US higher education leaders remain positive about their institutions’ financial health now and in the near term, reports CFO Perspectives for Higher Educationsixth annual such report from Syntellis production solutions.
Eighty-nine percent of college and university finance professionals say they are confident their institutions will be financially stable over the next five years, up from 72 percent in 2021.
Syntellis CFO’s Outlook for Higher Education to 2023 takes a detailed look at financial challenges, priorities and progress at US higher education institutions. The report is based on a survey of more than 100 financial institutions of higher education in the United States leaders.
“We’ve seen institutions improve their ability to quickly adapt to change, and that agility remains critical in today’s changing higher education landscape,” said Flint Brenton, CEO of Syntellis Performance Solutions. “But now there are forces converging to create additional volatility that will require CFOs to prepare — namely to adopt modern finance and budgeting tools — to enable fast and accurate analysis, planning, budgeting and forecasting.”
Key findings of the report include:
Optimism against the odds
A staggering 89 percent of respondents said they were confident their institutions would be financially stable over the next five years; this is up from 72 percent in the 2021 survey and 62 percent in the first year of the COVID-19 pandemic in 2020. However, confidence varied by funding source. A majority (98 percent) of four-year public colleges and universities agreed or strongly agreed that their institutions would be financially stable over the next 10 years, compared with 86 percent of four-year, private, for-profit institutions that rely more on tuition and increase revenue for the value of donations and investments more vulnerable to volatile market conditions.
More than half of respondents (60 percent) reported that their institutions did not make significant cuts due to financial constraints. For those respondents who said their institutions had made cuts, the cuts included: reducing administrative staff (84 percent); reduction of academic programs for students (35 percent); reduction of academic faculty (26 percent); and campus closures (16 percent).
A demographic cliff is approaching
The demographic cliff—the decline in full-time enrollment—is expected to begin around 2025, and is the issue expected to have the greatest financial impact on institutions in the next five to ten years. In 2022, many institutions introduced programs and services to increase student enrollment, with 57 percent citing improved mental health and wellness services, 45 percent increasing tracking and counseling services for at-risk students, and 35 percent increasing scholarships for food and student support.
Confronting labor shortages
After declining enrollment, labor costs were cited as the second biggest issue expected to have a marked financial impact on colleges and universities over the next five to ten years. A majority of respondents (96 percent) said work-related issues are already affecting their budgeting and financial planning. While 45 percent of survey respondents cited work management as an area that would benefit from improved data analytics, only 21 percent of finance professionals plan to modernize their financial planning processes related to work planning in the 2023-2024 academic year.
Higher education is technically lagging behind
Many finance professionals (60 percent) believe that higher education lags behind other industries in adopting modern budgeting and financial planning tools. While nearly two-thirds (64 percent) believe their college or university has the right budgeting and planning tools in place to respond quickly to changing environments, an overwhelming majority (85 percent) said their organizations need to do more to use financial and operational data to inform strategic decisions. It’s also clear that universities are still using outdated tools, with nearly half (49 percent) of respondents saying their institutions use spreadsheets manually to develop learning forecasts, 48 percent use spreadsheets for forecasting, and 41 percent use them for scenario simulations.
“From enrollment to jobs, inflation and more, it’s critical that universities have the right tools to stay nimble in the face of uncertainty,” said Kevin Bresser, vice president of higher education at Syntellis Performance Solutions. “While we are encouraged by the optimism contained in the CFO’s 2023 forecast for higher education, we understand the importance of robust data and analytics capabilities, as well as comprehensive financial planning, forecasting and budgeting tools, in working with our clients to navigate current challenges and prepare them for a secure financial future.”
The report uses material from the press release.