Coping with the lost decade How Higher Education Boards and Presidents can Lead Through Change Coping with the lost decade

Trend Lines are Not Sustainable: Structural Deficit

Where is Your College or University? Why do you say that? 1 Revenues keep pace with expenditures; resources for needs, growth, and vision can be identified – “same old” 2 Feeling the pinch 3 Need serious changes so we can fund needs, growth, and vision, as well as rebalance revenue/expense trend lines 4 Holy catfish, this is a Big Deal 5 Revenue/expense trend lines are diverging too much; Needs, growth, and vision are essential and require resources; We must make major changes and innovations in the next 5-10 years

Solution to Structural Deficit Increase revenues Cut cost and increase productivity Whittle away Major tune-up: Cost-benefit, ROI, CQI Stop doing things (termination) Do different things (diversification) Do things differently (innovation)

Sample Productivity Strategies

What is Strategic Finance? Strategic finance is aligning resource decisions —regarding revenues, creating and maintaining institutional assets, and using those assets— with the institution's mission and strategic plan. As institutions begin to move beyond emergency coping, they are tending toward becoming very purposeful, focusing every bit of resource on the highest priority needs. And governing boards are realizing that “fiduciary” is not synonymous with “fiscal.” Rather, they have a fiduciary duty to the mission of the institution and to ensuring its long-term future. Boards and presidents are becoming more proactive partners, and other executive leaders are becoming more engaged with board committees.

Strategic Finance Takes a Broader View Strategic Finance ADDS: Resources Money, capital Money, people, time, equipment, space, all assets Major functions Budget, audit, balance sheet… Strategic Plan, balanced scorecard, process redesign, strategic planning, technologies, outsourcing, partnering, continuous improvement, goals, performance reviews, incentive systems, change management… Mind-set Balance Expenditures Then, now, next year Precision Align Costs Future Innovation Orientation toward More money Clean audit More value Institutional vitality Leadership Finance/Administration All who make decisions affecting the university University Sum of its parts Synergies of energy It helps to think of “strategic finance” as “strategic resources.” Finance remains critically important. Strategic finance adds dimensions and it adds constituencies and decision-makers.

Target: Vision and Vitality Where we are going; what we will “look” like Vitality: Our mission-critical assets and ability to invest in the future

Strategic Plan Missing, Not Communicated, Forgotten

ALIGNMENT: Strategic Plan is Working

2020 Indicators: Vision # Vitality # Strategic Plan Goals Critical Priorities cause indicator change 2020 Indicators: Vision # Vitality # Vision Vitality This is a visual of the definition of strategic finance – aligning resources with the institutions mission and vision. Mission Core Values

Strategic Plan Structure Mission Vision: [Define Quality and Vitality in 2020 and Beyond] Cornerstone Indicators Priorities(what) Initiatives (how) Student Success Numbers A1 Projects A2 Urban Research B1 Regional Impact C1 C2 University Vitality D1 D2

Sample Future Board of Trustees Scorecard Indicator 6/10 12/10 6/12 Target Status Student Success * 6 yr grad rate 40% 50% = * Course completion rate 83% 84% 92% + Urban Research Transition * Faculty hiring 2 4 10 ++ * Lab renovations 2% 15% 25% 100% Regional Impact * Regional placement 17% * New businesses 5 University Vitality * Cost reductions $100K $250K $350K $20M * Faculty development $1K/FTE $1.1K $3K/FTE

Board-President Leadership in Times of Change Fiduciary “duty of care:” the “buck” of institutional vitality stops with the board. Develop/reinforce strategic board role. Partner with the president, respect president’s role, expect effective leadership. Find common ground on how much/what kind of change is needed. Understand/support change management strategies. Define and focus on a vital, sustainable future state and the actions that will cause it. Trust AND verify, both ways. Early, often. Keep roles clear and support each other.

This work is funded by Lumina Foundation for Education through a grant to the Association of Governing Boards of Universities and Colleges (AGB) Ellen Chaffee, Ph.D. Senior Fellow and Project Director, AGB ellen.chaffee@gmail.com