The Good Fight for Shared Services

The Good Fight for

By Dr. Jim Hundreiser

Dr. Jim Hundreiser is the inaugural vice president for consulting and business development at the National Association of College and University Business Offices (NACUBO). At NACUBO, he matches higher education institutions with new strategies that focus on growing revenue, building capacity, providing pragmatic solutions, conducting operational assessments and increasing student success and completion. He offers these observations on higher education and CSB+SJU’s role in it.

Shared Services

There is a demographic cliff on the higher-education horizon, with fewer children born in the early 2000s leading to several hundred thousand fewer students to enroll. Shifting demographics mean there are fewer traditional-age students in the market, fewer of those students have the ability to pay for traditional four-year education, and among some of those students there’s a growing perception that college is no longer a worthwhile investment. Our world is rapidly changing and most higher education institutions are moving too slowly. Thought leaders like Nathan Grawe (The Agile College), Arthur Levine (The Great Upheaval) and Mary Marcy (The Small College Imperative) have all stated that for institutions to sustain themselves, they must seek new modes of operating or completely reengineer themselves.

In many cases, those opportunities are presenting themselves in a shared-services model. Few would argue with the idea of pooling resources and sharing strengths in order to reduce costs and improve services for students. Almost everyone seems to argue about how to do it.

The simple idea of a shared-service model becomes very complicated, very quickly. There are no common definitions, few effective case study examples, and many institutional leaders touting unproven new partnerships with promises of cost savings if strategies work out. The reality is, few shared-service partnerships today are maximizing the partnership or pushing to increase the efficacy of these programs or providing any significant cost savings. The financial challenges many institutions are facing today are real. Most institutions (nearly all, in fact) are tuition-dependent. Smaller private and regional public institutions are significantly tuitiondependent, with some small and mid-size privates relying on tuition and fees for 80-90% of all revenues.

And, as reliant as schools are for that tuition, fewer families today have the ability to pay it, due to increases in tuition that have significantly outpaced inflation. At the same time, many colleges and universities have opted to fight for those scarce students by engaging in an amenities arms race – which has sparked a building boom that has increased operating costs … which, in turn, has caused increases in tuition. It’s a real conundrum. Some institutions are at risk of closure if they do not change the way they operate. Now is the time to respond to these challenges. States like South Dakota, Connecticut and Pennsylvania have started the process of merging their public institutions because of projected declining enrollments. Vermont has taken the most aggressive steps of any state and is in the process of merging almost all of its state institutions. These states are looking at ways to merge institutions, but not close campuses. The goal is to create greater efficiency while allowing students to remain connected to their local or regional area and fill state job and economic needs. The process, however, is messy, complicated and filled with conflict. At the root of the conflict – almost always – is institutional mission. Many public and all private institutions were created with a mission that leads their way forward. For

public institutions, the mission is often to serve the region and provide the skills needed for agriculture, mechanical operations and teachers. For most privates, the mission usually aligns with religious affiliations and seeks to ensure graduates who live out those values in the future. The need to hold onto mission may be the leading reason why institutions close rather than explore other ways to operate. Well-intentioned leaders can start out looking for formalized partnerships to serve the needs of the 21st century student. But after watching and reading about the [CSB and SJU are] experiences of others – painful stories of never giving up on conflict and damaged campus culture – they end up sticking with the strategies the relationship and of the top 500 institutions. The result of avoidance generally means continuing with how this will better a culture of cost cutting, putting more serve students burden on faculty and staff who are trying to carry the mission forward in ways that are unsustainable … but are sustainable enough to survive another year. There are glimmers of hope though. Some institutions have found successful ways to partner that have led to increased efficiency, more opportunities for students and new ways to offer academic programs where start-up costs or additional faculty hires would have been challenging. One example is the College of Saint Benedict and Saint John’s University in Minnesota. For almost 60 years

these two institutions have found ways to collaborate and coordinate. The key to their success might be that they chose to do the hard part first: academics. Processes require careful coordination. For CSB and SJU, they aligned calendars, agreed on costs for transferred credits, coordinated course offerings and eventually combined departments. Ultimately, the two schools seamlessly blended academic offerings into what is today a single curriculum under a joint provost. But those fights were as close to bloody as two Catholic, Benedictine schools are likely to get. And they stuck with it, even when it was messy. Too often in education, we don’t work through the messy. Right now, with an eye toward the demographic cliff, the two schools are choosing to align even closer. They are streamlining administration, have aligned their trustees into “common boards” made up of the same members, and recently announced the first president to serve both institutions.

These are significant changes for significant efficiencies. But they’re possible because both institutions have remained committed to making it work. Never merging. Never forsaking their individual identities. But never giving up on the relationship and how this will better serve students, allow for more flexibility, and provide opportunities to remain vibrant for decades to come.

The result of any shared-services model should be the opportunity to leverage infrastructure, technology, tools and services in ways that serve students. Infrastructure and technology are two areas that have seen significant increases in cost with no new revenues to support them – especially the costs related to technology. As the CSB and SJU example demonstrates, there are ways to implement shared models that create meaningful savings and significant improvements to serving students. Models could include two (or more) institutions starting new academic programs to leverage resources, facilities and start-up costs. Or they could provide student support services that are both in-person and online. Real savings and improved student outcomes happen when institutions align programs and services students want or need.

Shared-service models will reduce administrative costs over the long term so that funds can be provided for missioncritical priorities. The reality is, moving to these types of models is the future, even if the challenges are profound. Institutions need to create an infrastructure that supports shared governance and allows for careful analysis, but commits to taking action with tight deadlines. It takes leaders with the vision to see what’s possible. But it takes campus communities willing to stay engaged and endure the process. This is no longer a hypothetical construct for institutions to debate in the abstract. It is a way for many, potentially most, small, private institutions to operate in the future while continuing to live their missions and fulfill their goals.