“Show Me the Money!” Q&A about salary increases, funding new initiatives, and budget accountability.
In the movie Jerry Maguire, the lead character is an incredibly successful and charismatic sports agent. Jerry has a crisis of conscience one night, after the young son of one of his injured players curses him out. Jerry realizes he’s come to value his clients as paychecks instead of as people.
He feverishly writes and distributes a mission statement called “The Things We Think and Do Not Say: The Future of Our Business.” In it, Jerry challenges himself and his colleagues to care more about the welfare of their clients than about profits – to put people first. His colleagues applaud him to his face and then arrange to fire him. For good measure, they steal all of his clients but one: Rod Tidwill (played to near perfection by Oscar-winner Cuba Gooding, Jr.).
I find myself thinking back to that movie from time to time and how it relates to managing a university. How do we ensure that we are putting our Rod Tidwells – our students – first in an environment of escalating costs and competitive ambitions?
The pillars of our strategic vision include the Philosophy of Enrollment that I blogged about recently, which seeks stability of enrollment and an optimal student/faculty ratio from one year to the next in an effort to provide a consistently high-quality educational program for our students, and a stable and vibrant work environment for our faculty and staff. We are also nearing decision time on the key priorities put forth by the PLU community for our next comprehensive fund-raising campaign, which seeks to raise more than $100 million, and we recently signed a commitment letter to complete bond refinancing, which will improve our bottom line. The fiscal 2017 savings from this refinancing are estimated at $2.5 million, and annual savings through 2037 of more than $700,000. These savings are being put toward an operating reserve and other elements of “The Box” Resolution for the Care of People and Place. Finally, we are also hard at work on divestment of declining assets that will allow us to build our endowment.
I recently discussed this issue at a PLU Program Leaders meeting and asked faculty and staff to think about how we can offer competitive programs and facilities while also living within our means. Here are my answers to some of the questions that emerged. I invite you to ask more questions and share your thoughts below.
How does a 1% across the board raise get any closer to the goals of “The Box” resolution?
It’s important to note that it’s a 3% total pool. Our salaries range from 9% to 19% below the median of our peer group. So, that 2% pool will help us bring up those at the bottom (both those at the low end of salaries as well as those furthest from the median for their categories). It’s also worth noting that we have to generate 8-10% additional revenue, above our normal expectations, to achieve the goals of The Box. Since we have not increased our revenue much above our normal growth, the raises of recent years are not designed to fulfill The Box goals yet, although we have been increasing salaries and spending on facilities even during tough budget times. That’s a clear sign that the goals of The Box are important and guiding our macro decision-making. Once revenues start rising above our normal range, then we can do more. This increase in revenue will take everyone’s engagement, and the increased revenue needs to come from academic programs, continuing education, auxiliary enterprises, fundraising, and cost-saving efficiencies. As we’ve said from the beginning, it won’t be a straight line to reach our goals.
*Note: All comments are moderated
It is hard to budget if you don’t know how much income you are producing.
True enough. Thanks to the hard work of the Finance and Administration Division (with help from many other units), we have a much better handle on revenue and expenses, and we’re on the verge of implementing a modified Responsibility Centered Management (RCM) system, which will depend on us all clearly knowing and managing our income and expenses.
*Note: All comments are moderated
Is the board aware of the fact that we have not made enough cuts in staffing with the downturn in student enrollment?
It’s true that in some areas we are still staffed to accommodate 3,600 students. The Philosophy of Enrollment models are pointing toward a target range for total enrollment of 3,250 – 3,450, so I think we need to see where the Strategic Enrollment Management Advisory Committee (SEMAC) lands in terms of its final recommendation this spring, and what the Board of Regents ultimately adopts at its May meeting. I believe that the 43 positions we cut last year was the right number to achieve our aims for this academic year, but optimal enrollment and student retention are fluid challenges, and successful enrollment plans are living, active documents that should be referred to regularly and routinely modified as the dynamic market we operate in continues to shift. So, we need to continue our recruitment efforts and see what our 10th day numbers are in September. I’m encouraged by the fact that graduate enrollment continues to rise and undergraduate recruitment is at five-year highs, but we need to continue to carefully monitor enrollment and retention toward our goals of a consistently high-quality educational program for our students, and a stable work environment for our faculty and staff that allows us to live within our means.
*Note: All comments are moderated
Why are we cutting budgets on programs which are growing and contributing to increased revenue?
Ideally that would not be happening. RCM is designed to help us avoid this kind of problem, which can result from budget decisions being made too far away from where “the rubber meets the road.”
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What are we doing to address the fact that food costs continue to rise?
Actually, while the nominal cost of food has risen, the cost of food has declined relative to other necessities over the past four or five decades. We have also not raised our room and board prices for a couple of years now to make sure we’re competitively priced relative to our regional peers.
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Without a rate increase to keep pace with cost, we must seek other revenue sources from non-students.
In addition to holding room-and-board prices flat for the last couple of years, the staff of Hospitality Services and Campus Restaurants (new name for the old Dining and Culinary Services and Conferences and Events) are exploring options for optimizing the quality and efficiency of their offerings.
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Other revenue from outside the university is limited by current available parking. Are there plans to increase capacity?
I’d love to know more about how parking limits our capacity for additional revenue. As we explore new options for facilities on and around Garfield Street, we may need to figure out how to limit parking or charge for it.
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How are our marketing efforts tied to revenue and how are we measuring marketing impact?
Our general marketing campaigns (PLU’s first ever started in fall 2014) are designed to raise awareness of PLU. They complement our recruitment efforts, and respond to other universities’ marketing efforts. Our campaigns also aims to establish a sense of what PLU stands for and what makes it both distinctive and attractive. All of those things support revenue-enhancing efforts, even though they don’t on their own generate revenue.
We’ve been tracking at five-year highs for first-time undergraduates across all measures and that has been the case all year (and we hope that trend continues). You can’t really isolate advertising efforts from the many improved recruiting touch points – including a new welcome center, more off campus events, counselors who are traveling more and targeting new territories, enhanced student search strategies, increased engagement by faculty and regents, increases to our merit scholarships, and new tools like the 253 PLU Bound scholarship. But one thing to notice is the increase in inquiries. PLU was averaging around 15,000 inquiries during the first week of April in 2012, 2013 and 2014 and then we saw a pretty significant jump to nearly 20,000 last year at this time, and to more than 22,000 on the same date this year. There are many factors that have contributed to that jump, but I’d like to think that having greater visibility across our primary recruiting region has certainly been one of them.
The other thing we look at how is how our web site performs, where our traffic comes from, and how visitors engage with our content. Our web site is often the front door for students and their families who are just beginning to explore college options.
Again, there are lots of things that contribute to these year-over-year increases, most notably a new web site design that is optimized for mobile use, but an encouraging measure to note is the increase in unique page views of our first-year apply page, up 40% in one year. Referrals from outside web sites are up nearly 70%, and referrals of new users from social media are up over 200% year over year. Referrals of new users from email are up 150%, and that includes efforts by both Admissions and Advancement. The only measure that is down is our bounce rate, or the number of people who leave after only visiting one page, and that’s a good thing. We have seen this measure drop from nearly 42% in 2014 to 38% last year.