Financial management as revenue growth slows: Building budgets, sharing results, educating key constituents

The financial sustainability of private residential higher education is under siege, as revenue growth slows and costs continue to rise.

Summary

Higher education’s financial pressures are unlikely to abate anytime soon, so realistic revenue strategies, disciplined cost control and careful resource allocations will all continue to grow in importance. This paper describes how a well-respected liberal arts institution, Macalester College, successfully analyzed and addressed its financial challenges while gaining the ongoing support of faculty, staff and students.

Key Insights

• Campus leaders must understand the real dynamics of the business model as reflected in current financial results.
• To mitigate risk, institutions need to model possible future outcomes based on varying conditions.
• Long-term strategic plans should account for fluctuating revenue and cost projections and outline the institution’s possible contingency steps.
• Financial management strategies should be shared widely with all relevant constituencies to gain their input and support.

Methodology

The author, who is vice president of administration and finance at Macalester College, provides a detailed case study of how Macalester examined, addressed and communicated its financial challenges since the Great Recession.