While colleges and university budgeting calendars differ greatly, January is when many institutions are finalizing budget projections, considering department budget proposals, and working on ways to best allocate funds. As the business offices balance budget requests with institutional resources, staff are asking: What can we do this year to secure more consistent revenue? How can we reduce operational costs? Which projects do we prioritize? Part of the issue with trying to solve budget problems year to year is that solutions to these challenges take time to develop. In this series, we break down some of the budget challenges facing institutions in 2024 and suggest several long-term strategies colleges and universities can implement today to overcome these challenges in the future.
In Part 1 of our series, we’re exploring what institutions can do to tackle problems associated with uncertain funding sources.
What's Causing Concern With Traditionally Reliable Funding Sources?
Funding in higher education has become a moving target. State funding seems to be in constant flux, decreasing in 37 states between 2020-2021 and increasing in 38 states in 2022-2023. Federal funding is also uncertain year to year, with the House and Senate at odds over how much to allocate to higher education programs like work-study, Pell grants, and others. The looming demographic cliff means enrollments and tuition revenue will continue to drop, and so will advancement dollars. While Mackenzie Scott’s billion-dollar donation momentarily inflated the average higher ed advancement revenue, donor numbers have been falling for quite some time.
These fluctuations and uncertainties make it extremely difficult for business offices to put together budget proposals. What can institutions do to secure more consistent funding?
1. Gain Better Insight Into and Control Over College and University Finances
Information silos make it difficult for the business office to gain a holistic view of an institution’s finances. These silos exist because many institutions still use legacy technology that does not support end-to-end data integration or advanced analytics capabilities. Newer systems would solve these problems, but many business offices worry that spending limited resources on their own department is difficult to justify.
Unfortunately, operating via spreadsheets is more likely to impede than support the budgeting process. In this case, the adage “You have to spend money to make money” is entirely applicable, though it might be more accurate to say, “You have to invest in new technology to improve budget consistency.” Not only are many modern higher education finance solutions in the cloud, they also integrate with other enterprise systems and contain advanced analytics. These systems enable staff to gain a clearer picture into college financials while also introducing new opportunities to leverage data for informed decision-making.
2. Find More Effective Ways to Enroll and Retain More Students
When it comes to enrolling and retaining students, there are more strategies than can fit in a short blog—in fact, we’ve written several blogs on the topic. Our latest enrollment blog focuses on brand identity and how colleges can build their unique brand to enroll more students. Partnering with enrollment marketing experts like Spark451 can help clients audit their brand, improve visibility, generate more leads, and increase total yield.
But as the demographic cliff approaches and the student pool becomes more competitive, colleges and universities must also prioritize efforts associated with retaining current students and attracting more non-traditional learners to campus. Modern retention solutions like our Student Retention Suite can give institutions the tools to analyze student risk factors and implement early alert workflows. Solutions like Campus Marketplace powered by Jenzabar, meanwhile, combine program management software with marketing and skill bootcamps to help institutions launch non-traditional programs quickly and attract new learners to campus.
Another core component of any student enrollment and retention strategy is providing support for learners, including mental, emotional, situational, and financial aid. Colleges and universities should always be on the lookout to improve first-year student experiences. After all, if a student doesn’t like their freshman experience for one reason or another, what’s to keep them from never returning to campus? In terms of financial aid, another topic that we’ve covered extensively, institutions should create better communication around FAFSA completion. This ensures students get appropriate aid by encouraging new and existing students to better understand what they need to do and when.
3. Improve Advancement Efforts, Especially With the GOLD Demographic
It’s no wonder institutions are having trouble accessing advancement dollars. The 2008 recession—which ensured that many college graduates spent years making very little money and paying off heavy college loans—has wreaked havoc on advancement pipelines. The current housing and rental markets all but ensure that the most recent graduates won’t be able to help their alma maters for a very long time. This doesn’t mean that advancement offices can’t secure funding from alumni, it just means they’ll have to be creative in how they do so.
Advancement offices know the four Rs of fundraising—research, romance, request, recognize—but those in need of donor dollars are skipping the research and romance stages and diving headlong into the request. In this case of donor cultivation, however, romance is essential, especially when you’re dealing with graduates of the last decade (GOLD).
Where higher education business teams often look five years down the road, Advancement staff may need to look 10 years into the future—that’s about how long it takes for graduates to build up enough money to consider donating to their institution. To improve donation consistency, advancement offices need to create programs that keep new alumni engaged with the college—from when they first step off campus to when they can finally donate.
Employing New Strategies to Improve Budgeting Consistency
The volatility of government, tuition, and donor funding isn’t something that occurred overnight. Likewise, creating stability is going to take time, which is why institutions should start now. Business offices are already deep into the budgeting process, but implementing a new financial management or ERP system, employing innovative enrollment and recruitment strategies, and rethinking advancement approaches are all things that can be started this year to solidify funding sources and increase income streams.
Continue reading in Part 2, in which we’ll discuss alternative ways to reduce operational costs.
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As FAFSA Delays Continue, How Can Institutions Mitigate the Damage?
February 14, 2024
Student aid information won’t be released until March. Here’s how institutions can prevent further delays to the financial aid award process.