Outline Strategic Finance 2 · Overview Steps 1 - 6 Final Thoughts. TOP STRATEGIC ISSUES •...

Strategic Finance 2.0

TRACS Annual Conference 2017

Outline

Introduction Strategic Issues Context Framework

Overview Steps 1 - 6 Final Thoughts

TOP STRATEGIC ISSUES

• Business Model

• Partnership Imperative

• The Value Proposition

• Student Success and Completion

• The Academic Workplace

• Diversity and Inclusivity

• Campus Safety

• The Changing Environment of Higher Education

Strategic Finance 2.0 Duane Kilty

2017 TRACS Annual Conference

Strategic Choice

Most institutions will need to change. The question is when?



A Simple Truth



Some Institutions Might Not Survive



Most colleges and universities resist change.

The Objective



My Planning Model



Step 1: Reevaluate



Program Margins



Level 1

Program Margin Grid



Margin / Enrollment

Budget Forecast: Baseline

Show decision-making layers.



Step 2: Reimagine



Step 2: Reimagine



Clarity vs. Certainty

Strategic Thinking



Characteristics of Higher Education in 10 Years• Characteristic 1• Characteristic 2• Characteristic 3• Characteristic 4

Characteristics of the Institution in 10 Years• Characteristic 1• Characteristic 2• Characteristic 3• Characteristic 4

Step 3: Reduce



Budget Reductions



12 Principles for Cutting the Budget1. Be guided by mission2. Reduce to reinvest3. Understand the timing4. Avoid across the board cuts5. Adequately fund new ideas6. Don’t sacrifice quality7. Use a participatory process8. Full support from the board and administration is essential9. Communicate early and often10.Urgency depends on the situation11.What is best for the institution takes priority12.Cut deep enough the first time



Step 4: Reinvest



Model the Future



Step 5: Resolve



Executing the Plan



Strategy Execution MeetingsGood Habits

Step 6: Results



Strategic Financial Targets



Financial Dashboard

Measures converted to 7-point scale



Score Direction Actual TargetBS1 Adequate Working Capital 7.0 − 3.3 1.1 BS2 LT Resources / LT Obligations 7.0 − 0.46 0.40 BS3 Unrestricted Expendable Reserves 4.0 16,800,000 25,000,000 BS4 Growth in Reserves / Operations 1.0 − (8.9) 2.0 OS1 Net Operating Margin 1.0 − -14.0% 4.0%OS2 CR: Tuition & Fees / Total Expenses 2.0 − 61.6% 70.0%OS3 CR:Gift Income / Total Expenses 2.0 5.0% 7.0%OS4 CR: Endowment Inc / Total Exp 1.0 4.4% 7.0%OS5 Enrollment 2.0 − 797 1,000 OS6 Tuition Increase / CPI 1.0 − 5.4 2.0 OS7 Discount Rate 1.0 − 49.0% 42.0%OS8 Student / Faculty Ratio 1.0 − 10.6 14.0 OS9 Student / Non-Faculty Ratio 2.0 − 5.8 8.0 OS10 Benefits / Total Salaries & Wages 5.0 36.8% 36.0%OS11 Debt Service 7.0 − 3.3% 7.0%

Overall Total Score 44.0

Target Overall Score 90.0

Financial DashboardDate:

Final Thoughts

People problems• The transition will be difficult for some. • Fewer people paid better.

In ten years:• Will universities find a way to lower the price and maintain

quality?• Will online delivery be more prevalent?• Will the public be willing to continue to pay more?• Will the value of completing a degree still be in question?• Will universities find ways to be more productive; academically

and administratively?• What will the business model look like?

The list of questions is almost endless



Contact Information

Kilty ConsultingPlanning and Budgeting Solutions for Private Higher Education

Duane KiltyCell: 765-506-1620Email: [email protected]





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Outline Strategic Finance 2 · Overview Steps 1 - 6 Final Thoughts. TOP STRATEGIC ISSUES •...

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