Do Your Ambitions Exceed Your Budget?

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It’s that time of year again.  You know the drill.  A few months ago, you were asked to submit a budget.  So, you looked at all of your expenditures, contracts, and people, determined if there were any rate increases, changes for inflation, or other considerations, and then added some money for a new initiative, product, or person.  While some schools do people separately, you likely went through this yearly, episodic experience hoping for the best.

I know of at least 3 University Presidents who read my blog.  So let me now address you all for a second.  You took in the budgets and went over them with your CFO, potentially your Provost or other executive council, and then determined that the amount was higher than appropriate.  Perhaps you don’t feel the Board will ratify your amount or perhaps projections just don’t line up with the spend.  Heck, if the reports are right, almost half of college Presidents already told each department to take X% off of last year’s budget already.  But it’s about what comes next that I want to talk about.

What Are Your Priorities?

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A lot of leaders across higher education, at the point in the budget I have described above, will make a terrible mistake.  It may seem reasonable, or even fair.  It may seem like the solution that produces the least amount of drama.  It might seem like a good idea, but it’s not…

It is at this point many leaders will gather their executive teams and explain that everyone needs to now cut another X% from their submitted budgets.  Across the board, to be fair, everyone must now resubmit a budget that is less than the first one.  (Or maybe this process has happened multiple times in a row.)

Think about that for a minute.  While it seems like a “fair” thing to do, what you are saying is that every new initiative, new tool, or new hire is equal.  By that logic, each director or department head has created a budget that will impact big issues like retention, enrollment, or brand, and/or impact smaller issues like efficiency, communication, or integration exactly the same way. 

Let me share a very real example.  I wanted to leverage a resource that would start us down the path to realistic Competency Based Education (CBE), and would also start us down the road toward genuine adaptive learning.  By this, I don’t mean adaptive like SO many companies tout.  It seems that one of the greatest buzzwords of the past decade for education is adaptive.  No, I mean the tool was capable of handling the vision of adaptive that places remediated assets in front of a struggling student without them realizing it.  It could accelerate a student through the learning process if they already understand something, allowing them to focus on the things they did not yet understand.  And it would be capable of asking students for a learning goal and then show them how other students had achieved that goal behaviorally.  This tool would be learned and then used to create courses, starting with a few and after 2 years, likely being used by 1/3 of the eLearning courses at the school.  It was our bet that we would likely see a retention increase for those courses of 5-6%, thereby paying for itself in 24 months. 

Now THAT'S a golf cart...

Now THAT'S a golf cart...

Meanwhile, another department wanted some new golf carts.  (That's a big deal in Florida, with oppressive heat and a campus without shuttles / buses.)  These would used for various events throughout the year, likely even being used by parents or Board members during peak moments or big events.  But the department added them to their budget at almost exactly the same cost as my platform. 

But as soon as I had to cut a percentage from my budget, this adaptive tool was off the table.  I couldn’t cut existing programs or resources as I had 2 and 3 year contracts.  And I couldn’t cut people as that budget could not be moved to operational budgets anyway.  Meanwhile, the golf cart request had to go from 5 to 2, but they did get a few. 

Think about that.  What might a year with that adaptive tool set have given us?  How many students might it have saved per course and ultimately per term?  I can’t seem to find a way in which those golf carts helped retention….

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Get the idea?  Not all budgets are equal.  It takes some systems thinking or design architecture to push through the most important ideas and initiatives.  After all, most of higher education makes another major mistake when it comes to innovation.  They wrap all of their initiative budgets up in only one or two big ideas.  (That’s another blog altogether.)  So if they are going to use at least a portion of money on something big, they really should spend wisely and not just spend equally. 

Not all organizations work this way.  A few use a more systems like approach to budgets.  I even know of one school that creates a “Shark Tank” experience for initiatives each year.  But unfortunately most of that kind of forward financial thinking is not part of typical budget cycles.

Working The System

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To all of you who are beholden to this kind of budget process with little control to change it, consider something.  Most administrators are not entirely unreasonable when two departments want to collaborate.  Why not come back with an approach that shares budget when appropriate.  I tried to go to the golf cart team above and ask for their budget this year, promising I could help them out at a later time.  Unfortunately the “silo effect” took over, as course retention wasn’t seen as that department’s problem.  (Sigh)  But, assuming you can create a good working culture across teams, why not use that?  Tell the CFO or President (etc) that you are giving up your entire overage for the good of another department that has a great idea.  Then, the next time you have a great idea, work it the other way.  You likely know those years when you have something really important or potentially powerful and when you’re just spending the amount you’ve been given because you don’t want it taken away next year.  (Strike three when it comes to bad budgeting practices, by the way…)

This is how most successful small businesses and corporate giants operate.  The fact that you are at a college or university does not have to mean you succumb to bad practices!  Take the budget bull by the horns and work the system to your favor.  It can be done. 

Good luck and good learning.