College & University Leaders Are Optimistic About Their Institutions' Financial Future: KPMG Poll

NEW YORK, Sept. 6, 2012 /PRNewswire/ -- A majority of higher education officers believe their institutions will be in a better financial position in five years and will be able to either gain or retain their share of research funding, according to the inaugural Higher Education Outlook Survey by KPMG LLP, the audit, tax and advisory firm.

Despite this optimism, the 102 officers recently polled also expressed some concerns about the future.  A whopping 84 percent were either very concerned or somewhat concerned about their institution's ability to fund future capital investments and 66 percent expressed concerns about their ability to maintain current enrollment.

"Our poll reveals a dichotomy," said Milford McGuirt, KPMG's national Audit sector leader for Higher Education, Research & Other Not-for-Profits. "Fifty-seven percent of the higher education leaders we polled predict their institution will be in better financial shape in five years and 58 percent say they will either gain research funding or retain their proportionate share of funding.  Yet they are clearly worried about how they will fund capital projects and maintain enrollment in the future."

McGuirt said comparing the responses of public and private institution respondents revealed some interesting differences.  (Of the 102 survey respondents, 62 were from public institutions and 40 from private.)   For example, while 52 percent of private college respondents were somewhat concerned about maintaining enrollment, only 37 percent of public college respondents were. Also, 45 percent of public college respondents said their institution's standards for admission are higher than five years ago compared to just 30 percent of private college respondents who said so.

Somewhat surprisingly, nearly half (47 percent) of the respondents characterized their institutions' financial health today as somewhat better or significantly better compared with five years ago -- before the U.S. economic collapse -- versus 32 percent who characterized it as somewhat or significantly worse.  Another 19 percent said there was no change compared with five years ago.

Dealing with the impact of government cuts to higher education was also examined.  Asked which measures their institutions have adopted or are considering as a result of cuts, the most popular selection (53 percent of respondents) was increasing tuition, followed by delaying capital projects (cited by 45 percent  of respondents), offering more online courses (35 percent) and eliminating programs/disciplines that reflect less demand (34 percent).  The split between public and private respondents was also instructive.  For example, while 40 percent of public college respondents said they were considering offering more online courses, just 28 percent of private college respondents gave that answer.  Also, while 24 percent of public college respondents cited faculty and staff layoffs as a way to deal with cuts, just 8 percent of private college respondents selected that answer.

Asked specifically what factors cause tuition increases at their institutions, the most popular selection, by 48 percent of respondents (63 percent of public college respondents versus just 25 percent of private college respondents) was cuts in state funding followed by competitive pressure to hire better faculty (37 percent) and cuts in federal student aid (36 percent). 

"Tuition increases remain a huge issue for all institutions and these results shed light on what's causing increases and what other steps these colleges are taking to deal with cuts in government funding," said David Gagnon, KPMG Audit partner who serves higher education clients.  "For instance, it seems likely students will see more online course offerings as budget pressures continue."

Another question revealed that higher education officers are very focused on retaining students and seeing that they graduate.  Noting that many institutions are embarking on organizational transformations to address issues of cost, quality and access, one question asked what steps they are taking to address these issues.  The most popular response by far from both public and private college respondents was 'taking steps to improve retention and graduation rates,' cited by 61 percent of respondents.  The next most popular selections, both at 41 percent, were 'putting more focus on innovative approaches such as online education, without compromising quality' and 'reassessing curriculum to ensure it prepares graduates for the workplace.'

"These responses tell me that while many institutions are undergoing a transformation, they remain focused on the basics -- getting students to stay on board and earn their degrees," said Gagnon. 

He noted that the higher education leaders were also asked about technological change and innovation and that 46 percent indicated that 'investing in better data security' was on their technology agenda, with another 44 percent saying they were taking steps to improve their institution's social media capabilities.  More than one-third (36 percent) also said they were cutting costs by implementing cloud computing technology.

Asked specifically about social media and how Facebook and Twitter were helping their institutions perform certain functions, the two most popular choices were 'marketing/branding' – cited by 53 percent and 'more immediate communication from leadership to students' – cited by 52 percent.  Thirty-seven percent selected 'alerting students in the event of a campus security incident.'

"Social media is obviously a useful tool for higher education, as these results indicate," said Gagnon.

Asked to rank by importance a selection of tasks performed by a higher education board, the respondents' top four selections were fundraising, oversight of academic quality, strategy development and protecting the institution's brand.

THE KPMG HIGHER EDUCATION OUTLOOK SURVEY

The KPMG survey was conducted in May 2012 and reflects the responses of 102 senior officers in higher education.  Seventy-three percent described their role as financial (CFO, controller or budget officer) while 27 percent were academic officials.  Forty-four percent of the respondents said their institution had an endowment of between $250 million and $999 million while 17 percent said it was $1 billion or more.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International.") KPMG International's member firms have 145,000 people, including more than 8,000 partners, in 152 countries.

Contact:
Jim McGann, KPMG LLP
202-533-5783

SOURCE KPMG LLP

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