By Terri Albertson, CPA and Tom Gorman, CPA
When reflecting back on the most pressing trends currently challenging the higher education community, what remains constant in this rapidly transforming landscape is the mission of higher education institutions: preparing students with the right tools, knowledge and problem-solving capabilities to make productive and beneficial contributions to society.
In a slowly-recovering economy, however, the business and policy pressures that colleges and universities now face are both evolving and intensifying. From demographic shifts to peaking enrollment, as well as the growing influence of alternative methods of education delivery, the competition to attract and retain top students and faculty from a shrinking pool of candidates is at an all-time high, and will likely continue to grow. At the same time, cost pressures are compounded by federal funding challenges and an increased focus on measuring and reporting outcomes.
As institutions respond to this difficult environment, here are three trends to keep on your radar in the coming months:
VALUE METRICS
As tuition prices continue to rise, there are growing demands from the public and government alike for colleges and universities to demonstrate the value and return on investment (ROI) of their offerings. To measure this value in the most consistent and accurate manner—both within and across different institutions—conventional metrics that look primarily at completion rates no longer suffice. While the White House looks to advance a performance-based single rating system focused on access, affordability and outcomes, efforts are underway across the industry to develop techniques that more accurately measure knowledge acquired during college, as well as the success and quality of job placement after graduation. As more states gradually adopt performance based funding systems, metrics and ratings may also become more than a tool for consumer use; they are likely to transform into an impactful measuring stick that can compel compliance and enhancements from under-performing institutions.
RESOURCE SHARING AND CONSOLIDATION
Colleges and universities face demands to stabilize tuition rates while also improving their recruitment processes, and as a result, are increasingly looking for innovative ways to revamp their business models and cut costs. In the year ahead, we expect to see more institutions considering resource sharing and consolidation — including mergers — as
potential options to accomplish these goals. These partnership arrangements can enhance operational efficiencies, allowing organizations to broaden their outreach, offer more diverse programs and more effectively compete for top students. They are also often difficult to execute, however, as they require considerable financial and operational engineering, as well as alignment across and within two or more organizations around a shared vision, governance structure and goals.
INCREASINGLY COMPLEX REGULATORY ENVIRONMENT
The scope of rules, regulations and compliance considerations to which colleges and universities must adhere continues
to grow more complex. Amid the White House’s proposed single rating system, Clery Act compliance and the OMB’s Uniform Guidance, it’s critical that institutions and their leadership understand the ramifications of new and potential regulations in order to avoid the penalties and costly reputational harm that can result from non-compliance. Which higher education issues and trends are on your radar?
For more information contact a Templeton Advisor.
This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” newsletter (Winter 2014). Copyright © 2014 BDO USA, LLP. All rights reserved. www.bdo.com
