1. Economic Models Project AJCU Finance Officers Conference Bob Shea Senior Fellow, Finance and Campus Management Jackie Askin, PhD Economic Models Project Director

2. Overview of Economic Models Project Results from Focus Groups and Engagement Across our Industry Economic Model: Framework for Innovation What Does This Mean for AJCU schools? Discussion/Engagement with you Agenda

3. PROJECT OVERVIEW

4. Ensure that the economic models enable institutions to fulfill their missions of instruction, research and service Equip NACUBO members with a comprehensive tool that provides the foundation for institutional conversations Impact the national debate with objective quantitative and qualitative information Develop a communications strategy that allows NACUBO and its members to be a prominent voice in the discussion of the needed changes to the higher education economic model Economic Models Project Goals

5. Leaders and Influencers

6. EMP Working Group

7. Questions of access and affordability: increasing tuition Declining public support/philanthropy Changing expectations for outcomes Changing delivery modalities Increasing and changing costs Globalization Disappearing institutions and new competition Losing strategic conversation debate Why New Models?

8. 1.A sense of urgency 2.A powerful guiding coalition 3.Create a vision 4.Communicate the vision 5.Empower others to act on the vision 6.Plan for and create short term wins 7.Consolidate improvements and produce more change 8.Institutionalize new approaches Source: Winning at Change, John P. Kotter, Leader to Leader, No. 10 Fall 1998 How Do We/You Innovate the Economic Model?

9. FOCUS GROUP INPUT

10. “What strategic issues, spoken or unspoken, on your campus are inhibiting you from moving to a sustainable economic model?” The Strategic Imperative

11. 11

12. THEMES FROM CONSTITUENT COUNCILS 12

13. 13

14. 14

15. 15

16. 16

17. AGB Annual Meeting Focus Group Resistance to change Ability to be nimble in adapting to changing environment Clear picture of what the options for the new model are Knowledge about current economic model at the institution Leadership and knowledge Progressive/highly qualified leadership/professors Expertise to lead change Faculty and staff understanding of the current business model Union issues Union contracts negotiated at the state level Tradition Resistant faculty Funding (State / Philanthropy) Money - working on building endowment Resources for strategic investment Lack of free capital Inconsistent state funding Enrollment & Competition Geographic diversity of student body Competition with peers Push and pull between number of students and quality Changing student wants and needs Competition from for-profit institutions Competition from major public state university with branch moving into our university town Fewer students due to demographic changes Shrinking number of first-time, full-time university freshmen - need to expand market reach Growing enrollment year-over-year Location Outside Rules/Regs Accreditation issues Government imposed regulations - one-size-fits all issues Tuition Net student revenue Tuition discounting Too dependent on tuition General economic environment

18. THEMES ACROSS GROUPS 18

19. 19

20. 20

21. 21

22. 22

23. 23

24. Ratings Agency Perspective

25. “…we are limited by the ungodly combination of honoring tradition and unrealistic ambition—this is higher ed’s affliction.” VP of Enrollment, Communication and Planning My Favorite Response!

26. If we continue on the same path we are on, what does higher education look like in 5, 10, 25 or 50 years? –Status Quo –Incremental Change –Fundamental Change We Know What the Future Looks Like!

27. 27

28. ECONOMIC MODEL

29. Economically Sustainable An economically sustainable business model enables a college or university to efficiently and effectively acquire and maintain the resources and capacities needed to create and support demand for quality services and outcomes in its missions of instruction, research and public service over the long-term. It encompasses the financial environment, the institutional mission and value proposition, organizational structure and paradigms for decision-making, and institutional competencies, processes and products. In financial terms, the institution has adequate revenue and assets to meet on-going strategic goals, and income and expenses are balanced and changing at similar rates to maintain that balance.

30. Institutional Response To Economic Sustainability Challenge STATUS QUO/DECLINING DEVELOPINGSTRONG The college or university is encountering one or more of the following: (1) declining enrollment, (2) declining endowment, (3) declining public funding (if public institution), (4) increasing tuition rate… and is continuing to use short-term, incremental financial planning, having not identified strategic, financially- tested means to reverse the negative trends. The institution has adequate resources to accomplish desired outcomes for the short- term and is actively developing plans to implement transformational strategies. The college or university has sound economic forecasts for the foreseeable future, based on reliable, tested assumptions, and is strategically responding to changes in the environment with necessary structural innovation, capacity transformation, mission differentiation and/or financial strategies.

32. MarketCompetencies/ Capacities StructureFinance EnrollmentAcademic structure ConsortiaCost structure Economic Model Conversation

33. MarketCompetencies/ Capacities StructureFinance EnrollmentAcademic structure ConsortiaCost structure Are we accurately sized? Academic reputation in market College organizational structure Academic administrative Discount rate CompetitionCost trends Capital investments Endowment payout Economic Model Conversation

34. WHAT DOES THIS MEAN FOR AJCU SCHOOLS?

35. Tuition Discounting

36. Economic Model Innovation 1.Do AJCU schools need economic model innovation? a.How do you know? b.What criteria do you use a.Quantitative b.Qualitative? 2.As the college’s leadership, the direction and scope of the innovation is up to you. What strategic innovations should you consider?