"Slip-Sliding Away: An Anxious Public Talks About Today's Economy And The American Dream," is a report from Public Agenda which finds that the number one financial concern of economically-stressed Americans who also have children is college affordability. Also high on Americans' priorities, stressed financially or not: Social security and retirement benefits and job training.

If this isn't an indication of high demand for higher education, we don't know what is:

When it comes to what would be "very effective" in helping people become economically secure, the public puts its faith in higher education and job training, along with preserving programs like Social Security and Medicare. These are the top three solutions among both those who are struggling and those who aren't.

"Making higher education more affordable" led the list overall (63 percent) and among those who say they're struggling (65 percent). Preserving Social Security and Medicare was next at 58 percent (62 percent among the struggling) and expanding job-training programs came in third at 54 percent (56 percent for the struggling).

Neither cutting taxes for the middle class (48 percent) nor reducing the federal deficit (40 percent) get majority support, and other options rate even lower. ...

One reason for the faith in education may be the public's perception of who's struggling the most in the current economy. Three-quarters of Americans say that people without college degrees are struggling a lot these days, compared to just half who say college graduates are struggling.

The co-chairs of the Knight Commission on Intercollegiate Athletics - William E. Kirwan, chancellor of the University System of Maryland and R. Gerald Turner, president of Southern Methodist University, frame that report for boards of trustees in this article from Trusteeship. Their approach in this article is to examine what is known in the context of the recession and other college and university funding stresses.

[R]ising expenses—and the pursuit of more revenue to support college sports—have become a destabilizing force for many institutions, regardless of athletic mission or program size. According to the National Collegiate Athletic Association (NCAA), over the past decade, spending on athletics has been rising at a rate three to four times faster than the rate of increase of academic budgets among institutions competing in the NCAA’s Division I.

Moreover, most programs rely on institutional resources--in the form of student fees, general-fund transfers, and, in a few cases, state appropriations--to balance their budgets. such transfers are also rising much faster than other educational expenses. According to a recent analysis in USA Today, only seven universities generated enough outside revenue from athletics to cover their athletic costs in each of the past five years.

This is particularly concerning given the challenging financial conditions facing institutions. Universities are dealing with double-digit cuts in state appropriations and sharply reduced endowments in the face of rising costs across the boar--not to mention the loss of federal stimulus money meant to address the current recession. With employee furloughs, program reductions, and increased tuition and fees, spending on college sports can seem questionable or even counterproductive.

In The Chronicle, Scott Carlson shares some of the forthcoming report about higher education institutions from Moody's.

Institutions that already have large, well-established research programs and strong philanthropic support are pulling through the economic downturn relatively well, she said. The strongest institutions are in top demand and have fingers in a number of business lines.

Meanwhile, the weakest institutions—which draw students from a regional base and lack diversity in business lines—could still be endangered. Those institutions are generally small or mid-sized and do not have a robust fund-raising capacity. "We could see some of those merging or being absorbed by larger institutions, or even going out of business," Ms. Tuby said.

The report points to three "critical credit factors" that drive the 2011 outlook for colleges:

• "Weakened prospects for net tuition growth" because of a market preference for low-cost or high-reputation competitors.

• "Differing degrees of pressure on nontuition revenues," such as philanthropy or research money.

• A "need for stronger management of operating costs, balance-sheet risks, and capital plans."

"Dean Dad" says you can—maybe—use reserves to fix shortfalls (after some caveats): "The relevant question is whether the shortfall is fleeting or structural. If it’s fleeting, then spend away. If it’s structural, then make the changes that need to be made."

The starter for this blog post is a specific situation at SUNY New Paltz, but that's just the excuse to examine what reserves really are, whether they are useable or not in the first place, and when it might be okay to use them to patch up budgetary shortfalls:

I’ve written before on public college reserves, and how they differ from ‘endowments’ as usually understood. The short version is that endowments are supposed to produce income which can be used for various reasons, but reserves are supposed to be liquid and available either for capital projects (buildings) or short-term budget gaps. Reserves aren’t about generating income, even though it’s nice when they do; they’re there for emergencies and opportunities. Of course, that refers only to general college reserves.

Observation

Like the proverbial deer in the headlights, institutions around the world are coping with reduced funding and often using similar tactics for cost containment and revenue enhancement.

• Publicly supported institutions understand that reduced state budgets will affect them for many years into the future. Thirty-five states are assuming reduced fiscal resources will be available in 2010, while 42 states were forced to reduce their previously enacted 2009 budgets.

• Community colleges have been hit the hardest and been very creative about when they offer courses (all night long) and even who pays for them (anyone who is willing to donate to support a course).

• Space management is becoming a key area of concern, as no one wants the continuing operational costs of new construction. Likewise, energy management is high on everyone’s list.

Our Thoughts

The Higher Education Price Index (HEPI), as well as tuition, continues to outpace the Consumer Price Index (CPI), even though it dropped from 5 percent to 2.3 percent. Some are asking if higher education will be the next ‘bubble’ to burst.

• The highest percentage increase came in administrative salaries at 5.4 percent, up from 5 percent the year before. Virtually all the other components of the index had lower increases this fiscal year than last.

• According to the National Center for Public Policy and Higher Education, over the past 25 years, average college tuition and fees have risen by 440 percent—more than four times the rate of inflation and almost twice the rate of health care costs.

• Tuition and fees at private colleges rose at the lowest rate in 37 years (4.3 percent), but still higher than the CPI, which was 3.8 percent in 2008.

Kenneth W. Dobbins is president of Southeast Missouri State University focuses on strategic analysis of academic programs in this brief set of suggestions:

Most of us are faced with, or will be facing, the daunting task of balancing our budgets with less funding from state government. There are several ways to increase revenue and reduce costs, which seem to be easier than reducing or eliminating academic programs.

Examples of these “easier” approaches include: increasing capacity with larger classes; eliminating low enrollment classes; increasing teaching loads; redesigning courses; and adding more temporary or adjunct faculty instead of tenure track. However, the advice in the old saying, “do more or the same with less,” cannot be followed anymore.

With the easier approaches already taken, many of us must critically examine academic programs and ask what are we doing, how are we doing it, and should we be doing it at all. How you do this magic act depends on your campus culture and shared governance expectations, but below are several ideas for your consideration.

NACUBO's Matt Hamill completes a year's worth of Business Officer articles in the series, Catalyst for Change: The Economic Downturn Reshapes Higher Education. Read this latest article here; see links to all the articles in the series here.

To be sure, the recession has forced most colleges and universities to broadly reexamine themselves in an effort to reduce costs and adjust to rapidly changing enrollment patterns. Earlier articles in this series have examined institutional actions resulting from these internal initiatives. As Martin Van Der Werf, former director, Chronicle Research Services, Washington, D.C., observed in the March 2010 Business Officer article, “Regular, Express, or Online,” the changes are too broad and too fundamental to attribute to current economic conditions. “There is a rethinking of the way education is being delivered,” he says, “but I don't know if the financial crisis could be isolated as a single factor producing these changes. The financial crisis is encouraging students and families to question what they were already questioning, such as the delivery model, the cost of college, and the difficulty in obtaining a degree. The recession is merely accentuating what people were already thinking.”

Modified practices. The last several years have seen a wide variety of changes to institutional practices in the areas of resource allocation, budgeting, and budget management, but we have also witnessed more significant changes in educational delivery models. This array of initiatives shares one central goal: to drive down students' cost of getting a degree by taking significant costs out of the model. Examples of creative delivery models include online learning incorporated into the curriculum, adoption of three-year bachelor's degree programs, and programs created to blend an associate degree within a four-year program.

Other initiatives have expanded the use of consortia mechanisms to streamline certain campus functions, such as library services, information technology, and cooperative purchasing. Generally, these programs can be successful because of their cost-saving potential, without fundamentally changing what is unique about each participating institution. Another strategy employed by many institutions has been to adjust the price that students pay by revising their overall pricing and financial aid strategies, and their associated budgets. 

Public Policy is the magazine of the American Association of State Colleges and Universities (AASCU), a frequent collaborator with SCUP.

In Holistic, Positive Retrenchment, Kenneth W. Dobbins, president of Southeast Missouri State University distills some academic program review observations onto a single-page PDF document. He begins:

Most of us are faced with, or will be facing, the daunting task of balancing our budgets with less funding from state government. There are several ways to increase revenue and reduce costs, which seem to be easier than reducing or eliminating academic programs. Examples of these “easier” approaches include: increasing capacity with larger classes; eliminating low enrollment classes; increasing teaching loads; redesigning courses; and adding more temporary or adjunct faculty instead of tenure track. However, the advice in the old saying, “do more or the same with less,” cannot be followed anymore.

With the easier approaches already taken, many of us must critically examine academic programs and ask what are we doing, how are we doing it, and should we be doing it at all. How you do this magic act depends on your campus culture and shared governance expectations, but below are several ideas for your consideration.

Dennis Jones, of NCHEMS, seems to be all over the place. We've seen him recently at a SCUP board meeting, at the second Action Analytics Symposium, at SCUP-45, and now he has this piece in The New England Journal of Higher Education:

In all states, state governments decide how much of their budget goes to direct support of institutions and how much to student financial aid. In some states, elected officials also set (or must approve) tuition levels; in others, tuition policy is within the purview of institutional governing boards. Legislatures also affect institutional finances by mandates regarding the use of institutional resources devoted to student financial aid. In some cases, this takes the form of requiring that institutions waive tuition for certain groups of students (war veterans, families of protective service personnel killed in the line of duty, etc). In other cases, states put limits on the use of tuition waivers.

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Given the lack of attention given to alignment of the pieces, the fact that different policies are often the responsibility of different decision-making groups, and the different constituencies that line up behind different parts of the policy framework, it is little wonder that coherent policy is hard to achieve. The secret is aligning policy with goals; if this can be accomplished, aligning the various components with one another other becomes much easier.

This piece is blurbed, "IT organizations at American colleges and universities are getting clever with cost cutting. Two IT leaders share some of the small, creative tactics they've used to save hundreds of thousands of dollars for their schools while actually managing to improve services for their constituents." Renegotiating phone rates, reducing printing, automating time-sucking routine tasks: There's not much new here, but it's a good resource to use to make sure your list is complete. We kind of liked the on-line "office supplies exchange" that lets departments which have too many red pens exchange them with another department which has too many black ones. Works for toner cartridges, too. Oh, and does any campus, anywhere in the US, still print a course catalogue?