Board Workshop On Strategic Governance And Finance

transcript

Youngstown State University

Ellen Chaffee, Ph DEllen Chaffee, Ph.D.November 17, 2009

IntroductionsThe Strategic Board of Trustees: What?h d f hThe Strategic Board of Trustees: Why?

Table talk, lunchh d fThe Strategic Board of Trustees: How?

Action plan for YSU

fUnderstand strategic finance and how it differs from traditional oversight

h b f fAppreciate the benefits of a strategic approach for YSU at this time

f d fDefine and prepare to pursue a specific action plan to move to a strategic finance approach

It’s your showEveryone is equal

l l d dNo relevant topic is excludedNo discussion is ended

h h d hRespect each other and the timeHave fun

Who owns Youngstown State University?Who is their legal representative?h h b lWhat is their (YOUR) primary responsibility –

Represent what the people want? Ensure l h b dmission accomplishment? Prevent “bad”?

i i li hEnsure mission accomplishment!

You (and all other higher education trustees) have major new challenges to addressh d d hThe university, your students, and the nation

need you and others to step up to the plated d dToday is an opportunity to understand some

of the challenges and tools you can use to dd haddress them.

You need an action plan.

$60State Share of Instruction Challenges

StateYear SupportFY 2001 $48,354,640FY 2002 $46 799 630

FY 2002 $46,799,630FY 2003 $43,828,103FY 2004 $44,391,413FY 2005 $43,439,709

FY 2006 $42,168,147FY 2007 $42,830,088FY 2008 $45,694,496FY 2009 $49 503 768

Amounts include State Share of Instruction, and Access and Success Challenge funding. YSU’s funding

2010FY 2009 $49,503,768

FY 2010 $49,008,729

, g g gdecreased from $48 million in FY2001 to $42 million in FY2006. State support during the past four fiscal years has increased to levels near that of FY2000. Mandatory student tuition and fees were frozen during FYs 2008 and 2009.

Challenge: Revenue Source Trends

Tuition and Fees

40.0% State Support

25.0%2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

The proportion of revenue from state support has declined from over 50% in FY2000 to under 35% in FY2009, while the proportion of revenue from tuition and fees has increased to over 60% during the same period. *

% ChangeCleveland State 4 6%Cleveland State -4.6%Kent State -5.3%Toledo -12.9%Ohio State -13 0%Ohio State -13.0%Cincinnati -13.6%Miami -13.8%Wright State(Median) -14.5%Wright State(Median) 14.5%Shawnee State -15.3%Ohio -15.5%Bowling Green -15.6%gAkron -16.3%Youngstown State -16.5%Central State -17.5%

When adjusted for inflation SSI per FTE student has decreased 16.5% between FY2003 and FY2007. This is the second greatest decrease among Ohio public universities.

FY2010FY2010$1.2 Million Reduction in SSI from FY 2010 BudgetBudget$500,000 Reduction from FY 2009

FY 2011$4 9 Million Reduction in SSI from FY2010$4.9 Million Reduction in SSI from FY2010

Challenge: Squeeze Plays

FY2001 FY2004 FY2007

Challenge: Squeeze Plays

FY2001 FY2004 FY2007State Support per FTE Student $5298 $4314 $4019

General Fund Budget per FTE $10 863 $11 250 $12 748General Fund Budget per FTE Student

$10,863 $11,250 $12,748

Full Time Employees per 1000 FTE Students

113 103 103FTE Students

Since FY2001, State Support per FTE Student has decreased, while the Since FY2001, State Support per FTE Student has decreased, while the General Fund Budget per FTE Student has increased. This reflects the growing share of revenues from student tuition and fees. During the same period the number of Full Time Employees per FTE student decreased by 10.

H C it t d Obli tiHonor Commitments and Obligations

C t l EControl Expenses

R ll t RReallocate Resources

S t I iti ti d St t i PlSupport Initiatives and Strategic Plan

Budget Development Actions• Budget Development ActionsNon-Faculty Vacancy Deferral25 P iti25 Positions$1.13 Million

Major Expense ReductionsMajor Expense Reductions$1.13 Million

ReallocationsReallocations$2.57 Million

Funding for Academic InitiativesFunding for Academic Initiatives

Challenge: New Funding Model

Factor Previous Model Current ModelFactor Previous Model Current ModelEnrollment 14th Day FTE Enrollment Course Completions,

excluding “F”D N t I l d d I l d d S Ch llDegree Attainment

Not Included; Success Challenge

Included, Success Challenge rolled into Model

Student Not Included Weights course completion Economic Status and degree attainment by

OIG studentsAccess Mission Not Included; Access Rolls Access Challenge into

Challengeg

ModelStop Loss 100% 99% 1st year and 98% 2nd

What is the optimal enrollment for YSU?What is the optimal enrollment for YSU?

Should YSU continue to focus on growth as the primary goal of enrollment management?

How should the mix of students evolve?How should the mix of students evolve?

What ?What ?

E • FIDUCIARY: Are we doing what we are supposed to

• FIDUCIARY: Are we doing what we are supposed to

Ensure organization fulfills its pp

do?fulfills its mission

• STRATEGIC: Will we exist • STRATEGIC: Will we exist Ensure

organization’s STRATEGIC: Will we exist and succeed “forever?”STRATEGIC: Will we exist and succeed “forever?”

organization s long‐term viabilityy

Where are THEY looking much of the time??Where are THEY looking, much of the time??

Vision ResultsVisionStrategyConcepts

ResultsLong termBusiness plan

dResourcesFutureExpertise

Customer wants/needsEvidenceCompetitionp

SupportReadinessProductivity

pQualityEfficiencyBrand positioningProductivity Brand, positioning

ffHow would this affect our long‐term viability?What is the tradeoff with other needs?h ld b hWhat would be the 5‐10 year impact?

How does this advance our strategy?h h k l dWhat are the key national trends?

Why?Why?

U.S. goals and conditionsOhio goals and conditions

l d dYSU goals and conditions

ll h h“By 2020, America will once again have the highest proportion of college graduates

i h ld”in the world”‐ President Obama, 2/24/09

to increase the percentage of p gAmericans with high‐quality degrees and credentials to 60 degrees and credentials to 60 percent by the year 2025

Currently: 39%

Economy requires more graduatesIncoming students have greater challengesPreparationParticipationAffordability

Business model is becoming non‐viableAll revenue sources are maxing outRevenue and expense trend lines are not psustainable

f d dState funding 3%Tuition 3% above CPIStudent aid 4%

Expenditure per student 1‐2% above CPIStudent aid 4% CPI

20 Years of Trends

AFFORDABILITY GAP

STATE FUNDS GAP

Tuition

Expenditure/FTE

State approp

Hitting Home, Reindl

fIn an “age of discontinuity,” as Drucker called the current era, entrepreneurs could find

fsignificant opportunities to create or transform organizations if they were willing

h d f l h kto get ahead of societal changes. Druckersaid that the best way to predict the future is to invent it.

Rosabeth Moss Kanter, HBR

Th lik GM ld t i Thus, a company like GM could not survive simply by doing the old things with redoubled efficiency and lower costs The company efficiency and lower costs. The company needed to dramatically rethink its entire organizational model and related organizational model and related assumptions…. Sometimes there is no going back, because industry conditions and ysocietal needs have forever shifted, requiring an organization to do things in fundamentally

new ways.

Rosabeth Moss Kanter, HBR

h20th Century was one of technological innovationtechnological innovation

st C t t b f 21st Century must be one of institutional innovation

David Wiley, BYU, http://davidwiley.org/

Graduating more studentsKeeping graduates in Ohiop g gAttracting more talent to Ohio

http://measuringup2008.highereducation.org/

Associate Bachelor’sGraduate

Ages 25‐64

Ages 25‐34

USO Strategic Plan

MHEC Measuring Up

Applies to YSU

How?How?

Federal Government

Available State and Local

Govt. Funds

Economy

Higher

• K-12• Corrections• Health Care

Oth G t

Appropriations/GrantsStudent Aid

Education • Other Govt.

Tuition

Scholarships &Students Institutions

Scholarships &Waivers

Overview of the YSU BudgetFY2009FY2009

Source: Don Boyd (Rockefeller Institute of Government), 2009 *

ffIncrease efficiencyIncrease administrative productivity

lLeverage stimulus money

h lAPLU survey just out: “The survey results indicate that "universities are striving to

h d f hprotectprotect the core education mission of their institutions.”

GrowthQuality improvement

lProgress to strategic goalsDevelopment of a sustainable business model

d dAcademic productivityInnovation

Strategic Financial ManagementStrategic Financial Management

Budget OnlySet fixed targetsEstablish financial expectations

Strategic ApproachScorecardBusiness plansp

Manage costsPrioritize & allocate resourcesFixed budget incentive targets

Cost‐benefit analysesRolling financial forecastsTrending, benchmarkingg g g, gDynamic resource allocation

FROMAnalysis of results looking back

TO/AND

L ki f d d i iLooking forward and expecting improvement

Greater cost containmentGreater productivitylClear expectations

Innovation

LEADERSHIP

Strategic Finance

Strategic Goals

Strategic dIndicators

CommunicationInformation

Actions AnalysisCourse Correction

BOT and University PersonnelUniversity Personnel

Costs = spending not pricesCosts = spending, not prices

Focus on Education &Related, not total spending

Measure cost per student and cost per Measure cost per student and cost per degree/completion

Look at patterns over time

Cost reductions =Productivity

improvements =

Permanent structural d ti i di

pIncrease in output

(learning, research, jobs), reductions in spending

( g, , j ),without changing

admissions or spending

R d hi h /l d d Reduce high cost/low demand programs Address retirement eligibilityReduce growth in health careReduce growth in health careConsolidate administrative functionsReduce spending on non‐revenue producing Reduce spending on non revenue producing athleticsRestructure debt Restructure faculty compensation and rewards (use turnover to substitute teaching f l f h f lfaculty for research faculty)

Increase in student retention and graduation Reduce excess credits for the degree

d bIncrease credit‐by‐exam Increase distance‐based learning programs

f d hIncrease proportion of graduates who meet goals for critical learning

f d hIncrease proportion of students who remain –and are employed – in state

Managerial actions such asReduce administrative costs

klTackle ‘automatic’ cost increasesReengineer curricula

d lReengineer course deliveryEliminate or consolidate high cost/low d ddemand programs

d l d h hAcademic leadership actions such as:Students come to college fully prepared (no remediation)remediation)Accelerated learningMinimize “rework” and reduce credits to degree gImprove rates of course completionEncourage use of assessment/”test out” optionsLearning in the workplace/credit for experience

d d hCommit to average undergraduate tuition growth no more than CPI accompanied by increased need‐based aidbased aidAllow differential tuitions for high cost/demand programsp gExperiment with low priced options Greater on‐campus employment opportunities for studentsReduce time to degree

Support change in approach to budget building Examining old habits and conventional wisdoms about costsFocus on big picture, and progress on the goals and the strategies to achieve them

lf ll b h f d d lFulfill both fiduciary and strategic roles

Public accountability for results consistent with goalsTransparent metricsPublic outreach and continuous communication

Are state and university strategic goalsAre state and university strategic goalsClearly stated?Clearly – and frequently – communicated? Accompanied by performance metrics?Measured and widely reported at least annually?

Is performance considered in the resource allocation Is performance considered in the resource allocation process – are resources targeted to priorities/highest payoff relative to goal achievement?A t i f d ti it i l ?Are metrics for productivity in place?

SCH/FTE facultyStudents/administratorStudents/administrator

Is there evidence of improvement?pIs faculty time being allocated to highest priorities?Is institutional aid being effectively used to help meet goals?A h hi h i i i h ld ’ b d i ?Are there some things the institution shouldn’t be doing?Where would collaboration yield better results at less cost?Are investments being made inAre investments being made in

Restructuring curriculaReengineering coursesI i b i Improving business processesEnhancing support servicesInnovative approaches

Strategic Finance

Strategic Goals

Strategic dIndicators

Actions

fSelect the most important from:USO accountability measuresYSU academic strategic planYSU institutional strategic plan

Student retention ratesStudent graduation rates, incl. 1st generation, l kBlack, Hispanic

Number of adult enrolleesf f lPercent of S/S+ facilities

TREND LINESBENCHMARKS, PEER COMPARISONS

Cost per student, by key categoriesFaculty/SCH and staff/student ratiosOverallBy area

Deferred maintenance

TREND LINESBENCHMARKS, PEER COMPARISONS

fBe an advocate for strategic goalsInsist on seeing the data behind the decisions

h h bFocus on what the numbers are sayingHave the courage to ask the hard questions

l l h d kRegularly review the mission and market return from new initiatives

l b d dDevelop joint board committee meetings and activities – e.g., Finance and Academic

b b dSupport rotation between board committees*

“It is not necessary to change. Survival is not mandatory ”Survival is not mandatory.

W Edwards DemingW. Edwards Deming

David Wiley, BYU, http://davidwiley.org/

D i iDecisionsCommitment to strategic role

Agreement on key elements of that role (e.g., strategic goals, strategic financial goals, strategic indicators)

Ensure clear Board/staff roles and relationships

Ac & Stu Rels: access, quality indicatorsExt Rels: economic indicators

l ff d b l dFin & Fac: quality, affordability indicatorsInternal Affairs: indicator development, finformation resources, transparency

Executive and/or Trusteeship: board d d ll deducation and overall decision process

GOAL INDICATOR

TO DO, WHO BY WHEN

P t ti f Mid t Hi h Ed ti C t S it /6/ Presentations from Midwest Higher Education Compact Summit 11/6/09 http://www.mhec.org/index.asp?pageID=23HITTING HOME: Quality, Cost, and Access Challenges Confronting Higher Education Today, Travis Reindl, www.makingopportunityaffordable.orgy, , g pp y g“What would Peter say?” Rosabeth Moss Kanter, Harvard Business Review, November 2009.“The Board and its Financial Responsibilities,” Tom Longin and Rick Staisloff, AGB 1009 National Conference1009 National Conference

* Slides obtained from YSU staff * Strategies for Tough Times, Dennis Jones and g g ,Jane Wellman, November 19, 2009

* “The Board and its Financial Responsibilities,” The Board and its Financial Responsibilities, Tom Longin and Rick Staisloff, AGB 1009 National ConferenceNational Conference

Some minor edits from the originals

Youngstown State University provides open access to high‐quality education through a b d f ff d bl fbroad range of affordable certificate, associate, baccalaureate, and graduate programs.

Youngstown State University will become a national model for student‐g y fcentered comprehensive urban universities, transforming its students into successful professionals, scholars, citizens, and leaders. Building upon its tradition of developing the body mind and spirit YSU Building upon its tradition of developing the body, mind, and spirit, YSU will provide a full range of services and amenities to meet the needs of residential, commuter, and offsite students.

h h h l d h bl d fIn partnership with schools and the corporate, public, and non‐profit communities, YSU will promote diversity and excellence in teaching, research, and service to increase the educational attainment, economic , ,prosperity, and environmental vitality of the region. The University will be a center for intellectual and cultural activity and a catalyst for public engagement a catalyst for public engagement.