Difficulty Seeing and Planning for Future Scenarios Cited As Top Challenges
Amid increasing funding pressures for colleges and universities, a new survey published by PFM Solutions LLC, a leading provider of financial modelling technology using its Whitebirch platform, finds that more than three quarters (76%) of higher education financial executives lack a high degree of confidence in their long-term financial strategic planning.
The survey was conducted at the WACUBO 2017 annual conference, the annual gathering of financial and administrative leaders from higher education institutions in the western region, including fourteen western states, three Canadian provinces, Mexico and other Pacific Rim nations. The survey sample was based on more than 100 in-person interviews conducted at the conference.
“We see this as a wake-up call at a critical time for financial leaders in higher ed,” said Brett Matteo, President PFM Solutions. “Changes in enrollment and public funding demand the highest levels of confidence in long-term planning. Failing to evolve the tools and techniques needed to restore planning confidence will not only make it increasingly hard to compete, but will expose these institutions to new and growing risks.”
The 5,300 colleges and universities in the U.S. spend a combined $440 billion annually with increasing internal and external funding pressures. According to the College Board, colleges and universities in the U.S. enroll around 20 million students, down from a 2010 peak of over 21 million students. Public funding for higher education has also decreased. In 2014-15, appropriations per student FTE were 8% lower in inflation-adjusted dollars than they were a decade earlier and 11% lower than they were 30 years earlier. At the same time, tuition has continued to increase. Between 2011-12 and 2016-17, published tuition and fee prices rose by 9% in the public four-year sector, by 11% at public two-year colleges, and by 13% at private nonprofit four-year institutions, after adjusting for inflation.
According to the survey, lack of confidence among financial leaders is driven by an inability to effectively see and plan for the long term. More than two-third of respondents (68%) described their institution’s view of its long-term financial future as limited or problematic. More than half (56%) described their current process for long-term strategic planning as either problematic or burdensome.
The survey also shed new light on the barriers financial professionals face in advancing the tools and techniques in their planning process. When asked to pinpoint the greatest challenge to their institution’s long-term financial planning, one third (33%) admitted to difficulty in proving different future financial scenarios. Other challenges revealed by the survey included: a lack of advanced modeling tools (24%); lack of complete financial information (22%); and over-reliance on Excel spreadsheets (21%).
“Today’s campuses operate like small cities,” said Matteo. “To survive and thrive, financial leaders need to see all the dimensions and strategic possibilities in full detail in accelerating decision cycles. They need to cross their strategic plans against financial plans to truly understand what is possible and how to pay for it. We’re committed to equipping them with the next level of sophisticated, responsive, and powerful planning tools.”
About PFM Solutions
PFM Solutions, LLC focuses exclusively on developing and delivering best-of-breed financial modeling technology and services to public and private markets. Whitebirch is a high-performance financial modeling solution that helps financial professionals and their teams more effectively create, manipulate and communicate unlimited combinations of strategic what-if scenarios in real-time to enhance mission critical planning.
Designed for complex organizations in fast-changing environments, the patented technology provides a structured modeling environment for financial leaders to gain higher levels of insight about the downstream impacts of critical decisions and strategic options on financial positions. Purpose-built for organizations with large multi-dimensional operations, the Whitebirch engine takes financial strategy and decision-making to an entirely new level. To learn more, visit www.whitebirchsoftware.com.