The Future of Higher Education
FOCUS
May 16, 2012
Larry Goldstein
President, Campus Strategies, LLC
May 16, 2012
© Campus Strategies, LLC
1
Agenda
• State of the industry
– Demand / demographics
– Revenues
– Competition
– Increasing calls for accountability
• Institutional response
– Focus
– Better understanding of costs / revenues
– Prioritization
May 16, 2012
© Campus Strategies, LLC
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Employment / Education
Linkage
Seasonally Adjusted Unemployment Rate
July 2010
July 2011
Less than a high school diploma
13.9 %
15.0 % 
High school graduate
10.1 %
9.3 %
NATIONAL AVERAGE
9.5 %
9.1 %
Some college or associate’s degree
8.4 %
8.3 %
Bachelor’s degree
4.5 %
4.3 %
Source: Bureau of Labor Statistics
May 16, 2012
© Campus Strategies, LLC
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Lifetime Earnings (in millions)
$3.500
$3.252
$3.000
$2.671
$2.500
$2.268
$2.000
$1.500
$1.304
$1.727
$1.000
$0.500
$0.000
High school
diploma
Associate's
degree
Bachelor's
degree
Master's
degree
Doctoral
degree
Source: Georgetown University Center on Education and the Workforce
May 16, 2012
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Projected Job Demand Shifts
100%
90%
80%
70%
Master's or better
60%
Bachelor's
50%
Associate's
40%
Some college
30%
HS diploma
20%
Dropout
10%
0%
1973
1992
2007
2018
Source: Georgetown University Center on Education and the Workforce
May 16, 2012
© Campus Strategies, LLC
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Shifting Student Demographics
100%
2.6 MM
3.0 MM
2.9 MM
3.0 MM
3.1 MM
90%
80%
70%
Native American
60%
African American
50%
Asian American
40%
Hispanic
30%
White
20%
10%
0%
2001-02
2006-07
2011-12
2016-17
2021-22
Source: Western Interstate Commission for Higher Education
May 16, 2012
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South’s Public High School Enrollment
as a Percentage of Total US Enrollment
38.0%
37.0%
36.0%
35.0%
34.0%
33.0%
32.0%
2001-02
2006-07
2011-12
2016-17
2021-22
Source: Western Interstate Commission for Higher Education
May 16, 2012
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Virginia FTE Enrollment
2005—261,000
2009—294,000
2010—312,600
One-year change in Virginia 6.2 percent;
nationally 6.3 percent
• Five-year change in Virginia 19.9 percent;
nationally 14.9 percent
•
•
•
•
Source: State Higher Education Executive Officers
May 16, 2012
© Campus Strategies, LLC
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Impact of the Great Recession
• Dramatic endowment erosion
– Nearly recovered when national debt ceiling
debacle occurred
• Slashed state appropriations
• Backlash against tuition increases
– Ongoing concern about ability to pay, but
also willingness to pay
• Negative effect on liquidity
• Bond rating downgrades
May 16, 2012
© Campus Strategies, LLC
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State Appropriated Funds
(in billions)
$82.0
$80.9
$80.0
$78.3
$78.0
$76.1
$75.7
$76.0
$74.7
$74.0
$72.0
$70.0
$70.3
$68.0
$66.0
$64.0
2006
2007
2008
2009
2010
2011
Source: Grapevine—Illinois State University
May 16, 2012
© Campus Strategies, LLC
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Impact of Federal Stimulus
(in billions)
$82.0
$80.0
$78.0
$80.9
$80.6
2008
2009
$79.5
$78.9
2010
2011
$75.7
$76.0
$74.0
$72.0
$70.0
$70.3
$68.0
$66.0
$64.0
2006
2007
Source: Grapevine—Illinois State University
May 16, 2012
© Campus Strategies, LLC
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Projected State Budget Gaps
Budget Shortfall (in billions)
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
$174
$117
$79
$37
$96
$84
$72
$37
$27
$64
$13
Unavail.
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: National Conference of State Legislatures
May 16, 2012
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Dwindling Higher Education Support
from the Commonwealth
1992-1993
14%
2009-2010
11%
Higher
Education
Higher
Education
Other Agencies
86%
89%
Other Agencies
Source: SCHEV
May 16, 2012
© Campus Strategies, LLC
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Virginia Appropriation per FTE Student
2005—$5,600*
2009—$5,800
2010—$5,100
One-year change in Virginia -11.8 percent;
nationally -7.2 percent
• Five-year change in Virginia -8.9 percent;
nationally -3.2 percent
•
•
•
•
* Constant 2010 dollars
Source: State Higher Education Executive Officers
May 16, 2012
© Campus Strategies, LLC
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Economic Outlook
• Weakened prospects for net tuition growth
– Market preference for low-cost or highreputation competitors
• Pressure on non-tuition revenue sources
– Philanthropy, research funding, etc.
• Need for stronger management of operating
costs, balance sheet risks, and capital
investments
Source: Moody’s Investors Service
May 16, 2012
© Campus Strategies, LLC
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Four-Year Institution
Undergraduate Enrollment Growth
12,000,000
42%
10,043,915
10,000,000
8,000,000
6,000,000
32
%
6,285,149
Fall 1999
21
%
2,558,594
4,000,000
2,000,000
Fall 2009
539%
1,200,172
0
Public
Nonprofit
For profit
Total
Source: National Center for Education Statistics
May 16, 2012
© Campus Strategies, LLC
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Criticisms of HE Performance
• What Will They Learn by American Council of
Trustees and Alumni
– Sharply critical of the lack of rigor in core
educational requirements—diffusion of the
curriculum
• Academically Adrift: Limited Learning on College
Campuses by Arum & Roksa
– More than a third of college seniors’ writing
skills had not improved since their first
semester of college
May 16, 2012
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Accountability / Performance
• Multiple federal commissions addressing
tuition pricing and expectations regarding
improved educational results
• Most recent HEA reauthorization resulted in
increased scrutiny and reporting requirements
• Increased pressure on and from accreditors
• Call to double the number of college
graduates to meet increased international
competition
May 16, 2012
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Current Institutional Realities
•
•
•
•
•
•
Academic programs drive institutional costs
HE adds programs but rarely subtracts them
Too many “try to be all things to all people”
Insufficient resources to do everything well
Across-the-board cuts lead to mediocrity
Unrealistic to expect increased resources
– Redistribution of existing resources is best
option
May 16, 2012
© Campus Strategies, LLC
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Institutions’ Response
• Improved management focus
– Integration of comprehensive planning,
resource allocation, and assessment
• Accompanied by deep understanding of
revenues and costs
• Improved approaches to resource allocation
• Responsibility center management…
May 16, 2012
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Institutions’ Response (Contd.)
• Identify niche, exploit it, and achieve /
maintain excellence within that area
• Academic / administrative program
prioritization
– Identify resources invested in activities not
contributing to institutional success
– Discontinue those activities and invest the
resources in successful programs or those
with potential for success
May 16, 2012
© Campus Strategies, LLC
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Future of Higher Education
Questions, Comments,
and Reactions
Larry.Goldstein@ Campus-Strategies.com
540.942.9146
May 16, 2012
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