1. Improving board capacity for strategic financial oversight Jane V. Wellman AGB Consultant for Strategic Finance Indiana Trustees Academy August 30, 2010 Association of Governing Boards

2. The changed context Challenge to increase degree attainment Structural shift away from public funding Greater tuition dependency, risks low-income access and success Rising public skepticism about college and university values – and value “Fractured dialogue” between college presidents, the public, policy makers, and faculty Unsustainable revenue/cost gap Association of Governing Boards

3. US - Estimating the attainment “gap” Using a 60%/25-34 age group attainment goal 1. Current % of Adults Aged 25 to 34 with College Degrees (2008) 37.8% 2. Average Annual % Change from 2000 to 20080.34% 3. 2020 % with Avg. Annual Change Carried Out41.9% 4. Projected 25 to 34 Year Olds in 2020 45,065,697 5.Additional Degrees Needed to Met Goal = (60.0 - 41.9 percent)*45,065,697 8,165,954 6. Additional Degrees Needed Annually (to make linear progress) 123,727 7. Current Production of Associate and Bachelors (2007-08) 2,313,233 8. Annual Percent Increase Needed4.2% Association of Governing Boards

4. 80% of national ‘gap’ occurs in these 20 states Association of Governing Boards

5. Gaps in state financials could approach 7% of spending on AVERAGE - “The Lost Decade” of state funding Source: Don Boyd (Rockefeller Institute of Government), 2009 Association of Governing Boards

7. Our Revenue Model is Not Sustainable Association of Governing Boards

8. GroupDefinition of ProblemSolution College PresidentsCaught in iron triangleReinvest in higher education! PublicCaught between growing importance and decreasing access Protect access at all costs! State Financial Officers (and legislators) Need more college graduates Increase productivity and retention! FacultyDeteriorating quality of students and declining standards Raise standards, improve K-12, stop talking about productivity! Outside inside: the fractured dialogue about college costs and the road ahead Source: John Immewahr, Villanova University, based on research for Public Agenda. Association of Governing Boards

9. The view from the outside: growing public critique about spending priorities 201020082002 Which comes closer to your views? a)Colleges today mainly care about education and making sure that students get a good education b)Colleges are more like businesses and care about the bottom line 32% 60% 35% 55% 43% 52% Which comes closer to your views? a)The state system of higher education needs to be overhauled. b)The state system of higher education is okay as it is. 49% 39% 48% 39% 48% 39% If colleges cut budgets, the quality of education will be hurt 40%42%40% Colleges could spend less and still protect quality 54%53%56% Association of Governing Boards

10. Changing the value proposition Value = more money Quality = $$ Belief in the inevitability of spending increases Cost reduction equated with loss of quality Doing new things requires new money Value = cost effectiveness Revenue is finite How the money is spent more important than $$ alone Focus on core resources and not total budget Attention to cost reductions and performance improvements Association of Governing Boards

11. Historic focus – year-to- year budget balancing Fund-raising Annual budget review Focus on generating revenue to balance the budget Public advocacy Evolving focus – strategic finance Fund-raising Multi-year focus on fiscal sustainability Cost and performance review Bridging internal and external expectations The evolving Board role Association of Governing Boards

12. Board tools for improving a focus on value Be explicit about attainment goals Set the agenda for continuous attention to investments in value: spending, efficiency and effectiveness Support establishment of institutional process for doing the deeper work Adopt appropriate metrics for benchmarking spending and performance to measure changes over time Communication! Internal as well as externa l Association of Governing Boards

13. Setting the agenda Process is key: Board needs to find ways to focus the work and bridge gaps between internal and external audiences Work with the President to frame the agenda and set goals for aspects of the work Frame the work in positive and not punitive ways Look for evidence of progress in meeting goals Continuous attention to documentation and communication Association of Governing Boards