As tuition levels rise, there are growing calls for fiscal responsibility and expectations that colleges and universities will use data to drive financial decisions and tie expenditures to student outcomes. However, many institutions don’t have the tools to make those connections, resulting in financial decisions that are oversimplified and lacking sufficient context.
A report by ACE’s Center for Policy Research and Strategy (CPRS) with support from TIAA Institute, “Evolving Higher Education Business Models: Leading with Data to Deliver Results,” explores how higher education is moving from a data-poor to a data-rich environment and examines leadership strategies that presidents and their teams can use to couple financial and learning outcomes data with business model analysis to drive performance and enhance the academic enterprise. It will be discussed this afternoon at ACE2016, ACE’s 98th Annual Meeting, during a 2:45 p.m. (PDT) session that will further examine these issues.
“Higher education finance is often viewed as a black box, with revenue generation, spending and the monitoring of student outcomes often taking place separately from each other,” said Louis Soares, co-author of the report and vice president of CPRS. “This report provides recommendations that will allow presidents, provosts and chief financial and chief information officers to review business and academic models through a return-on-investment lens to drive efficiency and effectiveness.”
The report finds that financial decision making is best guided through business model approaches that prioritize data transparency, providing stakeholders a look into the connections between expenses, revenues and education outcomes. Increased transparency enables exploration of the return on investment of cross subsidies across academic programs and, in turn, requires an improved understanding of costs at the program and course levels that allow for data-driven program and course delivery.
This report and three accompanying background papers are funded by the TIAA Institute and were inspired, in part, by proceedings from a September 2015 ACE/TIAA Institute convening of college and university presidents, provosts, chief financial officers and others.
“Higher education institutions can benefit from creating more financial transparency, but some simply lack the tools,” said Stephanie Bell-Rose, TIAA senior managing director and head of the TIAA Institute. “Putting the proper supports in place that allow leaders to confidently rely on data to make financial decisions will help advance strategic innovations that lead to better student outcomes.”
According to the report, transparent financial and learning outcomes data will require new approaches to leadership. The focus of shared governance will shift from institutional dialogue and coherence toward institutional performance based on agreed upon metrics. Through the implementation of the “networked leadership” approach described in the report, in which leaders increase transparency, empower frontline community members and guide performance standards and metrics, institutions are better equipped to respond to environmental demands.
Finally, according to the report, as data-rich colleges and universities continue to evolve, their leaders should become skilled at creating and managing high-performance networked learning enterprises, embedding data-informed decision capabilities at all organizational levels, promoting collaborative approaches to achieve established performance outcomes and utilizing technologies that incorporate financial and outcomes data.