We see a recurring pattern of enrollment stagnancy or decline, shrinking net-tuition revenue, followed by substantial cuts in programming, faculty, and staff. When this pattern repeats itself over multiple years morale suffers, vision shrinks, and the institution begins to lose momentum. Institutions succumb to systemic under investment in the very areas that are critical to the future success of the institution.
When an institution achieves a balanced operating budget by repeated cuts instead of by revenue growth, this leads to systemic under investment in the very areas that are critical to the future success of the institution.
New program development stops. Crucial student success services shrink or disappear. Scholarship support dwindles. Information technology infrastructures stagnate. Marketing and student acquisition budgets are squeezed. Crucial equipment is not replaced. Deferred maintenance mounts.
Perhaps worst of all, faculty and staff salaries and benefits fall out of competitive ranges making it harder and harder to recruit and retain the people who are the heart and soul of a university.
We call this a “prosperity gap.”
In our work with affiliated institutions, we have found most institutions have a prosperity gap equal to 5% to 10% of their annual operating budget. In other words, the operating budget needs to be 5% to 10% larger year after year to begin erasing the gap between current and needed investment in the future of the institution.
Faced with chronic revenue shortfalls and recurring under investment in growth, institutions typically take one of four approaches.
We offer a different and innovative alternative:
Business model transformation by leveraging the strengths of a comprehensive shared services platform.
We believe that for colleges and universities to thrive in the next decade they must develop a financial model that allows them to continuously invest in their people, their academic programs, and their student experience.
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