Meet your evolving needs with three integrated business lines in one professional services firm.
Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.
Impacts of financial decisions
10 Cost-Cutting Strategies for Colleges and Universities
The end of the Great Recession has not ended the mandate to cut costs at many colleges and universities. The trick is to reach goals in a way that doesn’t harm the academic integrity of the institution. That is best accomplished through a strategic approach that includes actions that are relatively simple and some that are highly impactful.
Here are 10 cost-saving strategies that many education executives have implemented with successful results. This is by no means an exhaustive list, but it may spawn additional ideas across all departments and disciplines.
- Require electronic check processing: Requiring direct deposit of payroll and expense checks for all employees reduces paper and frees up the payroll staff to perform other, more productive duties.
- Go paperless: The costs associated with printing, storing, and maintaining paper documents can be significantly reduced. Along with using electronic payroll, institutions are reporting savings by using electronic payables, as well as reports, mail, meeting agendas and minutes, and student and personnel records.
- Conduct benefit eligibility audits: Colleges and universities rarely test for health insurance eligibility, or conduct benefit eligibility audits. Consequently, a surprisingly high number of employees carry ineligible dependents on their health insurance, including divorced spouses, and even distant relatives and friends. To combat this problem, an institution can 1) conduct regular benefit eligibility audits, 2) conduct internal spot checks of employees more apt to skirt the rules, and 3) entice employees to comply by charging a fee if they don’t remove ineligible “dependents.”
- Hire student employees: Students are an almost endless supply of part-time workers at a relatively low cost. Hiring them does double duty by getting work done and providing them with real life experience. Some students could even be potential full-time employees later.
- Make alternative work arrangements: Many Baby Boomers now have to work longer because they can’t afford to retire. Be flexible with these valuable, experienced employees. Offer work arrangements that result in less work (maybe even part time) and more time to enjoy retirement. Of course, it’s important to target positions that don’t require full-time staff year-round. Encourage employees to use vacation time and unpaid leave, too. Alternative work arrangement may also include furloughs, or shutting down departments for a period of time, such as during holidays or summer. Staff would take unpaid leave or vacation for this period.
- Eliminate high-maintenance landscaping: Many institutions are beautifying their campuses with lower-maintenance perennials, grasses, and ground covers that don’t require costly daily labor, heavy watering and frequent mowing, plant replacements, pruning, cleanup, or chemical treatments.
- Eliminate duplicate health insurance: Employees may be covered by two health insurance plans, their own and their spouses, for example. Higher co-pays and deductibles may be effective in thwarting dual coverage.
- Offer or expand online courses: Online costs are typically less than brick-and-mortar and can bring in additional revenue from students who normally would or could not attend.
- Conduct a profit margin analysis: Some institutions can profit from tuition through better course management. But before that can happen, it is essential to know the break-even point for academic courses by applying direct expenses to tuition. Understanding the break-even point allows an institution to more strategically determine the frequency of course offerings, number of classes, and possibly even course content. These factors can be used to assure return on investment. Using this business-model approach to course and degree portfolios can be game changing; some institutions even profit from tuition through better course management.
- Establish continuous improvement: Costs, processes, and communication can be greatly improved by evaluating the activities that drain time and other resources. Organizations that conduct Kaizen or efficiency examinations of work processes also learn that people become more productive and satisfied when they can focus on strategic initiatives rather than inefficient tasks. The process involves examining jobs and activities to determine what can be done better or even eliminated.
There are just as many opportunities to increase revenue, and they should be explored as well. We’ll look at a few of those in the next issue of this newsletter. In the meantime, these and other cost-saving strategies can help preserve much-needed funds while improving processes, and most importantly, can maintain your institution’s ability to offer the highest educational value to its students.