How can universities control rising operational costs?
The cost to run a college is amplified by a multitude of factors, including inflation, decreased state funding, and tuition discount rates. In fiscal year 2022, institutional costs increased 5.2 percent from the prior year.
As the cost to run a college increases every year, enrollment challenges are becoming a threat to higher education. Overall college enrollment has been steadily declining over the last decade and has decreased by 9.89 percent from 2010 to 2023.
Furthermore, the rate of enrollment among new high school students into colleges and universities has declined by 7.3 percent year over year. With the rising costs and decreased enrollment, how can higher educational institutions tap into opportunities to save on costs?
A strategy to right-size the institution is key in addressing rising cost challenges. Colleges and universities can investigate administrative through several cost saving methods, including:
- Review current administrative processes. Look for opportunities for automation that can simplify processes and remove duplicate efforts. This may include reviewing current software and weighing options for a change in software that is more tailored for the university or analyzing manual processes that could be more efficient.
- Evaluate current staffing for the possibility of merging departments or units as well as the needs to fill any vacancies can aid in saving costs.
- Consider outsourcing services. Universities can analyze the costs of outsourcing services like food services, IT operations, building maintenance, student health centers, and recreational centers.
Additionally, universities and colleges can look to thoughtfully cut costs in academics by:
- Optimize office and classroom space. As in-person work has shifted to a hybrid or remote environment in some cases, there is a reduced need for office and classroom space. These spaces may be reallocated to other departments or for other uses to best utilize the rooms.
- Look for opportunities to utilizing facilities in diverse ways. Tracking the utilization of various spaces on campus can optimize its use and has the potential to discover using the spaces in a new way. For example, there may be opportunities to rent facilities to other organizations or departments.
- Perform a review of academic programs and departments with considerations for costs and enrollment. Consider key performance indicators that may reveal potential reorganizations that prove to be more efficient.
While considering optimizing resources for academic programs and departments, it is important to take a look at the breakdown of the fields in which students are earning their degrees and focusing resources in those fields.
52.1 percent of all bachelor’s degrees earned in 2021 are in five fields: business (18.2 percent), health professionals and related studies (12.9 percent), social sciences and history (7.7 percent), biological and biomedical sciences (6.3 percent), and psychology (6.1 percent). Reviewing the concentrations of university’s academic programs can guide the university to the proper cost cutting strategies.
How Can Schneider Downs Help?
The collective expertise and real-world experience of the Schneider Downs Consulting practice can help higher education institutions better assess, plan and control operational costs and savings, as well as mitigating large-scale cyber, compliance and IT risks that can cause unforeseen financial damages.
If you have any questions, please contact our Higher Education Industry group directly at [email protected].
About Schneider Downs Higher Education Services
The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.
To learn more, visit our Higher Education Industry Group page.
