In our continued quest to ensure our clients are able to help each other through challenging times, we are sharing periodic client showcases. In the below Q&A session with Baker Tilly client Ed Steinmetz, Senior VP for Finance and Administration at the University of Scranton, Ed discusses the challenges and success of transforming the university’s budget process.
The University of Scranton is a Catholic and Jesuit institution, one of just 28 in the United States. Even among Jesuit schools, Scranton prides itself on its strong sense of community and individual attention to students. For example, Scranton employs a seminar model for all first-year students that enables faculty to get to know new students through specially developed courses related to their majors. Scranton excels at helping its students gain acceptance into medical school at rates that are nearly twice the national average. Similar exceptional success can be found in students receiving prestigious international fellowships, as Scranton is included among the nation's top Fulbright producers.
Scranton’s extensive national accolades include being counted among the top 10 colleges or universities in the North by U.S. News & World Report for the past 22 consecutive years. Most recently, Scranton was ranked 22nd in the nation for the impact it has on the earnings of its graduates, according to a first-ever ranking by The Economist, the well-respected international news publication.
I have a background in public accounting and worked for a regional firm before I started at University of Scranton in 1991. This is my 25th year at the university, where I helped to establish the internal audit function then moved to Assistant Vice President for Finance. Now I am the Senior Vice President for Finance and Administration and oversee the finance, facilities, human resources, and IT aspects of the school.
Higher education is always changing, and with that comes a number of challenges for the university and its students, especially concerning pressures around affordability and access. Since I first started at Scranton, there has been a more significant burden placed on net tuition revenue growth as the need to continue to provide a personalized experience to our students both inside and outside the classroom and the ongoing pressure to address unfunded mandates from various groups leave less funding available to operate the institution. Combine that with the pressures placed on students in terms of affordability and our need to shift more and more of our available revenues to scholarships to ensure access created a net revenue tension that required a different way of looking at our finances.
We knew we needed a more integrated approach to budgeting and had to create a better way to more consciously connect our expenditure and resource allocations. The evolution of our budget process included the realization that mission and margin are not mutually exclusive. Our goal was to be much more intentional about our resource allocations to improve how we can help students succeed and enhance the quality of the student experience. Our home grown instructional cost data model specifically aligns our academic resource strategies with student needs, and has become the baseline of our framework for a comprehensive resource review. This new model allows us to drill down costs and margins by department, program, and other key components to view specific spending patterns and better understand how resources are being allocated as well as the potential impact of each dollar spent on program contributions.
In developing a comprehensive, multifunctional cost data model in house, we can better connect and align our resources with University of Scranton’s specific strategies. It is also our hope that this more inclusive process will continue to improve the overall experience for students, staff, and faculty. Our process is not complete, but we’re on the right track.
In order for our change management process to work, we really had to focus on communication early on. From day one, we began communicating our commitment to the process with university leaders and staff, and clearly articulated the impact we hoped it could have. The key was letting everyone know that there was no need to panic and articulating that industry pressures were demanding a change. Taking the time to explain why it is important to execute this transformation the right way was also vital to the success of this change. We met with campus groups and emphasized our commitment to provide full transparency around the data and the process. Steering committees were formed to help guide the process and get others involved from all across the university.
Education was a huge part of our budget transformation process. Our team had to learn all about the new model, what it tells us about costs, and where we allocate resources, then communicate that to the rest of the university. We also met to discuss and learn more about the changes in the industry and need for Scranton to collaborate and prepare for future change.
It will hopefully improve the student experience and allow us to maintain and even improve our key metrics given our ongoing budget pressures. We use a holistic, drill down visualization model to look at budget, costs, and contribution margins, which provides a lot of transparency to our data. Another big advantage of this approach is the long term financial sustainability it provides to the university.
Overall, I would follow most of what we did again. There were no major stumbles and I don’t have any regrets, so if I had to do it over again, I would just start the approach sooner. Having widespread input from leaders across campus earlier in the process would also be beneficial. It can be a challenge to manage this process, so feedback from others is always helpful.
At the end of the day, this process helped stabilize our institution during challenges times. I think the initiative improves the quality of the university, the experience for students, and the resources we are able to provide to our students, faculty, and staff. It also allowed us to pull more people into the budget transformation conversation. This topic is front and center at colleges and universities across the country, which reinforces how important it is for everyone in higher education. I’m proud that we are well on our way to fully implementing our budget transformation process.
“The higher education landscape is changing and if we don’t change with it, the budget process at our university just won’t be as successful and won’t allow us to achieve our strategic goals. We have a mission and we have a margin, and we can’t just focus on one. We need to connect them in order to strengthen the University over the long term. A lot of universities have started the budget transformation process, or are at least starting to have the conversation. There is no perfect way to implement this, but institutions need to do something to maintain the financial stability of their college or university.”– Edward Steinmetz, Senior Vice President for Finance and Administration
For more information on this topic, or to learn how Baker Tilly higher education specialists can help, contact our team.