Business Practices Seminar Evolving Higher Education Business Environment April 20, M. Dwight Shelton, Jr.

Transcription

1 Business Practices Seminar Evolving Higher Education Business Environment April 20, 2017 M. Dwight Shelton, Jr.

2 Overview Trends in Higher Education National Pressures Virginia Higher Education Opportunities for Virginia Tech Growing Demand for A Virginia Tech Education Rising Status of Virginia Tech Evolving Funding Model Philanthropy Strategic Partnerships Cost Containment

3 Trends in Higher Education

4 National Pressures Enrollment Number of high school graduates will flatten and begin to shrink in coming years 3,600,000 3,500,000 3,400,000 3,300,000 3,200,000 3,100,000 3,000,000 2,900,000 2,800,000 2,700,000 2,600,000 Total U.S. Public and Private High School Graduates Actual Source: Western Interstate Commission for Higher Education (WICHE) Projected Already feeling impact: More than four in ten private colleges and almost three in ten public colleges missed their goals for enrollment and tuition revenue in 2016.

5 National Pressures Enrollment In most regions, number of high school graduates will flatten/shrink in future South Region may experience some growth, but flatten over time (VT is in South) 1,400,000 Total U.S. Public and Private High School Graduates by Region ,300,000 1,200,000 South 1,100,000 1,000, ,000 Actual Projected 800, , , ,000 West Midwest Northeast 400,000

6 National Pressures Possible Reductions to Federal Spending Mandatory spending continues to grow Medicare, Medicaid, other military and civilian benefits Discretionary spending includes Higher Education research & financial aid Large cuts proposed for the National Institutes of Health Possible changes to the structure and availability of some forms of federal student aid (Federal Work Study, Supplemental Equal Opportunity Grant) Impacts of hiring freeze or future reductions in federal workforce could negatively impact Virginia budget

7 Federal Spending by Category Discretionary vs. Mandatory Spending National Pressures Source: Congressional Budget Office, 2016 Budget Analysis

8 National Pressures Growing Student Debt Nationally, 68% of graduates have debt averaging $30,100 Net Price increasing faster than income, particularly for low-income families Concern at both federal and state level over rising debt

9 National Pressures Average Debt per Borrower and Percentage of Students Graduating with Debt Class of: VT National Average $ $ 24,175 $ 25,672 $26,807 $27,865 $28,873 % 52% 54% 55% 53% 53% $ $ 26,600 $27,850 $28,400 $28,950 $30,100 % 66% 68% 69% 69% 68% National data from the Project on Student Loan Debt, an aggregator of Common Data Set submissions.

10 10 National Pressures Net Price Total cost of attendance less average institutional financial aid package. Key component of the economic decision faced by a student/family. Cost of Attendance Net Price Difference Virginia Tech $ 44,710 $ 40,710 $ 4,000 SCHEV Peer Average 49,058 37,492 11,566 Advantage/(Disadvantage) $ 4,348 $ (3,218) $ (7,566) Cost of Attendance Net Price Difference Virginia Tech $ 44,710 $ 40,710 $ 4,000 Regional Competitive Peers 46,062 36,204 9,858 Advantage/(Disadvantage) $ 1,352 $ (4,506) $ (5,858)

11 Expectations of Modern University Industry needs highly-skilled labor force: National Pressures Jobs in STEM-H fields are growing faster than graduates (software development, data analytics, cybersecurity, etc.) Traditional degrees in liberal arts/humanities moving to be more technologyoriented and serve analytical roles within organizations (pattern-finders) Universities increasingly relied upon as economic development drivers: Capital growth and employment in higher education centers and institutes Research to develop new solutions and support commercialization Focus on partnerships between higher education, local/regional/state governments, and private businesses to grow research and job opportunities

12 Limited Focused State Investment In Virginia, mandatory costs are driving government spending, limiting opportunity for new investment in higher education. Health care Compensation Retirement K-12 education Virginia Higher Education

13 Virginia Higher Education State had to close $1.26 billion shortfall in state revenues over the biennium. For Virginia Tech, this means a General Fund reduction of $8.6 million in (5% of total General Fund allocation for the University Division) Land Grant division (Agency 229) was sheltered from reduction State approved employee pay raises effective July 10, % for staff 2% for faculty (merit-based)

14 Virginia Higher Education State reductions have traditionally been partly offset by tuition increases Current pressure from State representatives and the university BOV to slow tuition increases, even though state support is declining For , Virginia Tech continues the trend of slowing increases 20.0% 18.0% 18.3% 17.5% Percentage Increase over Previous Year 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 14.6% 9.2% 9.3% 6.1% 10.8% 6.6% 9.8% 9.6% 3.9% 4.9% 4.9% 3.9% 2.9% 2.9% 0.0%

15 15 Virginia Higher Education Tuition and General Fund per student at Virginia Tech combine to generate fewer resources per student than in $14,000 $12,000 $12,324 General Fund and Tuition & Fees per Resident FTE Inflation Adjusted to $11,457 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Inflation Adjusted GF/FTE per Resident Inflation Adjusted T&F Resident Undergraduate *Estimated **Projected Inflation adjustment utilizing the Higher Education Price Index (HEPI).

16 Trends in Higher Education At your table, spend 3 minutes discussing the following: How is your area impacted by federal funding changes? Sponsored Research, Student Financial Aid How is your area impacted by state funding changes? E&G, Research, Cooperative Extension How is your area impacted by tuition and fee changes? E&G, Auxiliaries, Departmental Research

17 Opportunities for Virginia Tech

18 Growing Demand for a Virginia Tech Education Enrollment growth is impacting every corner of campus. Growth is a source of incremental resources, and also a new cost. Academic Quality Supporting Infrastructure Student Life and Support Activities Opportunities New resources are largely needed to address rising fixed costs and university strategic priorities.

19 19 Growing Demand for a Virginia Tech Education We are experiencing a significant increase in demand, and undergraduate applications reached a new high for Fall 2017 admission. Demand is broad-based and includes several areas where Virginia Tech is in a unique position to provide additional access to qualified students. 28,000 26,000 Applications to Virginia Tech 27,226 24,000 22,000 20,000 18,000 16,000 14,000 15,883

20 20 Enrollment Growth The university has grown in phases over its history, and is beginning a new wave of enrollment growth to address demand.

21 21 Enrollment Growth The University plans ton continue modest enrollment growth in targeted areas over the next several years. 35,000 { PROJECTED------} 30,000 25,000 20,000 15,000 10,000 Veterinary Medicine O/S Grad--Full-Time VA Grad--Full-Time O/S UG--Full-Time VA UG--Full-Time 5,000 0

22 Virginia Tech s Rising Status U.S. News & World Report: Four graduate programs in Top 10 of their respective disciplines Evening MBA Program (#7), Civil Engineering (#7), Environmental Health Engineering (#6), Industrial Manufacturing Systems (#6) Money Magazine #18 Best Overall College #9 Best Public College #2 Best Colleges You Can Actually Get Into Princeton Review #1 Best Quality of Life #1 Their Students Love These Colleges

23 Opportunities for Virginia Tech At your table, spend 3 minutes discussing the following: As Virginia Tech Grows: Has your area felt an impact? What future impacts will enrollment growth have on your service area? What can the university administration do to support you and your operations?

24 Evolving Funding Model

25 25 Evolving Funding Model Increased emphasis on Philanthropy Envision more partnerships Examples: Carilion Clinic, Agriculture Initiative with State Increase student financial aid to support access and enrollment goals Strategically managed enrollment growth supported by incentive models (PIBB, Winter, Summer, Professional masters) Cost containment and efficiency efforts

26 Endowment Trends $900,000,000 Trends in Total Endowment and Endowment per Student $30,000 $800,000,000 $700,000,000 $25,000 $600,000,000 $20,000 $500,000,000 $400,000,000 $15,000 $300,000,000 $10,000 $200,000,000 $100,000,000 $5,000 $ $0 Endowment Value Endowment per Student

27 27 Endowment Benchmarking 2016 Endowment $ per Student University of California, Davis Foundation SUNY Stony Brook Foundation Rutgers, The State University of New Jersey University of Colorado Foundation Iowa State University and Foundation SUNY Buffalo Foundation University of Minnesota Endowment University of Missouri System Virginia Tech Foundation University of Florida Foundation North Carolina State University and related Foundations Purdue University The Pennsylvania State University University of California Berkeley (UC Berkeley Foundation) Michigan State University The Ohio State University University of Wisconsin Foundation The Texas A&M University System University of Pittsburgh University of Southern California University of Texas System University of Michigan Cornell University University of Virginia 9,360 11,589 18,346 19,603 21,293 22,673 23,145 24,408 27,406 30,245 35,393 39,801 41,477 41,512 48,158 60,331 60,440 91, , , , , , ,961 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000

28 Partnership Opportunities Future Growth Through Strategic Partnerships Health Sciences and Technology activity, much of it in Roanoke, through a collaboration with Carilion Clinic that is expected to attract students, faculty, research scientists, physicians, and investors. National Capital Region activity including growth in federal and private research partnerships, as well as student enrollment in both undergraduate opportunities and masters level programs.

29 Student Financial Aid Student Financial Aid supports access and affordability, as well as targeted enrollment growth. Beginning in , the university has invested more heavily in financial aid than the state. This trend will continue. $35 State and Institutional Undergraduate Scholarship Support $30 $25 Dollars in Millions $20 $15 $10 $8.8M $18.6M $16.3M $5 $ $1.04M State Scholarship Support Institutional Scholarship Support

30 Bending the Cost Curve Why focus on Cost Control? Annual increases in tuition and fees cannot be sustained Rising cost of current operations and improvements to academic programs Legislative limits on out-of-state student enrollment Emphasis on efficiency, effectiveness and containment through: Programmatic review: aligning new initiatives with the university strategic plan Destination Areas: Effective partnerships between existing fields Improving use of assets and existing spaces Consolidation and shared services, elimination of duplicated efforts Discovering new funding models that are innovative, agile, and sustainable University must focus on partnerships and financial models that support academic excellence and world-class research while advancing access and affordability.

31 Evolving Funding Model At your table, spend 3 minutes discussing the following: Will the shift in the funding model impact your area? What do you think your area will look like in 10 years? Will you serve campus in the same way? Are there examples or ideas of successful change that have been implemented in your area that could be useful to others on campus?

32 Thank you for your contribution to Virginia Tech s success! -Dwight