DOE Doesn’t Get It! Others Are Working on It. Here Is What Is Useful!
First Published on Stevens Strategy Blog
The Voluntary Institutional Metrics Project has worked for two years designing a common dashboard for institutions of higher education. The purpose of the dashboard is to display the cost of a degree, the default rates for graduates, and the skills attained by graduates. The major problem with the project is that very few institutions have the data or the analytic tools to get at these measures. Very few colleges have the operational or financial data to determine what all degrees cost, what skills have been mastered, or the cost or skills for a particular degree.
Setting goals is simple yet having the capacity to achieve those goals is not. A goal such as determining the cost of a degree appears on the surface to be a straight forward and achievable outcome, but it is easily overwhelmed by massive data issues. Here is the essence of the problem in costing a degree – colleges would have to track the cost of every student that is graduating by degree. In most cases, administrative and financial systems do not differentiate associates, bachelors, masters, or doctorate degrees. Redesigning a college data system to figure out the cost of a degree would cost a small fortune and would take an immense amount of time, neither of which colleges, especially small colleges that are struggling, have in abundance. Several presidents who participated in the Metrics Project complained about the disconnection between project goals and the cost to generate the metrics to achieve those goals.
Dashboards are necessary and useful tools for presidents and boards of trustees. At this time, the Project Dashboard may be too ambitious. What key decision-makers need from a dashboard is a quick picture of the current data and forecast conditions of the college within its operating year. The dashboard should also point out problems with an attachment to explain how the problem will be resolved. Listed below are several common elements from the literature and from the experience of Stevens Strategy that should be part of a dashboard:
Simple Financial Dashboard – the report should not be overly detailed, but it should include the main sources of revenue, expenses, and several additional measures to show the capacity of the college to pay for current operations and obligations. The highlighted items can also be displayed as charts.
Operational Dashboard – this report lays out several factors that drive financial performance for the current fiscal year and for the next several fiscal years.
These two dashboards recognize the data limitations at most colleges, which constrain what they can report. It is in the interest of colleges and their attendant business offices to do the following to improve their ability to analyze performance and to respond to new federal requirements.
- Chart-of-Accounts – design the chart so that it can include every revenue producing program and its attendant expense departments that accurately reflect the operational structure of the institution. In addition, expenses should be sub-divided so that their impact on revenue production and on supporting operations can be identified and analyzed.
- Assets and Liabilities – the chart should be designed so that it also reflects the revenue flow and expense departments in the operational structure of the institution.
- Payroll – this system should also complement the chart-of-accounts.
- Depreciation and Interest – should be allocated and updated to assign space and interest to the correct revenue and expense departments.
- Enrollment System – the coding for enrollment by student and by credit hour and the coding in the chart-of-accounts should complement each other so that enrollments and financial accounts for each academic program can be aggregated and analyzed.
- Reports and Analysis – the institution should design reports so that it can carefully analyze its operations and the effects of its operational decisions. Annually, the key decision makers should meet to intensively review the effectiveness of its strategy, its operational decisions supporting the strategy, and the performance of its instructional delivery system, marketing plans, capital investments, and financial structure. Furthermore, on-going, revised, and new strategies should be tested through its financial forecasting model.
Even though most institutions are not ready for the intensive data requirements under the expected Department of Education reporting regulations, colleges and universities should prepare their financial and operating systems now. Good data not only will provide the basis for compliance with expected federal regulations, but good data also gives the institution the information needed to analyze their costs, productivity, and strategies.