It’s early fall, and that means it’s higher education board season. Over the next few weeks, almost every small private institution in the country will host a meeting of its board of trustees. Our experience working with finance leaders around the country is that folks spend a lot of time preparing for these meetings. Sometimes, they’re heads down for weeks gathering reports and anticipating questions.
At this point in the academic year, we find that, in addition to getting critical operational updates, e.g., status of that big construction project, boards are interested in a few things:
- The audit (likely finalized recently) and what it can reveal about financial strengths and weaknesses
- A review of the prior-year’s performance, including enrollment and fundraising
- Big and exciting initiatives for the upcoming year
- Hearing from any new leaders who took their seats over the summer, perhaps for the first time
In other words, the fall board meeting is really an opportunity to celebrate success and articulate the short-term priorities for the academic year. We think there are a number of tools you can leverage to navigate these conversations effectively and to drive critical strategic conversations at the board level. Let’s break these down for each of the main bullets above.
Understanding the Audit
Your auditor will almost certainly prepare a presentation for your board that walks through your audited financial statements and highlights areas for celebration and concern. There are a couple of really important numbers (that you likely already know), including the change in net assets. A negative change in net assets can indicate an operational deficit. We already know that more than 50% of private, nonprofit institutions have an annual deficit. Your auditor may even leverage some benchmarking based on publicly available data to help your board understand the institution’s performance relative to the field. When there’s an operating deficit, or just a big change in revenues or expenses, a savvy board will ask, “How did that happen?” and “Will it happen again this year?”
Reviewing Prior-Year Performance
You’re probably ready to answer at least one of the questions above. For instance, “Enrollment went down, and we made some investments in programs that haven’t taken off yet.” At your fall board meeting, a trustee might follow up by asking, “Which programs are doing well, and where are we making investments that may not make sense?” To answer this effectively, you would really need to be able to break down your programs by campus, college, department, course level, modality, etc. If you’re using Program Economic Analysis (PEA), you can do this pretty quickly by using the Economics and Trend Analysis dashboards, before your board meeting. Other dashboards, like Program Benchmarking, might help you address concerns about how your institution’s academic operation compares to similar schools.
Setting the Operational Focus for the Year
The board meeting is also an opportunity to validate priorities for the upcoming year. If you’re making data-informed decisions, you have already identified where improvements are necessary and you’ve already drawn a line from that conclusion to a series of potential tactics. In PEA, that might mean using the What If dashboard to discuss the benefits of growing enrollment or choosing not to fill certain open faculty lines. It might also mean using Program Tuition in your enrollment management office to better understand how you can grow tuition revenue without growing enrollment in a constricted market. That could help your board have strategic conversations about setting tuition and fees or approaching donors.
Showcasing Leadership & New Approaches
The fall board meeting may be the first time that a finance, academic, or enrollment management leader is able to present directly to the board of trustees. Therefore, it’s a good time to demonstrate that you know the institution well and have already thought about where some operational improvements may be appropriate. This is an excellent opportunity to showcase some data-informed decision making. But it’s also your best chance to inspire strategic thinking from your board.
Using PEA to Drive Strategic Thinking
Effective boards of trustees are not “in the weeds” on the institution’s operation. They govern. They don’t manage. But in order to govern toward success, the board has to know which way is up. Here, we’ve outlined that you probably have a lot of resources at your fingertips that will help your board ask effective strategic questions.
To recap, you can use tools like Program Economic Analysis to:
- Understand the source of your operating deficit (or surplus), so the board can determine whether a pivot is needed on revenues or expenses.
- Review historical performance trends for aspects such as enrollment or faculty compensation, so the board can start to explore strategies that will help you build the academic portfolio of the future.
- Explore new opportunities for revenue growth, so the board can identify potential diversification or market-alignment priorities.
- Aggregate academic and finance data, so you have a single source of truth driving your reporting and informing your strategy.
Interested in seeing how PEA can empower your institution and board with data-backed insights for more strategic planning? Book a demo with our Higher Education Consulting team today or explore additional PEA use cases.