The American Council on Education (ACE) published an article summarizing the results of a September 2020 survey of 300 college presidents. ACE provided a few key observations:
- Slightly more than half of the presidents surveyed (55 percent) said their enrollment is lower this fall than a year ago.
- Thirty-one percent of private four-year college presidents said they enrolled more students this fall, compared to 15 percent of public four-year and 10 percent of public two-year leaders.
- Seventy percent of four-year college executives reported decreased international student enrollment.
The 55 percent of respondents that experienced enrollment decreases exceeded earlier expectations by 3 percent. Community colleges experienced the largest drop in enrollment.
Response to Enrollment Drops
The survey also asked the respondents to provide their expected reaction to reduced enrollment. Those responses include:
- Freeze hiring in the current year - 61%
- Freeze hiring next year - 20%
- Freeze cash compensation this year - 54%
- Freeze cash compensation next year - 23%
When asked about the most pressing issues being faced due to COVID-19 this September, 53 percent of the college presidents surveyed said long-term financial viability was the most pressing issue.
The Broader Issue – Long-Term Financial Sustainability
While across the board hiring and pay freezes may help get current-year and next year’s budgets in line, the bigger problem remains a concern of top executives. How do we create an economic model for long-term financial sustainability?
It’s like baking a cake—some recipes require a limited number of basic ingredients to get the desired final product. Others require numerous elaborate ingredients to make the final product turn out. Baking the financial sustainability cake for most colleges follows the latter. It’s a complex and balanced process that requires:
- Managing cash, liquidity, and debt
- Understanding and managing the drivers of economic success, which for most colleges is academic programs
- Finding cost-cutting opportunities
- Finding new academic programs and new student populations that can be served within the institution’s mission
- Finding alternative revenue streams available based on current resources
- Enhancing the usage of existing real estate assets
To orchestrate that kind of elaborate change, it will take the best efforts of a motivated team to communicate well, enlist the assistance of the best thought leaders on campus, and execute plans with precision.
BKD has tools and tested leadership resources to assist you in this effort. Reach out to your local BKD Trusted Advisor™ or submit the Contact Us form below for access to these resources.
As the cost of providing education continues to rise while funding sources decline, many higher education institutions are exploring new business models for improved financial sustainability. Learn how to use data to make strategic decisions with BKD’s Financial Sustainability Services.