“The world has changed.” No…the world is changing. Let’s not fool ourselves into thinking that we know the full impact of COVID on our lives, let alone our jobs in higher education.
I, like most of you, have been asking myself and my colleagues tons of questions about the future of our institution. What will it look like? How will our approach and business model change? While I certainly don’t have the answers to all of these for you – because almost all are institution-specific – I thought it would be useful to jot down some questions that you may or may not have thought about. If you get one light bulb moment, I will have been successful.
Hindsight is 20/20 – literally:
The second half of last fiscal year changed on us all in what seemed like an instant. The pandemic hit us quickly and every minute we were reacting to the latest news or guidance we were receiving. Most institutions halted on-ground instruction and went to 100% online delivery. How did you end up last fiscal year with the impacts of COVID in the spring? Did you refund students’ fees? Housing? Dining? Did CARES Act funding more-or-less make you whole? Have you leveraged the direct-to-student portion for continuing students? E.g. did you provide that funding only to students enrolled in summer or fall? If you had the means to do so, did you pre-buy supplies for the fall, as needed, for social distancing and other safety measures?
We all did some level of learning from the spring and summer and we’ve prepared for, and have begun, Fall semesters. I expect that we have all seen reductions in revenue with movements to online, and changes to our expenses with the need to purchase masks, hand sanitizer, plexiglass, signage, etc. – were all those reflected in your initial FY21 budgets? Have you experienced lower enrollment than you were planning at the beginning of the year? Is it because students either didn’t want to “go away” (from home) to come to your institution or because they didn’t want to participate in the online delivery most of us are offering? What changes are you having to make, even within the fiscal year based on how your revenue is looking? Thinking ahead: Have you identified the changes you have the capability to make? Have you planned additional levers to pull based on certain thresholds?
Impacts of online modality:
We’ve all been forced to move instruction online – almost everyone in the spring and summer, and most institutions, even if only partially, at some level for the fall as well. Spring 2021 doesn’t seem like it will be much different. Are you reliant on a particular modality of delivery? Have you budgeted out the differences between online and in-person delivery? Are those online demanding lower tuition? Are you providing a discount? What about course fees? Are you refunding course fees if, for example, students are having to procure a lab-in-a-box in the absence of using your facilities to do their labs? Technology has been the critical factor for most institutions. What level of investment did you make in new hardware to be able to transition to online delivery? How about new software packages? Are the expenses you’ve incurred one-time or do you need to build them into your recurring expenses for all future years? Are you learning things from the spring, summer and start of fall that are already causing changes to planning for spring semester? Do any of those plans represent significant additional expense? Are you investing more in student success for those that are not as keen on learning virtually? What retention costs are you incurring to ensure that students are having a good experience and come back in the spring? Are you offering virtual student events? Are those at an additional cost? Thinking ahead: When the day comes when we are able to offer our full suite of courses in the traditional face-to-face modality, we don’t know how the students will choose. After they were “forced” into online offerings last spring, summer and this fall, will some find that they like it better? How will this affect the business of your operations?
What about your mandatory fee package? Are you refunding full or partial fees for amenities or services the students are not able to utilize? Do your fees support expenses you are unable to reduce (i.e. debt service payments)? Are you having to discontinue certain services to come in line with reduced (or eliminated) lines of revenue? Are your auxiliary units having to pull from their reserves? Will such a pull necessitate elimination of future plans that had been approved by students (e.g. expanding a recreation center)? Thinking ahead: Will you change your mandatory fee strategy and description so that you can justify charging it even with changes in modality or on-campus presence? Will you consider rolling it into tuition and having more of a single price?
What is the impact of the changes in your Athletics programs from COVID for Fall (and maybe Spring) FY21? Are you considering eliminating sports that are the biggest drain on net expenses? Have you done the analysis to know which those are? What are the various aspects of your Athletics department revenues? Are donations reduced? What is the impact on sponsorships? What is the reliance on ticket sales? Are students expecting refunds for games they are not able to attend this fall? Are your coaches’ contracts structured to mirror other parts of your university’s salary modifications in times like this? Or do they pay the same regardless of what is happening in other areas? Thinking ahead: Are you revising those coaches contracts? Will the additional year of eligibility being considered impact your out-years models for recruiting or expenses?
Have you had to instate furloughs? Layoffs? Salary reductions? Has your tenure model affected your ability to react to your revenue? Are there other personnel contracts that have affected your ability to adjust personnel expenses? Thinking ahead: Are you making changes in these areas to allow for more flexibility in the future? Dare I mention it – is tenure ‘on the table’?
How conservative have you been in budgeting? How has that changed with what we’re learning this year? How much ‘upside’ do you build into your budget? How much ‘downside’? Do you model and budget for various scenarios? What are your leading indicators and how early and how quickly can you react to what they are telling you? Do you have the entire leadership team’s buy-in to actions for the institution to take based on what the indicators tell you? Thinking ahead: Will you work to create a more immediately scalable budget to react to changes as they come along, especially mid-year?
How heavily tuition-dependent is your institution? Are there initiatives related to other funding streams that you can move forward to implement? Is your senior leadership team thinking creatively about what new streams of revenue might be viable to consider or implement? Are donations increasing or decreasing during this time? Is your Advancement group reaching out to donors to ask for additional support from your donor base? Are they specifying the need for unrestricted dollars? Thinking ahead: Are you using this opportunity to develop new donors?
Managing teams reporting to you:
Any changes in how you manage and lead your team with the virtual environment most of us have implemented? Are you continuing to allow partial or full teleworking arrangements? Why or why not? Are you able to track productivity of your teleworking team members? Are you reacting to any changes you see in individual’s productivity to ensure that morale of the entire team stays as high as possible? Have you had to make reductions in your own teams? How are you engaging those who remain to be smart and efficient; to consider everything they do to not waste precious resources? Are you reviewing all your processes together to see which might be able to be eliminated or combined to reduce the effort? Are you providing some allowance for flexible or alternative schedules for your team members who are parents whose children’s schools have gone online? During times like this, senior leaders often have information that can help our team understand the challenges and to be engaged in helping to find solutions. How are you engaging with your direct reports and your entire team? Are you meeting with them (virtually) to demonstrate calm, thoughtful leadership? Are you providing continued access to you and engagement to your teams? Are you sharing information that you are able to? Are you asking how they are doing? How do you demonstrate care for your folks in such challenging times? Thinking ahead: How will you use what you are learning about yourself and your teams to make you an even more effective leader going forward?
Red flag actions:
What do things look like at a high level for your institution and any major red-flags for long term viability? Are you pulling from reserves? Are you increasing your endowment draw? How much are you hoping for a new round of stimulus to shore up finances? Thinking ahead: Do you anticipate debt service impacts? If so, are you going to reach out, proactively to talk to your FA or bondholders?
Learning a lesson, or two:
We certainly will (or had better!) learn from what we are all experiencing and all these questions we are asking. This is a true-life stress-test of our institution! Thinking ahead: How will we use those lessons to better our institution – to rethink our approach on our higher education business model?
Higher education has been criticized for the lack of flexibility in our business model. If there were a few things we really should learn from this type of crisis, they are 1) that we need to improve the diversity in our revenues and 2) to create flexibility in our operations/expenses to be able to quickly react to these types of changes. Are you working toward these changes?
You’ve all asked these questions and a thousand more. Asking the questions, and pushing for change is a critical responsibility of those of us in positions of leadership in higher education. If ever there was a learning-opportunity not to waste, this has to be it.