Strategic Finance 2.0
TRACS Annual Conference 2017
Outline
Introduction Strategic Issues Context Framework
Overview Steps 1 - 6 Final Thoughts
TOP STRATEGIC ISSUES
• Business Model
• Partnership Imperative
• The Value Proposition
• Student Success and Completion
• The Academic Workplace
• Diversity and Inclusivity
• Campus Safety
• The Changing Environment of Higher Education
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Strategic Choice
Most institutions will need to change. The question is when?
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
A Simple Truth
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Some Institutions Might Not Survive
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Most colleges and universities resist change.
The Objective
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
My Planning Model
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Step 1: Reevaluate
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Program Margins
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Level 1
Program Margin Grid
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Margin / Enrollment
Budget Forecast: Baseline
Show decision-making layers.
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Step 2: Reimagine
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Step 2: Reimagine
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Clarity vs. Certainty
Strategic Thinking
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Characteristics of Higher Education in 10 Years• Characteristic 1• Characteristic 2• Characteristic 3• Characteristic 4
Characteristics of the Institution in 10 Years• Characteristic 1• Characteristic 2• Characteristic 3• Characteristic 4
Step 3: Reduce
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Budget Reductions
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
12 Principles for Cutting the Budget1. Be guided by mission2. Reduce to reinvest3. Understand the timing4. Avoid across the board cuts5. Adequately fund new ideas6. Don’t sacrifice quality7. Use a participatory process8. Full support from the board and administration is essential9. Communicate early and often10.Urgency depends on the situation11.What is best for the institution takes priority12.Cut deep enough the first time
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Step 4: Reinvest
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Model the Future
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Step 5: Resolve
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Executing the Plan
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Strategy Execution MeetingsGood Habits
Step 6: Results
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Strategic Financial Targets
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Financial Dashboard
Measures converted to 7-point scale
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Score Direction Actual TargetBS1 Adequate Working Capital 7.0 − 3.3 1.1 BS2 LT Resources / LT Obligations 7.0 − 0.46 0.40 BS3 Unrestricted Expendable Reserves 4.0 16,800,000 25,000,000 BS4 Growth in Reserves / Operations 1.0 − (8.9) 2.0 OS1 Net Operating Margin 1.0 − -14.0% 4.0%OS2 CR: Tuition & Fees / Total Expenses 2.0 − 61.6% 70.0%OS3 CR:Gift Income / Total Expenses 2.0 5.0% 7.0%OS4 CR: Endowment Inc / Total Exp 1.0 4.4% 7.0%OS5 Enrollment 2.0 − 797 1,000 OS6 Tuition Increase / CPI 1.0 − 5.4 2.0 OS7 Discount Rate 1.0 − 49.0% 42.0%OS8 Student / Faculty Ratio 1.0 − 10.6 14.0 OS9 Student / Non-Faculty Ratio 2.0 − 5.8 8.0 OS10 Benefits / Total Salaries & Wages 5.0 36.8% 36.0%OS11 Debt Service 7.0 − 3.3% 7.0%
Overall Total Score 44.0
Target Overall Score 90.0
Financial DashboardDate:
Final Thoughts
People problems• The transition will be difficult for some. • Fewer people paid better.
In ten years:• Will universities find a way to lower the price and maintain
quality?• Will online delivery be more prevalent?• Will the public be willing to continue to pay more?• Will the value of completing a degree still be in question?• Will universities find ways to be more productive; academically
and administratively?• What will the business model look like?
The list of questions is almost endless
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Contact Information
Kilty ConsultingPlanning and Budgeting Solutions for Private Higher Education
Duane KiltyCell: 765-506-1620Email: [email protected]
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
Strategic Finance 2.0 Duane Kilty
2017 TRACS Annual Conference
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