Higher Ed Innovation Brought on by the Pandemic

with Host Dr. Drumm McNaughton and Guest Dr. Kim Hadley | Changing Higher Ed Podcast 090

Table of Contents

Higher Ed Innovation Brought on by the Pandemic

The COVID crisis has caused greater uncertainty than the Great Recession, however, we have seen some impressive higher ed innovation brought on by the pandemic that otherwise may have never transpired. John Brown University is one of those impressive case studies in innovation, transformation, and risk planning, as well as the way they involved the board and stakeholders in navigating the crisis. 

In a normal year, higher education CFOs see variance around predictions. However, the great number of unknowns that emerged from the pandemic caused greater operational and financial risk for higher education institutions, which in turn caused even greater variance around expectations. Additionally, CFOs were concerned about the potential of more unknowns related to external forces that could control operations.

With the Great Recession, higher education leaders knew that it would affect their endowment as well as families’ ability to pay, so the unfunded discount rate at institutions went up during that time. However, the level of variability that emerged during the pandemic exceeded that significantly.

Immediate Planning and Innovation

As the pandemic emerged, John Brown University put together a COVID task force that came out of the institution’s emergency response team. When the pandemic hit in March 2020, JBU – like other universities – delayed its return from spring break by a week. This window gave faculty an extra week to transition their classes to emergency remote learning, which differs from online learning that has a specific pedagogy.

While completing the Spring 2020 term, university officials realized that students were isolated at home and probably would be unable to work or fulfill internship arrangements during the summer. The decision was made to offer classes online with a solid online pedagogy. Full-time faculty converted many of the university’s classes to online experiences that were offered over two summer terms, instead of the usual single summer term.

Traditional students had a wonderful response to these offerings, and this allowed the university to serve students well because they could take classes they needed from full-time faculty and accelerate their progress toward graduation. These classes also helped students remain connected to JBU during this uncertain time so they would return in the fall.

Additionally, this enabled the university to recover lost revenue from the spring term, even though the classes were offered at a discounted rate. This decision also created a new revenue stream that could continue, e.g., offering two summer terms instead of just one.

Risk Planning and Returning to Campus

In Fall 2020, the university made the decision to start earlier than normal so that students could be sent home at Thanksgiving. This decision was based on several factors. First, JBU intended to hold mostly in-person classes, often in alternative spaces that were outdoors, and late fall outdoor classes could be cold.

For example, the university set up tents outside so students could take their food from the cafeteria and then spread out and eat. Because of these accommodations, eating outdoors during December and January was not feasible. Additionally, Thanksgiving marks the beginning of flu season, which has symptoms that could be easily confused with COVID.

Students returned to campus on February 1, 2021, which created a gap. This proved to be provident because January was a peak COVID time and students weren’t on campus. Additionally, this allowed the university to offer an online January term because of the shift to a later spring start. These classes were again taught by full-time faculty, and even though students were charged a lower rate, this became another source of new revenue for the institution.

Part of the “fallout” from the delay of the start of the spring semester was that there was no traditional spring break. Instead, shorter periodic breaks were scheduled so that students didn’t feel the need to travel, thus decreasing the risk of exposure. The semester also ended later.

In Summer 2021, JBU continued to have online offerings but did not offer these classes as the same as 2020 to enable students to resume working, doing internships, and traveling over the summer months.

Strategic Planning for Demographic a Shift

JBU has not yet experienced demographic shifts due to the enrollment cliff, but leaders realize that changes are coming. The university began strategic planning for the demographic shift even before the pandemic hit. 

One of the more interesting demographic shifts is that the majority of JBU’s students taking online courses live within 50 miles of the institution. This is not unusual; as nationally recognized online graduate programs have developed (e.g., SNHU, GCU, WGU), students have gravitated toward them, whether that’s an institution near the student or a very large university with a strong brand.

However, traditional undergraduate students do not follow this pattern, as they are more about the undergraduate experience. As the pandemic happened, JBU’s traditional students communicated clearly that they preferred face to face courses, but were willing to have some classes taught online in a hybrid model.

Higher Ed Innovation Due to Pandemic

JBU was venturing into collaboration before COVID and continued to leverage these partnerships once the pandemic started. For example, the university received a grant several years ago to create an online program primarily for the online education population. However, COVID caused JBU to pivot these classes to serve traditional undergraduate students. Had the university not had that grant, the university’s leaders would have reached out to consortiums that would allow JBU students to fill classes.  

JBU also is considering how it can improve a major without carrying all the fixed costs, something that is possible through collaboration with another institution that has a strength in a specific program to teach the higher-level courses. JBU was doing this prior to the pandemic but believes this approach will be more important moving forward. For example, the university has a criminal justice program, and its students take online classes offered by another college that has a strength in that area.

Additionally, JBU offers a cybersecurity master’s degree program, but it can also offer an undergraduate program through a partnership with another institution. The university’s outdoor ministry majors can now pick up disaster relief and emergency management through a partnership with another institution that has a strength in that area. Students at another institution are taking JBU’s construction management classes because of that program’s strength.

Utilizing Innovations in Technology 

While students want in-person education, JBU’s student population has a higher tolerance for online learning. Therefore, collaborations can help institutions thrive by creating new programs without the cost structures.

Additionally, using novel technology can be a boon to keep students interest. For example, JBU installed “owl cameras” throughout campus. These cameras, which follow the speaker, allowed students who were quarantined or isolated to attend class. Implementing this technology required training faculty as well as ordering and installation of the technology, but these cameras proved to be a key ingredient in allowing JBU to serve students well during this time.

These cameras will remain in the classroom in case there’s a spike in COVID cases in the fall semester. In addition, student-athletes and other students who travel will benefit from the camera’s ability to capture lectures, as would hybrid classes that are developed in partnership with another institution.

Cash Flow Planning

Spreadsheets in early April 2020 caused many CFOs consternation since institutions didn’t know what was coming. JBU’s CFO worked with the comptroller and the financial analyst to put together eight different scenarios of potential outcomes. After evaluating them, the CFO presented four scenarios to the Board of Trustees and kept the governing board involved in this conversation moving forward.

The CFO also looked at cash flow in relation to the variability of the potential outcomes, and as a result, went to the bank and increased JBU’s line of credit by five times what it was at that point. The university had not used that line of credit at all during the past two decades. She was clear with the bank that the line of credit was not a solution but would enable the university more time to be able to make better strategic decisions if it was needed. She was able to get that line of credit approved, although the institution never had to use it. Moving forward, JBU is cutting its line of credit in half for the 2021-22 school year.

The CFO also evaluated the university’s assets and identified different endowment donations that could be used for contingency reasons. If the donor had put a restriction on a donation, that donation was placed in a “do not touch” list unless a conversation with the donor changed its parameters.

The same analysis was conducted in relation to governmental funding. However, quasi-endowment, which was board-designated and not restricted by a donor, could be redesignated by the board. The CFO also looked at various departmental reserves. She listed all these assets and identified how they could be liquidated into cash for an emergency, which she presented to the bank.

JBU’s Board of Trustees is strong as a whole and JBU leaders maintained regular and ongoing communications about budget and finance with them.  Additionally, some board members have significant business knowledge, which proved very helpful during the pandemic.

Of additional benefit, JBU had done budget education – what they called Budget 101 – with the faculty and staff leading up to the pandemic. This training involved small doses over a long period of time to help individuals understand the budget and budgeting process, as well as the main levers that could be pulled. For example, the training helped everyone on campus understand what “net revenue” meant, how the endowment works, and how capital budgeting and operational budgeting differ.  Understanding these general basics helped facilitate conversations within the institution, and would allow it to move forward if there were budgetary shortfalls.

This transparency also enabled the institution to build a culture of collaboration. This level of trust is not built overnight. This was important as COVID emerged.

JBU’s cabinet took compensation cuts before asking anyone else to take these measures.  Additionally, JBU does not have tenure, but faculty have multi-year contracts. As COVID emerged, faculty agreed to initially teach summer classes at reduced rates and signed a contract that allowed the leadership to reduce compensation, if needed, to get through the year.

Fortunately, JBU did not have to take these measures. Because the year ended so well, JBU was able to restore the full level of compensation for those classes. University leaders initially reduced the 403(b) match from 7% to 4%, but by March 2021, the institution was able to restore this level of matching to the previous level. Additionally, over the year, the institution was able to give $1,000 bonuses to every full-time employee and a $500 bonus to every part-time employee.

Mission-Focused Transformation

The institution also remained mission-focused during the turbulent time of COVID. For example, the leaders went to donors of a center on campus. While the center had a wonderful mission, that mission was not as connected to the traditional undergraduate student, so the employees of the center took on converting the programming to serve traditional undergraduate students.

Leaders also looked at programs where there was low enrollment. This conversation about enrollment and what is serving students best is ongoing. The reprioritization and transformation continued through the pandemic.

Three Recommendations for Higher Education Leaders and Boards

  • Focus on mission and determine what specifically makes it great and what differentiates it from other institutions.
  • Figure out how to be more collaborative with other institutions.
  • Contingency and flexibility planning is not going away. The biggest risk to an institution is the risk that its leaders don’t see coming. Having a Contingency plan and risk management planning is more important than ever.

Resources

Dr. Drumm McNaughton provides governance consulting; strategic planning, implementation, and change management consulting, and accreditation consulting for higher ed institutions. 

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