Thursday, August 6, 2020  |  Category: Eduvation Insider

Fragile Finances, Budget Cuts & Money-Back Guarantees

Good morning!

The COVID19 pandemic is becoming increasingly deadly, surpassing 700,000 deaths worldwide and still accelerating, killing one person every 15 seconds for the past 2 weeks. (“It is what it is,” says US president Donald Trump, in a refreshing admission that objective facts still exist.)

The global human cost is staggering, but the financial impacts on higher ed institutions are also unprecedented. Today, a focus on finances, expenses and revenues – as well as student pressure to bring back pass/fail grading, more money-back guarantees in Ontario, and of course an assortment of CdnPSE updates…

Fragile Finances

If misery loves company, perhaps it is reassuring to know that institutions from Austria and Australia to Arizona and Alberta are struggling with massive budget shortfalls…

uMelbourne Cuts for $1 B Shortfall

Australia’s top-ranked university, uMelbourne, has announced that it will terminate 450 permanent staff and faculty FTEs, and even more casual and fixed-term employees, by the end of the year. The university projects a $1 billion shortfall in its revenues over the next 3 years, primarily due to border closures and declining international enrolment. The administration refused a jobs protection framework proposed by the National Tertiary Education Union earlier this year. THE

Massive Shake-up in Scotland

The Scottish Funding Council has launched a consultation to cope with a projected $700M deficit facing its universities in the wake of COVID19 and Brexit. “We will be considering the overarching framework that can further develop a connected, collaborative ecosystem for learning and teaching and research; reflects government and tertiary education objectives; and secures accountability for public funding.” Academics fear that their institutions may lose autonomy on fundamentals like program offerings, or may even face involuntary mergers. The Scottish government has made it clear that it is opting out of the UK’s “restructuring regime.” Glasgow Times

500 US Colleges Fail the Stress Test

For months now, analysts have been predicting that the pandemic will drive hundreds of US colleges into bankruptcy. (More than 50 have closed since 2015.) Now, a “Financial Fitness Tracker” identifies the ones at greatest risk, based on enrolment, tuition revenue, endowment and state appropriations data as of this spring – not even accounting for COVID19’s effects. Of 2,600 colleges, more than 500 show signs of strain in 2 or more categories, and they seem disproportionately to be in Ohio and Illinois. Hechinger

Bad Choices Left Colleges Vulnerable

When the COVID19 crisis struck this spring, one-quarter of US institutions had no financial contingency plan in place, and they had already accumulated substantial debt. Nationwide, enrolment declined 12% since the 2008 recession, while colleges increased full-time faculty by 7% and administrative/support staff by 16%. While the stock market achieved 11.2% gains, higher ed endowment funds realized just 6.8%. And despite enrolment declines, US colleges have spent $11B a year adding 70 million sq ft of facilities. Administrative management and financial accountability should have been subject to greater scrutiny before the pandemic. Higher ed’s financial challenges have been exacerbated by decentralized budgets, excessive spending on athletics and legal settlements, and institutional rankings that reward spending per student. Hechinger

Campus Saint-Jean Threatened?

uAlberta is reportedly studying 9 restructuring scenarios to reduce its campus footprint and achieve more efficiencies – and 6 of those scenarios could lead to the closure of Campus Saint-Jean, UofA’s francophone satellite. Plans already call for 77 of CSJ’s 410 courses to be discontinued. Supporters of CSJ fear assimilation into UofA would amount to “cultural and linguistic genocide.” They may have a legal avenue, based on a 1976 agreement. CBC

Budget Cuts

When times get tough, the first reflex is always to start cutting expenses – but the varying perspectives of presidents, CFOs and faculty point to very different targets…

Anxious Financial Officers

A survey of 273 US higher ed financial officers (Jun 3-16) found that half feel little confidence in their institution’s financial stability, particularly in the short-term, and the mood has dropped most sharply at community colleges and private nonprofit universities. Most incurred <$2 M in unanticipated COVID19 expenses, but have already invested “significantly” in infrastructure to support virtual learning. More than a third expect to eliminate administrative and adjunct faculty positions, and underperforming academic programs, by year-end, while slightly fewer anticipate employee furloughs. 26% hope to return to normal operations within 18 months. IHE

Presidents Expect Layoffs & Furloughs

A survey of 119 “cautiously optimistic” US university presidents (Jun 25 – Jul 12) finds that 85% expect to maintain tuition fees, and to convene classes in person at some point this fall. Only 10% expect revenue losses to exceed 15%, although 88% plan to lay off staff, 60% furloughs, and 64% across-the-board budget cuts. 59% say they will decrease pay for senior staff, 42% that they will cut benefits, and yet 55% say they will make nocuts to academic programs or faculty positions. AAC&U

Faculty Suggest Cutting the Frills

Emeritus professor of economics Richard Vedder writes in Forbes that 500-1000 US colleges will be pushed into bankruptcy or mergers, as enrolment declines at some institutions hit 25% this year and next. In his rather cranky rant, he recommends furloughing faculty one day a week, reducing research expectations and increasing teaching loads; dismissing staff who are just “administrative bloat”; cutting pay perhaps 20%; selling off conference centres, dorms, athletics facilities and perhaps even hospitals; downsizing college athletics; and instituting a moratorium on new buildings. “This crisis is an opportunity to do the previously politically impossible,” he concludes. Forbes

Revenue Streams

A global health crisis and economic recession may not naturally inspire entrepreneurial confidence, but there are opportunities for higher ed institutions to generate new revenue streams…

Cutting Costs, Seeking New Revenue

A survey of 97 US college presidents (June) found that 66% expect to resume in-person instruction this fall, and 59% to resume athletics too. Nonetheless, 91% are at least somewhat concerned about enrolment declines, and 88% about overall financial stability. Since earlier surveys (March and April) they are more worried about donor giving rates and demands for tuition reimbursement. About half had already implemented furloughs, layoffs, or cuts in salaries or benefits – and 25% of those expected never to reverse the cuts. 89% would likely lobby for more government support, 76% cultivate new donors, and 33% draw from the endowment. 55% said they would likely reduce the academic portfolio, and 12% reconsider tenure policies. IHE

Entrepreneurial Revenue Options

My pre-COVID article on alt revenue, “Supporting the Academic Enterprise: Entrepreneurial New Revenue Streams for Your College,” has been published this week in the League for Innovation in the Community College’s journal, Leadership Abstracts. (Available without membership for the next 2 months.) I sum up dozens of entrepreneurial options, from monetizing affinity and leveraging your campus, to commercializing academic activity and pursuing new markets. Leadership Abstracts

Pass/Fail Grading

Although surveys find that at least three-quarters of students believe they should pay less for a “primarily online” academic semester, in Canada at least their protests have not had much impact. (Yes, some ancillary fees have been reduced or eliminated, but tuition fees have stayed stable or even increased.) In the past few days, students have been coming forward with a new demand…

uSherbrooke Summer Students seek Pass/Fail

Students at uSherbrooke are apparently lobbying for a return to the pass/fail grading option for summer courses this year. More than 2,000 Sherbrooke students have signed a petition – nearly half the students registered for the summer session. CBC

SFU Students seek Pass/Fail for Fall

More than 3,000 SFU students have signed a petition asking the university to offer a pass/fail grading option again this fall, arguing that “the quality of education… has decreased but expectations have stayed the same.” Global

Both UdeS and SFU have responded that the pass/fail grading this spring was offered because the delivery mode changed abruptly and without warning. The same is not true, they argue, for the summer and fall terms. Clearly students have a very different sense of the rationale to justify a change in academic assessment.

Guarantees

To reassure anxious students facing an online Fall term (and discourage them from deferring enrolment), several Ontario institutions have offered guarantees…

In late May, Ontario Tech announced a money-back “Student Experience Guarantee,” allowing students to withdraw by Oct 9 for a full tuition refund. Ontario Tech

Shortly thereafter, Sheridan announced a “Fall Experience Guarantee” with very similar terms. Sheridan

At the beginning of July, Fanshawe launched a 4-part “Experience Guarantee,” which allows students to defer tuition and fees, but not recoup them. Fanshawe

Now, Confederation College has unveiled a “Commitment” to first-year, first-semester students this fall. Those students can withdraw by Oct 7 and receive a full tuition refund. “These unprecedented times call for an unprecedented approach.” Confederation

Campus Updates

Algonquin College has “renewed and broadened” its partnership with Orient Education Services, which delivers 6 Algonquin diploma programs in Kuwait under the AC-Kuwait brand. The new agreement, which runs until August 2025, will see the branch campus operate under a new name: “The Canadian College of Kuwait – Algonquin.” Algonquin

U Canada West announced yesterday a blended delivery approach to Fall courses, which will see them reopen their West Pender and new Vancouver House campuses for “limited on-campus learning.” Masks will be mandatory, and “Student Health Ambassadors” will help ensure students maintain physical distancing. UCW will provide $455,000 in financial relief to international students required to self-isolate for their first 14 days. uCanWest

Laurentian U will begin Phase 2 of its Return to Campus plan on Aug 12, bringing more researchers to campus, opening more student services, and preparing to welcome nearly 500 students to residence. Laurentian

uRegina and St Lawrence College alumni and donor data was also involved in the Blackbaud breach in May. uRegina  |  SLC

SaskPolytech plans a “two-pronged” approach to delivery in the Fall, with “some limited in person learning opportunities,” particularly for apprenticeships, nursing and health sciences programs. The institution was in the late stages of finalizing a new strategic plan when the pandemic hit. Saskatoon Star-Phoenix

Thanks for reading. Stay safe and stay well!