disastrous to enrollment and budget plans. Depending on the wealth of the families of new or continuing students, colleges could face a dramatic hit to their bottom line. So what should presidents, chief financial officers, financial aid officers, and admissions officers do?

1. Find out the level of vulnerability that you face. Ask the financial aid officer to tabulate:
• The number of continuing students who receive sub-prime or non-governmentally backed loans;
• The total, average, and standard deviation of the value of these loans;
• The number of new students who may have to borrow money to complete their financial package before matriculation.
2. Have the financial aid office prepare a list of the names, addresses, email addresses, and phone numbers of these students - both new and continuing.
3. Have the chief financial aid officer meet with local lenders or other lending agencies to see what can be done to package financing for these students if the crunch hits.
4. Prepare information packages for each student that sets a deadline to cover the balance of their financial obligations to the institution.
5. Set-up a calling team to personally contact each person and arrange to get them to apply for money immediately.

This crisis may never happen, but it is best to prepare a response now rather than later. If the crunch does arrive with the start of classes and no action was taken earlier, colleges may find that the usual challenges of starting the fall semester are the least of their problems. ]]> http://stevensstrategy.com/blog/2008/03/subprime_credit_crunch_poised.php http://stevensstrategy.com/blog/2008/03/subprime_credit_crunch_poised.php General Sun, 16 Mar 2008 14:50:39 -0500

A person employed by the University in an administrative, supervisory, academic or research, or support staff position (including law enforcement unit personnel and health staff);

A person or company with whom the University has contracted as its agent to provide a service instead of using University employees or officials (such as an attorney, auditor, or collection agent);

A person serving on the Board of Trustees; or

A student serving on an official committee, such as a disciplinary or grievance committee, or assisting another school official in performing his or her tasks.

The FPCO further notes that a school official has a legitimate educational interest “if the official needs to review an educational record in order to fulfill his or her professional responsibilities for the University.” Within these parameters, an employee concerned that a student’s actions suggest a credible threat should share the information the school official charged with the responsibility of addressing such matters. In our example above, the professor should provide a copy of the email to the appropriate campus professional. Parental notification also can serve as an effective tool in addressing student health and safety needs. While FERPA generally prohibits parental disclosure without the student’s consent, there are two notable exceptions to the rule. The first exception permits parental disclosure if the college or university can confirm that the student is the parents’ dependent for federal tax purposes. The second allows privacy to be breached if the student is under 21 and has a drug or alcohol violation. If these two scenarios are not applicable, the school should seek the student’s consent and/or determine whether the behavior at issue triggers one of the exceptions to FERPA discussed earlier. Given the recent on-campus incidents over the past few years, it is increasingly evident that colleges and universities must take a more proactive approach to observing and interceding with a troubled student. Despite privacy concerns to the contrary, FERPA does not serve as a significant obstacle to taking such a proactive approach. With a clear understanding of the parameters of FERPA and appropriately trained administrators, faculty and staff, colleges and universities are in a position to help avoid further tragedies. Note: Other exceptions to FERPA exist and we urge administrators to review the act in its entirety. We also would be remiss is noting that additional restrictions may arise under applicable state or federal laws. Discuss these issues with your counsel. ]]> http://stevensstrategy.com/blog/2008/03/protecting_our_students_in_the.php http://stevensstrategy.com/blog/2008/03/protecting_our_students_in_the.php General Sun, 16 Mar 2008 14:46:20 -0500

Carefully manage new costs - especially personnel costs that usually have the greatest potential of quickly driving up costs.

Add new revenue programs or revenue sources at least every other year.

Weed out programs by using responsibility management analysis to identify programs with costs that exceed revenue. This analytic method will take into account the issue of financial productivity for general education service courses.

Develop a coherent financial aid strategy to target students that will enhance the college's academic standing and its market reputation.

Get auxiliary services to produce positive net income or out-source the program.

Place a portion of positive cash flow into a quasi-endowment fund that can throw off income to reduce reliance on tuition income.

]]> http://stevensstrategy.com/blog/2008/03/pricing_pressures_in_higher_ed.php http://stevensstrategy.com/blog/2008/03/pricing_pressures_in_higher_ed.php General Sun, 16 Mar 2008 14:41:29 -0500

Presidential leadership that is market savvy is a necessary condition for a turnaround. This requires a president with the personal skills to change the dynamics and culture of a college and the experience to know how to deliver what the market wants. The board must make sure that its president has these skills and must be willing to pay the going price to find the best person to lead the turnaround.

Top quality leadership team in skilled positions – chief academic officer, chief financial officer, and chief marketing officer - is a critical secondary condition for the turnaround. Good presidents, great plans, strong financial support, and board commitment for a turnaround can be thwarted by mediocre leaders in the skilled positions. Effective change means that these chief officers must get others to do their work well, have the perspective to know what works, and the technical experience to know the right course of action.

Support for presidential leadership and willingness to implement change is the primary responsibility of the board. The board must not use tradition, personal interests, or intrigue to inhibit strategic change. If the board looks to revive a long dormant culture that is neither relevant to current markets nor pertinent to improving the college’s financial position, then the turnaround will never make headway. The board must make it patently clear that it supports the president’s strategy. If some board members find the president’s strategy unpalatable then they must seriously consider moving to the sideline given that the strategy is reasonable and ethical.

Process makes change legitimate by involving internal and external constituencies vital to the turnaround in the design and implementation of the turnaround. Nevertheless, process must not divert the direction nor act as a break on the pace of change. The president must assure that the constituent process expeditiously acts to formulate a realistic and timely strategic plan.

Reliable and valid data to test strategies are imperative so that the board and president can figure out what is available, what could work, and what is needed to make it work. In some ways, putting together a reliable and valid data set can be as daunting as process and leadership. Data at most colleges and in particular at schools in severe financial straits is poorly maintained if it even exists. For example, enrollment data in the registrar’s office is usually not reconciled against revenue reported in the audit. As a result, it is frustrating to build an accurate forecast model on enrollment data that that is out of sync with the financial data. Another area where data and audits are not in tune is expenses. At the end of the audit, the business office is handed changes that must be booked to the ledgers. However, these changes are not made to the budget reporting system, which is the source of detailed expense information. Time and extensive effort must be expended to get precise financial data.

Money to underwrite the turnaround is essential if it is going to have a reasonable probability of success. There are few instances where the confluence of good luck, a clever president, and a market ripe for new educational services have taken a college from death’s door to financial stability. In most cases, money was also needed to buy time, top quality leadership and professional support to get a turnaround rolling. The board has a key role in finding quick cash – either from their own generosity, from alumni or friends of the college.

These six principles can be summarized as the right people in the right place at the right time with enough new cash to take reasonable risks to kick start the turnaround. Although these half dozen rules do not guarantee success, they do compile practices that have worked in producing successful turnaround strategies. If the president, board, and community work together in good will and concentrate on the turnaround, they have a good chance of turning around even the most moribund institution.]]> http://stevensstrategy.com/blog/2008/03/keys_for_successful_turnaround.php http://stevensstrategy.com/blog/2008/03/keys_for_successful_turnaround.php General Sun, 16 Mar 2008 14:32:51 -0500 Dr. Austin's Presentation You can find more about Dr. Austin at her web site: Dr. Ann Austin ]]> http://stevensstrategy.com/blog/2008/03/ann_austin_cic_presentation.php http://stevensstrategy.com/blog/2008/03/ann_austin_cic_presentation.php General Mon, 10 Mar 2008 15:48:56 -0500 Having sat through literally hundreds of board meetings as a college trustee, hospital trustee and college president, I've lost track of the times I've heard that "this place needs to be run more like a business". But in my private business experience, I've also seen business organizations that were the height of disorganization and inefficiency. I would cringe at the thought of these businesses being the model for good business practices. In the spirit of full disclosure, I must admit in one or two situations when I was leading the business, I was one of the contributing parties to the disarray! As I've pondered this question, I've come to this non-controversial conclusion: Tax-exempt entities (I hate the term non-profit, as I believe it becomes a guiding principle and self-fulfilling prophecy for many organizations) are on one hand guided by a mission that rises above the issue of simply making a profit, yet they would benefit from some business practices often adopted by profit making firms. http://stevensstrategy.com/blog/2007/12/academic_program_evaluation.php http://stevensstrategy.com/blog/2007/12/academic_program_evaluation.php General Wed, 12 Dec 2007 22:00:00 -0500 You may have already heard that the Internal Revenue Service (IRS) has proposed a substantial revision of the Form 990 that most nonprofit colleges and universities are required to file annually in order to disclose operational and financial information to both the IRS and these institutions' stakeholders. The expansion and breadth of the information requested in the proposed Form 990 has caused organizations like Guidestar, the Association of Governing Boards (AGB), and Independent Sector (IS) to object. These organizations have raised concerns about over-regulation and frustrations regarding whether the wrong questions are being asked, or the right questions are being asked in the wrong way. http://stevensstrategy.com/blog/2007/12/overreaching_by_the_irs.php http://stevensstrategy.com/blog/2007/12/overreaching_by_the_irs.php General Wed, 12 Dec 2007 20:00:00 -0500 http://stevensstrategy.com/blog/2007/06/education_wars.php http://stevensstrategy.com/blog/2007/06/education_wars.php General Mon, 11 Jun 2007 21:18:51 -0500