Continuing my end-of-the-year observations, I urge you to spend a lot of time studying your budget. Take a close look at the gross revenue generated at your campus, as well as your direct costs of delivery. (By direct costs I mean actual costs of instruction, local staff and facilities. Do not include any overhead or other charges levied by the main campus.) In most cases that I’ve seen, the net revenue per student credit hour is significantly positive. In fact, generally, the net revenue is higher at branches than at a residential main campus, precisely because the branch has a more focused, limited mission.
Your main campus finance people may insist that you consider allocated costs from the main campus, such as for admissions and financial aid support, registrar, and so on. For some purposes they are absolutely correct, but at the same time, you should know that the overhead you pay (or the branch income they keep) probably is free cash to the main campus. Would the main campus really save money if your campus disappeared tomorrow? Even if your instructional cost is buried in main campus academic budgets, I’ll bet the answer is no.
Your president and others may need help to understand that you are a profit center, but do your homework. Ask your financial aid director how many positions could be eliminated if you disappear. Ask your admissions director, head librarian, registrar and others. The answer will almost always be “none.” From an accounting perspective it may be legitimate to charge you a fair share of underlying costs at the institution, but from a business development perspective, I’ve found that branch-driven costs are almost always marginal. That may be the real reason your campus is effectively a cash cow.
Finally, it is tempting to think that branches are an outmoded delivery method and that online programs can serve the same audience just as well and, perhaps, less expensively at scale. But I argue that branches serve a different audience than either the main campus or fully online programs. This is far too big a topic for a blog post, but I think many branches can make a compelling case for an aggressive growth strategy that will generate enrollment that neither the main campus nor online programs can attract. Why shouldn’t an institution take distinct approaches in all three worlds and expect all three to perform well?
Here’s a little lagniappe: Check out Marc Freedman’s piece in the Harvard Business Review blog on the opportunity presented by Boomers. (http://blogs.hbr.org/2014/08/universities-cater-to-a-new-demographic-boomers/?utm_source=Socialflow&utm_medium=Tweet&utm_campaign=Socialflow) Please consider how you might create innovative programs to serve this audience. It is a special interest of mine, and I have written about the encore stage, both in this blog and in my other blog, Creating the Future, at www.drcharlesbird.com/creatingthefuture.
As always, I am available to serve as a resource, coach or consultant. Get in touch if I can be of help, and I hope you have a great 2015.