Each year, Inside Higher Education surveys college and university chief business officers about the financial challenges facing higher education institutions in the US. This year’s survey shows that, overall, optimism is on the rise, but challenges remain with getting the right data and information to make informed operational decisions.
Among the 415 chief business officers (CBOs) or senior financial officers who responded, 63% are confident about their institution’s financial outlook over the next five years — up from 56 percent in last year’s survey. Half of CBOs are confident their college will be financially stable over the next 10 years.
Yet higher education continues to face significant financial challenges, including tuition freezes, debt servicing costs, and discounted tuition rates — which nearly half of CBOs (48%) cited as “unsustainable” at current levels.
17% of CBOs say senior officials at their colleges have had serious talks about merging with another college or university — up from 12% a year ago — and 18% believe their college should merge with another institution. However, most say a merger is unlikely to happen within the next three years, with only 11% responding that a merger is “very” or “somewhat likely” in the near future.
Slightly more than one-quarter of CBOs (27%) say their college has had serious discussions about consolidating services with other campuses. Half of CBOs believe their college should share administrative functions with another college or combine academic programs. The vast majority see a reduction in expenses as the primary benefit of such moves, cited by 81% of respondents.
58% of CBOs at public institutions said their college is part of a multi-campus system. This structure allows them to share institutional functions and programs, resulting in cost savings. The most commonly shared services across campuses are legal services (80%), enterprise computing systems (76%) and internal audit (72%). A slim majority say their university system shares human resources (52%), while fewer share academic program offerings (45%) and compliance (44%).
When it comes to technology and related services, there is untapped potential for additional cost savings. Less than half of CBOs surveyed (49%) agreed that their institution makes efficient use of technology. This result is unsurprising to those of us in the technology sector (Oracle was a sponsor of the 2018 survey) because aging campus systems — particularly in finance — are driving more university business officers to look at options in the cloud.
While CBOs routinely run monthly financial reports and year-end projections, they say they aren’t getting enough from the systems they currently own. Less than half of CBOs said their institution has the information it needs to make informed operational decisions. 62% agree that greater transparency will lead to better financial decisions. This is where moving to modern finance, HR and student systems — such as Oracle Cloud — can help, providing deeper reporting and analytical capabilities, in addition to lower costs.