In a new survey by Inside Higher Ed and Gallup, less than half of surveyed chief financial officers expressed confidence in the sustainability of their institution's financial model over five years. Over half of business officers strongly agreed that the business model for elite private universities is sustainable ” only 4 percent expressed the same for for-profit universities.
Inside Higher Ed's 2013 Survey of College and University Business Officers was released mid-July. Last Tuesday, Inside Higher Ed sponsored a free webinar to discuss the survey's findings and gather reactions from campus administrators.
Inside Higher Ed and Gallup surveyed almost 460 chief financial officers to measure how business officers perceive and address fiscal and budgetary issues facing U.S. higher education institutions. Questions in the survey included how chief business officers perceive the sustainability of their institution's financial model, most pressing financial issues and best strategies to increase revenue and reducing operating costs.
Key Findings
In addition to skepticism of their institution's long-term viability, most CFOs believe that a significant number of colleges and universities are facing financial crises.
Why all the skepticism and why are they questioning the long-term viability of their own institutions or the sector generally?┬" asked Inside Higher Ed Editor Doug Lederman. I think a major reason is a feeling that the tuition elasticity we have seen stretched over the last couple of decades may be reaching its end¦.And by far the answer that got more responses than anything was the statement, ˜I am paying more attention to the market limits on the ability to raise fees that I was five years ago.' We are really seeing increasing downward pressure on institution˜s ability to raise revenue from students. At the point that is true, I think that may be contributing to the idea that institutions - a traditional source of revenue and what may have at times seemed unlimited isn't anymore.┬"
Ninety-two percent of business officers agreed that student retention is the best non-traditional source of revenue. Most CFOs also say that changes in university spending will come from a reallocation of state funds rather than increased tuition revenue.
The top strategy for reducing operating costs among surveyed CFOs was using technology and analytics to evaluate and improve programs and reduce structural costs. However, a majority of CFOs said that their institutions lacked the tools and data to allow effective decision making.
How do your opinions on your institution's financial situation compare with this survey? Click here for an interactive survey summary infographic, or here to download Inside Higher Ed's 2013 Survey of College and University Business Officers.