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Public Education Trends

Public Education Trends

6/15/2016

 

TREND 1: Developing Sustainable IT Funding Models to Support Core Services and Support Growth

For many schools, the distribution of IT resources is focused on reactive, short-term budgeting. To compete for future students, schools need to embrace the most current technology and shift the focus towards building more sustainable IT funding models. To reduce the total cost of ownership, schools are embracing technology refresh programs that allow the IT staff to focus more time on innovation and growth, and less time on chaotic technology management. 


Challenge: Reactive and Chaotic Technology Management

According to a recent study by the EDUCAUSE Review, IT spending on institutional activities is largely allocated to the ongoing expenses of “running the institution” with going towards 76% running the institution with only 24% going towards institutional growth and transformative change.For many institutions, the distribution of resources is representative of a reactive and short-term budgeting model to support core IT services. 


Solution: Supporting Core Innovation Through a Technology Renewal Program 

By ensuring IT funding models have long-term support, institutions avoid the chaos of a reactive IT strategy. Many schools are getting ahead of technology management with a Sustainable Technology Renewal Program to support core services, such as wireless network infrastructure and student, faculty and staff devices. This proactive strategy allows the IT department to focus more time on innovation and growth, with the peace of mind knowing that core services are supported. 

Source1: Grajek, S. (2015). Top 10 IT Issues, 2015: Inflection Point. EDUCAUSE Review Online. Retrieved January 25, 2015, from https://www.educause.edu/ero/article/top-10-it-issues-2015-inflection-point


TREND 2: Establishing Cash-Flow Neutral Funding Models for Energy Efficient Investments

Sustainability projects continue to be a critical focal point as schools work to reduce their carbon footprint of energy usage on campus. Many schools are looking to strategic cash flow neutral funding solutions that align projected energy savings with operating lease payments. Replacing old systems with new, Energy Efficient alternatives, not only saves a school money on its energy costs, but these projects can often pay for themselves using a cash-flow neutral or shared savings funding model. 


Challenge: Financing the Replacement of Outdated, Inefficient Equipment 

According to the National Center of Education Statistics (NCES), the amount that colleges and universities spend on operations and maintenance of buildings and grounds equals $14 billion/year with an additional $6 - 7 billion/year being spent on energy and utilities.Many schools are quickly realizing that the potential savings energy projects can generate makes them different from other deferred maintenance projects.


Solution: Updating Old Equipment with Energy-Efficient Replacements that Essentially Pay for Themselves

Replacing old systems with new, Energy Efficient Alternatives is not only savings schools money on their energy costs, but often, these projects can pay for themselves using a cash-flow neutral or shared savings funding model.


TREND 3: Reevaluating the True Cost of Deferred Maintenance Projects

Schools around the country are facing a backlog of deferred maintenance projects to address their aging campuses. Unfortunately, the longer they defer these projects, the worse (and more expensive they get. That's why many schools are taking a more proactive approach by investing in campus improvements and maintenance, which not only eliminates the backlog of projects, but also significantly reduces the amount of money needed for campus repairs in the long-term. 


Challenge: Reevaluating the True Cost of Deferred Maintenance 

According to a recent article in the Chronicle of Higher Education, schools have a total of $36 billions of deferred maintenance costs, with $7 billion of that considered urgent.1 Schools around the country are facing a backlog of deferred maintenance projects to address their aging campuses. Unfortunately, the longer they defer these projects, the worse (and more expensive) they get. According to a recent report from Sightlines, every $1 spent on the annual maintenance budget avoids $3 in capital reinvestment.2


Solution: Proactively Investing in Campus Improvements

Many schools are taking a more proactive approach by investing in campus improvements and maintenance, which not only eliminates the backlog of projects, but also significantly reduces the amount of money needed for campus repairs in the long-term. For schools that don't have capital budgeted, many are finding that utilizing structures such as interest-only payments during the installation period, with simple fixed-rate financing can be a great alternative to deferring. 

Source1: Carlson, S. (2012, May 20). How the Campus Crumbles. The Chronicle of Higher Education. Retrieved April 6, 2015, from https://chronicle.com/article/How-the-Campus-Crumbles/131920/
Source2: Source : State of Facilities in Higher Education 2014 Benchmarks, Best Practices & Trends. (2014). Sightlines.


TREND 4: Investing in Majors & Academic Programs

As competition for top students and staff grows again this year, many schools will consider developing new academic programs. Often, these schools are looking to align necessary upfront expenses (such as capital improvements and the purchase of new assets) with the future arrival of projected new tuition revenues to improve cash flow. Step financing solutions and deferred payment options are becoming more common strategic finance structures for schools to achieve that goal. 


Challenge: Funding Majors & Academic Programs

As enrollment continue to decline and competition for students grows, many schools are considering the development of new academic programs. Often, the upfront expenses such as capital improvements and the purchase of new assets are great and can leave schools feeling overwhelmed by investments required to support these programs prior to realizing the revenue that is generated. 


Solution: Aligning Upfront Expenses with Future Tuition Revenues

By aligning the necessary upfront expenses with the future arrival of projected new tuition revenues through step financing or deferred payment options, schools can improve cash flow while growing their new program.  These financing options are becoming more common strategic structures for schools to achieve the goal of starting new programs.


TREND 5: Minimizing the Impact on Cash-Flow During ERP Software Implementation

Schools will continue to improve campus productivity in FY 16–17, and investments in enterprise software will be a popular option. For many schools, the long and costly implementation creates a great deal of unpredictability in the budget. By establishing term financing for the large upfront costs (including consulting, service and software), schools can proactively manage the impact on their budgets with predictable monthly payments. 


Challenge: Upfront Expenses Associated with Long ERP Software Upgrades

When it comes to updating your school’s software systems, there can be a lot to consider. Projects range from small, ongoing maintenance initiatives to larger, ERP implementations that require full system overhauls. And the upfront expenses that are typically associated with these types of projects tend to be costly and somewhat unpredictable. With most ERP implementations, many schools are left wondering how to pay for the large, upfront investments on top of the software licensing costs.


Solution: Minimize the Impact on Cash-Flow During Implementation Period 

Many schools are looking to bring predictability to the unpredictable costs of an ERP implementation, but many are unaware that you can finance these initial costs. Increasing, schools are beginning to use financing as a vehicle to transform those large, upfront and unpredictable costs for new ERP system implementations into fixed, predictable monthly payments that are spread out over time. This means less surprises in your budget and better cash-flow.

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