Balancing Budgets and Growing Enrollment

Cathy Donovan [00:00:00]:

Hello and welcome to the Innovating Enrollment Success podcast where we explore how colleges and universities are adapting to today’s challenges and creating meaningful connections with students. Across higher ed financial pressures are mounting. Institutions are facing fewer college-bound students, enrollment, dips, and rising expenses.

The reality is clear: for many campuses, growing enrollment is no longer optional. It’s the only path forward. I’m Cathy Donovan, agency marketing director at Paskill, a higher education enrollment marketing firm that helps institutions across the country connect the dots between student behavior and enrollment strategy.

Today I am joined by two experts who see these challenges from very different and complementary angles. Chester Moyer is a partner at Ruben Brown and leader of their colleges and university services group. Chester has worked with colleges for more than 20 years, helping them navigate financial realities with clarity and strategy.

Dave Black is Vice President of Market Research and Consulting at Paskill. Dave has spent his career on campuses running workshops and building enrollment strategies that bring admissions, marketing, and faculty together to move the needle.

Welcome, Dave and Chester.

Dave Black:
Good morning.

Chester Moyer:

Thank you. It’s great to be here.

Cathy Donovan: 

Fantastic. Well, let’s get started. Chester, this one’s for you. So, we’ve seen more closures and mergers in recent years as financial stress takes its toll. From your perspective, what are colleges up against right now?

Chester Moyer: 

Yes, Cathy. Well, that’s a great question. Thank you. One of the things that Reuben Brown does, or one of its core services is financial statement audits.  And so it’s October. The year end fiscally for many of these schools is June 30th, and we are right in the heart of presenting to the leadership of these schools and the boards about the results of our financial statement audits. And at a very high level, a trend that we’re seeing across the nation, across schools that we work with in schools that we pay attention to is that generally speaking it’s the smaller enrollment dependent schools that are under the greatest near-term financial pressure.

And honestly, thank goodness for the investment returns this past year because that’s really supported many of these schools, because the operating results, and what I mean by that is that the tuition that students are charged compared to the expenses that the school has incurred, that that tuition revenue isn’t supporting the expenses.

Cathy Donovan:

Now how is this different from five years ago? Is it a big contrast?

Chester Moyer:

That’s a great question, too. The difference from five years ago, in many ways, structurally isn’t all that different. We were seeing a gap between the operating revenues and expenses at that time, too. But if you remember, in 2020, that was right when COVID happened and the federal government provided a lot of additional support to schools.

That was in the form of these programs called HERF, Higher Education Emergency Relief Funds, HF 1, HF 2, HF 3. That poured a lot of funds into the schools, and there was just a lot of disruption from an operational perspective. The income statements looked a lot out of whack. There was disruption in the administrators and so on working in the schools there was frankly a lot of noise that was covering up or masking maybe some of the structural vulnerabilities of some of these schools from a tuition revenue compared to their expenses. And now that it’s five years later, COVID has since passed and these federal funds are no longer there, those structural vulnerabilities remained and they’ve kind of been exposed. And that’s the reality that a lot of the schools are dealing with now.

Cathy Donovan:

Right. And what’s at stake if these institutions don’t adapt?

Chester Moyer: 

Well, great question, again. Adapting is really important and I think that the consequences of not adapting are not fun to think about. When I envision a school that’s really thriving, I think about investments being made in facilities, investments being made in the technology that’s provided to students.

I think of teachers and professors getting pay raises and good benefits, but those things may not be realistic, at least all not together, and that can definitely have the potential to impact the prospective students when they’re considering joining.

Cathy Donovan:

All right, Dave. How about you? When you walk onto campuses today, how do you see the stress showing up in admissions and marketing teams?

Dave Black:

Yeah, it’s evident on many campuses and referencing back to Chester’s comments about the pandemic impacting the enrollment and marketing aspects of the institutions a little bit differently in the sense that there was a decrease in on-campus enrollments. We know about the challenges they had with academics. How do we deliver remote learning? In some ways, it’s similar in the sense that it exposed and then accelerated some things that were already happening. That remote learning environment, working remotely as a team, cross-functional collaboration was challenged. Some things that were already out there were kind of revealed a little bit more quickly through the pandemic, and what we’re seeing now is that many of the institutions are still struggling to kind of find that foothold, that balance between what’s going on in the marketplace with the demographics, the value of the college degree being challenged.

Students are really looking at many options.  I think on average, the high school students look at about six different colleges, applying to six different colleges. We’re also seeing an impact of direct admits that are really kind of inflating some applicant and admitted student pools. So what we’ve got is a challenge between what is our base that we’re comparing against.

We can’t look at 18 and 19 and 20 service years, we can’t look at 20, 21, 22 because of the pandemic impact. We’re really struggling to figure out what is that middle ground? How do we build projections? How do we look at our marketplace? How do we figure out how we’re going to work with these students?

And to add into all of that, we’ve got some really significant shifts in technologies, as Chester was mentioning about that investment, AI is not just an issue that’s being found in the classroom, but it’s impacting how we market the institutions, how they find students, how we interact with students. The changes over the last years are really significant in the pressures on these teams to build enrollments, to make that financial budget, that headcount probably stronger than ever. It’s showing itself in many different ways.

Cathy Donovan:

Right. I’m curious how that financial pressure changes the daily reality for people who are tasked with recruiting the next class?

Dave Black:

Yeah, it impacts how they go about their day in the sense of where do they spend their time recruiting?  What are the audiences that they’re chasing? Impacts the marketing that they’re putting out there every day.

I did not mention social media, but that’s also a significant change from maybe six or seven years ago. It’s not that there wasn’t social media, but how students and institutions utilize social media is greatly changed. That financial pressure is causing a lot of institutions just trying to do anything they can to build an applicant pool and an accepted student pool.

Even knowing that sometimes that pool is not really going to yield well, they’re bringing in their marketing, they’re bringing in students who may not really have a good fit for the institution and what they’re trying to accomplish. So, it’s not a good marriage always. They’re building applicant pools, but maybe not good applicant pools.

Cathy Donovan:

Okay. Let’s talk a little bit about the leaders of the institutions. Obviously, they see this red ink. Chester, what kind of hard conversations are you hearing between boards, their presidents, and CFOs?

Chester Moyer: 

Well, I’d say the conversations are mixed to be honest, in my opinion. In some cases, but not all, but some cases, those difficult conversations aren’t happening with the seriousness and scrutiny that I think they really need to, that will lead to course change. And part of it is that honestly the income statements and university operations and how those two show up together on the income statement, that can be quite complex. And also, we talked about the pandemic and how that was disruptive. There have been some important leadership changes in the administrative roles that would have the oversight of some of these functions.

There might be some senior positions that are still unfilled or being filled by people with less experience. The conversation really comes back to two points though, and one is that first, these results are not sustainable, and then secondly, what is going to happen that’s different from today that’s going to either reduce expenses or increase revenue, or both going forward.

Cathy Donovan: 

Okay. That’s a lot to think about. Dave, how does that translate into the lived experience of admissions counselors and marketers who are told, like you said, we need more students now, go get ’em, right?

Dave Black:

Yeah. That’s a charge that they hear all the time. I think there’s a real balance where we recognize on a spreadsheet, on a balance sheet income statement, we need to hit a certain number of enrolled students recognizing tuition discount rates are well over 50% now for private colleges, but we’ve got this benchmark that we’ve got to hit for enrolled students and that’s causing us to approach this in ways that aren’t sustainable in the sense that we’re trying to get as many applicants, as I noted before, as many applications as we can and accepted students, but we’re not going to yield well out of that. We’re trying to do all things.

Also, it’s a challenge. In the admissions and enrollment areas, you’re being asked to increase enrollments maybe 10 or 15 or 20%, over a prior year or two years, which is almost unrealistic because we’re not maybe making the same expenditures to actually build that pool.

We’re coming up with a target number, and yet, please understand, Chester and I are generalizing a little bit, this is not everybody, but we’re coming up with a target number for new student enrollment, that’s maybe just not attainable unless they’re doing something different. But then we’ve got the challenge for some of these institutions. We don’t have the revenue, the resources available to go and increase our marketing the way we would like.

We’re asked to build a better pool, enroll more students, but we don’t always have the resources because we’re under those financial strains. The marketing department is saying, hey, we need to do more lead gen. We need to be out there in different ways. We need to really update our website content. And I’m not saying rebuild the entire website, but we’ve got to get our content up to speed and we don’t have the resources either in the sense of staff or vendor partners that they might bring in. So, there’s a real dynamic between what we want to accomplish and the resources available. And it’s putting, you know, not just pressure on CFOs, on the admissions offices and the VPEMs.

Cathy Donovan:

Sure. And also the coaches. I mean, I know that’s how my daughter’s finding her path to college through coaches, which have been great, but may not tell you the whole story. It’s time to talk solutions though, because we’ve got a little bit of a dark cloud here. Let’s brighten things up with some options. Chester, when you’re advising a college that’s under strain, are there practical steps that they can take to control these costs without really cutting to the bone?

Chester Moyer:

Yes. I’d say that the dark cloud is there and cutting costs is not fun. So that’s not something that I think a lot of administrators and leadership like to think about, and that is part of the difficult conversation. That’s again, not always happening because it’s not fun, but it really speaks to the reality of the situation that you can’t just change a number on a spreadsheet and get the change that you need.

Some common considerations that we give to manage cash outflow and expenses. Here’s a few things. First of all, you do need to consider pausing new capital projects like new buildings. Maybe the accounting team wants a new ERP system, it might not be the best time to make that investment. A second thing could be reduced hiring. Are you going to consider asking your full-time professors to take on more classes and not hire adjuncts as much as they would like, or as much as you would like in the future? Even not necessarily bringing on new tenure track faculty at this point. Another thing is providing retirement incentives, that is a short-term cost, but on the net can lead to a longer reduction. That would be a net gain or net positive for the college or university.

Another thing is looking at different departments, and can there be some consolidation of those departments? To have fewer deans, fewer have a little bit less of an administrative burden. Another thing would be knowing which professors are the most productive from a credit hour standpoint. And so which teachers basically have the most credit hours moving through their courses?

Meaning that if you have a professor that’s teaching a lot of credit hours and a lot of students or a teacher that’s not doing as much, is the school aware of that and are they actually subsidizing that professor in a way that’s not as productive from that standpoint? And are they okay with that? Does it lead to the mission, you know, contribute significantly to the mission of the school? Are they doing other things or do we need to ask that professor to be more productive strictly from that credit-hour perspective? Yes, those are a few things. There’s more, but the underlying theme is that they’re not always fun, no.

Cathy Donovan:

Alright. Dave, when you’re called in how do you, what are these top recommendations to grow enrollment? I know there’s short-term and long-term, but I’m sure teams want to feel there’s something that they can do to help make a difference right away.

Dave Black:

Yeah, I think there are some, and again, Chester, I appreciate you’re having those hard conversations versus me having to have those hard conversations. When you talk about cuts in any way or finding more efficiencies that’s a real challenge. But I think there are some things that we can do that are short term because we, for many of these institutions, we don’t have five or 10 years to make the change on this. There’s things that we need to see in in the coming years.

And reminder to all the people listening to this that you bring in the class are under enrolled class this year. You have to live with that class for three more years. It’s not just this year. You’ve got to live with a shorter decrease in overall enrollment. Going forward, those short-term numbers impact us in the long term. But back to what can we do? I think we’ve got to look at where those immediate opportunities, looking at your admissions and marketing operations, some sort of assessment and audit that makes sure that your activities are aligned with goals.

Figure out what is working and what’s not working, and where can you build on and where do you need to cut back? It’s hard to just be out there doing things, but are they strategic? Do they really kind of further the goals? You got to look at your admissions team. Are they being asked and being led to do the right things, for example.

We’ve talked a couple times already about lead gen and just this idea of direct admits. I mean, the pressures that are put on admissions teams to work with a bunch of students that are in an admitted student pool that they don’t know, they just kind of arrive there. That’s a whole new skillset for a lot of admissions teams to work with them to make sure that we’re yielding out of that the way we would like.

And certainly, we can always look at our web content. Again, we don’t need to redesign the web. But are we putting out content that’s going to be helpful to the students that is working well with all the new algorithms that are being put out there with AI models? I think we’ve got to look at our paid media.

Are we really developing top end leads that are fruitful that we can do something with? It’s not about just generating impressions, but are we getting good conversions out of that? So I think there’s some things that we can do in the short term. That will help the institutions and it’s not going to be just working harder.

Almost every admissions team that I’m working with, that I visit with, they’re working hard. We’ve gotta give ’em the tools and the resources and the leadership to be successful in those roles. Big ask, real big ask, but a lot is at stake.

Cathy Donovan:

Definitely. And I think for me as a parent with a college-age child making decisions, when you do get to that campus, you know, you want eye contact, you want to be seen, you want a good experience. You know, if you’re watching a game or you’re visiting and talking with students, that needs to be positive, too. So I think it’s definitely the marketing that gets them there and gets them interested. But how do they deliver on that marketing with a good experience when they’re on campus. I don’t know if either of you have opinions on that of not just the marketing or the financial plans, but the kind of campus culture that really helps rally the troops to kind of be aware of their financial concerns and work to make a difference.

Dave Black: 

Organizations like individuals have self-esteem when you’re challenged that can really press your self-esteem. How you feel about yourself, how you present yourself as an organization, and those financial pressures make it hard. I mean, you really ought to be thinking about how is the campus community managing this because the students feel that, prospective students and families visiting. They can sense that.

And then there’s also the, I don’t want to say it’s uncontrollable, but you’ve got to be aware of the social media aspect of this, that the organic media that is out there, current students and staff and faculty and prospective students and parents, the comments that they’re making on social media, it carries a lot of weight that influencer group like that.

Certainly a lot challenges and not many quick fixes. Some of these things you have to do now, but it’s going to take a year or two to burn. You know, you can certainly say, well, let’s develop some new programming. And I think that’s a very wise consideration, but new programming is not going to show up for two or three years, but you got to be looking at it. What can we do in the short term is still the question. And, and Chester, what do you see that the schools are doing maybe in that short term that could kind of give resources or reallocate resources to help with that marketing and enrollment side?

Chester Moyer:

Yeah, that’s, it’s a great question and one of the things that really impressed me when the pandemic started was actually how quickly schools did adapt and the significance of the changes that they did make in that very short period of time. It was unlike anything I had seen in my career.

Dave Black:

Here, here.

Chester Moyer:

It would take a lot again, I think, to get to that kind of a mindset, but it showed that it’s possible that the movement from campus-based learning to remote learning and instructing the professors and the students on the expectations and how that would work, and setting up the IT infrastructure for that was incredible.

Big changes can happen if everybody’s unified in that mission and understands the importance of that mission. I would say that there isn’t necessarily one answer as to doing something in the short term, but I would say that you can look back just in the recent history and see examples of how a school has made some significant changes that were important to them and made it work.

Cathy Donovan:

Okay, last question. I know we’re talking about solutions here, but specifically to institutions and their presidents and their boards of trustees, we know they want fixes fast, but just talking to you both now, you know what’s realistic in terms of talking to those heads of the school?

Chester Moyer:

Yeah. I think kind of continuing from that last point, I agree with Dave a hundred percent that most often changes if they’re done with this shared governance model. They take time. Unfortunately, the enrollment rhythm, you know, can take six months before you see the impact of a new enrollment class, six months to a year.

New programs can take two to six years before they’re showing a true bottom-line benefit. There can be a strong impact to these changes, but it can be a slow drumbeat. It goes back to one of the things we talked about earlier, about having the difficult conversations, addressing the structural reality of the situation, having a candid, honest discussion with people who want to make a difference.

That can include donors that are outside of the campus community or are involved, but when you need to make that big ask to be prepared to ask and why, and what’s the vision behind it? As well as the shared efforts of the finance team providing accurate, timely financial budgets, the enrollment teams providing accurate assessments of what is realistic, given the circumstances, and being honest about what is it going to take in terms of additional resources to get the goals that have been outlined?

Sometimes I think that one department, like a finance team might say, well, that’s admissions that’s on them to hit that enrollment number. And I think one of the things that we see of the schools that are making the best changes right now is that it is not a siloed approach to this. It is not one department operating in its function and worrying about only its function. It is a definitely a collaborative approach towards this and you can extend that collaborative approach even further beyond these functions that we’ve talked about.

And it’s really everyone at the campus getting inspired about the passion and feeling the spirit of the university and getting out in the community to build up a positive vibe around the campus and that can engage donors that you wouldn’t expect it. It can engage prospective students in a way that you wouldn’t expect.

And it can take time and you might not see a direct one-for-one benefit, but as they say, you know, a pile of shavings could add up to a big pile over time. And I think a good illustration of that is my son is 13 years old. He’s a long way away from college. He just started playing volleyball and he’s in a developmental low-level program here. But there are three students from the local college that come out and help with the boys’ team, and they’re very visible when they’re there. They’re super supportive. They’re wearing their college shirts and when you go up and talk to ’em and you say, Hey, this is a great school. They feel, yeah, it’s a great school. It’s an excellent school, and there’s just, they’re carrying with them a positive vibe and that small impact, you might say, well, how does that play into what we’re talking about? Well, I think it’s part of everyone doing their part to increase the positive energy that this campus needs to continue to grow.

And it’s not just them, you might say the history professor or some other function you say, how’s that tied to enrollment? Well, you know, maybe the history professor can be involved in the community by doing a small lecture series at the local library and you get a handful of people to show up. Put the posters up in the community and everybody who passes through the library sees that. It just creates a positive environment in the community and, really I think, reflects the important and, and meaningful impact that these colleges have in their local communities. That, that this kind of thing can help.

Help these colleges attain these kind of objectives. So it’s not just, it’s not just one group, it’s not just a finance problem, it’s not just an admissions team problem. It it is something that’s best addressed collaboratively across the whole, the whole organization. Everyone, including the faculty.

Cathy Donovan:

A hundred percent, worth fighting for, for sure. How about you, Dave? From an enrollment strategy standpoint, what can schools do now versus what requires that long-term investment?

Dave Black:

Yeah, I want to just tag on to one thing that Chester just said cause it sets up I want to share with everybody is the leadership has to make some hard decisions and has to have some hard conversations. But what we want to try and do is figure out what is the messaging, what is the vibe we want to share? I mean, internal communications in these times of stress really become important. How are we sharing these messages and what are we asking everybody to do?

And recognizing that everybody has a different role in marketing, in recruiting, but we’re kind of all on the same bus together. But there are some things that I think that we can do really from a strategic standpoint that are short term and long term. You know, just looking at your paid media, you’re trying to build more visibility at the top.

And paid media is getting a lot of attention and as it should, but with AIO and GEO and just those changes that are at the top part of that media funnel. We have to make sure that our teams are up to speed on that so they’re taking advantage of that, that there’s a really, a holistic approach to this.

I don’t want to talk for Cody and Sam, our digital team. There’s dozen people, much more experts on this than I am, but everything needs to be thought of as we walk through these marketing agendas, it’s not just the social, it’s not just the paid media, but we’re redirecting them. What does that website look like? What does the admissions team do when we get a lead that comes in?

The holistic approaches is so important. Are we optimizing all of our media to generate the best leads? Are we creating that feedback loop so we don’t continue to get more bad leads. Are we giving good data back into our systems that creating that loop where we are then generating more good leads?

There’s just so many things. It’s not just doing paid media, it’s doing good paid media. It’s not just having an actively engaged admissions team. It’s making sure that your admissions team is trained and is well versed in how do they handle objections? How do they handle conversations that the public might bring to them?

I heard your school is struggling a little bit. We’ve got to give them the tools and the resources to be able to address those issues. We’ve got to look at what are we asking our campus partners to do? How are we engaged in the full campus and visits, accepted student days, yield conversations, testimonials, influencer marketing, how do we bring the whole team together and all this.

Recognizing that we all have different roles and we’ve kind of got day jobs that we’ve got to do, right?  I’m an instructor, I’m a faculty member. I’m being asked to lead this particular area, but I also want to be helpful to our marketing and enrollment. The same token, how can our alumni services work better with admissions to generate more visibility, maybe more stories?

So it’s very much a holistic approach in the sense of cross campus, as Chester was noting, but also in the way that we engage in activities. If we’re doing it in a siloed approach, we probably will underperform, but again, at some point hard decisions need to be made in different areas that could impact others and how we talk about it and how we all are viewing that future is going to impact how we react to hearing those words.

I think there’s so many opportunities, and Chester made such a great point. We’ve seen higher ed make adaptive changes at a rate during the pandemic that we never saw before. It was really quite impressive how we adopted and can we get that energy back on more campuses without having a crisis to generate that energy. Some very thoughtful comments on that Chester, about looking at it from the expenditure side.

Cathy Donovan:

I also like how Chester focused on the actual students. I think that’s definitely a a point of inspiration is how, what are the students like who are at your institution? What are they doing well? What are they enjoying? I think that’s very inspiring for folks to invest or consider your school based on the experience of your current students.

Well, thank you both for the conversation. We know that there is no single budget cut or a quick fix is going to solve today’s challenges, but when there’s a financial strategy and an enrollment strategy that work hand in hand, institutions can chart a path forward.

Dave and Chester, thank you so much for being with me today.

Dave Black:

Thank you, Cathy. Appreciate it.

Chester Moyer:

Thank you, Cathy. That was great.

Cathy Donovan:

Awesome. For more about Chester and Dave, you could see our show notes or connect with them on LinkedIn, and if you’d like to talk about how Paskill can support your institution’s enrollment goals, reach out anytime.