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Colleges and universities across the United States have shut their campuses and moved every curriculum online. Few were prepared for such a dramatic and sudden shift to online learning systems.
In this video, we explore how higher education institutions could utilize scenario planning and financial modeling to come out on top of the shift to online learning. See how Synario can help explore potential futures as well as identify opportunities to increase online learning revenues down the line.
Today we will be covering some ways higher education business officers can help support better strategic decisions despite the uncertainty COVID-19 has brought to us all.
We have been busy helping our clients answer complex questions coming down from presidents, senior leadership, board, finance teams, and even rating agencies.
Today we will be sharing an example of how scenario planning can increase confidence in uncertain times as institutions weigh alternative impacts of online strategies.
I'm Kevin Kuhar from the higher education group of Synario PFM. We've worked with higher education institutions f or over a dozen years, from Wofford College to Texas Tech, to quickly model and present credible analysis.
One decision many institutions are facing is how they are meeting the needs of at-home students.
While some colleges and universities were relatively prepared to migrate their curriculums online, most were not.
Shifting to online learning can be an expensive process and many schools are making rapid short-term decisions without analyzing the long-term financial consequences.
With 2.4 million undergrads studying online in 2018 and growing, online learning is becoming a relevant and attractive avenue for students and institutions alike.
COVID-19 has triggered a massive shift in how education is being delivered to students. And the future could hold positive financial outlooks for institutions who are able to capitalize in today's environment.
For this video, we will focus on three possible scenarios.
These scenarios are first - The Sanguine Outlook.
This is almost a best case scenario where the virus impacts are over quickly, and we return to business as usual before the fall.
The second scenario is Closures Through 2021. This scenario includes expansions to online offerings to increase long-term revenue streams.
The third scenario also includes closures through 2021, but in this scenario the institution chooses to keep offerings traditional. Foregoing long-term expansion to online offerings.
These examples are illustrative. The impacts to each scenario will be defined through your knowledge of your business in collaboration with your stakeholders.
I've defined the different impacts that I want to consider and hooked them up to corresponding initiatives and selecting where the impact is on the financial statement. These expense impacts are just one type of impact.
We can make other impacts in their corresponding tables. A capital impact, as an example, you would make assumptions for sources of funding, uses of funding, and debt assumptions such as the term or interest rate.
The same concept applies to other types of impacts we want to make. Including employee impacts, enrollment impacts, bed impacts, or gift impacts.
Once impacts are defined, we can see the impact of each initiative on the financial statements. Layered into the projection or viewed on the margin.
A learning management system, as an example, I can turn on and layer those impacts into the scenario or I can look at it on the margin and see the difference impacts.
There are impacts to salaries, benefits, non-personnel expense. Even depreciation and interest on the income statement. On the balance sheet, I have impacts to my deposit to bond trustee, land, buildings, and equipment, debt, and of course the cash balance.
Synario becomes really powerful when you start to mix and match different initiatives or decision points and seeing the impacts on our complete set of financials. As an example, I can turn on the learning management system. I can turn on the efficiencies in online learning. Or I could turn on expense reduction and see the impacts of all of them on my complete set of integrated financials.
These individual initiatives can then be bundled together into scenarios.
Let's take a look at the Closures to 2021 + Online scenario. When I open this up I can see the different impacts I've chosen to include or not include in a scenario. For this, I've included my online learning management system. I've also included the efficiencies in online learning.
Let's say you wanted to add another impact that is not currently considered here. Maybe you want to see what an additional residence hall would mean in this scenario,
I can turn this on, and layer this into the scenario. I can then layer in another impact, maybe an expense reduction into the scenario, and again see things updated.
Or maybe I want to see different possibilities for what my endowment returns are. Colleges and universities that use this pandemic as a springboard to enhance their online learning initiatives could see long-term financial benefits.
Higher education finance leaders suspect an enrollment cliff in 2025 and online offerings could help shore up future lost revenues. With Synario, finance leaders can quickly build in changes to online strategies while incorporating the effects of other goals, initiatives, and economic conditions.
Using long-term planning through this crisis is the first step to understanding impacts of what COVID could mean for your institution. We've seen successful finance officers continuously use scenario planning and financial modeling as a routine part of their regular business.
Do so enables better collaboration and agility to seize opportunities and avoid threats. Keep an eye out for our upcoming videos on different areas of higher education that are being impacted by the coronavirus.
The old way of doing business will change as campus leaders, boards, and accreditors move to focus on long-term sustainability and remaining competitive in the changing environment.
The good news is that financial modeling doesn't have to be hard or time consuming. You can get a Synario model up and running for your institution in 30 days to start sharing valuable insights.
We are here to answer any of your questions and discuss how financial modeling could work at your institution.
Feel free to reach out to me directly at [email protected] or visit us at Synario.com.