Existential crises are not new to regional public universities. Three years ago, an article entitled “Public Regional Colleges Never Die. Can They Be Saved?” suggested that, while regional public universities are the “workhorses of a public higher-education system,” they are “hemorrhaging students and struggling to balance their budgets.” Nathan Grawe’s eye-opening research two years ago forecast that the enrollment and budgetary crunch for regionals would be serious especially in the eastern United States with enrollments declining by 20 percent or more in the next 10 years. One has to be concerned as to the future and viability of the regional state university in our overall higher education system. In November, before COVID-19, Grawe argued that “now is the time to address the cracks already visible in our practices and financial models.” With the coming and persistence of the COVID-19 crisis, the situation is even more pressing. This blog will look at regional public universities from three perspectives—the crisis before COVID-19, the crisis after COVID-19, and strategies to maintain the relevance and viability of this sector as we move forward.
The Crisis Before COVID-19
The magnitude of enrollment declines at regional public universities cannot be overemphasized. Post-Secondary enrollment has declined for nine straight years. This decline has been disproportionately felt by regional public universities. For example, 9 of the 14 institutions in the Pennsylvania state university system experienced double-digit declines in enrollment between 2009 and 2017; and in Massachusetts, 7 of the 9 state universities experienced enrollment declines of between 1 and 15 percent in the last 5 years. Grawe argues that declines in community college enrollments, an important feeder for regional public university enrollment, will exacerbate downward trends for the regionals. The magnitude of this threat is revealed in Massachusetts where community college enrollment has plummeted in the last five years with all 15 institutions experiencing enrollment declines of between 13 and 32 percent. Added to the competition and demographic decline is the challenge of declining state allocations. The Great Recession of 2007 decimated public university budgets. State allocations to regional public universities in 2017 were $9 billion (inflation-adjusted) less than they had been in 2008. Regional public universities that were primarily funded by state allocations before the Great Recession are now primarily funded by student tuition and fees.
Regional public universities also face significant competition from online providers with both regional and national scope. A Massachusetts student, for example, has the opportunity to study online regionally at a Southern New Hampshire University program or nationally at one offered by Phoenix University or Arizona State University. Arizona State offers a high-quality brand recognition opportunity, and Southern New Hampshire has just announced a low-cost ($10,000/year) online instruction residential program coupling the convenience of online instruction with the on-campus experience that could become a significant disruptor to New England higher education. All of these opportunities challenge the value proposition for a regional public university. One recent critic argued that “technology has made regional universities obsolete.”
With these pressures bearing down on regional public universities, they were facing a true existential crisis—what is the place of the regional public university in the educational world?
The Crisis After COVID-19
Each of the problems that existed before COVID-19 will likely become worse as we start the 2021 academic year. Budget cuts from state governments could be draconian. State revenues are plummeting (Moody’s Analytics estimates a 20 percent decline in 2021), and it is unclear that the federal government will come to the aid of the states or higher education. Many states have already announced cuts to current budgets and some states have frozen disbursements to universities. Uncertainty rules for AY2021 allocations.
At the same time, enrollments are likely to decline. Recessions normally result in increases in college enrollments as education becomes less expensive when the opportunity costs of obtaining a well-paying job are diminished. This, however, will not be a normal recession. Given the impact of diminished family income due to declines in the equity markets and record-high unemployment rates, families will be challenged to manage the tuition costs. Additionally, enrollment declines will be exacerbated by shifts toward online enrollment resulting in decreased revenue from room and board. This shift to online instruction will also increase operating costs (see our recent blog “Too Many Buildings, Not Enough Bandwidth”). And there is significant worry that students will delay college attendance taking a “gap year” in 2021 waiting for the uncertainty of the crisis to subside.
The competition from online universities is also likely to intensify. The well-funded, high-quality fully online programs of universities like Arizona State were designed over many years to maximize the advantages in convenience and modality that online education offers. They will not be scrambling in the fall to convert formerly face-to-face courses and programs into online ones. These courses will likely be of higher quality than those converted to online delivery in the last few months. As I argued previously, they will be offering a national brand name as well as a high-quality online program and often at a lower price than the regional state university. These programs are scalable, and the regional public universities should expect intense competition for students this fall.
Maintaining Relevance and Viability
The future is not totally bleak for regional public universities. Regional public universities have several significant advantages when compared to large state flagship universities and small private colleges.
Advantage 1 – Regional public universities are closer to home
Many recent surveys have indicated that students and their parents may prefer college opportunities that are closer to home as we recover (or cycle through) this crisis. In this sense, the regionals may be geographically advantaged even allowing students to commute to campus as opposed to becoming dorm residents.
Advantage 2 – Regional public universities may be just the right size
Regional public universities are typically moderately sized, neither as large as some of the mammoth flagship universities nor as small as private colleges. They are large enough to offer a wide range of programs that go beyond what a small private college can offer while not being a mega-state university where students can get lost. Furthermore, their size may make them better positioned to implement social distancing strategies (smaller student body size when compared to mega-state universities makes social distancing easier as does their larger physical footprint than small colleges).
Advantage 3 – Regional Public universities are well-positioned to respond to unique student needs
Many regional public universities have dramatically increased their student support services in recent years developing programs focused on persistence and graduation. Such programs are well suited to assisting students navigate the changes and ambiguities brought on by this crisis.
On the other hand, the impact of the crisis will be dramatic for regional public universities. Survival will depend on implementing significant changes to programs and operations. Here are just a few strategies that should receive significant attention in the upcoming months. Situations will differ from campus to campus and from state to state, but overall these are the kinds of questions that regional public universities and their systems should be asking.
Strategy 1 – Identify, focus on, and promote the unique “value add” of your university or system
While focusing on the unique “value add” of a university is going to be critical in the upcoming years for all colleges and universities, it will be especially important for regional public universities. As previously mentioned, state flagship universities and small privates will be squeezing the traditional enrollment base of regional universities. It is imperative that the regionals identify and defend their position in the academic marketplace. Often these universities excel in important areas such as providing more personalized attention than their flagship cousins and at a lower cost. Historically, their roots are as schools of education and their ties to local, regional, and even national K-12 school systems are formidable. Similarly, they often have (or can develop) tight relationships in the regional economy, graduating students who want to stay within the region as opposed to making the jump to a New York or Boston metropolitan center. Finally, they have often developed a focus on First Generation students and the persistence of these students to graduation. These are strengths that can be emphasized and can help these schools maintain both enrollments and state aid.
Strategy 2 – Examine and strengthen your academic program portfolio
As Michael Ginzberg argued in a recent Optimal Campus blog “Planning and Budgeting Post COVID-19,” universities should avoid the temptation to redress budget shortfalls by making across the board cuts. Such actions will reduce the competitiveness of the institution and accentuate declining competitiveness. This is the time to develop accurate cost and revenue data, to model that data in a way that provides a greater understanding of the interconnectedness of academic programs, and to decide to divest from programs with doubtful futures and to invest in programs with growth potential. Benchmarking offerings and staffing of academic program areas against comparable universities can also assist in making effective decisions (benchmarking can also be an effective tool for determining how to make other than “across the board” cuts in non-academic areas as well). These decisions must also be made in a manner that is collaborative, involving stakeholders from across the university environment, and that is mindful of the core mission of the university. Navigating the politics of such a process will be challenging; but if regional public universities are to survive, they must make these kinds of assessments and decisions. The regional public universities are often referred to as “comprehensive institutions.” At this point, being too comprehensive may be dangerous.
Strategy 3 – Examine all programs for cost-effectiveness
(1) Close unprofitable off-campus instructional sites
Regional public university expansion in recent years has seen the growth in sites away from the university’s primary location. Some of these are cost-effective. Many are not. They continue to exist for political and just plain academic inertia reasons. This is the time to close these sites. It will not be easy. Earlier this spring, Vermont announced the closing of 3 state college campuses only to back away from that decision within 2 months. Closing such campuses, however, could yield significant cost savings.
(2) Close co-curricular programs and centers that are not cost-effective
Every university has numerous programs and/or centers that are not cost-effective. In some cases, these centers were once vital and productive, but the founders have retired or moved on and the activity level has waned dramatically. In other cases, these centers were recently created but have never lived up to their promise. Often, the budgets of these centers are surprisingly large. Now is the time to eliminate unproductive centers and to use the savings either to invest in growth opportunities for other programs or to deal with the budget shortfalls elsewhere in the university.
(3) Drastically restructure athletic programs
It is highly questionable whether or not college sports programs will be able to function this fall. All intercollegiate athletic programs were eliminated in the spring semester. These programs are very expensive and, for the most part, draw limited attention from students or the community at regional public universities. Some universities compete in NCAA Division I. Such programs cost millions of dollars to operate and yield negligible revenue for regional universities. Other universities compete in NCAA Division II where scholarships drive up program costs while revenues remain negligible. Even universities competing at the Division III-level where there are no athletic scholarships incur significant costs and losses. Typically, athletic programs have been “sacred cows” at US universities. This might well be the time for regional public universities to make significant cuts in these programs and to opt for a “club sport” model that would be dramatically more cost-effective.
(4) Look for ways to coordinate and consolidate regional state university systems.
Unlike the situation across the country, many states in the northern and northeastern United States do not have state university systems. In Massachusetts, for example, each of the 9 state universities and 15 community colleges are governed by a separate board of trustees and operates as an independent institution. This leads to inefficiencies and higher cost structures than should be the case. In recent years, both Georgia and Pennsylvania have begun to consolidate and coordinate their state systems to a significant degree. The cost savings and other efficiencies offered by coordination and consolidation could be critical to surviving the long-term impact of the Coronavirus crisis. Opportunities exist in a number of areas:
(a) Back office operations—In areas such as purchasing, finance, human resources, and auxiliary services such as IT and security, there is a limited need for separate functions at each and every university campus. Many states like Massachusetts have already implemented cooperative purchasing strategies with success. Moving forward into other areas and actually consolidating operations at a system level has the potential to reap significant additional savings.
(b) Academic programs—Not only are academic programs duplicated at each of the universities but also the various universities have many small unprofitable majors. Cooperation between institutions whereby each university chooses specialty areas on which to focus and others “sunset” their competing programs could both decrease costs and increase quality. Cooperation in the development, offering, and staffing of introductory courses would also offer such opportunities. For example, foreign language programs at most regional state universities are quite limited and could offer an opportunity for cooperation. These programs could implement a state-wide technology-focused introductory language program, develop focus languages for each institution that fit geographic regions, and provide strategies for students to access upper-level language classes at institutions other than the one at which they are primarily enrolled. This could allow costs to be reduced while increasing the quality of learning. Similarly, does each of a state’s regional universities need an online MBA program? Might not the universities develop a higher quality and more financially successful program if they did so cooperatively?
(c) Closing and actual consolidation of regional universities—Both Georgia and Pennsylvania have consolidated regional universities in recent years. When Mt. Ida College closed in Massachusetts three years ago, a state legislator remarked that the closure brought into question whether the state had too many regional state universities. If enrollment in the regionals continues to decline, consolidation or closure may be a reasonable response.
The impact of the COVID-19 crisis will be particularly severe for regional public universities. These universities were stressed prior to the emergence of the virus this winter. “Cracks” in this system were already evident. Dramatic change will be necessary if these institutions are to remain the “workhorses” of our public higher education system. The crisis has created many immediate problems for every university. Regional public universities, however, cannot afford to delay planning for intermediate- and long-run strategic changes.
This is part of a series of blog posts meant to outline strategies for dealing with the mid-term and long-term implications of the Coronavirus crisis and our changing higher education environment. Let us know what questions and challenges you have about the future either by leaving a comment below or by contacting our principal consultants directly.
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