Board Workshop On Strategic Governance And Finance


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All-day workshop for trustees and executive leaders of a public university that must achieve ambitious new goals despite increasingly scarce resources. Topics include strategic finance and organizational change.

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Board Workshop On Strategic Governance And Finance

  1. 1. Youngstown State University Ellen Chaffee, Ph.D. Ellen Chaffee, Ph D November 17, 2009
  2. 2. Introductions The Strategic Board of Trustees: What? The Strategic Board of Trustees: Why? h d f h Table talk, lunch The Strategic Board of Trustees: How? h d f Action plan for YSU
  3. 3. Understand strategic finance and how it  f differs from traditional oversight Appreciate the benefits of a strategic  h b f f approach for YSU at this time Define and prepare to pursue a specific action  f d f plan to move to a strategic finance approach
  4. 4. It’s your show Everyone is equal No relevant topic is excluded l l d d No discussion is ended Respect each other and the time h h d h Have fun
  5. 5. Who owns Youngstown State University? Who is their legal representative? What is their (YOUR) primary responsibility – h h bl Represent what the people want? Ensure  mission accomplishment? Prevent “bad”? l h b d Ensure mission accomplishment! i i li h
  6. 6. You (and all other higher education trustees)  have major new challenges to address The university, your students, and the nation  h d d h need you and others to step up to the plate Today is an opportunity to understand some  d d d of the challenges and tools you can use to  address them. dd h You need an action plan.
  7. 7. State Year Support $60 FY 2001 $48,354,640 State Share of Instruction Challenges $50 FY 2002 $46,799,630 $46 799 630 FY 2003 $43,828,103 $ in Millions $40 FY 2004 $44,391,413 $30 FY 2005 $43,439,709 $20 FY 2006 $42,168,147 FY 2007 $42,830,088 $10 FY 2008 $45,694,496 $0 FY 2009 $49,503,768 $49 503 768 01 02 03 04 05 06 07 08 09 10 20 20 20 20 20 20 20 20 20 20 FY 2010 $49,008,729 FY FY FY FY FY FY FY FY FY FY Amounts include State Share of  Instruction, and Access and Success Challenge funding. YSU’s funding  , g g g decreased from $48 million in FY2001 to $42 million in FY2006.  State support during the past four fiscal  years has increased to levels near that of FY2000.  Mandatory student tuition and fees were frozen during   FYs 2008 and 2009.  *
  8. 8. Challenge: Revenue Source Trends 70.0% 65.0% 65 0% 60.0% Tuition and Fees 55.0% 50.0% 45.0% 40.0% State Support 35.0% 30.0% 25.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 The proportion of revenue from state support  has declined from over 50% in FY2000 to under  35% in FY2009,  while the proportion of revenue  from tuition and fees has increased  to over  60% during the same period. 8 *
  9. 9. % Change Cleveland State -4.6% 4 6% Kent State -5.3% Toledo -12.9% Ohio State -13.0% -13 0% Cincinnati -13.6% Miami -13.8% Wright State(Median) -14.5% 14.5% Shawnee State -15.3% Ohio -15.5% Bowling Green g -15.6% Akron -16.3% Youngstown State -16.5% Central State -17.5% When adjusted for inflation SSI per FTE student has decreased 16.5% between FY2003 and  FY2007.  This is the second greatest decrease among Ohio public universities. *
  10. 10. FY2010 $1.2 Million Reduction in SSI from FY 2010 Budget $500,000 Reduction from FY 2009 FY 2011 $4.9 $4 9 Million Reduction in SSI from FY2010 *
  11. 11. Challenge: Squeeze Plays FY2001 FY2004 FY2007 State Support per FTE Student $5298 $4314 $4019 General Fund Budget per FTE $10,863 $10 863 $11,250 $11 250 $12,748 $12 748 Student Full Time Employees per 1000 113 103 103 FTE Students Since FY2001, State Support per FTE Student has decreased, while the  General Fund Budget  per FTE Student has increased.  This  reflects the  growing share of revenues from student tuition and fees.  During the same  period the number of Full Time Employees per FTE student decreased by 10.  * 11
  12. 12. Honor Commitments and Obligations H  C it t   d Obli ti Control Expenses C t l E Reallocate Resources R ll t  R Support Initiatives and Strategic Plan S t I iti ti   d St t i  Pl * 12
  13. 13. • Budget Development Actions Non-Faculty Vacancy Deferral 25 Positions P iti $1.13 Million Major Expense Reductions $1.13 Million Reallocations $2.57 Million Funding for Academic Initiatives *
  14. 14. Challenge: New Funding Model Factor Previous Model Current Model Enrollment 14th Day FTE Enrollment Course Completions, excluding “F” Degree D Not I l d d N t Included; Included, Success Ch ll I l d d S Challenge Attainment Success Challenge rolled into Model Student Not Included Weights course completion Economic Status and degree attainment by OIG students Access Mission Not Included; Access Rolls Access Challenge into g Challenge Model Stop Loss 100% 99% 1st year and 98% 2nd y year. * 14
  15. 15. What is the optimal enrollment for YSU? Should YSU continue to focus on growth as the  primary goal of enrollment management? How should the mix of students evolve? *
  16. 16. What ?
  17. 17. Ensure  E   • FIDUCIARY: Are we doing  organization  pp what we are supposed to  fulfills its  mission do? Ensure  organization’s  • STRATEGIC: Will we exist  organization s  long‐term  and succeed “forever?” viability y
  18. 18. Where are THEY looking, much of the time?? Where are THEY looking  much of the time??
  19. 19. Vision Results Strategy Long term Concepts Business plan Resources Customer  wants/needs d Future Evidence Expertise p Competition p Support Quality Readiness Efficiency Productivity Brand, positioning Brand  positioning
  20. 20. How would this affect our long‐term viability? ff What is the tradeoff with other needs? What would be the 5‐10 year impact? h ld b h How does this advance our strategy? What are the key national trends? h h k l d
  21. 21. Why?
  22. 22. U.S. goals and conditions Ohio goals and conditions YSU goals and conditions l d d
  23. 23. “By 2020, America will once again have the  ll h h highest proportion of college graduates  in the world” i  h   ld” ‐ President Obama, 2/24/09 slide 25
  24. 24. to increase the percentage of  p g Americans with high‐quality  degrees and credentials to 60  percent by the year 2025 Currently: 39%
  25. 25. Economy requires more graduates Incoming students have greater challenges Preparation Participation Affordability Business model is becoming non‐viable All revenue sources are maxing out Revenue and expense trend lines are not  p sustainable
  26. 26. State funding 3% f d Expenditure per  d Tuition 3% above CPI student 1‐2% above  Student aid 4% CPI
  27. 27. 20 Years of Trends 3 2.5 AFFORDABILITY GAP 2 STATE FUNDS GAP 1.5 Tuition 1 Expenditure/FTE State approp 0.5 CPI 0
  28. 28. Hitting Home, Reindl
  29. 29. In an “age of discontinuity,” as Drucker called  f the current era, entrepreneurs could find  significant opportunities to create or  f transform organizations if they were willing  to get ahead of societal changes. Drucker h d f l h k said that the best way to predict the future is  to invent it. Rosabeth Moss Kanter, HBR
  30. 30. Thus, a company like GM could not survive   Th      lik  GM ld  t  i simply by doing the old things with redoubled  efficiency and lower costs. The company  efficiency and lower costs  The company  needed to dramatically rethink its entire  organizational model and related  assumptions…. Sometimes there is no going  back, because industry conditions and  y societal needs have forever shifted, requiring  an organization to do things in fundamentally  new ways.   Rosabeth Moss Kanter, HBR
  31. 31. 20th Century was one of  h technological innovation 21st C t   Century must be one of  t b     f  institutional innovation David Wiley, BYU,
  32. 32. Graduating more students Keeping graduates in Ohio p gg Attracting more talent to Ohio
  33. 33.
  34. 34. Associate Bachelor’s Graduate Ages 25‐64 Ages 25‐34 USO Strategic Plan
  35. 35. MHEC Measuring Up
  36. 36. Applies to YSU
  37. 37. How?
  38. 38. Federal Government Economy Available State and Local Govt. Funds • K-12 • Corrections Higher • Health Care Education • Other G t Oth Govt. Student Aid Appropriations/Grants Tuition Students Institutions Scholarships & Waivers *
  39. 39. Overview of the YSU Budget FY2009 * 48
  40. 40. Source: Don Boyd (Rockefeller Institute of Government), 2009 *
  41. 41. Increase efficiency ff Increase administrative productivity Leverage stimulus money l APLU survey just out: “The survey results  h l indicate that "universities are striving to  protect the core education mission of their  h d f h institutions.”
  42. 42. Growth Quality improvement Progress to strategic goals l Development of a sustainable business model Academic productivity d d Innovation
  43. 43. Strategic Financial Management
  44. 44. Budget Only Strategic Approach Set fixed targets Scorecard Establish financial expectations p Business plans Manage costs Cost‐benefit analyses Prioritize & allocate resources Rolling financial forecasts Fixed budget incentive targets g g Trending, benchmarking g, g Dynamic resource allocation
  45. 45. FROM Analysis of results looking back TO/AND Looking forward and expecting improvement L ki  f d  d  i  i
  46. 46. Greater cost containment Greater productivity Clear expectations l Innovation LEADERSHIP
  47. 47. Strategic  Strategic  Finance Goals Strategic  Indicators d Communication Information Actions Analysis Course Correction BOT and University Personnel University Personnel
  48. 48. 57 *
  49. 49. Costs = spending, not prices Costs = spending  not prices Focus on Education &Related, not total  spending Measure cost per student and cost per  degree/completion Look at patterns over time 58 *
  50. 50. Productivity  Cost reductions = improvements = p Increase in output  Permanent structural  (learning, research, jobs),  ( g, , j ), reductions in spending  d ti  i   di   without changing  admissions or spending 59 *
  51. 51. Reduce high cost/low demand programs   R d  hi h  /l  d d  Address retirement eligibility Reduce growth in health care Consolidate administrative functions Reduce spending on non revenue producing  Reduce spending on non‐revenue producing  athletics Restructure debt  Restructure faculty compensation and  rewards (use turnover to substitute teaching  faculty for research faculty) f l f hf l 60 *
  52. 52. Increase in student retention and graduation  Reduce excess credits for the degree Increase credit‐by‐exam  d b Increase distance‐based learning programs Increase proportion of graduates who meet  f d h goals for critical learning  Increase proportion of students who remain – f d h and are employed – in state 61 *
  53. 53. Managerial actions such as Reduce administrative costs Tackle ‘automatic’ cost increases kl Reengineer curricula Reengineer course delivery d l Eliminate or consolidate high cost/low  demand programs d d slide 62 *
  54. 54. Academic leadership actions such as: d l d h h Students come to college fully prepared (no  remediation) Accelerated learning Minimize “rework” and reduce credits to degree  g Improve rates of course completion Encourage use of assessment/”test out” options Learning in the workplace/credit for experience slide 63 *
  55. 55. Commit to average undergraduate tuition growth  d d h no more than CPI accompanied by increased need‐ based aid Allow differential tuitions for high cost/demand  p g programs Experiment with low priced options  Greater on‐campus employment opportunities for  students Reduce time to degree 64 *
  56. 56. Support change in approach to budget  building  Examining old habits and conventional wisdoms  about costs Focus on big picture, and progress on the goals  and the strategies to achieve them  Fulfill both fiduciary and strategic roles  lf ll b h f d d l 65 *
  57. 57. Public accountability for results consistent  with goals Transparent metrics Public outreach and continuous  communication 66 *
  58. 58. Are state and university strategic goals Clearly stated? Clearly – and frequently – communicated?  Accompanied by performance metrics? Measured and widely reported at least annually? Is performance considered in the resource allocation  process – are resources targeted to priorities/highest  payoff relative to goal achievement? Are metrics for productivity in place? A   t i  f   d ti it  i   l ? SCH/FTE faculty Students/administrator slide 67 *
  59. 59. p Is there evidence of improvement? Is faculty time being allocated to highest priorities? Is institutional aid being effectively used to help meet  goals? Are there some things the institution shouldn’t be doing? A  h     hi   h  i i i   h ld ’  b  d i ? Where would collaboration yield better results at less  cost? Are investments being made in Restructuring curricula Reengineering courses Improving business processes I i  b i   Enhancing support services Innovative approaches slide 68 *
  60. 60. Strategic  Strategic  Finance Goals Strategic  Indicators d Actions
  61. 61. Select the most important from: f USO accountability measures YSU academic strategic plan YSU institutional strategic plan
  62. 62. Student retention rates Student graduation rates, incl. 1st generation,  Black, Hispanic l k Number of adult enrollees Percent of S/S+ facilities f f l TREND LINES BENCHMARKS, PEER COMPARISONS
  63. 63. Cost per student, by key categories Faculty/SCH and staff/student ratios Overall By area Deferred maintenance   TREND LINES BENCHMARKS, PEER COMPARISONS
  64. 64. Be an advocate for strategic goals f Insist on seeing the data behind the decisions Focus on what the numbers are saying h h b Have the courage to ask the hard questions Regularly review the mission and market  l l h d k return from new initiatives Develop joint board committee meetings and  l b d d activities – e.g., Finance and Academic  Support rotation between board committees b b d *
  65. 65. “It is not necessary to change.  Survival is not mandatory. Survival is not mandatory ” W. Edwards Deming W  Edwards Deming David Wiley, BYU,
  66. 66. Decisions D i i Commitment to strategic role Agreement on key elements of that role (e.g.,  strategic goals, strategic financial goals, strategic  indicators) Ensure clear Board/staff roles and relationships
  67. 67. Ac & Stu Rels: access, quality indicators Ext Rels: economic indicators Fin & Fac: quality, affordability indicators l ff d b l d Internal Affairs: indicator development,  information resources, transparency f Executive and/or Trusteeship: board  education and overall decision process d d ll d
  69. 69. TO DO, WHO BY WHEN
  70. 70. TO DO, WHO BY WHEN
  71. 71. Presentations from Midwest Higher Education Compact Summit 11/6/09   P t ti  f  Mid t Hi h  Ed ti  C t S it  /6/ HITTING HOME: Quality, Cost, and Access Challenges Confronting Higher  Education Today, Travis Reindl, y, , g pp y g “What would Peter say?” Rosabeth Moss Kanter, Harvard Business Review,  November 2009. “The Board and its Financial Responsibilities,” Tom Longin and Rick Staisloff, AGB  1009 National Conference
  72. 72. * Slides obtained from YSU staff  * Strategies for Tough Times, Dennis Jones and  g g , Jane Wellman, November 19, 2009 * “The Board and its Financial Responsibilities,”   The Board and its Financial Responsibilities, Tom Longin and Rick Staisloff, AGB 1009  National Conference Some minor edits from the originals
  73. 73. Youngstown State University provides open  access to high‐quality education through a  broad range of affordable certificate,  b d f ff d bl f associate, baccalaureate, and graduate  programs. 
  74. 74. g y f Youngstown State University will become a national model for student‐ centered comprehensive urban universities, transforming its students  into successful professionals, scholars, citizens, and leaders.  Building upon its tradition of developing the body, mind, and spirit, YSU  Building upon its tradition of developing the body  mind  and spirit  YSU  will provide a full range of services and amenities to meet the needs of  residential, commuter, and offsite students.  In partnership with schools and the corporate, public, and non‐profit  h h h l d h bl d f communities, YSU will promote diversity and excellence in teaching,  research, and service to increase the educational attainment, economic  , , prosperity, and environmental vitality of the region.  The University will be a center for intellectual and cultural activity and  a catalyst for public engagement.  a catalyst for public engagement