Despite Financial Worries, Optimism Wins Out

Despite Financial Worries, Optimism Wins Out

More than eight in 10 administrators surveyed—mainly controllers/budget officers and CFOs—say they’re very or somewhat concerned about their institutions’ ability to fund future capital investments. Two-thirds expressed concerns about maintaining enrollment. A significant number of leaders have adopted or are considering tuition increases (53 percent), delaying capital projects (45 percent), eliminating programs that reflect less demand (34 percent), or freezing faculty salaries (28 percent).

Yet, these leaders expressed optimism about the current financial health of their institutions compared to five years ago, and their financial health in five years compared to today. Most expect to either gain or retain their share of research funding. And 44 percent are likely to spend energy, time, and resources on technology enhancements.

The audit, tax, and advisory firm KPMG LLP conducted the Higher Education Outlook Survey, which collected responses from 102 campus administrators.  
Milford McGuirt, KPMG’s national audit sector leader for higher education, believes the optimism is due in part to some respondents being from financially strong private institutions with philanthropic support in place. Institutional pride of survival also comes into play. “These university leaders have gone through 2008 and 2009. That was a tremendous experience with tremendous adjustments, including organizational transformation,” he says.

Institutions focused primarily on tuition dollars face greater risks than those with healthy alternative streams of revenue, such as research dollars and auxiliary services, McGuirt says.  Forty percent of respondents plan to spend a lot of energy, time, and resources on identifying alternative revenue sources over the next five years.

Fundraising and capital campaigns were also identified as key initiatives in the coming years, for 42 percent of respondents. McGuirt has had conversations with CFOs and presidents about how much additional debt they can take on, how much can be raised in a capital campaign, and the financial ROI of investing in a capital program. And, he adds, boards are weighing in to say, “We’ll let you as a leader embark on this, but we’re not going to turn dirt until X amount of capital dollars have been raised.”


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