Budgeting in the Time of COVID

Rethinking our financial strategies during times of great uncertainty.
Pink piggy bank wearing mask

EVERY HIGHER education institution needs to adopt sound financial strategies, but such strategies work best when they are sensitive to the needs of the people they will affect the most. I often use the following example: Let’s say I have two children and one of them has special needs. When I write my will, I do not divide my assets into equal parts. While that would be mathematically fair, it also would be careless and morally unjust. A sound financial strategy would split assets in a way that takes each child’s unique needs into account.

The same kind of reasoning works for academic institutions as they try to determine how their resources should be allocated. Who needs them the most?

This question was important even before the pandemic. Higher education institutions have been facing tremendous financial challenges, driven by shrinking revenues, decreasing enrollments, skyrocketing tuition and fees, and lack of public support. COVID-19 has brought additional challenges, including a lack of international students, higher operating costs, and uncertain future revenues.

All schools must take steps to stop the spread of the coronavirus in their communities, but each type of institution faces its own challenges. Small private schools face possible insolvency should they fail to provide students with in-person campus experiences. Large public universities in the U.S. must balance the need to manage budget cuts handed down by state governments with the need to direct more financial support to online education. Even elite universities with lofty endowments are fielding requests for tuition refunds from students who believe that remote learning is inferior to face-to-face instruction—and some are facing potential lawsuits from students and parents.

With so many financial challenges facing colleges and universities, what is the path forward? I argue that we must rethink our fundamental business operations. It’s true that, as they set their financial priorities, academic administrators must consider the competing needs of multiple constituents. Even so, just one touchstone should drive their decisions: what best meets the needs of students.

BEING ‘FAIR’ IS INEFFECTIVE

After spending millions of dollars to procure personal protective equipment and testing kits to detect COVID-19 infections, universities must figure out how to make up for increased expenses and decreasing revenues. Some schools are cutting budgets for all units equally. Because this seems like a fair approach, it is an easy way to silence the critics.

However, it’s not an appropriate financial strategy. It does not distinguish which units or teams are more mission-critical and which ones are less so. In other words, good strategy requires choosing not just what to do, but what not to do. 

The truth is that a school’s operating units are not all created equal. For example, if our commitment is to educate students, we must recognize that many universities—especially those in urban areas—serve large numbers of economically underprivileged and first-generation college students. Without accessible and affordable education, these students will not be able to pursue education to better their lives. Moreover, during the pandemic and the economic lockdown, some lost their jobs. Under these financial constraints, many might need to skip a year—or even worse, drop out of school for good.

As the dean of Florida International University’s College of Business (FIU Business) in Miami, I know this well. Many of our students received financial assistance through the U.S. CARES Act, which was designed to help Americans negatively affected by COVID-19. However, funding for students ran out in June—and we still had requests from more than 400 students who needed help.

In response, we expanded our Dean’s Destination Fund, originally established to help students graduate on time, to help students in financial need due to the pandemic. We reached out to our alumni and other supporters for donations and were able to provide hundreds of students with scholarships ranging from US$500 to $2,000.

THE TRUTH IS THAT A SCHOOL’S OPERATING UNITS ARE NOT ALL CREATED EQUAL.

During the economic downturn, it will be exceptionally important for us not only to retain and graduate students, but also to enroll new students, support students who need financial assistance, and help students stay focused on their coursework. For that reason, we have made it clear to all FIU Business stakeholders that student-facing units are the most mission-critical for our institution. Academic advisors, career counselors, financial aid officers, and recruitment and admission staff all fall into this student-facing category.

Part of our investment in our students took the form of communication. This fall, as we brought students back to campus for limited face-to-face classes, most members of our professional staff continued to work from home. Even though our staff members were available by phone and email, we understood that some students might show up at our offices to seek support. So, outside each of these student-facing offices, we placed signage that included a QR code. When students scan that code with their phones, they are connected to staff members live via Zoom.

We also know that many of our students are feeling anxiety due to the sense of isolation brought on by quarantine. To address their anxiety, we created a series of webinars spearheaded by the FIU Business chapter of Beta Gamma Sigma. Called our “Brave Zone” series, these webinars have been held twice per month since the summer. They focus on topics that range from developing habits that support mental and physical well-being to maintaining motivation.

MANAGING FACULTY WORKLOADS

While we are closely focused on student success, we are also mindful of the importance of our faculty’s research. At R1 universities, the research workload for tenure-track professors often exceeds their teaching workload. As a business school dean at an R1 school, I wholeheartedly support scholarly productivity. But when business schools face tremendous budget cuts, I find myself asking: How can our school support our research strategy while supporting our students?

One quick fix is to rebalance faculty’s workloads, placing greater emphasis on instruction and less on research. An alternative solution is to offer faculty overload pay to take on additional responsibilities. If budgetary concerns arise at FIU Business, we are open to reducing faculty’s service workloads and deferring nonessential committee work so they can maintain their research productivity.

Some schools have hired more adjunct faculty or non-tenure-track professors as a way to lower instructional costs. Yet school administrators may feel that this type of solution could jeopardize their school’s qualified-faculty-to-student ratios. It could compromise a school’s research profile in the short run and even impact its accreditation status. On some campuses, adjusting faculty workloads could run afoul of faculty unions.

That’s why it is imperative for administrators and faculty to engage in fluid and honest communication as a way to keep everyone’s jobs intact for the long haul. If both sides can agree on a defined time period of budgetary crisis, faculty might be more willing to take on additional teaching assignments during that period to avoid layoffs and furloughs.

Additionally, if schools separate teaching, research, and service, faculty members might be encouraged to self-select into assignments that prioritize teaching over research. However, in doing so, schools should be clear on how they assign value to different faculty responsibilities. That is, faculty should know that taking on “value X” in teaching is equivalent to taking on “value Y” in research.

INVESTING IN FLEXIBILITY

During the pandemic, many business schools were able to convert to remote learning in a very short time. Yet, many academic administrators are still concerned about their schools’ inflexible teaching modalities and lack of technology infrastructure.

Even now, amidst a recession, I believe that business schools need to increase their investments in technology to support their faculty’s efforts and keep their operations flexible. They should hire more IT staff and instructional designers to support and train faculty, and they should put incentives in place that encourage faculty to develop methods that are more learner-centric. By investing in flexible, agile, and innovative program delivery, schools will be better able to support students facing significant personal challenges.

AMIDST A RECESSION, BUSINESS SCHOOLS NEED TO INCREASE THEIR INVESTMENTS IN TECHNOLOGY TO SUPPORT THEIR FACULTY’S EFFORTS AND KEEP THEIR OPERATIONS FLEXIBLE.

If schools make meaningful investments in technology, they can depart from the traditional student cohort model. With the right infrastructure in place, they can allow students to easily switch between online and face-to-face modalities and/or between full-time and part-time programs.

As a complementary strategy, schools also can help students manage their finances, so they will not have to drop out because they are unable to pay their tuition. For instance, schools might allow students to pay smaller tuition installments in the first year, gradually increasing amounts as they approach graduation. Or they could award financial incentives such as scholarships or stipends for good grades and program completion. Although tracking students’ tuition payments under such flexible arrangements can be challenging, these tactics and incentives can promote student success.

SEEKING OUT OPPORTUNITY

At FIU Business, we have invested our resources in adopting a HyFlex class delivery model in both our undergraduate and graduate programs. HyFlex teaching gives students the option to either attend courses in person or remotely, at any time during their programs. Sadly, as we allocate our resources, we might temporarily have to view peripheral student engagement programs (such as Welcome Week and Coffee with Deans) as secondary and nonessential for our operations.

While our college already delivered 40 percent of our undergraduate courses online, our decision to adopt a HyFlex model was heavily influenced by the fact that many students do not have reliable internet at home; some do not have home environments that are conducive to learning.

For the HyFlex delivery model to be successful, we have had to follow parallel strategies in our budgeting decisions, prioritizing both faculty training and technological investment. At the same time, our faculty and staff must adopt entrepreneurial mindsets and share best practices for motivating students. Faculty who opt to teach in HyFlex environments can provide an in-person experience for students who come on campus and accommodate students who need to learn from home.

If there is an uptick of COVID-19 cases, the same faculty can teach remotely as well. The HyFlex model also has the potential to engage international students across different time zones without concerns about visas and travel restrictions.

The pandemic lockdown revealed the vulnerability of the brick-and-mortar model in higher education. Many schools have rushed into online instruction—by choice pre-pandemic and by force post-pandemic—with the assumption that remote delivery of education is a saving grace. To be sure, investing in technology for technology’s sake is not a good investment. When we invest in technology, it should be because it improves student learning outcomes.

In adopting the HyFlex model at FIU Business, we faced challenges that ranged from outfitting classrooms to shifting our faculty’s mindsets. However, at the same time, we have observed preliminary success in student performance, and we believe the model has the potential to offer our students even richer learning experiences. Going forward, our strategy will be to pour more resources into adopting HyFlex course delivery; we will continue to develop innovative teaching modalities and equip classrooms with technology.

I believe that how well schools adopt such student-centric financial strategies could determine whether they survive in the years to come. 


Joanne Li is dean, Ryder Eminent Scholar Chair in Business, and professor of finance at Florida International University’s College of Business in Miami.

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