Tackling Budget Challenges in 2024 Part 2: Rising Operating Costs
To higher education administrators, especially those working in the business office, the following statement comes as no surprise: The costs of running a college are rising. Faculty salaries need to keep pace with inflation, utilities and material costs have skyrocketed, and—with fierce competition for a declining number of traditional-aged students—few institutions have been able to increase tuition enough to keep up with rising operational costs. Looking to 2024, it’s important that institutions focus on what they can do to reduce operational spending.
In this series, we are breaking down 2024’s top budgeting challenges for colleges and universities. Part 1 of our series explored how to better secure uncertain funding sources. In Part 2, we’re examining 2023’s rising operational costs and exploring what institutions can do to potentially minimize expenses in 2024.
Don't Reduce Faculty and Staff Compensation and Benefits
When it comes to reducing faculty and staff compensation and benefits…don’t. There’s a great deal of turnover in higher education, and to retain the top-notch talent that your institution needs to thrive and differentiate from other schools, you need to provide your faculty and staff with the best compensation and benefits packages possible.
Rather than reducing compensation and benefits, consider whether you need to fill vacant positions. Successfully implementing and adopting modern technology can improve the efficiency of lean teams. Modern student information systems can automate time-consuming manual processes. You can implement workflows, automate communications, and create reports in seconds. Improved efficiency means work gets done faster and requires fewer individuals to complete.
For example, the University of Mary used Jenzabar’s modern technology to improve its degree conferral processing productivity. Where the process once took 4 staff members 45 days, automating the process with Jenzabar’s solutions enabled it to be performed by 3 staff members in as few as 2 days.
Don't Downplay Investments in Higher Education Technology
Should institutions reduce technology spending? This is a tricky question to answer, especially as we established in the previous section that there are many ways newer technology can create the type of time-saving efficiencies. In this case, rather than reducing investments in core technology, you should consider whether or not you are investing in the right technology.
Investing in newer cloud ERPs can go a long way toward reducing operational costs. Moving to the cloud means an institution no longer needs to house, power, and protect servers. Cloud ERPs also enable institutions to scale their system capacity based on actual server demands. Rather than over-purchasing capacity to handle the twice-a-year registration spikes, institutions can scale only when necessary.
Many institutions are also investigating single-vendor solutions as a way to reduce spending. Working with a single vendor introduces the opportunity to consolidate, and thereby reduce, maintenance costs as well as unite core systems on a centralized platform, which can eliminate data silos and improve campus-wide collaboration. This gives campus leaders access to strategic data that inform cost-saving program and operational decisions.
Look Toward Reducing or Deferring Maintenance Costs
There are so many voices out there reiterating that reducing or deferring maintenance costs is not in an institution’s best interest for a variety of reasons. But having been forced to do more with less for years, how can higher education institutions tackle maintenance projects and hit budget targets without shortchanging students, cancelling important programs, and cutting key staff members?
The question may sound rhetorical, but it’s not. Institutions would need to create smarter budgets; they would have to figure out what exactly students need to be successful as opposed to what students want; they would have to use data to identify the demand for and cost of certain academic programs; they would have to determine where to consolidate staff roles and which efficiencies to put in place; and they would need to analyze the costs, benefits, and risks associated with delaying infrastructure maintenance.
All of this needs to happen, and all of this can happen when institutions have the right technology systems in place. At the risk of sounding repetitive, on top of helping institutions reduce operational costs, single-vendor solutions aggregate data from across the institution. This makes it possible for decision-makers to answer key questions about finances, student and program success, and staff efficiency quickly and accurately. They can then compare these analyses to current maintenance projects to determine priority, pushing out initiatives that may be lower on the list of to-dos.
Do You Have to Spend Money to Reduce Costs?
Not necessarily. The recommendations laid out above suggest that you investigate where you are spending money so you can better understand how investing in different systems or in different priorities can improve overall sustainability. With so much data spread out across your campus, the task of gathering, analyzing, and using that data to give you a clear picture of your operating costs can be daunting—but it is also necessary. Discover where you can improve faculty and staff efficiency, consolidate your technology spending, and prioritize projects based on ROI, expected outcomes, and objectives.
Read Part 3 of the series here, which discusses how business offices can address emergency preparedness.
If you missed Part 1, you can find it here.
