NACUBO Meeting Speaker: Business Officers Should Rethink College Finances

NATIONAL HARBOR, Md. – With growing government pressure to boost degree productivity and increased public resentment over tuition hikes, higher education leaders need to rethink funding schemes to meet new fiscal challenges.

That’s the advice that Washington State University president Elson Floyd shared Tuesday at the annual 2012 annual meeting of the National Association of College and University Business Officers, or NACUBO.

“We need to create a financial model where tuition increases can and must become more predictable,” Floyd said during a panel discussion titled “The Changing Financial Model of Public Universities.”

In addition to being more predictable, Floyd said, tuition should be stable, fair and affordable.

But due to decreased state appropriations for higher education, Floyd said, legislatures and governing bodies rely disproportionately on tuition, “and thus you have this volatility.”

Floyd, whose varied career as a university president has taken him to Western Michigan and Missouri before he arrived at Washington State University, presided over a significant tuition increase at his own institution earlier this year.

He attributed the increase to a 56-percent decrease in state appropriations over the past five years.

“That translates into roughly $280 million,” Floyd said. “For us, that’s substantial.”

Although Floyd didn’t mention the exact amount of the tuition increase during his talk, his university recently moved to raise tuition by $1,500 per year for resident undergraduate and graduate students, according to a university web site.

Floyd said that the decrease in state appropriations was “offset some by tuition increases, but that’s not a model that’s sustainable.”

Detailed plans on how to get institutions out of financial quicksand were not abundant during the discussion, but there were plenty of ideas and insights on where to look, what kinds of questions to ask and what issues to raise.

Floyd shared how his own views on tuition freezes have evolved over the years.

“At one point in my career I was a very strong advocate for freezing tuition, or having one tuition level for those entering the institution,” Floyd said. But he found that students didn’t appreciate the idea of freshmen, sophomores and juniors all being in the same classrooms but paying different rates.

“So you have to make decisions about fairness in the same way you have to make decisions about how comfortable you are raising tuition,” Floyd said.

 He cited the need to have “more thoughtful conversations” with legislatures about tuition increases and how those increases impact affordability and access.

“It’s vitally important to do that and I can’t think of a better group than this group,” Floyd said.

Other speakers included Dr. John C. Cavanaugh, chancellor of the Pennsylvania State System of Higher Education, who stressed the need to bring clarity to public discussions and media accounts of tuition increases.

For instance, he said, higher education leaders need to draw distinctions for the public between when tuition increases generate new money versus when they merely substitute for lost revenues.

He also said “when we throw around percentages we do ourselves a disservice” because there’s a major difference between various percentage increases on various base tuitions.

“But what gets reported is the percentage,” Cavanaugh said.

David W. Strauss, principal of the Art and Science Group, a higher education consulting firm that provides market intelligence, advised higher education leaders to assess the impact of tuition increases on accessibility and the overall academic preparedness of their student bodies.

Some institutions, he said, are poised to raise tuition significantly without losing any applicants, while others may raise tuition less so and it would still drive the number of applicants down.

Strauss presented another scenario where a university could raise tuition by 30 percent and lose 4 percent of students, but if it gave close to half the amount of the increase tuition to grant aid for low-income students, the actual number of students would go up by 4 percent.

“It could mitigate the negative effect of the price increase and keep a significant amount of revenue,” Strauss said of this particular institution.

At a separate talk on Monday, higher education finance chiefs said as CBOs of color step up to replace their mostly White and slightly older predecessors, mentoring will take on added importance as the job increasingly calls for skill sets that transcend the role of bookkeeper.

“I find myself less and less every day on the campus,” said Ronald L. Rhames, vice president for business affairs at Midlands Technical College, during a panel discussion titled “The Changing Face of the Chief Business Officer.”

Explaining that he increasingly meets with various stakeholders to discuss university business interests, Rhames said: “No more bean-counting.”

Cynthia Teniente-Matson, vice president for administration and chief financial officer at California State University, Fresno, said she makes it a point to get to know new employees in her office who are in their 20s and 30s—particularly women—to make sure they feel welcome.

“Their onboarding experience hopefully helps them know they’re welcome here,” Teniente-Matson said.

Much of the conversation at the panel hinged on the findings of a soon-to-be-updated 2010 NACUBO profile of current higher education chief business and financial officers.

The survey turned up some occasionally sharp contrasts between White and non-White CBOs that suggest both groups have career trajectories, experiences, frustrations and aspirations that are sometimes incongruent.

For instance, the survey found that minority CBOs were generally younger, tended to be more recently hired and looking to make their next career move soon, whereas more White CBOs were slightly older, had been on the job longer and were more often looking to retirement as their next career move.

The survey also turned up a “credential difference.” For instance, 58 percent of the CBOs of color in the survey had an MBA versus only 48 percent of White CBOs, whereas only 28 percent of CBOs of color had a CPA whereas 39 percent of White CBOs had a CPA.

Panelist Dawn Rhodes, vice chancellor for finance and administration at Purdue University, said the reason she obtained an MBA instead of a CPA was to signal on her resume that she was prepared to handle more than just ledgers.

Teniente-Matson said it’s important to disaggregate demographic data such as that compiled in the survey on an institutional basis to better understand what’s happening on campus.

She said doing so creates an opportunity to have “broad conversations about diversity, which is easier to do when you actually have the data and you can dissect and bifurcate what is happening in different areas.”

“You can help put it to scientific statistics that show why this is an institutional concern and why we should also be focused on issues of diversity,” Teniente-Matson said. “You don’t want to be seen as the only person who’s championing issues of diversity. But the facts will help sell this concept.”

Rhames said that, when NACUBO updates the survey in January 2013, his hope is that more people respond so that NACUBO can have more reliable data as it seeks to create and offer programs that meet the career development needs of CBOs of the future.

“It’s the data that’s going to help us make the right decisions,” said Rhames, who serves on the board of the Southern Association of College and University Business Officers, or SACUBO.

“With your help we can collect the right information and become better within NACUBO and regional associations,” Rhames said.