By Owen Daugherty, NASFAA Staff Reporter
For the first time in the history of Inside Higher Ed’s survey on the matter, chief business officers’ confidence in the financial stability of their institutions over the next five years dropped below 55% and was eclipsed by their confidence in the next 10 years, according to a new survey.
The shift is likely due to the bleak economic outlook higher education across the board is currently facing in the relative short-term, though there is more optimism about the long-term prospects, Doug Lederman, editor-in-chief and co-founder of Inside Higher Ed, said during a virtual presentation of the survey findings.
“This year's survey is rewritten almost entirely, given the unprecedented nature of this moment,” Lederman said Tuesday, noting that the survey was conducted in June, with responses from 273 business officers. “It is pretty wholly focused on COVID and on the recession it has fueled.”
Notably, only 52% of respondents expressing confidence in the financial stability of their institutions over the next five years is a 10% drop from the previous year, and the year-over-year drop was particularly significant among business officers at community colleges and private non-profit doctoral and masters institutions.
Additionally, less than 20% of business officers across all sectors indicated they strongly agree that they are confident in their institution’s financial stability over the next five years.
The findings underscored the precarious financial situation many institutions now find themselves in due not only to the economic disruptions caused by the novel coronavirus, but also the state budget cuts to higher education and declining enrollments at many institutions that are likely to ensue.
With the fall semester taking place online at institutions across the country due to the pandemic this year, 42% of business officers said their college is likely to lower or freeze tuition in the next 12 months, including 26% who said their college is “very likely” to do so. Furthermore, 78% of business officers said their institution is very or somewhat likely to increase financial aid for students.
Nearly 60% of business officers said their institutions had spent less than $2 million in unanticipated budget expenses due to the coronavirus outbreak, with the biggest expenditures related to additional cleaning of campus facilities and the transition to remote learning, such as making sure students were properly equipped and ensuring their systems were up to date and optimized for remote learning.
Spending on COVID-19 testing and contact tracing was the third largest expense, according to the survey.
Roughly 22% of respondents said they spent between $2 and $5 million in unanticipated budget expenses, and 18% said they spent more than $5 million.Though, as Lederman noted, this survey was conducted in June and those expenses could rise through the summer as institutions prepared for a fall semester full of uncertainties.
“Campuses have been spending a lot of the summer investing in a lot of things to make their campuses safer on the chance of a return to campus, which some schools are still counting on,” he said
As for budget cuts institutions are likely to take going forward in response to the new economic reality, business officers overwhelmingly said they would not reduce health care benefits for employees, take an unscheduled or larger-than-planned draw from their endowment, or reduce faculty and staff pay.
However, 40% of respondents said they would look to eliminate adjunct positions or end underperforming academic programs.
“I think it is worth noting the adjunct, 40% of them losing their jobs, and the furloughs ... these are real costs,” said Scott Jaschik, editor and co-founder of Inside Higher Ed. “These are people ending up without jobs and many times without much prospects for jobs.”
At institutions whose operating budget is supported by an endowment, 19% of business officers said the spending rate will increase and only 9% said it will decrease. Additionally, only about 1 in 5 of those surveyed said their institutions took funds that were over and above their endowment policy in the last 12 months. Notably, 27% said they planned to do so in the next 12 months.
“That is a sign … of the strain that a lot of colleges are under in this sort of critical situation,” Lederman noted.
Publication Date: 8/13/2020