BEEBE -- A consulting group hired by the Arkansas State University System laid out several recommendations Friday for how the system and each of its five campuses can generate revenue, cut costs and be more efficient.
Huron Consulting Group presented its findings -- a third of which focused on revenue enhancements and the remainder on efficiencies and cost-cutting measures -- to the Arkansas State University board of trustees at a meeting on the Arkansas State University-Beebe campus. The administrative business cases alone could pull in between $10.6 million and $20.1 million annually for the system, the consultants said.
The recommendations come at a time when state funding for higher-education institutions has been flat and the state is switching to a new method that awards schools that help students progress to graduation and eventually earn certificates or degrees. They also come as colleges and universities are facing increasing pressures to keep the cost of attendance -- specifically tuition and fees, their main revenue sources -- to a minimum, or, for the forthcoming year, steady.
"This is a study to help us know where to do further analysis," ASU System President Chuck Welch said. "This is a study to help us understand where our challenges are, where our opportunities are, where there are some areas where perhaps we are exceeding our peers and some where we are falling behind our peers, an opportunity for our campuses to take this information and work collaboratively together to try to find ways to address these and chart our future path."
The system enlisted Huron last fall for $1 million, half of which was paid for with state discretionary funds awarded by Gov. Asa Hutchinson and half through ASU System savings. The system's share of the contract accounted for 0.33 percent of the system's fiscal 2017 $293.2 million expenditures, it has said.
"It's a one-time expenditure that will result in ongoing annual savings," Welch said. "So it will pay for itself many, many times over."
The consulting group interviewed more than 100 ASU System stakeholders and received more than 900 survey responses, said Andrew Laws, Huron's managing director. The consultants then worked with a steering committee to prioritize, he said.
One area focuses on enrollment management. ASU-Jonesboro is behind its peers in four- and six-year graduation rates and has a slipping retention rate, said Nick Kozlov, a higher-education consulting associate at Huron. ASU-Jonesboro's Chancellor Kelly Damphousse has made it a priority to raise both rates and has challenged the campus to raise first-year retention rates -- now at 74 percent -- to 85 percent, Kozlov said.
An increase of 1 percentage point in retention could mean $73,000 more in net tuition revenue, he said.
Plus, with the new funding model that awards schools for increasing student graduation rates, schools could see up to $600,000 more, he said.
The largest opportunity in enrollment management, Kozlov said, was in ASU-Jonesboro's discounts strategy.
"What was notable to us was that the net tuition revenue -- so this was after the sticker price of tuition and the price that students ultimately pay once they get on campus -- was lowest of the peer set," he said. "Jonesboro has the lowest out-of-state tuition as well, and ultimately discounts its tuition by about 44 percent to students on campus."
The consultants dove deeper into the discounts data, comparing it with expected family contributions, and found that ASU-Jonesboro was awarding financial aid on a first-come, first-served basis to students who demonstrate merit through test scores.
"What we see in practice is that those students that come from better-off families that are more able to pay are the students that have higher test scores and also apply earlier," he said. "And so they are receiving the highest amount of aid, and what that ends up doing is leaving less aid for those students who are more in need and ultimately decreases retention when they cannot consistently afford college."
Changing the way the four-year university awards aid could pull in between $1 million and $3.5 million, he said.
Among the other recommendations, consultants said the system could enhance revenue by collaborating in outsourcing campus functions.
"I think one of the most striking things that we saw -- and understanding that this is a new system and campuses are still learning how to collaborate -- was that there were a number of different contracts used for the same services on each campus," Kozlov said. With campus bookstores, "there are four different contracts across two vendors, and what we see is that each campus is getting different returns from those contracts."
Other recommendations focus on procurement, development, organizational redesign, human resources, information technology and facilities operations.
The consultants carried out an academic review a bit differently, calling on shared governance principles and data on human resources, finances, courses, curriculum and academic policies. Huron found that each campus had varying abilities to do data analyses, which hurts the system's ability to plan for the future, Laws said.
It also found that the system could collaborate more on strategic academic activities and align resources.
Consultants created a "cost-to-educate" system that allows professors, deans and other educators to understand cost and revenue of certain courses and degree programs.
Overall, though, consultants said the system was lean and that they remained positive about the system's outlook.
"I really think that the story is, it's an incredibly difficult market out there right now in higher education," Laws said. "Institutions are facing lots of challenges, and the Arkansas State System has taken some hits. We've seen enrollment decline, but we're weathering the storm quite well. There's many things we should be proud of. We are a lean organization."
Trustees asked no questions after the consultants' hour-long presentation Friday.
Board chairman Tim Langford of Little Rock said the efficiency study had been on the board's wish list for a few years.
"We've been talking about it because of the mounting economic pressures, the declining government resources, the increased costs," he said "We wanted to be proactive and even challenge the status quo to increase the efficiency of our operations.
"What we want to do at the system is to just develop and establish more of a data-driven and analytical mindset. Going forward, I think we want to be still committed to shared governance. We're at the 40,000-foot [level] as the board of trustees. We just expect the campuses and the system to analyze these findings, establish their priorities, work collaboratively and develop an action plan."
Metro on 03/03/2018