The year 2020 was marked by the start of a world-wide pandemic, unprecedented changes, and institutions and individuals alike having to adapt quickly to a rapidly changing environment. The impact of COVID-19 on the higher education sector has been momentous and far-reaching. The financial strain of declining student revenue on an industry already challenged by pre-pandemic enrollment declines was significant. While the pandemic has brought and continues to bring challenges as it reaches its first anniversary, here are three valuable lessons higher education institutions should consider moving forward.
Enrollment
Enrollment has always been an area of focus for higher education institutions. New York’s institutions in particular have experienced increasing challenges with enrollment prior to the pandemic. The 2020 Census has only confirmed the startling statistics – New York State’s population has declined more than any other state in the nation, with more than 1.4 million people having exited the state over the past decade. The pandemic has further elevated the importance of communication with current and prospective students, specifically regarding emergency student grants, campus reopening plans, room and board refunds, and so much more. While double-digit enrollment declines were experienced by many intuitions across the state in the fall of 2020, some institutions who began communicating with students at the onset of the pandemic (and did so in a proactive and transparent manner, even during times when there were more questions than answers) were more successful in retaining students throughout fiscal 2020 and into the 2021 academic year.
Another consequence of the pandemic is that it forced institutions to reconsider the term “geographical confinement.” Is it the physical location of an institution that truly defines its ability to reach prospective students and retain existing students? Is in-person instruction the only way to secure student engagement? Are students well equipped for remote learning, and supported by a team of caring faculty, just as likely to succeed outside of the classroom as they are in the classroom? These are some of the many questions that institutions are grappling with.
Retaining Talent
Retaining experienced and skilled faculty and administrative staff has become the second most important lesson of the pandemic. The Chronicle of Higher Education reported that colleges and universities closed out 2020 with continued job losses, resulting in a 13 percent drop since February 2020. The U.S. Labor Department estimates that American academic institutions have shed a net total of at least 650,000 workers, according to preliminary, seasonally adjusted figures released in February 2021. Put another way, for every eight higher education employees employed in February 2020, at least one has lost or left that job 10 months later. In a year where institutions were forced to make tough decisions and reduce staffing, identifying those individuals essential to moving the institution forward has become a lesson in survival. As long-term senior management and faculty members retire, new leaders of colleges and universities need to bring a lot more than a strong technical skillset – the ability to communicate, collaborate with other institutions, and tolerate a high degree of uncertainty, especially with respect to regulatory guidance becoming increasingly important prerequisites for leading a higher education institution in the midst of a pandemic and beyond. Institutions that are willing to entertain flexible and/or remote working arrangements and are laser-focused on ensuring the safety of their students and staff are the ones that are best equipped to weather the storm.
Finances
A third lesson highlighted by the pandemic is the increasing importance of paying attention to an institution’s finances. For many years, institutions with significant endowments have enjoyed a sense of safety and security and may not have been forced to think too deeply about liquidity or cash flow. Fiscal 2020 was marked by a more than 30 percent decrease in contributions made to educational institutions, room and board refunds, declining enrollment revenue and, delayed and/or reduced payments from state contracts. While Federal government relief funding was provided to most institutions, the timing of cash flow was a major issue for many. Projecting cash flow into the future, having short-term and long-term financial viability scenarios, thinking critically, and setting realistic assumptions are some of the key elements which have allowed some institutions to remain financially healthy, while so many others experienced existential financial issues and increased borrowings.
Higher education institutions have a proven track record of being on the forefront of innovation. Channeling out-of-the-box thinking to turn challenges into opportunities will allow institutions to emerge stronger and be better prepared for what the future holds.
If you have any questions, do not hesitate to reach out to our higher education experts at The Bonadio Group.
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We, therefore, make no warranties, expressed or implied, on the services provided hereunder.