Business Continuity

A third of all colleges and universities in the United States are in a weaker financial state today than before 2005, according to a new study.
Colleges have more liabilities, higher debt service, and increasing expenses without the revenue or cash reserves to back them up, as well as limited ability to pass costs onto families, according to Boston-based Bain & Co.

Proving that few higher ed institutions are immune from the effects of the economy, schools such as Yale and MIT are included on Bain’s list.

• Cuts in state funding have forced University of Alabama trustees to consider tuition increases for the fifth straight year. Tuition hikes ranging from 7 percent to 8.6 percent are expected for all three campuses. If approved, tuition for in-state undergraduate students will rise 7 percent from $4,300 per semester at the main Tuscaloosa campus to $4,600. Tuition for out-of-state students would rise nearly 5 percent from $10,950 per semester to $11,475.
• Originally slated for cuts, Pennsylvania’s higher ed system will see spending remain at 2011 levels.

It’s an increasingly common move by campus officials during challenging economic times: voluntary retirement. Offering these incentives to faculty and staff provides a ready means of reducing personnel costs while not being seen as severe and traumatic as layoffs, salary reductions, and furloughs tend to be.

Although the details of such plans vary from one college to the next, they all rest on the potential for shrinking the workforce during times of static or declining budgets.

It’s no trade secret that there is a growing trend of colleges using developers to construct student housing. A number of universities, particularly public institutions, are finding it advantageous to work with large real estate developers.

However, based on my years of experience, the advantages of working with private developers go well beyond public universities and construction of student housing.

Higher education costs are skyrocketing at a rate much higher than inflation. While states have drastically reduced public university budgets, those universities are constrained from raising tuition costs appreciably. Add to this the fact that higher education is a labor-intensive enterprise, and you begin to understand the dilemma in which we college administrators find ourselves.

Until recently, many 403(b) employee retirement plans were viewed not as actual plans but as clusters of individual employee contracts with different vendors. Higher ed institutions were like middle men, with their role limited to passing through employee contributions to individual plans. Administrators saw little need to pay much attention to their 403(b) plans or to exercise much oversight of third-party mutual funds or insurance companies managing employee funds.

Few students—traditional or nontraditional—complete their work within the 9-5 work day. Rather, libraries and dorm rooms are bustling late into the night with students burning the midnight oil. But, according to findings from the 2012 ACUTA (The Association for Information Communications Technology Professionals in Higher Education) ResNet Survey, only 9 percent of colleges and universities offer 24/7 network support.