Negative Financial Outlook for Higher Education Sector
The two most prominent investment rating firms (Moody’s and Standard & Poor’s) have recently issued negative outlooks for higher education. Moody’s expressed concerns about the ability of colleges and universities to significantly increase tuition revenues the way they have for the past 20 years. Additionally, there is little optimism that state funding for public institutions will grow enough to offset increased expenses. The State Higher Education Executive Officers Association (SHEEOA) reported in 2014 that total educational revenue (net tuition plus state and local funding) per student dropped by 6.2 percent between 2008 and 2013.
The most significant risks are to regional public institutions and tuition-dependent private institutions. According to Moody’s, in fiscal 2013, net tuition revenue dropped for 25 percent of regional public universities compared, with four percent for flagship public schools, and public systems as a whole. “Regional public universities will be most susceptible to local declines in the number of high school graduates and improving job prospects”. It is believed that flagships/systems, those with the strongest brands, more diverse revenues, broader scope of operations, and greater wealth will continue to fare reasonably well, even as they will still need to make careful resource allocation decisions.
According to The New York Times, net tuition has either been flat or falling at 73 percent of colleges. Most colleges do not have the market power to significantly increase their prices, and maintain their enrollment levels. The number of higher education institutions on the Department of Education watch list has grown by one-third since 2007.
SHEEOA concluded its 2014 annual report with a warning that the financial realities for higher education cannot be ignored. “Parents, students, institutions, and states must make tough decisions about priorities – choosing those investments that are essential for a better future and where they can reduce spending on the non-essential in order to secure what is essential for our future as a successful society.”
Political Pressure Mounting to Control the Cost of Higher Education
The costs of higher education have come under increasing scrutiny during the recent recovery from the Great Recession. Over the past 30 years, tuition and fees have grown at a rate that significantly exceeded general inflation. According to the National Association of State Budget Officers (NASBO), the published “sticker price” for tuition and fees for the 2012-2013 academic year was more than 3.5 times the published price 30 years earlier, adjusted for inflation. As the overall economy has struggled to regain its footing in the last five years, the annual average tuition increase has been 6.7 percent.
A wide variety of high-profile voices including The New York Times, Forbes, The Wall Street Journal, and President Obama are openly questioning whether higher education has priced itself beyond the reach of many Americans. A common criticism is perceived “administrative bloat” at many institutions. Late last year economist Rudy Fichtenbaum expressed a widely-held view in The Wall Street Journal that increased costs are being driven by a “metastasizing army of administrators with bloated salaries” and “the growth in entertainment spending and spending on amenities (including) luxury dorms, new dining halls and rock-climbing walls.”
In the New York Times, Dr. Andrew Hacker of Queens College echoes the sentiment that institutions must reexamine spending priorities. “Colleges know that whatever they charge, students will pay, largely by taking out loans. The Reason: Only colleges can grant degrees, an award most young people think they must have. Yet the shameful truth is that too little of the revenue goes for education. Colleges have been rifling tuition checks for all manner of extraneous outlays, with undergraduate instruction barely making the list.”
Regardless of your opinion of these assessments, there is unquestionably a growing perception that colleges and universities must take significant steps to control costs. The Obama administration has proposed that the Department of Education establish a rating system for colleges and universities to hold them accountable for performance and help ultimately bring tuition under control. Evaluations will be based on measures such as the average tuition they charge, the share of low-income students they enroll, and their effectiveness in ensuring students graduate without too much debt. The eventual goal is to tie federal funding and financial aid to performance.
We would like to congratulate the winners of the 2014 Women’s Leadership Institute Scholarship. We are very pleased to announce this year’s scholarship recipients:
(in alphabetical order) Candice Baldwin, Elizabeth Boretz, Gaye Cooksey, Maria Fuentes-Martin, and Kristi Jovell. Congratulations to all of you!
A reminder for those who will be attending the 2014 Women’s Leadership Institute, the deadline for early bird registration is November 4, 2014. We look forward to seeing all of you there!
SJG’s Valerie Szymkowicz will be speaking at the NASPA Region I Annual Conference as part of a panel program with Scott James and others, entitled “How to be young, experienced and in a leadership role on campus.” The panel presentation will feature individuals who have advanced quickly in their career and will address the challenges and opportunities faced by young individuals who have navigated the traditional career paths in higher education. Panelists will address career strategies that have been valuable to their professional growth and development and the first 90 days in leadership.
The program will take place on Tuesday, November 18 from 2:30 – 3:30 p.m. as part of the NASPA Region I Annual Conference in Newport, RI. We hope you will be able to attend!
On October 3, 2014, the NASPA Foundation and its Board of Directors selected Ellen Heffernan as its new member of the Class of 2015 Pillars of the Profession! The Pillars award is designed to honor members of the profession who:
The Foundation gave Ellen this award in recognition of her outstanding service and significant contributions to the profession. This new class of Pillars will be introduced at the 2015 Annual Conference on March 23, 2015 in New Orleans, Louisiana.
As part of the Pillars program, the NASPA Foundation accepts gifts in the name of each honoree. These gifts come back to the student affairs profession as scholarships, research grants and awards. Please help us celebrate the 2015 Pillars with a donation in Ellen’s name to the NASPA Foundation. Your gifts ensure the advancement, health, and sustainability of the student affairs profession and help answer the challenges we face as educators. You may donate online here. To learn more about the Foundation’s Pillar class, go here.
SJG – The Spelman & Johnson Group is delighted to be offering five scholarships to cover registration fees for the 2014 Women’s Leadership Institute, to be held in Laguna Niguel, California from December 2-5, 2014. Scholarships are open to all those that wish to apply, however, there will be a preference given to women professionals from Community Colleges, Tribal Colleges and Universities, Native American-Serving, Nontribal Institutions, Historically Black Colleges and Universities, Hispanic-Serving Institutions, or Asian American and Native American Pacific Islander-Serving Institutions. Ideally applicants should possess at least ten years experience in higher education administration in a mid- or senior-level position. There will be five awardees selected from applications received on or before October 17, 2014. To apply for a scholarship please email your resume and a brief two paragraph statement that outlines what you hope to gain professionally from attending this Institute to email@example.com with the subject line WLI.
The Women’s Leadership Institute is the premier program for women leaders across campus. The program is designed for women who aspire to new or advanced leadership positions on campus. The Institute features a curriculum with an overall focus on building the next generation of leaders in higher education administration and will address such issues as leadership self-assessment, fiscal management, intercultural competencies, etc.
The Women’s Leadership Institute is co-produced by members of the Council for Higher Education Management Associations (CHEMA) – ACPA, ACRL, ACUHO-I, ACUI, APPA, NACUBO, NAEP, NASPA, and NIRSA. The member registration fee will be extended to all members of these partnering associations. To register for the Institute, please visit http://www.acui.org/wli/
As a new academic year begins, our friends in the fields of campus/student activities are facing several challenges. Some are fairly new challenges, while others seem to always be around.
How many offices have recently changed their name or are considering a name change? Many campus activities offices are moving toward names like the ‘Office of Student Engagement’ or ‘Campus Engagement’ to more accurately reflect the services and programs the office is now responsible for maintaining. These offices have never only been about activities – it has always been so much more. Perhaps a name change will allow the office to garner more respect from the campus community.
Campus activities offices are being asked to do much, much more. Many other offices and departments are now reaching out to the office of campus activities for co-sponsorship and collaborative programming opportunities. This is in addition to the usual offices that campus activities has traditionally partnered with throughout the year. When the rest of the campus discovers the reach and impact campus activities can have with students, these different offices want to work with campus activities. While this is a wonderful recognition of the work of student activities, finding ways to add programs/activities to an already packed schedule with no more hours in a day, adds to the stress of trying to “be everything to everyone,” that many offices feel today.
Share with us your experiences of these challenges. Are you being pulled in a hundred different directions? Are you thinking of changing your office’s name or have you done so recently? We would love to hear from you, and about the ways that you are managing the increased expectations of your office.
Continuing with the theme of challenges to campus activities offices, this month we are also discussing financial resources.
Resources, particularly financial, are always an issue. It does not matter what type of campus you work on, large, small, public, private — finances can impede progress and create obstacles for innovation. Many campus activities offices are funded through some type of student fee. Usually this is a fee charged to each student to help provide them with a vibrant on-campus community as part of their classroom experiences. Generally, fees not only supports programs and services, but sometimes staff and student salaries. Students paying this fee can enjoy most, if not all of the activities/services for free, or for an additional modest fee depending on the event. Most institutions give a portion of this fee back to student organizations through a funding process, thereby allowing students to pursue their own creative activities that further their interests and passions.
The days of thinking the student activity fee will always be a secure, protected source of funding are now in question. Institutions are beginning to question this revenue source and, in some cases, they have started to look at ways in which other departments/offices might use these funds. As budgets tighten, this fee represents some potential funding relief for larger institutional projects. However, repurposing these funds comes with its own problems, as many fees represent a negotiated contract between the students and the institution. There is a cost to all of these decisions as well as potential benefits.
Another aspect of the fee discussion entails the students who pay the fee, but may not ever access the associated services. This argument has been prevalent on campuses for years. At the University of Southern California, a system was created to allow graduate students to opt out of paying the fee. In doing so, they waived their access to any and all privileges associated with this fee, including travel grants to support their academic research. More recently, the University of Tennessee, Knoxville has allowed its students to opt in to paying the fee for the first time. Those choosing to opt out of this program may not utilize the services/activities supported by the fee. Does this means that organizers of an event must now check to see which students have paid the fee and are allowed entry to the event? In addition, some students still pay this fee but if they do not opt in, the fee that would have gone to student-organized programming, will be re-allocated to other services for students. It is unclear if the student can select where that money will go.
Another topic for discussion at a later time would be fees and distance learners. At some institutions, these students do not pay the fee, yet they wish to access services supported by this fee or even other, more traditional on-campus services. How do we work with these students to create a positive college experience for them?
What are you experiencing on your campus? Are you concerned that your fee may be repurposed? We would love to hear from you.
We wanted to share a great article from the July 2014 issue of Money Magazine by Kim Clark, entitled “What to Ask at Career Services: A college’s placement office is now one of the most important stops on the tour.” The article covers important topics that students should discuss at their career services office, including staff, types of services, career preparation, and internships.
To read the full article, follow the PDF link: What to Ask At Career Services – Money Article
Greetings from SJG – The Spelman & Johnson Group!
With the long days of summer ahead, it is time to consider grabbing a favorite cool beverage and a good book to nurture body and soul. In the spirit of the season, we thought we would share a few publications on our favorite topic of higher education that have proved especially insightful. Perhaps you will want to tuck a volume or two into your bag before heading off for a well-deserved summer retreat!
SJG’s suggested Summer 2014 Reading List includes:
Presidencies Derailed: Why University Presidents Fail and How to Prevent It
Authors: Stephen Joel Trachtenberg, Gerald B. Kauvar, and E. Grady Bogue
Publisher: Johns Hopkins University Press – July 2013
During 2009 and 2010 alone, 50 college and university leaders resigned, retired early, or were forced out. The authors of Presidencies Derailed set out to determine whether a pattern existed. The authors provide a thoroughly researched account of career incidents that led to the downfall of leaders in private institutions, public universities, and community colleges.
Higher Education Accreditation: How It’s Changing, Why It Must
Author: Paul L. Gaston
Publisher: Stylus Publishing – December 2013
This book addresses this question head-on, asking whether accreditation is indeed in need of radical reform, and the agencies’ authority should be curtailed; or whether in fact, as accrediting agencies maintain, ensuring rigorous and consistent standards and degrees are a reliable gauge of student attainment.
Search Committees: A Comprehensive Guide to Successful Faculty, Staff, and Administrative Searches
Author: Christopher D. Lee
Publisher: Stylus Publishing – June 2014
Finding the right candidate for administrative, professional, and faculty positions is one of the most important tasks that any institution or enterprise undertakes. However, few higher education professionals receive training on the search committee process, but are expected to serve on, or lead, committees. This book provides advice, training, and a step-by-step guide for conducting a rigorous, thorough search.
We hope you enjoy these selections – they are available online and through your local independent bookseller or public library.
Have a terrific summer!
Jeannette Cabrera Palacios was given the NAER 2014 Hall of Fame Award. NAER sponsors the Recruiter’s Hall of Fame–an award that honors professionals in the executive search industry. Induction into the NAER Executive Recruiter’s Hall of Fame is restricted to those individuals that have demonstrated leadership in the profession of executive search and that possess a substantive and proven career history of superior contribution to the practice of executive search. Congratulations Jeannette!