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New ideas
Report outlines ways unis can lower costs and generate new revenue .
By Wade Zaglas
Recent research by Inside Higher Ed and Hanover Research found 89 per cent of college and university presidents cite “ overall financial stability ” as a top concern . Now , a new report says regaining financial stability in the face of rising operational expenses and declining tuition revenue will require creative strategies .
To thrive , institutions will need to explore every avenue to reduce costs while sustaining the educational mission . As one of the largest expense categories in higher education , campus facilities are a potentially powerful source of savings – and revenues – in today ’ s challenging fiscal environment .
Moving forward after the COVID experience , the report urges higher education institutions to leverage facilities in new ways to support their bottom line while also enhancing the campus experience .
The authors , from real estate company Jones Lang LaSalle , say : “ It ’ s possible to pursue some short-term strategies and tactics that will help cut costs relatively quickly , as you explore long-term strategies for sustained savings and revenue .
“ Coupled with a holistic view of your facilities , innovative management practices you adopt today will help you reduce long-term operating costs and conserve resources too .”
Taking care of business “ Rather than carrying costs indefinitely , you may find opportunities to lease or repurpose these assets to more productive use ,” the report says .
“ While a sale is the best option for producing additional income in the near term , repurposing existing facilities and associated cost avoidance should also be considered . Consider a sale / leaseback for some properties , such as a universityowned medical office building ...”
“ This allows you to sell the property , but lease it back in order to better deploy capital where it ’ s most needed . Depending on the property type , condition , level of occupancy and other factors , a property may be appealing to other investors .”
Pause operations in unoccupied buildings or floors Another gem of wisdom contained in the Hanover Report is identifying days when campus buildings are at their quietest , and can therefore be utilised by other paying groups or organisations .
“ Given the need for social distancing on campus and the continued use of virtual learning , many campus buildings are likely to see reduced utilisation and / or more volatile occupancy where buildings are heavily occupied on some days and sparsely occupied on others ,” the report states .
“ Data-driven analysis can help you determine whether buildings should be fully or partially closed based on occupancy patterns , and how to use facility management to reduce the operating costs of underused buildings while preventing long term operational issues .”
Facilities Management ( FM ) is another way to sustain savings and improve service and campus experience “ Top FM service providers can typically reduce your long-term operating expenses by anywhere from five per cent to 30 per cent through operational efficiencies in the management of energy , workflow , and supply chains as well as workforce administration ,” the authors say .
Underutilised land and facilities can potentially be transformed from financial burden to revenue-generating assets .
“ Spalding University , for example , was able to reduce operating expenses by $ 100,000 annually within the first 60 days of partnering with an FM service provider . Typically , a qualified FM service provider will seek to ensure continuity by hiring your personnel and then training them in the latest campus real estate technologies and practices .”
Prioritise capital projects with data-driven planning The authors said to keep a close eye on “ and determine the future visions for the ageing , undeveloped or closed building ”.
Analysis of that data will reveal whether it makes more economic sense to pause building operations , renovate or demolish existing facilities , the reports says .
In addition , you should reassess existing capital projects in the pipeline , as some of the design and occupancy assumptions for these projects may have changed given travel restrictions , headcount changes , uptake of online learning and remote working .
For example , many universities that planned significant capital works pre-COVID must re-assess project space requirements , design and budget to ensure they are fit for purpose in a post-COVID world .
Create a new energy relationship “ In a typical partnership , the energy provider funds the installation of solar panels or other energy technology and provides the engineering resources to distribute the power to the central plant ,” the report says .
“ Over time , the institution benefits from improved energy efficiency and lower energy costs .
“ Many colleges and universities own underutilised land and facilities that can potentially be transformed from financial burden to revenue-generating assets that also serve the campus and even the general public ,” the report says . ■
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