According to a recent survey by TD Bank, college and university financial decision-makers across the country cite reduced tuition and declining fee revenue as major causes for concern and are increasingly considering "going green" to save on operating expenses, while ramping up information technology (IT) spending and investments in updating campus infrastructure.
TD Bank's survey of chief financial officers, accounting officers, comptrollers and other financial managers at private, not-for-profit colleges and universities across the US found that nearly three out of four (72%) respondents view reduced net tuition and fee revenue as their biggest financial concern, even as they deal with decreasing private gift income (59%).
Despite these concerns, spending is expected to increase in many areas over the next 12 months, with 77% expecting to invest in on-campus "green" power or environmental sustainability projects over the next five years.
Financial Concerns
Respondents also report concern about cash flow management (39%), reduced endowment market value (31%), weakened balance sheets (22%) and access to credit (19%). As the stock market has bounced back from its lows in the fall of 2008, concern about loss of endowment market value has been cut in half, from 68% over the past three years to just 31% today.
The financial management practices that college and university financial decision-makers expect to focus on in the coming year include:
Reduced private gifts income (68%)
Reduced net tuition and fee revenue (61%)
Weakened balance sheets (48%)
Cash flow management (48%)
Access to credit (39%)
Reduced endowment market value (36%)
The survey also highlighted that higher education executives have a lack of confidence in the U.S. economy overall, with just one quarter saying they are very optimistic, while 51% are neutral.
Going Green to Save Green
Reduced energy costs are one way college and university executives are looking to trim operating expenses (64%). Other areas of prospective cost savings include:
Reducing vendor relationships and procurement costs (50%)
Freezing or reducing compensation for faculty and staff (49%)
Freezing most or all capital projects (42%)
Reducing administrative staff (25%)
Reducing or eliminating some academic programs (25%)
Reducing student services and financial aid (15%)
Despite seeking ways to save, investing in on-campus "green" power or environmental sustainability projects (25%) is a key area where institutions are looking to increase capital expenditures, with over three quarters of respondents (77%) expecting to increase spending on these projects over the next five years.
Projects in Need of Financing
Executives have a long list of projects they're seeking to finance over the next 12 months, including:
Renovating existing campus infrastructure and facilities (63%)
Expanding or creating new academic programs (50%)
Investing in IT and equipment (48%)
Investments in heavy equipment, office/lab equipment or furniture (16%)
In addition to "going green," executives expect capital campaign fundraising and private gifts will yield the greatest potential for expansion projects (51%), followed by tuition revenue (26%), bond financing (7%), bank or institutional financing (5%) and endowment investment (2%).
About TD Bank's Survey
TD Bank polled financial decision makers and influencers at four-year private colleges and universities in the U.S. to understand their main financial concerns when considering campus investments over the next 12 months. The survey was conducted by ORC International, an Infogroup company, in April and May 2011. Overall results for n=100 can be interpreted with an error margin of +/- 9.75 at a 95% confidence level.
CHERRY HILL, N.J. and PORTLAND, Maine, July 12, 2011 /PRNewswire/ --