In 2005, President George W. Bush launched a bold and expensive plan that included preparations for what seemed then to be an unlikely event: a global pandemic. In an ABC News article, author Matthew Mosk explains how President Bush was able to mobilize some resources to put together the playbook for dealing with such a catastrophe.
Mosk says, “The effort was intense over the ensuing three years, including exercises where cabinet officials gamed out their responses, but it was not sustained. Large swaths of the ambitious plan were either not fully realized or entirely shelved as other priorities and crises took hold.”
Fast forward to today. How many schools are prepared for what is ahead? How many have a plan? How many have financial reserves and resources to innovate and pivot to deal with the crisis? We will soon find out.
Most schools appear to still be in crisis mode as they try to make decisions about how to deal with the spring 2020 semester or quarter. Administrators will soon have to face board members’ hard questions about what comes next. How will they respond? Will they be ready to answer the hard questions, or will they talk more about all the activity they are currently engaged in and how the next step really needs to be the analysis of what is ahead?
Taking time and gathering insights—once summer is over and the new school year starts—would be a normal response. But, for many schools, time is not on their side. Instead, they’re faced with calls to make partial refunds of food service and housing revenues collected. As one school in the Midwest acknowledged, their costs were not going to be reduced, so making the cash refunds was just not possible. Come August 1, cash reserves will be in very short supply in many places.
Should administrators take their time and hope for the best this fall? After all, this will blow over soon enough, right? No one knows for sure, so the time to step on the gas to be ready for difficult board meetings and the equally difficult summer of 2020 is now. That means now, not in two or three weeks. So, that brings an important question: What’s needed?
According to leading experts, including Dr. William Massy, there is a need for schools to analyze academic program margins and the education market demand, check on any major change to determine mission alignment and model the associated decisions in a way that tracks cash flows, balance sheet impact, income statement impact and key ratios reviewed by regulators and financing entities.
Dr. Massy, in his upcoming book Resource Management for Colleges and Universities, says “Resource allocation in colleges and universities needs to become more responsive to academic mission, marketplace realities, and the requirements of financial sustainability.” Such improvement is needed, he asserts, because few institutions currently have the evidence, know-how and cultural capacity to take advantage of modern information systems and models.
Higher education leaders need to focus here. ABC News reporter Tom Bossert, who was in the White House during the Bush administration, says “Bush did not just insist on preparation for a pandemic. He was obsessed with it,” according to the ABC News article.
To save as many schools as possible, the industry needs that level of obsession. If not, the lyrics to the R.E.M. rock ballad might come true—it may be “the end of the world as we know it.”
Please review the Related Thoughtware below and reach out to your BKD Trusted Advisors™ and higher education leaders, or use the Contact Us form below, to discuss tools and approaches to planning this summer, including how you may benefit from BKD’s financial sustainability services. We are here to help.