Year after year, colleges and universities are expected to meet loftier goals with tighter budgets. With smaller teams, more staff turnover, and less money to spend, higher ed institutions are forced to look more strategically at annual budget planning.
Effective budget planning identifies what is most important for your department while strategically allocating resources to projects and tools that will make the largest impact for your department.
More schools are adopting a new strategic framework to cut costs while investing in the future of the institution, a move away from traditional budget modeling.
This trend shifts budgetary focus from:
- Internal business needs to external student support
- Budget balancing to return on investment
- Internal program offering decisions to data-informed, externally focused decisions
- Small resource investments to strategic investments that drive mission, results, and student success
This strategic framework enables colleges and universities to support needed changes and capacity building to better align strategy and resources. As with all things in higher education, it is easier said than done.
So how can departments adopt this framework for the coming fiscal year? How can we be proactive, rather than reactive, to benefit your students and faculty?
1. Ask (and answer) strategic questions about your department and the institution’s future.
What do your students need and want? Where do those student needs and your department’s strengths align? Where are we with our current capacity and resources? Where do we need to be to meet our goals? How do our goals help meet the needs of our students/faculty/institution?
These types of questions help identify where resources should be allocated to make the biggest impact, rather than where internal conversations suggest they “need” to be distributed.
2. Identify strategies, projects, and initiatives that contribute to the school’s mission and shared future vision.
Look at your answers to the questions in step one. What are the small number of investments needed to get where we need to? What will they cost, and how can we reallocate resources toward these investments? What metrics do we need to be tracking to show success and prove a return on our investment?
For example, admissions teams typically track year-over-year enrollment numbers, student success may look at retention statistics, advancement teams often look to funds raised by campaigns, etc.
3. Reorganize your existing financial data and collect new data to reconsider how you’re investing resources.
What initiatives generate the most revenue? What are the returns on these investments? Where do you have the most opportunity to grow if you were to invest in a new resource?
Most departments have one or two areas (think billboards, direct mail, tv commercials, dated systems) that cost far more than they are worth in terms of effectiveness with ROI that is poor or difficult to measure. Look for opportunities to invest in solutions that better reach and support students, reduce the workload on staff, and offer more transparency in terms of impact.
4. Shift your focus from short-term fixes to long-term solutions.
One-time cuts (salary reductions, hiring freezes, benefit rollbacks, etc.) are temporary band-aids, offering short-lived relief from your budgetary problems. These strategies aren’t sustainable, contributing to increased staff turnover, burnout, and poor morale.
Most schools will find they need to make cuts in some areas while investing in others to build capacity. When aligning resource allocation with the goals defined in step one, you can make strategic budgetary decisions while building a more sustainable future for your institution.
5. Create a plan for communicating, and soliciting feedback from stakeholders.
Don’t worry about getting everyone on board. Focus on providing the appropriate data to answer the “why” behind your change, earning support for your new strategy, and building better long-term financial solutions for your school.
Plan For The Future.
It’s no secret that the current higher ed financial model isn’t sustainable. Schools that approach budget by the modern playbook, grounded in a strategic finance framework, put themselves at a significant competitive advantage over schools resistant to change.
The sooner your school gets on board, the closer you are to long-term financial health. Schools adopting this framework see increased enrollment and improved student outcomes, happier staff, reduced turnover, and ultimately more year-over-year revenue.
This framework was presented in Inside Higher Ed by Tammy Kolbe, an associate professor of educational leadership and policy at the University of Vermont, and Rick Staisloff, founder and senior partner at rpk GROUP (higher ed financial consulting).