Revenue Generation Strategies E-Book

Jeffrey W. Alstete

• Herausgeber: John Wiley & Sons
• Kategorie: Bildung
• Serie: J-B ASHE-ERIC Report Series (AEHE)
• Sprache: Englisch

Seitenzahl: 248

Veröffentlichungsjahr: 2014

Beschreibung

Achieving successful financial viability by broadening revenue sources is one of the most important issues facing colleges and universities today. Increasing operating costs, along with the reliance on traditional student tuition, government support, and philanthropy, are challenging universities. One way administration leaders and faculty are meeting this challenge is to establish supplemental revenue streams from a variety other sources such as: * continuing education, * credit and noncredit certificates, * degree completion and upgrade programs, * study abroad, * domestic and international branch campuses, * distance education, * auxiliary services, * technology transfer, and * partnerships or alliances with other organizations. These types of activities, formerly considered secondary ventures, are now integral to lasting and responsible financial strategic planning. This monograph examines a wide variety of supplemental income options and opportunities, as well as examples of restructuring financial planning schema. While not negating the value of traditional college education, these new revenue sources in fact lead to greater institutional effectiveness. This is the 1st issue of the 41th volume of the Jossey-Bass series ASHE Higher Education Report. Each monograph is the definitive analysis of a tough higher education issue, based on thorough research of pertinent literature and institutional experiences. Topics are identified by a national survey. Noted practitioners and scholars are then commissioned to write the reports, with experts providing critical reviews of each manuscript before publication.

Leseprobe

ASHE Higher Education Report: Volume 41, Number 1

Kelly Ward, Lisa E. Wolf-Wendel, Series Editors

Revenue Generation Strategies: Leveraging Higher Education Resources for Increased Income

Jeffrey W. Alstete

Revenue Generation Strategies: Leveraging Higher Education Resources for Increased IncomeJeffrey W. Alstete ASHE Higher Education Report: Volume 41, Number 1 Kelly Ward, Lisa E. Wolf-Wendel, Series Editors

Copyright © 2014 Wiley Periodicals, Inc., A Wiley Company. All rights reserved. Reproduction or translation of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. Requests for permission or further information should be addressed to the Permissions Department, c/o John Wiley & Sons, Inc., 111 River St., Hoboken, NJ 07030; [phone], fax [phone], www.wiley.com/go/permissions.

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ISSN 1551-6970  electronic ISSN 1554-6306  ISBN 978-1-119-04906-7

The ASHE Higher Education Report is part of the Jossey-Bass Higher and Adult Education Series and is published six times a year by Wiley Subscription Services, Inc., A Wiley Company, at Jossey-Bass, One Montgomery Street, Suite 1200, San Francisco, California 94104-4594.

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CALL FOR PROPOSALS: Prospective authors are strongly encouraged to contact Kelly Ward ([email protected]) or Lisa E. Wolf-Wendel ([email protected]).

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The ASHE Higher Education Report is indexed in CIJE: Current Index to Journals in Education (ERIC), Education Index/Abstracts (H.W. Wilson), ERIC Database (Education Resources Information Center), Higher Education Abstracts (Claremont Graduate University), IBR & IBZ: International Bibliographies of Periodical Literature (K.G. Saur), and Resources in Education (ERIC).

Advisory Board

The ASHE Higher Education Report Series is sponsored by the Association for the Study of Higher Education (ASHE), which provides an editorial advisory board of ASHE members.

Ben Baez

Florida International University

Amy Bergerson

University of Utah

Edna Chun

University of North Carolina Greensboro

Susan K. Gardner

University of Maine

MaryBeth Gasman

University of Pennsylvania

Karri Holley

University of Alabama

Adrianna Kezar

University of Southern California

Kevin Kinser

SUNY – Albany

Dina Maramba

Binghamton University

Robert Palmer

Binghamton University

Barbara Tobolowsky

University of Texas at Arlington

Susan Twombly

University of Kansas

Marybeth Walpole

Rowan University

Rachelle Winkle-Wagner

University of Nebraska – Lincoln

Contents

Executive Summary

Foreword

An Introduction to Revenue Origins and Changes

Need for Revenue

Established Income Sources

Recent Disruptions and Opportunities

Academic Programs for Generating Additional Income

Noncredit Academic Programs

Credentialing and Certificates Programs

Degree Completion and Upgrade Programs

Partnerships, Alliances, and Joint Ventures

Study Abroad Programs

Branch Campuses

Online Distance Education

Nonacademic and Auxiliary Opportunities

Maximizing Facilities Utilization

Other Alternative Revenue Sources, Grants, and Outsourcing

Technology Transfer

Strategic Considerations for New Income

Budget Planning Options

Contemporary and Developing Approaches

Conclusion

References

Name Index

Subject Index

About the Author

End User License Agreement

List of Tables

Chapter 2

Table 1

Table 2

Chapter 3

Table 3

List of Illustrations

Chapter 1

Figure 1 Rating the Financial Health of Our Institutions

Figure 2 Condensed Revenue Illustration for Public Four-Year Institutions

Figure 3 Condensed Revenue Illustration for Public Two-Year Institutions

Figure 4 Condensed Revenue Illustration for Private Four-Year Institutions

Guide

Cover

Table of Contents

Chapter 1

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Executive Summary

New opportunities and increasing challenges have created a need for a thorough review of existing and innovative practices for financial revenue in higher education. Supplemental revenue streams that earn additional income for colleges and universities include continuing education, credit and noncredit certificates, degree completion and upgrade programs, study abroad, branch campuses, distance education, auxiliary services, technology transfer, and partnerships or alliances with other organizations. These endeavors were previously regarded as sideline ventures, but are becoming recognized as strongly needed revenues that supplement traditional tuition income. Graduate schools and schools of continuing and professional studies are offering more postbaccalaureate certificates and credentialing programs that reflect new demands in the modern workplace and global markets. Certificate programs may be the largest area of academic revenue growth for higher education over the next decade, and institutions must plan to leverage their assets with both academic and nonacademic activities. This monograph seeks to examine several important questions in continuing higher education, supplemental programs, and auxiliary services today. Specifically, why is there a need for more revenue? What are the options and prospects for colleges and universities to increase income from these and other nontraditional sources? What challenges do different higher education institution types face in enhancing their existing revenue streams? How can colleges and universities strategically plan to leverage their resources to fulfill their current mission and expand revenue streams effectively?

Higher education has gained the perception by some people and groups as overpriced, ineffective, outdated, and not producing a sufficient return on investment. The reasons stated often include the easy access to nearly unlimited funds from student loans, supposedly overpaid and underworked faculty, overstaffed bureaucracies, a lack of accountability, and a general disconnection from the needs of society. In addition, there have been widely publicized problems with many for‐profit institutions that have resulted in legislative scrutiny and accreditation intervention. To compound the financial problems and public image, macroenvironmental issues such as the slow growing economy, volatile financial markets, rapidly changing demographics, and other societal changes are creating challenging dilemmas to maintain operational viability. Therefore, supplemental revenue generation can broaden the support base and help mitigate some of the criticism facing traditional collegiate institutions. Moreover, there is a view by some observers and organizations that there is a societal devaluation of college degrees that is causing a wider recognition of new types of credentialing that is different from programs that were previously offered (DiSalvio, 2013). However, established colleges and universities have already been offering various types of certificate programs and online delivery systems for many years. Supplemental revenue is being achieved at institutions using on‐campus, off‐site, and online distance education courses in fields such as business, information technology, and healthcare (Cottrell et al., 2012; Pritchett, White, & Skinner, 2006). Internal and external stakeholders should be informed that certificates, credential programs, and traditional higher education degrees are not mutually exclusive. One of the main premises that this monograph proposes is that there can be a beneficial synergy in creating a mixture of educational offerings that serve multiple constituencies and purposes.

While some higher education scholars and leaders have voiced concerns about the current and pending financial problems, along with external doomsayers, there are also critics of believers in a “higher education bubble” (Reynolds, 2012) and state that the worries about financial demise are exaggerated. Times of distress such as this can actually allow and encourage colleges to try new ideas in program creation, implement organizational improvements, and arrange supplemental revenue sources. There are many colleges and universities today that meet their budget goals regularly and are properly planning for different contingencies in financial performance each year. Often, three possible outcomes are annually planned for, such as not meeting budget expectations, achieving, or exceeding the revenue goals. Opportunities have developed with noncredit programs and courses becoming common and often a requirement in many professions. More adults are pursuing additional credentials, and generally seeking additional higher learning. Some traditionalists within academe lament the supposed decline of more traditional higher learning as professional training and practical vocational‐type courses are increasingly being offered at many types of institutions (Aronowitz, 2001). Yet, it can also be seen that many noncredit programs offer highly educated faculty members with expertise in specific areas an intellectually stimulating opportunity to teach sophisticated topics such as art, music, theatre, writing, history, current affairs, and other subjects to mature leaners. Examples can be found in schools and departments of continuing education at many types of public and private institutions. Noncredit programs can support the concept that not all students should enroll in traditional academic degree programs (Rosenbaum, 2004), and that in offering quality education for people who need career training or self‐development, established colleges and universities can be the best provider as shown in many successful examples. In addition, there are alliances, joint ventures, and partnerships with other higher education institutions and private corporations that have become increasingly common methods of academic program expansion. These endeavors enable institutions to achieve new revenue rapidly, lower internal program development costs, save time on institutional approval for some organizations, and most importantly qualify for authorization by state agencies and federally recognized accrediting bodies.

Certain observers of the recent trends in higher education state that one of the primary reasons for the increase in online distance education programs offered is the relatively higher cost of traditional on‐campus collegiate learning (W. G. Bowen, 2013; Kamenetz, 2010). Bowen discusses the linkage between the rising tuition rates (or as he calls it, a cost disease) and the expansion of online learning and overall institution information technology costs. He warns that there are hidden costs for building and maintaining the technology infrastructure and compliance issues that may not necessarily increase efficiency or uphold the broad goals of a true higher education experience. Other writers such as Kamenentz (2010) forecast that people will increasingly use distance education and other online‐learning platforms in a more do‐it‐yourself fashion to achieve their personal learning goals. Kamenentz sees several underlying fundamental trends guiding the recent transformation that affects what he sees as a coming transformation in higher education. This includes the prediction that most of the increase in higher education enrollment will come from non‐traditional institutions and that students will primarily attend lower cost or less selective institutions such as community colleges and for‐profit colleges. This estimate may have lost some validity in light of the recent declines in for‐profit enrollments and increasing scrutiny by government agencies.

Nevertheless, alternative nonacademic revenue sources can be created and delivered by many types of institutions as described in the methods and examples identified. For a long time, other organizations such as companies, hospitals, and secondary schools have contracted with colleges and universities to educate their employees rather than attempt it internally. Therefore it can be viewed that academe has been a subcontractor of education services to some extent. So, it should not be surprising nor overlooked that outsourcing of revenue ventures in higher education is also an accepted practice. Outsourcing can be conducted by signing agreements with private off‐campus companies to offer and operate services which may have historically been administered by the institution (D. Thompson & Morgovsky, 1996). In addition, since part of the mission of many higher education institutions is the creation and dissemination of knowledge, financial benefits from these activities may be a rational goal. Colleges and universities receive revenue royalties from patented discoveries, and the trend in licensing and patenting the inventions created by faculty members has increased partly due to technology transfer programs (Grassmuck, 1991). As institutions have learned to benefit from these activities, there is increasing financial support for faculty research, start‐ups, and inventions (Di Meglio, 2008). These revenue streams can help colleges and research universities in particular remain true to their mission yet yield significant revenue that supplements tuition income, along with other revenue from hospitals, student housing, endowments, and additional sources.

Modern college and university strategic planning activities now include specific financial revenue objectives and use effective budgeting models. Responsibility center management (RCM) is an approach that reinforces the attainment of academic priorities while delegating operational authority and accountability to unit‐level departments (Hensley, Bava, & Brennan, 2001; Kosten, 2009; Mayer, 2011; Neal, 1995; Strauss & Curry, 2002; Whalen, 1991). Performance‐based budgeting (Dougherty & Reddy, 2013) and performance funding (Burnett, 2012; Layzell, 1998; Liu, 2011) are other approaches that can be used to encourage revenue‐generating activities by awarding financial resources based on the achievement of specified results (Dougherty & Reddy, 2013). Plans such as this can include intentions to:

award financial resources based on performance determined by results achieved,

identify and implement new revenue sources,

use committees and individuals from all levels of the institution to determine what is institutionally viable and mission‐centered, and

integrate academic planning and budgeting more effectively.

Successfully sustaining financially viable operations depends on effective budget implementation with consideration for institutional values in operational planning and resource allocation (McClenney & Chaffee, 1985). The importance of successful delivery of the strategic goals and plans has been identified as the cornerstone of any income generation activity in higher education (Warner & Leonard, 1992). In recent years, colleges and universities have learned to recover from challenging financial circumstances by looking for best practices at other institutions that can be adapted. These modern administrative techniques are combined with creating new programs or customized initiatives to help institutions survive in a competitive higher education marketplace that requires adept leadership and prudent financial management. Mactaggart (2007) recognizes how revenue can rescue institutions from dire financial circumstances by achieving a balanced budget with actions such as making the campus more attractive, adding graduate programs specializing in the latest topics, reducing costs but not necessarily personnel, and strategically improving the institution's public reputation. Additional revenue generation activities can support the fundamental purpose of higher learning and sustain organizational viability, not dilute or diminish it.

Each institution's distinctive competencies and capabilities should be identified and built upon in an effective strategic planning process to compete in today's challenging environment. Colleges and universities have many opportunities to address both local community needs and the demand for greater global awareness in education. Chief academic leaders and budget planning officers should work together to create a broad differentiation strategy for the organization by developing a successful vision, specify financial objectives that rely less on traditional tuition revenue, determine a plan with specific amounts of alternative revenue that are realistic, implement the plan while being mindful of higher education's organizational nuances, and continually evaluate the results to make adjustments as needed. Faculty and administrators should work together to arrange effective, distinctive, sustainable holistic systems of income generation that ensure students can receive a sound education while supporting the traditions and important institutional missions.

Foreword

As public support for higher education has declined, tuition has hit the margins, and endowments have lacked performance, colleges and universities have had to engage in a wide array of activities to supplement budgets and generate revenue. Once relegated to the domain of for‐profit entities, revenue generation has become a necessity for colleges and universities looking to balance budgets and grow into the future. In spite of the demand to be entrepreneurial and open minded about different approaches to budget diversification, how and where to seek additional revenue is not always easy to find in a competitive fiscal climate where multiple organizations are looking for broadened opportunities for income to meet organizational demands.

In this monograph, Revenue Generation Strategies: Leveraging Higher Education Resources for Increased Income, Jeffrey W. Alstete provides an overview and analysis of the need for additional revenue in addition to the various ways that higher education organizations can diversify financially and broaden their sources of revenue. The monograph includes an overview of the different types of revenue generation strategies including academic programs, nonacademic and auxiliary opportunities, and planning for new income strategies. Each chapter provides a thorough review of the different types of review streams and ideas to develop the streams. The topics included in the monograph are thorough and broad‐based. Alstete is careful in his consideration of factors like institutional type and public/private backgrounds in addition to how these factors shape revenue generation. Revenue generation is highly context and situation dependent, and the author is careful to consider how different settings, institutions, and leaders can broaden revenue.

The monograph is sure to be of interest to administrators working to broaden revenue opportunities at their institutions. Throughout the book readers will find practical and useful examples that outline how different types of revenue can be used and in what types of settings. Researchers interested in finance, leadership, entrepreneurialism, and other topics related to revenue generation are also sure to find the monograph useful and informative. The author provides a very thorough and analytical review of the literature. The monograph is well‐researched and informed and provides a base of understanding and information for people interested in research in the area of revenue and the types of programs that can diversify additional revenue opportunities. The book is also sure to be helpful and informative to those interested in strategic planning, from either an administrative or a research perspective. Revenue generation is an important component of the planning process, and as administrators consider growth in the future, the monograph can serve as a tool to help guide a comprehensive planning process.

The financial landscape of virtually all higher education institutions have changed in recent years. Campuses across the country rely on a broad array of revenue streams in order to stay vital and support organizational goals. The Revenue Generation Strategies monograph provides a wide compendium of information to guide administrative decision making related to financial diversification and is a welcome resource to add information and understanding related to budgeting, finance, leadership, planning, and other contemporary issues related to revenue.

Kelly WardLisa E. Wolf-WendelSeries Editors