Podcasts Education Changing Higher Ed University Finances during Crisis Situations with Dr. Rob Hartman | Changing Higher Ed 041

University Finances during Crisis Situations with Dr. Rob Hartman | Changing Higher Ed 041

Published: April 25, 2020, 5:24 p.m.

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The current pandemic is offering a wealth of learning for higher education. By taking that approach, institutions can better position themselves to survive through the challenges that will continue to ripple through the nation.

This podcast features Rob Hartman, who is the chief financial officer of Columbia International University (CIU) in Columbia, S.C.

Taking a Learning Perspective

There are so many lessons that can be learned during this time period, even though many institutional leaders are rightfully stressed about the pandemic and its fallout. Therefore, taking a learning approach can be really helpful during this crisis. This pandemic is forcing people into doing things that they had previously resisted. Now that they\\u2019re getting their feet wet, they are realizing that these changes aren\\u2019t so bad.

Hartman also noted that this is a time when if we\\u2019re not paying attention, the current situation could sink our institutional ship. However, if we are paying attention, we can learn how to do business more efficiently through using the technology that is available.

Financial Challenges

The pandemic and its aftermath potentially will have a huge impact on an institution\\u2019s finances. Loss of donor funds and the drop in the institution\\u2019s endowment are the biggest hit that Hartman is seeing at this moment. For example, Hartman\\u2019s institution was anticipating several large donations from major funders. However, the market decline led these donors to withdraw their gifts.\\xa0 While these donors probably will return because they are loyal to Columbia, they currently need to focus on their own interests since they have lost millions of dollars.

Columbia\\u2019s operations have not been adversely affected at this point. When the pandemic hit, the institution responded quickly to move everything to online learning in order to keep day-to-day operations going. At this point, the university\\u2019s payables are down since athletic events are not taking place so Columbia is not leasing buses, purchasing fuel or incurring hotel costs. This has led to some short-term savings.

Columbia also has made refunds in relation to room and board. However, these refunds haven\\u2019t had a major impact on the institution\\u2019s finances.

Hartman said the institution also has sought federal funding to help cover some costs. He pointed to the Department of Education, which has stepped up to help with some of the institution\\u2019s financial issues. In addition, Columbia secured a Small Business loan that is forgivable if used for payroll. That will help the institution continue to operate through summer.

Looking Forward

This pandemic is accelerating higher education\\u2019s movement into a future that was still projected to be many years away, forcing higher education\\u2019s hand. Many institutions are taking a hard look at how to survive the current situation while also determining how to move forward. Hartman said that if this situation hadn\\u2019t happened, in his experience, higher education would have remained much the same.

Recessions tend to be either demand side or supply side, but rarely are they both.

This downturn is an anomaly in that it is both. The demand side has been shut off. The federal stimulus will help in this area. However, there are still concerns about the supply side, which will have far-reaching consequences on higher education, including institutional closures as well as ways higher education can reinvent itself into different forms.

Projections need to be done for the summer and fall semesters at this point, realizing that there is a big unknown -- how long the pandemic will last. Therefore, Hartman is regularly asking the university\\u2019s recruiting and advertising departments about what they\\u2019re seeing in relation to fall enrollment. He noted that there is good news in that the admissions team has stepped up to do creative recruitment events virtually. The viewership for some of these events have been vastly higher than an in-person tour.

At this point Columbia\\u2019s enrollment numbers for fall seem to be holding steady and match the institutional goals. However, if the pandemic goes on for another 4-6 weeks, the concern becomes whether people will have the financial resources to pay for their education.

Hartman hopes institutions learn lessons moving forward that include providing a less-expensive education to students, which will resulting in savings for both the student and the university. He also believes that while some students still want the full college experience, other students\\u2013especially the Gen Z, who are technologically inclined\\u2014will embrace online education more than earlier generations. They want to stay at home to watch a lecture, hear a speech or do a test, instead of attending school 100 miles away.

After dealing with immediate financial needs through seeking financial support from the Small Business Administration, institutions need to think creatively. The admissions staff need to reach out in a more personal way by conducting phone calls or creating virtual visits. Also, higher education leaders, faculty and staff need to maximize their contacts to recruit prospective.

Institutions also will learn to do things less expensively after this pandemic through relying on technology to hold meetings or to attend webinars. Hartman noted that his institution\\u2019s next meeting of the Board of Trustees will be held via Zoom. This decision is far-less expensive, because it saves the cost of airline travel, hotels, etc. Other meetings and trainings \\u2013 including Board trainings and president\\u2019s cabinet meetings \\u2013 also have been moved to virtual platforms. While it\\u2019s not totally the same as meeting face-to-face, Hartman sees the value in these types of meetings and believes that the quality comes close to matching an in-person meeting.

If the Current Situation Continues

If the pandemic and recession do not go away and people do not go back to work in the next 3-6 weeks, Hartman believes there will be serious problems in higher education, manufacturing and the service industry. \\xa0Continuation of the current circumstances also may provoke the need to discuss undergoing a merger or acquisition. A merger may make sense if there\\u2019s a good cultural fit and the financing can be arranged to have a buy-out or to relieve debt. A merger offers a workable way to preserve the institutional culture and keep an institution going.

Three Recommendations for Higher Education Leaders

Hartman suggested several takeaways for higher education leaders:

  • Don\\u2019t let fear force your decision-making. You need to think strategically. Knee-jerk decisions done in absence of strategic thinking will lead to unintended consequences.
  • Don\\u2019t forget to think about where the institution will be three months from now. We\\u2019re currently caught up in the whirlwind of the moment, but we need to be thinking about scenarios in relation to fall enrollment and then identify budget decisions that may need to be made. You need to have prepared 2-4 budgets so you can transition into the leaner budget if the institution doesn\\u2019t meet its enrollment goals.
  • Don\\u2019t despair. Always look for the lessons in a crisis. What can we learn? How can we implement this learning to become better? Some of the results that come out of this pandemic will be a good thing. Ultimately, the most important thing to focus on is taking care of people.

Bullet Points

  • The pandemic is an opportunity to learn as individuals and as organizations. By taking this approach, leaders can lower the stress level related to this situation.
  • While there are some financial challenges currently emerging in relation to donor gifts and the endowment, the present situation also includes cost savings, such as cancellation of all travel for athletic teams. Institutions also are tapping federal sources of funding, including through the U.S. Department of Education and the U.S. Small Business Administration.
  • While focused on the day-to-day, leaders also need to take a longer view. Of special note are fall enrollment numbers. Institutions need to be creative about connecting with prospective students through available technology.
  • Institutions also need to continue exploring less-expensive options, such as technologies like Zoom, for after the pandemic is over. Previous face-to-face meetings such as board meetings, board trainings and president\\u2019s cabinet meetings can effectively be done virtually using these types of technologies.
  • If the current situation is prolonged, some institutions may need to start considering mergers or acquisitions.

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