BKD’s Contribution Margin Analysis helps universities set course for program improvement and savings. The tool provides a visual analysis of the financial contribution margin at various levels of detail—school, department, program, class, faculty member—for an institution. Jim Smith, vice president of fiscal services at Oklahoma State University Institute of Technology (OSUIT), offers insight into how his university has used and benefited from analysis.
Q: What aspects of the tool were most useful and why?
A: This is the first time our university has had an analysis this detailed. The tool allowed us to quickly work with reports to evaluate concerns and consider solutions. We appreciated:
- The University Performance Dashboard because you see multiple years and see everything in one place.
- The Contribution Margin Dashboard because it has many options to view schools, courses and instructors and how they’re performing. This particular dashboard—and the reports we generated from it—was presented to the deans, who then used it to come up with strategies to improve performance.
- The Quadrants Dashboard, which provides a useful visual of each different school or program. If a school is losing money, we can task that school’s leadership to bring up its contribution margin. If we can get each school to bring up its contribution margin, we’ll make significant headway in our financial discipline.
Q: What differentiated data in this tool from information OSUIT previously used, and how has that resulted in acceptance by users such as the deans?
A: BKD’s Contribution Margin Analysis empowered our deans to come up with the best solutions for their schools and allowed them to be precise. The deans could look directly at their units’ performance and create recommendations and action items for their schools and programs, from how many classes they schedule per semester to how many seats they have in each class.
In our technical schools, a lot of our labs and classes are greatly limited in size because of safety and the price of the equipment, such as our large road graders and earth-moving equipment. Most of our technical programs were below-zero contribution margin. I’ve been amazed at how providing this information has helped our deans, who wanted to do better but didn’t know how or in what areas to improve. BKD’s Contribution Margin Analysis allowed us to develop solutions that are having a practical effect on our bottom line. Our deans are executing common sense steps, and the tool helped them understand what they needed to do.
Q: Can you share one direct example of how your institution has changed a program based on data from the tool?
A: We offered an international food course that had multiple sections, and the dean realized the university could consolidate it into one course and use the course’s instructor to teach other courses, which reduced the need to hire adjuncts. This program was losing more than $400,000 a year. For fiscal year (FY) 2019, the loss is down to $140,000, and there will be no loss by FY 2020—in fact, there will be an increase. This would be a more than $500,000 swing in a two-year time span.
Q: How has the tool helped the university overall?
A: For years we were creative and used every cost-cutting feature we could imagine in an attempt to avoid transferring financial burden to the students. We didn’t want to increase tuition. The analysis tool has been a game-changer in getting leadership involved, improving efficiencies and solving financial issues. It’s made us more of a team, and we’re each doing what we can to make the institution a place where we can thrive. Overall, it’s been a morale booster for the rest of the campus.
To learn more or request a complimentary demo, visit bkd.com/cma.