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How colleges can provide finance training to trustees

Answers to three big questions about providing boards with finance-oriented professional development
University Business, August 2018
  • LIFELONG LEARNING—Colgate Hall at Colby-Sawyer College is one place on campus where trustees congregate. At least one hour of each meeting involves learning more about finance topics such as cash flow and budgeting.
  • BONUS TRAINING—Grinnell College trustees meet at the Joe Rosenfield ’25 Center, the campus hub, but new one-hour finance-focused webinars are helping to support the board in its in-person decision-making. (Justin Hayworth at Grinnell College).

When Susan Stuebner became president of Colby-Sawyer College in New Hampshire in 2016, she faced a $4 million operating loss and a projected $2.6 million deficit for the following year. Stuebner made significant changes: She cut five majors, laid off employees and, in one of her first moves, initiated financial training for the board of trustees.

“Many of the trustees weren’t aware of what was going on because the finance committee reports were cursory,” she says.

Now each of their three board meetings per year include at least one hour of instruction covering topics such as operating budget assumptions, cash flow, endowment approaches the college takes (and why), and capital improvement financing.


Sidebar: 13 key financial questions to answer for trustees


“We quickly realized that not only did the finance committee need to understand these and other issues, but the entire board did too, because they would be voting on decisions involving them,” she adds.

Colby-Sawyer is just one of many academic institutions working to boost their trustees’ financial acumen.

“When the largest association of accountants develops a training program that includes a unit on governance, it shows you that it’s more and more important,” says Lynch, partner in charge of not-for-profit services at the firm, citing nonprofit certification training introduced by the American Institute of CPAs in recent years.

Following are three key questions campus leaders must consider when offering financial training to the board of trustees.

1. When should we do the training?

An institution’s needs and the board’s knowledge level determine the best timing. Illinois state law requires that new trustees at public colleges and universities receive financial instruction from a certified trainer.

At Harper College, a public community college in suburban Chicago, that training takes the shape of a day-long financial workshop offered by the Illinois Board of Higher Education. It doesn’t stop there, though.

Every December, the board participates in a two-hour financial workshop that delves into the college’s five-year plan and reviews what happens if assumptions change.

“Making sure our trustees understand the flow of money is extremely important,” says Maria Coons, Harper’s chief of staff and vice president of institutional planning and strategic alliances.

Lycoming College in Pennsylvania started providing financial training as part of its board orientation several years ago as new trustees replaced well-informed, seasoned  members. This was influenced in part by a financial aid error and other financial irregularities at Birmingham-Southern College in Alabama that cost the institution millions of dollars in 2010.

“Birmingham-Southern’s financial exigency, when trustees said they didn’t know there was a problem, confirmed the need for this,” says Chip Edmonds, executive vice president of advancement at Lycoming.

Meredith College in Raleigh, North Carolina, is providing up to three hours of training at its summer 2018 retreat, while Ohio’s Baldwin-Wallace University did a 45-minute workshop at its April meeting this year.

“This was the first time we’ve done this very high-level finance tutorial because it’s ever more important today that board members understand the finances of higher education and the financial picture of their own institution,” says Baldwin-Wallace’s president, Bob Helmer.

In October, the CFO and other officials plan to follow up with a detailed presentation on the finances, during which they will drill down on various key spreadsheets.

2. What should we cover in the training?

Even the most financially sophisticated trustees can benefit from instruction that is specific to higher education finances.

“We have very bright, financially astute trustees running billion-dollar businesses, but that doesn’t mean they understand how we operate,” says Edmonds of Lycoming. “The education piece is absolutely important in helping them become partners with us.”

The biannual retreat for University of St. Francis trustees includes four hours of financial education and stewardship training. The trustees review the Illinois institution’s financial statements, and they spend a significant amount of time studying the requirements of the 990 form that tax-exempt organizations must file with the IRS.

“We pay a lot of attention to this because it tells our story,” says President Arvid Johnson. “When you look at the numbers, it gives a sense of how efficiently an organization is deploying its assets toward the mission versus just taking care of expenses.”

The idea is also to go beyond “yes” answers to provide narrative detail and background in the Schedule O. Schedule O provides a space for the narrative information required for responses to specific questions on Form 990. Trustees, he says, need to fully understand what goes on the form and why. Financial topics can also be introduced remotely.

This fall, Iowa’s Grinnell College will begin running one-hour financial webinars in addition to its regular board meetings.

The first session, a deep-dive into Grinnell’s cost structure and financial controls, is designed to support the board’s decision-making process and allow trustees to ask the right questions throughout their tenure. A second webinar will address the broader higher education cost landscape and the implications for trustees as the institution’s fiduciaries.

At Stetson University in Florida, President Wendy Libby often lets trustees’ questions drive the training provided at every board meeting. “We will take what the board asked about in one meeting to guide what we teach about in the next one,” she says.

Or, they might educate the board on a specific strategic decision being made so trustees have the necessary background in advance.

3. Who would be the best trainer?

For the first Grinnell webinar, Patricia Finkelman, chair of the board of trustees, is developing the content with college staff and board leadership. “This has to be Grinnell-specific,” Finkelman says. “No two colleges have the same financial situation. We all have our own unique opportunities and challenges.”

For the second webinar, a national expert will address the big picture.

Some colleges bring in consultants. The auditing firm Sikich will present the four-hour financial session at the University of St. Francis’ biannual retreat.

Meredith College officials decided to have an enrollment consultant lead the financial session at its 2018 summer retreat to help trustees better understand the correlation between tuition increases and discount rates.

“Boards are understandably concerned about keeping tuition as low as possible and they may also have a specific discount rate in mind, but there’s a tension between those two numbers,” says Matthew Poslusny, senior vice president and provost. “This is an important concept to keep in mind when setting tuition each year.”

However the training may be structured, the intense competition in higher ed makes it vital, says Armand Alacbay, vice president for trustee and government affairs at the American Council of Trustees and Alumni.

“The public is looking at alternatives to the current model, and as institutions look at alternative delivery options such as online learning, the onus is on boards to anticipate future trends,” Alacbay says. “Other industries do that, but with higher education the question is, ‘How do you plan for the future if you don’t have the framework for how it’s financed?’ ”

This kind of thinking has made a difference at Colby-Sawyer. The $2.6 million deficit it faced in 2016 is no longer a thorn in its side. Stuebner says, “For fiscal year 2018, the college will be within $50,000 or less of meeting its $34 million budget.”


Sandra Beckwith is a western New York-based writer.