College administrations are facing unprecedented challenges in the wake of the coronavirus pandemic. While each situation is unique, there are several immediate key steps every school should consider.
Based on our extensive experience helping higher education institutions improve their financial stability and improve operations, Carl Marks Advisors knows that the decisions made today will have an amplifying, profound impact on a school’s long-term well-being. With that in mind, we believe higher education leadership should have five near-term objectives:
- Communicate clearly and frequently to students, families, faculty and administration
- Execute a strategy to convert to a virtual campus
- Focus on registration and newly-admitted students
- Re-evaluate financial stability
- Cater to your future alumni (those graduating soon)
Communicate Clearly to Students, Faculty and Administration
In order to maintain the trust of students and their families, faculty and administrators, schools need to be transparent and in constant communication. Schools must provide consistent updates and be prepared to answer student concerns. Given the rapid pace of change, the communications horizon should be kept to two weeks or less.
During a time of upheaval or fear, remember that the administration and faculty can be a calming influence for the student body, creating a special bond. This is critically important for international students and those with limited financial means as they need the most administrative support. Offering housing and meal plans will be a strong first step that both helps those in need and keeps students connected to the school. This is a current challenge, as some states are prohibiting operating cafeterias and are shutting down student housing.
Convert from Campus-based Learning to Virtual Campus
While many colleges are switching to virtual classrooms, there are several challenges that must be addressed with faculty, students, and tech support.
First, be clear that the virtual classroom is a temporary solution. A traditional college won’t be able to replicate in-classroom quality instruction in a short period of time, so it is best to be forthright about the limitations and the timeframe for any changes. While this may mean completing the current semester virtually, realize that this is only happening because we are all operating under the most unusual and stressful circumstances. Students should be encouraged to be a partner with their schools, and to be patient.
Most schools’ IT departments and technology infrastructure were not created to handle streaming and online content for every class, so there will likely be disruptions and frustrations. Here, again, lead with transparent, robust communication.
Focus on Registration and Newly-Admitted Students
Over the next few weeks, acceptance letters/emails will be sent to potential new students, who will make school selections likely without the benefit of another visit or new student day. In lieu of these on-campus activities, schools should invest in additional marketing and communication with prospective students.
Equally important, schools need to consider measures to secure enrollment for the summer session. Even if the virus threat is diminished, many students and families will take a “wait and see” attitude rather than risk a possible repeat of the current situation. Financial incentives for the summer term should be on the table.
While the limits of your communications team and budget may be stretched, these are essential time and financial investments. These near-term decisions have long-term implications for enrollment and, therefore, for the financial prospects of your school.
Re-evaluate Your Financial Stability
During these times of upheaval, it is imperative that your team review projections for the remainder of the current year and the next school year. Schools with budgets and tracked results against those budgets are in the best position to make prudent decisions. Projections on enrollment and costs need to be evaluated and updated. If you haven’t created integrated financial statements, including an Income Statement, Balance Sheet and Change in Cash Position, now is the time to get started.
As you budget, consider the importance of conserving cash and to address the potential for unforeseen expenses. While schools have received the majority of their tuition for spring term, cash outflows will be extreme over the next few months as we look forward to a challenging period for enrollments. We expect tuition reimbursement to be an issue as displaced students will request room and board refunds due to the closing or extreme cutbacks in on-campus housing. Some costs will be reduced to offset the lost revenue, but there will be a large shortfall as a result of the refunds.
Creative solutions and difficult cuts are inevitable. Endowments may need to be tapped, but restrictions need to be respected. “Sacred cow” projects should be reevaluated within the current environment. When these decisions are made, it is essential to have timely input from all working groups, but decisions need to be made with information provided by the accounting department.
Cater to Future Alumni
For those nearing graduation (potentially 25% of your student body), these final months of enrollment will shape the type of alumni they will be for years to come. This group is most concerned about its potential for employment upon graduation, and without the job fairs and employer visits, schools must create alternative employment support solutions. Think outside the box to address this need. Work with your business partners to match graduating students with jobs.
When it comes to the graduation ceremony, it is too early to make a decision on if and when to celebrate. Decisions on ceremonies should be made closer to the potential day, as more information is received regarding social distancing.
Next Steps
As a crisis management and restructuring firm with extensive higher education experience, Carl Marks Advisors is well-equipped to assist you in many of these decisions. Our team can guide key decision makers through their options and help execute a financial strategy that’s based on a solid understanding of budget preparation, cash flow needs, and marketing requirements for institutions of higher learning.
We understand the complex challenges that lenders, investors, administrators and trustees are currently facing. Our professionals work closely with the administration and trustees to address strategic positioning, pursue merger or acquisition opportunities, improve revenues and enrollment, implement programmatic changes, and resolve regulatory and accreditation issues.
