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Higher education institutions are seeking ways to keep offering a fruitful education in the face of revenue cutbacks and resistance to tuition increases.
Many public universities are facing their biggest budget challenges in their histories. There has been a trend over the last decade of continuous decreases in state funding for higher education in most states. Public universities have generally responded by both cutting expenses and increasing tuition, shifting the burden of funding to the individual students and their families.
With the deep recession starting in 2009, and the end of funding from the American Recovery and Reinvestment Act (ARRA), this trend has grown exponentially. According to the Center on Budget and Policy Priorities, 43 states have cut funding for higher education in FY11, forcing universities to increase tuition, sometimes dramatically.
Replacing previous funding sources with tuition increases is unlikely to deliver long-term success however, since the protests against tuition hikes are mounting and institutions are losing their ability to meet their educational commitments.
The financial crisis created a strong impetus for new ways of thinking. There are many examples of high-performing universities answering the call for change. The ability to demonstrate a willingness to collaborate across universities and the private sector, to inspire innovation and to think creatively will be the keys to future success.
Safeguarding education. Some universities are taking a top-down approach to stimulate innovation and collaboration to find new ways to preserve education services under a new, lower cost model. Others are rethinking how they deliver services.
Balance political pressures. The sheer size of university budgets allows institutions to gain significant value by leveraging the economies of scale among “non-political” budget items. These include procurement of goods and services and the management of physical assets such as IT, real estate and fleet.
Develop creative financing solutions. Some organizations have introduced innovative ways to achieve results even when they lack the resources to pay for them. Universities can transfer the risk of implementing change to partners through value-based contracting, a proven way to meet university needs while focusing specifically on the delivery of agreed outcomes.
Accenture’s budget rightsizing approach lets universities attack budget gaps using an integrated framework of proven best practices drawn from both the public and private sectors. By focusing team efforts on creating value from economies of scale and sharing services, public managers can involve the entire enterprise and, in the process, drive sustainable hard dollar cost savings and revenue increases.
Accenture proposes a three tiered approach:
In Accenture’s experience, the following success factors are critical:
November 4, 2011
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