While higher ed is slowly bouncing back from the pandemic, adjusting to the ‘new normal’ remains a challenge. This is apparent in the ongoing exodus of college president resignations and pushback from higher-ed unions in the face of funding cuts and loss of credibility from student loan debt and other scandals.
With enrollment down nearly 10 percent, mergers and acquisitions up 21 percent, and a growing list of campus closures, accreditors are keeping a closer watch on post-pandemic operations and overall institutional effectiveness.
New federal policies are putting downward pressure on accreditors, which in turn is putting downward pressure on institutions and their governing boards. As a result, compliance requirements are becoming more stringent, and accrediting bodies want institutions to provide more evidence of financial stability and viability moving forward.
While many in higher ed are feeling the pressure, the general outlook for colleges and universities is not all doom and gloom. As an aside, I’m a big believer in higher education and its staying power. Change can be messy, but I do think higher ed as a whole will rise to the occasion and do what’s right for students.
And before pointing blame at accreditors, accreditation leaders want the public to know that today’s accreditation process is often misunderstood and under-appreciated in terms of how it has stepped up its game to improve student outcomes, financial viability, transparency, monitoring, innovation, and data-informed decision-making.
However, despite accreditors’ improvements, critical gaps remain. As a result, startup accreditors are coming onto the scene in an attempt to fill the gaps and solve higher ed’s ROI dilemma. The Workforce Talent Educators Association (WTEA), for example, recently released new workforce success standards in response to a lack of accreditation requirements for evaluating workforce outcomes.
Increased discussion in Congress about accreditation reform may also require accreditors to pay more attention to student economic outcomes. The shift could influence how federal funding is allocated to higher education institutions in the future, should Congress decide to make funding determinations based on performance benchmarks.
At the state level, Governor Phil Murphy is backing legislation to make New Jersey’s public colleges and universities more transparent about their finances. The bills at hand would require schools to submit a yearly fiscal monitoring report to the Secretary of Higher Education and undergo a financial audit every three years. One of the bills even proposes to appoint a state monitor to manage an institution’s fiscal operations should the state’s audits deem fiscal instability.
In order to provide sufficient evidence of fiscal responsibility and sustainability, institutions need to implement better strategies and tools across the board to fully optimize their data, support scenario planning, and stress test their finances. In other words, it’s time for higher ed to graduate beyond operational budgeting to a more sophisticated and forward-thinking approach.
It’s worth noting that CFOs will have an important role to play when it comes to meeting new accreditation requirements. Boards of colleges and universities are also looking for more in-depth financial reporting. Therefore, CFOs and business officers should be equipped with the right data and tools to meet these growing expectations and reporting obligations.
Building a strong foundation for financial intelligence is key for stability and creating trust among stakeholders. Achieving this requires making appropriate digital upgrades and leaning into financial modeling. Long-range financial planning (LRFP), for example, is a smart way to provide advanced decision-making support that CFOs need for planning, especially in times of crisis or when major disruptions occur. LRFP offers evidence of good financial management for accreditation purposes with scenario planning and multi-year projection capabilities.
Academic and administrative cost benchmarking is another must-have for providing evidence of good financial stewardship. With a strategic approach to internal and external benchmarking, data sharing among institutions can illuminate where changes are needed, how to optimize existing resources, and where to make strategic investments to promote financial sustainability. The Higher Learning Commission, an accreditor, provides several financial and non-financial indicators that can be used by institutions to benchmark.
A historically narrow focus on accreditation and assessment management is now a thing of the past. Advancements in automation, plus myriad new and improved ways to collect and interpret data, mean continuous evaluation and improvement is part of the ‘new normal.’
The collective hope and expectation for higher ed will be an eagerness to embrace digital transformation. Incoming campus leaders and staff will usher higher ed into its next era–an era of heightened connectivity and adaptability. With better tools and strategies in place, gathering the financial data needed to meet evolving accreditation requirements won’t seem as daunting.
Bottom line: Accreditors, as well as government regulators, are looking for stronger evidence of proper financial management and sustainability. CFOs and business officers must be ready with the appropriate data on-hand to demonstrate how their institutions are fiscally responsible now, and will be well into the future.
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