THE WEEKLY BLAB
Volume 7, Issue 19 – January 24, 2013
January is here and the weather is turning a bit colder. Of course, Georgia cold isn’t all that cold. I was looking at the news this morning and there’s a cold wave hitting the northeast, and Al Roker took the time to point out that there was a lake effect snowstorm about to hit Oswego and Syracuse, NY. I grew up in Syracuse, so I know those kinds of storms well. Lots of people think that it’s Buffalo that has the really horrible weather, but Syracuse beats it for snow eight years out of ten.
Things heated up in soccer this weekend, with Chelsea beating Arsenal 2-1, Manchester City winning 2-0 over Fulham, and best of all, the evil Manchester United only eking out a tie with Tottenham. The cursed Robin Van Persie scored ManU’s only goal. He’s on an absolute tear—11 goals in his last 11 games, and 22 goals in 23 games total. You hate to see someone that good playing for the opposition. So, Chelsea and Manchester City both move up a net two points in the standings.
Of course, it was a cold wind blowing for Atlanta on Sunday, with the Falcons out ahead 17-0 and then losing the game 28-24. I wasn’t watching the game, but every time someone scored, my iPhone buzzed and posted a message with the score from Channel 11. In last week’s BLAB, I mentioned that I know almost nothing about football, but that I had seen the last minute of last week’s game, where Atlanta won the NFC against the Seahawks. Well, Russ Hunt was only the first among many to tell me I knew even LESS than that, since it wasn’t the NFC championship game—it was a playoff game.
Cold Wind Over Academia
Steve Wrigley, down at the Board of Regents, circulated an article dated January 16, 2013 from Moody’s Investors Services last week. The headline read: “US Higher Education Outlook Negative in 2013—Revenue Pressure on All Fronts Intensifies Need to Grapple with Traditional Cost Structure.” It seems that Moody’s has shifted its outlook for Higher Education from stable to negative, even for the leading revenue- diversified colleges and universities. The outlook for the rest of the sector has been negative since 2009, so according to Moody’s, we’re all in the same leaky boat now.
The article goes on to say: “The new sector-wide negative outlook reflects mounting pressure on all key university revenue sources, requiring bolder actions by university leaders to reduce costs and increase operating efficiency. As the economic growth languishes below previous benchmarks and the federal government seeks to reduce spending in key areas, even market leading universities with diversified revenues are facing diminished prospects for revenue growth. Universities have been restraining costs in response to the weak economic conditions since the 2008-09 financial crisis, but they have only recently begun examining the cost structure of their traditional business model.”
Moody’s say there will still be a strong demand for higher education, but argue that higher education’s ability to keep raising prices is nearly exhausted. The five major factors contributing to their negative outlook are:
1. Price sensitivity continues to suppress net tuition revenue growth
2. All non-tuition revenue sources are also strained; diversity [of revenue streams] no longer offers a safe haven
3. Rising student loan burden and defaults taint perception of value of a college degree
4. Increased public scrutiny drives escalated risk of more regulation and accreditation sanctions
5. Prospects for long-term sustainability depend upon strong leadership through better governance and management
Some of the data reported in the article includes that family net worth has fallen to its lowest level since 1992, the number of high school graduates is declining (having hit its peak in 2007-2008), and that nearly half of all universities experienced an enrollment decline in Fall 2012.
As to public colleges like ourselves:
“Public universities are now as market driven as private universities, but remain a lower cost option with stronger pricing power. In response to long-term declines of state funding, these universities have responded by raising tuition and increasing out-of-state enrollment year over year. Net tuition revenue has therefore grown in direct response to diminished government support. We expect this trend to continue, but the juxtaposition of public focus on affordability combined with public universities’ access mission and the need to generate tuition revenue presents a unique challenge to this sector. The tuition survey shows that public universities are projecting a lower rate of growth for net tuition per student of 2.7% for FY 2013, down from a median of 6.7% over the past five years (2007-2012).”
In other words, we can’t continue to raise tuition to offset cuts in state funding. Moody’s notes that the main way that universities can deal with this economic problem is by continuing to invest in online and distance learning programs, which allow universities to grow enrollments and tuition revenues, while increasing the flexibility and productivity of faculty. 69% of higher education leaders see online learning as a key long-term strategy, and in Fall 2011, 32% of higher education students took at least one course online.
The major strategies that are being adopted to grow revenue and increase efficiency nationally include centralizing services (so far in Georgia this hasn’t worked so well—the first round reportedly increased costs), consolidation within public systems (four USG institutions were recently merged into others), increasing the reliance on adjuncts (this has been happening for a while), reaching out to new markets (non-traditional students), online education, forming partnerships, eliminating small underutilized programs, increasing space utilization (also an initiative within the USG), and changing the tuition pricing model to charge for additional coursework.
So—where does this leave SPSU? We’re bucking the trends in some good ways. While our state funding is down, our enrollment is up significantly. We have enjoyed consistent growth of about 6% a year for the past seven years, in part due to our highly desirable program mix. The fact that our degrees lead to jobs is increasingly well known, and we’ve added programs in key areas like engineering, computer game design, accounting, and new media arts. All are doing very well for us. We’ve also improved retention and graduation rates, also leading to enrollment increases. While our current rates are still nothing to write home about, they have consistently increased for the past seven years. We’ve timed things out really well too, with SPSU having gotten approval for about $100M in new construction just before the economy collapsed, so we have some new facilities to offset some of the older buildings that still need extensive renovations. Our University is increasingly well known and we have a strong reputation.
On the challenge side, we’re reaching some capacity limits for space, which will force us to schedule in a more efficient manner (which we’re doing). Good office space is increasingly at a premium. Lack of raises for several years is definitely a morale-killer, and some universities in the USG are reporting that they are losing significant numbers of faculty. This hasn’t really hit us yet, though we may be seeing the first hints of it.
The main challenge for us will be to maintain our solid growth and to continue to improve our retention and graduation rates. The state funding formula will soon favor graduation rates instead of number of students, so we need to do an ever better job of helping students meet the outcomes of our rigorous curriculum and programs. We’ll have to do better in meeting the needs of non-traditional students, which means (among other things) that the fraction of courses and programs we offer online will need to continue to rise. We’ll have to become more entrepreneurial in our outlook, looking for opportunities, going after grants, and increasing efficiency.
Can we do it? It won’t be easy, but of course we can! Think about how far we’ve come in the past several years, beyond many people’s expectations of what they thought was possible. We’re in the best position we’ve ever been in as a university, and if we fix a few holes and all pull together, we can continue to break through to national and international prominence.
Last Week’s Trivia Contest
Last week’s trivia contest drew a lot of entries, with most getting four or all five right. Our winner with the fastest finger is Jennifer Louten (Biology and Chemistry), only six minutes after the BLAB went out. Here are the correct answers:
- Cyclist that just confessed to Oprah. Lance Armstrong
- Top golfer caught in many affairs, the divorce cost $100 Million. Tiger Woods
- Boxer who bit off more of Evander Holyfield than he could chew. Mike Tyson
- Got her husband and two other men to break her competition’s leg with a police baton. Tonya Harding
- Say it ain’t so. “Shoeless” Joe Jackson
This Week’s Trivia Challenge
Questions this week will focus on the word “cold” (what else?). As usual, the first with the most takes the prize. No looking up the answers now! SEND ALL ENTRIES BY EMAIL TO firstname.lastname@example.org, since if you put them as a response on the BLOG, everyone will be able to see them!
- Alligators are, kangaroos aren’t.
- Coldest possible temperature, in degrees Celsius.
- 1977 hit by the rock group Foreigner.
- World War II German high-security prison camp.
- 1971 movie starring Dick van Dyke, also a 1969 Plastic Ono Band single.