Higher education leaders are moving away from a surgical approach of simply cutting costs towards one of developing and nurturing portfolios based on market needs.
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Academic Portfolio: Achieve Financial Success with a Data-Driven Approach to Academic Portfolio Management
June 23, 2020
Andrew LawsManaging Director
Build the Case for Change
When universities are faced with financial challenges, leaders typically search for administrative efficiencies first, hoping to protect academic offerings. With the changing higher education landscape, that strategy is unlikely to be sufficient in the future.
50%
of an institution's total expenditures are made up of academic programs.
85%
of Chief Business Officers report that the ability to experiment with new programs is the key to building new revenue streams
90%
of Chief Business Officers are hesitant to shut down academic programs
49%
of Chief Academic Officers anticipate declines in liberal arts education
Evaluate Academic Programs as a Portfolio
Institutions should think of their academic programs as a portfolio where leaders recognize the need to maximize resources, market relevance and mission-driven activities. The array of academic programs an institution offers, when strategically designed, powerfully supports its competitive advantage in the marketplace, leading to distinctiveness and long-term financial sustainability.
A successful academic portfolio review should:
Ensure financial sustainability
Fulfill strategic priorities
Strengthen market differentiation
Align student outcomes with market needs
1. Determine Which Courses are Cost Drivers
Academic portfolio management allows institutions to understand component-level costs for all course instruction across academic units. To evaluate course costing:
Course Compensation + Course Overhead + Financial Aid + Space = Total Course Cost
Total Course Cost ÷ Credits = Average Cost Per Credit
2. Assess Opportunities for Effectiveness
Once component costs are determined, institutions are able to identify majors with component costs that exceed net revenue per degree.
Data-Driven Takeaways
2.5x: The cost of offering courses for undergraduate majors versus core courses
10: The 10 most popular majors graduate 50% of students
$25 million: The financial value of faculty members' non-instructional releases
20%: The percentage of faculty instructional costs resulting from miscellaneous pays
30%: The number of duplicated programs across 12 unique majors
3. Design Your Optimal Portfolio
When evaluating enrollment growth and instructional cost numbers, consider the following questions:
High Cost, Enrollment Decline
- Are there any efficiencies that can be gained in the various programs to reduce costs?
- Is there a tipping point at which the program costs would best be optimized?
Should institutional - investment be reduced?
High Cost, Enrollment Growth
- Are these prestige programs that are critical to maintaining our identity?
- Do these programs help to round out our offerings?
Low Cost, Enrollment Decline
- Can any of these programs be refined to better appeal to the student market with minimal investments?
- How do we communicate the value of these programs?
Low Cost, Enrollment Growth
- Can these programs sustain their growth patterns (through class demand and/or outcomes/employability)?
- Are these programs that align with our mission and identity?
- Do we need to invest additional funding in
Huron partners with institutions to look at the intersection of competitor programming, market demands, program economics, academic policies, program structures and academic offerings to help create a common understanding of the academic portfolio and to inform decision making.
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