The annual NACUBO meeting is always an opportunity to touch all bases of Administration and Finance. This year was no exception As such it helps explore a number of issues as well as get new ideas on emerging issues. This has become one of the premier Higher Ed events

Sessions touched many topics from planning to fraud and motivation to large scale systems implementation and much more. Over 200 exhibit booths provided many opportunities to talk to vendors in the higher red business. Over 1300 participants provided much opportunity for interaction with peers.. Papers were distributed for all sessions which made it possible to benefit from numerous concurrent sessions..

It’s a long report but most readers should find a pearl of wisdom.

I. General Sessions
These sessions are general in nature and were presented to all attendees. They provide an excellent framework as we begin to consider our next round of planning.

A. Presidential presentation - Faculty Productivity - Bob Hoover - University of Idaho

It was interesting to see a college president and former academic choose the topic of "Faculty Productivity" for his theme. At the UI, this means more intensive performance review, higher faculty student ratios and faculty inclusiveness in planning. Accompanying this are salary increases for those left, emphasis on incentive systems and early retirement initiatives.

The major need is not to work harder, but to work smarter in these times of reduced federal funding, increased competition and technology opportunities.. He noted in the year 2000, an individual student will have access to more info in 4yrs than prior graduates did in a lifetime. Knowledge now doubles in 7 years.

A residential campus is still the form of choice for most students. However new high tech competition will facilitate global on line education and facilitate different capacities for delivery of some education.

Faculty productivity is the biggest operational issue to be addressed . Some suggested strategies at UI are:

B. Motivation - Lou Holtz, former football coach at Notre Dame - Holtz gave ample evidence of why he was a successful coach - He can motivate!! Now author of a new book, " Winning Everyday", the energetic Holtz outlined 6 ways to take charge of a life and lead an organization

1. Attitude - change this and you can change results - either yourself or others.. Don’t talk about your problems, 90% don’t care, 10% are glad you have them. Critics may be unfair but don’t address them. Address yourself and what you need to do. Change yourself and ignore critics.

2. Take pride in your sacrifices - success comes from sacrifice and discipline... what you do for others matters.

3. Have a passion to succeed. Everyone wants to win..but, Holtz asked, can you live with losing? If so, you might. Get rid of excuses. Don’t fight change

4. Understand your sense of purpose - educators often confuse their customers. Railroads did not understand that their purpose was to transport people. If so they would have become airlines and we would have the Pennsylvania or New Haven Airlines today. Will colleges make the same mistake? He noted Notre Dame understands this. Students need to learn how to live and make a living. The main faculty role is to educate students.

5. Dream - Keep your enthusiasm and originality alive. Imagine if Martin Luther King had said, " I have a strategic Plan." When you are at the top your become the hunted. Don’t get complacent. Dream bigger. Look up ,when you are on top of a mountain.

Remember WIN means, What's Important Now". Focus on what you need to do NOW!

6. Be an asset not a liability.. Lift up instead of pulling others down.. Don't be petty or jealous. He noted three question other will always ask of you:

Successful people get a yes to those question in their relationships.

C. The Human Face of Technological Change - Jen Jones -cultural anthropologist- author on American culture - 7 books, and PBS series She noted that in order to look at the future, we must see it as a story with some key elements ( eg:; Scenarios)

She noted many universities are 20 years behind reality in dealing with change. They may not see the curvent story that is unfoldingwith technology, and process change, This is especially true of faculty in many schools. She suggested faculty are often like a "lodge’...closely gathering to protect a sacred tradition. through rules, rituals, and closed windows.

To tell a good story about the future of an organization one needs to look beyond traditions. A main idea is needed that fits the marketplace. She noted administrators are often ahead of faculty in seeing across the spectrum. This new story needs to be based on a set of values that are sustainable both today and tomorrow. For example, does it contain an e-mail basis? Is registration integrated electronically through transcripts.? Are transactions based on a need for face to face interaction? Students want some 1-1 advising , and some personal intervention but no longer need it all that way.

The story needs to emphasize

justice. Without justice failure is inevitable (eg:: Soviet Union, apartheid). How we treat people needs to be a key part of our story...even on-line!

Leaders need to model their institutional story in their personal lives. They need to demonstrate emotional energy for change in order to be credible. Young people today often refer to leaders who do not add value as "Pimps." Young people are becoming Nerds. They are less interested in combat sports. Bill Gates is their role model.

The content of our new story needs to have a less bureaucratic, flatter organization that involves faculty..especially if we expect them to change. We need to close the gap between client and leaders.

Ask, "In our system, what needs to go and what's abut to come into it?". These are key strategic planning questions.. Give energy and resources to new stuff coming in.

See change as a puzzle of many pieces. Find boundaries. Today, organizations need to deal with changes, maintain justice, handle complexity, deal with more sophisticated people issues and emotions and be effective in order to do more with less.

Curriculum planning needs to address this. It needs to deal with technology, diversity, demographics, economics. There will be new worker in the future. They will need more capabilities. A smaller campus will be an advantage Tenure is less relevant and is an old story that needs to go away. Our markets are international. Census categories are our of date as more people are mixed culturally. Today’s leaders are an in between generation between WWII and the new millennium. Will we be seen as dinosaurs or Mighty Morphin Power Rangers.? Our customers expect the latter.

II Specific sessions/ exhibitor materials

A. Overview: Following are ten specific issue areas that came from more focused sessions

1. Technology: the Wake Forest approach, year 2000 issues, Datatel materials, Yale’s financial system implementation

2. New approaches to copier / printing services; New Xerox hardware integrated with smart cards, Boston Based Collegiate printers, CEI

 3. Physical Plant/Energy issues - Mass HEFA electricity program, modular construction, third party housing development, Physical Plant consulting

4.Smart cards - purchasing cards (Commerce One, American Express),

5. Nationwide private college tuition plans

6. Check fraud

7. Cost of higher education/ financial strength - National cost commission, Moodys/S&P materials, financial viability ratios

8. Digital textbooks

9. Investment management

10 Implementing change - Vanderbilt (The Eagle and the Monk),

11. NACUBO Awards - Nebraska

B Technology issues

1. Wake Forest approach - Lynda Goff - Wake Forest ( 3700 students ) 37 point Strategic IT plan includes laptops for all student and faculty every two years..students own at graduation, smaller ( 11-1) classes faculty release time. Plan funded by 5 million dollars from endowment at startup, tuition increase to cover long term funding, doubled IT operating costs offset by some savings elsewhere and increased revenues from auxiliaries. IT staff ( IS, Lib, VP) tripled from 24 to 72 between 1995 and 98 reducing ratio to campus pop. to 1 to 63.

IT perspective is Centralized administrative computing servers and help desk, distributed academic help in depts, student help in Residence halls, standardization and vendor partnering. Keeping standardized is the biggest challenge!

More information is on WF web site at

Computers www.wfu.edu/Computer_information/

Strategic plan www.wfu.edu/P2000

2. Yr. 2000 - Dept of Education - A Dept. of Education exhibit distributed a small booklet about the depts. strategy for its data exchanges and contingency plans. It has a web site with more info on this at www.Ed.gov/y2k

Best practices information is at www.gsa.gov/gsacio/bpfedgud.htm

3. Datatel ( along with competitors at Oracle, Peoplesoft and SCT among others ) had booths. I brought back the full set of Datatel Colleague materials. Of interest to me is their Top View Executive Information System which seems to me to be something worth discussing early in any development process to be sure that detail systems development is guided by some long term top management reporting requirements. For example, financial modeling etc.will be driven by the way the chart of accounts is structured.

4. Yale - Joe Mullinix (VP Finance and Administration) described the goals of Yale’s major financial systems upgrade. Because their medical school and facilities are such a major part of their operation (40% of billion dollar budget) much had to be tailored to medial research needs). However there were some aspects that are common to many of us.Public accountability mandates better financial reporting butcost accounting in particular. It is also needed for effective day to day management especially in terms of managerial evaluation. Reporting needs to be addressed to providing information that will matter and be useful in decision making .It must reflect cross subsidies where funding is provided to various expenses from several sources,. It must reflect total cost allocation

Yale is establishing a new chart of accounts that in addition to organizational hierarchy and type of expense grouping also reflects a project number in every account. This serves to relate expenses and revenues to projects as well as traditional dept. hierarchy reporting. This to me was a major insightto get real cost accounting.

Projects can be used to: group common departments, relate some revenues to expenses, separate grant reporting and many other details within the accounting structure. It will eliminate much off -system record keeping that depts. do to make up for traditional system weaknesses.

Some reporting concepts discussed were actual to projected, net costs of operations with allocated revenues, review of cross subsides, cost analysis of auxiliary services, return on investment reviews for capital expenses, debt capacity reviews,available funds balances and cash flow review.

The concept of establishing systems security rules is critical. Staff need to be coded properly in Human Resources in order to have proper access to information needed to perform required job tasks.

The downside is increased system complexity, too much detail reporting anda need to integrate new software releases across the organization.

C. Copiers and printing - For anyone investigating a new contracted or consortium approach to copier/printing services,these three vendors opportunities might be addition to what is are already considering.

1. Xerox - A number of impressive new products were demonstrated at the Xerox booth. One in particular might be of use in providing printer services to student computer users. Students could pay for printed pages using dollars on their ID card just as they would a vending machine. The software is on the expensive side ( $5,000 per server) and might require a ten cent per page charge to fund it. This might be too expensive although creative pricing might charge less for a small use and higher amounts for big users. Other interesting ideas were a new system for Library ( Pharos), improved services for in house publishing, plus integrating distance education materials, and network print /digital copier management

2. Collegiate Press - Boston This is the print service for Northeastern. They supply the full range of print services to higher education customers. They are Boston based They indicated they knew of no customer paying more than 3 cents per copy.

3. CEI College Enterprises is a California base firm that provides on campus retail and production centers for coping printing and imaging services. They are integrated with one card systems most notably Special Teams ( the provider of our dining hall card access system). Started at Univ. Southern California, they now serve 240 campuses nationally.

D. Physical Plant/Energy

1. Power Options- the Mass HEFA ( Bob Cioleck - director) Electricity plan in which about 200 Mass not for profits are participating was a presenter. This Massachusetts plan seems to be one of the better ones nationally. The HEFA/PECO plan is already producing extra benefits due to an Edison rate increase. No savings will be earned until after ta November referendum which is holding the Mass. restructure hostage.

2. Educational Housing - George Scott - President -www.student housing.org is a New York based firm that has been successful in developing student dormitory/apartment type housing projects in urban areas. The firm oversees the entire construction process and arranges leases with participating colleges. While financing is done on a taxable basis and the ownership is private and taxable, the facility is kept full by college commitments. He would like to show those interested their successful New York operation. It might be a way to provide for increased student housing without a major capital commitment or lengthy project oversight. This is a concept worthy of more consideration possibly as a consortium approach.

3. Collegiate Housing Foundation - This is a 501 c3 organization established to facilitate the development of student housing on college campuses. Developers use CHF as a owner/borrower to provide for housing development on a tax free but yet off balance sheet basis. The college typically owns the land and issues a ground lease to the developer through which it controls much of the operational details. Rochester Institute for Technlogy ( 256 bed unit opening this fall) is a northeast school who used the approach. UConn is also represented on their board of directors.

4. College Park Communities - is another player in the third party campus housing market. www.collegepark.org who claims to specialize in "providing a total lifestyle designed for a contemporary student that meets the specific needs of your college." 24 references were noted largely at state universities around the country (none in New England/NY)

5. Modular Construction - Kullman Industries of New Jersey is a firm that has had a successful track record in providing a modular approach to construction. Modular (not portable or tents) are preengineered that are partially assembled off site. This reduces much of the local labor union hassle in much of the construction. It is especially useful for classroom buildings. Construction is done in a controlled environment reducing waste, materials, can be customized or standard, framing is done to local building codes and projects are often done 50% faster. On site footing work is done at the same time as walls are constructed. off site Middlesex Community college in Bedford Mass did their administration building . All 5 campus bldgs are modular.

6. Facility consultant - Roesell Kent and Associates ( 770-998-1691 or www.rkafacility.comprovides consulting services and training. They are independent and not trying to take over cleaning.custodial/maintenance services. They will develop program evaluations, create manuals, conduct feasibility studies, develop contract specifications, provide training, use software to developstaff assignments and provide training programs for supervisors, managers and staff.

7. CES Way of Houston is an energy - demand side consultant who will evaluate demand at large operations with a desire to develop a capital plan to conserve energy use. This might be a useful source to evaluate our chiller plant planning. The statue of Liberty, SUNY Buffalo and LSU are three of their major success stories.

E Smart Cards

The area of id cards that was most interesting was Purchasing cards to be used as a vehicle to reduce many of our small dollar purchase orders which tie up purchasing time and generate considerable accounting/payables activity. The Common Fund/Core States bank card is similar but has some limitations in reporting from it. Information was provided by two other alternatives, American Express and Commerce Bank of California.

1 American Express - a traditional T&E card provides this as a new program in this area with a newblue Amex card that is described as a "corporate purchasing card. " In addition to use at American Express locations, the card may be used on numerous ( over 30,000 I believe) Amex developed purchasing contracts . More information is available at 1-800-492-4920. It handles the tricky cost distribution process a bit differently although still not optimally. The college ges a single bill but that is backed up by a electronic file with information to allow us to distribute to budget accounts. Accounting software called Accounting Link aids this process. Since we already have an Amex relationship, this is something we should investigate further.

2. Commerce One - This is a California based company that has a web based purchasing operation that has some interest. Product catalogues are put on a web site, 5 million items are already in the potential data base. This would have a major impact on our overall purchasing process.
See their web site www.commerce one.com

.3.. Cybermark - Another player in the smart card production is Cybermark an outgrowth of the former MCI/Florida State Card Applications Technology center. Their materials seem to be the next generation in this application which continues to evolve. It will eventually use the student ID card as a personalized financial and information data warehouse.Their web site is www.cybermark.com

F. National Private School Tuition plan - There are a variety of state run tuition plans such as the the Massachusetts plan. The downside is that these restrict students to schools in a particular state. Now a number of private colleges are working to establish a nationwide plan that has a wide variety of private schools. The plan uses the investment performance as a vehicle to control tuition costs for those who sign up. It’s called Tuition Plan Inc. It was started by 7 southern schools and its leadership is at Furman. At present 50+ signees are nationaly based. There is still some national enabling legislation that is needed regarding taxability of funds before the plan can fully go forward. A nonprofit corporation is being set up to administer the plan.Participating colleges guarantee a tuition rate for a particular year. Funds are invested by the group and school sshare in good and bad investment performance which will then allocate monies to schools that students eventually decide to attend.

This looks to be a creative way to participate in a national plan, and leverage some investment opportunity.

G. Check Fraud - In a very engaging session, Frank Abegnale one of the leading national experts on check fraud (employed by Loder Drew audit firm in Calif ..web site www.Loder Drew.com outlined ways in which today’s high tech check priniting systems might potentially leave an organization open to check fraud.

He noted that in 1997 check fraud ( $12.6 billion) was the leading form of white collar crime, far exceeding ATM ($18 Million), credit card ( $712 million) , bank robberies ( $70 million) or other forms of money related crime. Over a million bad checks are processed daily. ..50% are felonies, but in 1997, there were only 1500 arrests, 124 convictions. Of these just 26 people went to jail. It’s a safe business.

Putting today’s laser printing, color copier and information technology together with unethical people has compounded the problem. He distributed a booklet outlining steps an organization can take to make insure its laser check and other payment processes are made more fraud resistant.

In a colorful manner he outlined examples of ways that thieves get an institutional check format, account numbers ,bank wiring instructions, signatures of key officials and use them to remove funds from accounts before an institution can catch it in a monthly reconciliation.

A few suggestions to review with your staff and auditor:

a. Have a separate zero balance wire account into which funds are wired. Do NOT give out the wire numbers for accounts from which funds can be removed.

b. Never put information on your checks such as ( must have two signitures if over $5,000) . A thief would make all checks $4999.

c.. Have a postive pay relationship with your bank in which you provide the bank with a file of all checks that you issue and against which they must match any check submitted for payment. I believe we do this. He said this is the single best thing to do to reduce fraud.

d. Use special non erasible check papers ( call 1-800 APAPERS for info.) Guard check stock closely. Also, reconcile every 30 days, distribute responsibilities, bond employees, and do background checks on anyone involved with check processing.

New currency is much more counterfeit proof. The new Hundred dollar bill has numerous anti-counterfeit features including ink that changes colors when you tilt bill a different way (100 in lower right corner). New 20’s will be out Sept 15 and new $10 bill in January 1999. Staff who handle money should be trained in recognizing counterfeits.

A new UCC federal regulation #3406 has reduced a banks liability in cases of check fraud and made it easier for bank sto blame the ssuer of a check if the account was not reconciled promptly, checks stored safely, polices not developed or procedures enforced.

H. Costs and Finances ..Higher education is under attack from the public as being too expensive, from the investment community as being a greater risk and from the government for fiscal instability so as to limit its student loan programs. There was a lot for finance officers to see and hear about the finances of higher education.

1. National Cost commission - Jon Brown, President of the Assoc Independent California Colleges and Universities and member of the recent National Commission onCollege Costs and Prices established by Congress gave a report from his experiences on this important group.

A few highlights:

a. He noted the commission DID NOT discover that

1) Federal aid increases costs (Arthur Haupman research paper says it does)

2).information technology has reduced cost He noted that Moore's law that the price of technology reduces by half every 18 months as capacity doubles does not seem to help higher Ed. Instead IT has raised expectations for state of art educational equipment and actually raised the cost of instruction

3). There is a simple way to understand college financial statements - see report by Gordon Winston - prof of economics at Williams ( will be a presenter at EACUBO in DC in Oct)

4). There is one best way to deal with the issue of college costs - more information is needed. Colleges have been too secretive.

b. In the future, based on his own experiences , he expects that the trend in govt. support will be less positive, family willingness to pay will become more of an issue than ability to pay, virtual universities will serve new needs not replace existing schools and students will continue to expect costly campus amenities.

c. General suggestions - modify or end tenure, flatten organizational structures, reduce shared governance, provide regulatory relief, reduce mandatory requirements and consider price controls. All of these have significant political opposition and are unlikely to happen.

As a result of the commission, he expects Congress in the new Reauthorization bill will require more information disclosure. Therefore it’s up to us to be sure that does not become a new burden. Current regulations already cost colleges about 12.5% of their revenues. If we don’t make our costs more understandable, there will be public and eventually congressional pressure for still more regulations.

2 Financial Responsibility Standards - The Dept. of Ed has been trying for several years to develop a series of ratios to develop a quantitative way to show that certain schools are in danger of not being viable and should therefore lose the right to receive federal financial aid. With the aid of consultants from KPMG they have developed three ratios and a means to summarize the three into a final financial strength ratio. The process is complex , uses the new financial reporting formats and will only punish the weakest of the weak.

Three ratios -

PRIMARY reserve - resources available to support the mission ( expendableresources/operating size). This measures viability and liquidly.. largely unrestricted endowment divided by budget

EQUITY - measures capital resources and ability to borrow - Net assets which are assets less liabilities including debt ( both restricted and unrestricted) divided by Total assets

NET INCOME- profitability and ability to operate within means Change in net assets ( gain/loss) divided by total revenues

 The results are then given a score from -1 to 3 depending on the result. The three are then combined into a final number by taking 40% of the first two (primary and equity) and 20% of the third ( net Income) to get a final score.

If the final result is below 1.0, the school is clearly not healthy and financially responsible and may have trouble meeting its operating needs. Additional monitoring and surety are required

If the score is between 1 and 1.4, it is in " the zone" and while it should be able to continue, it can’t do so without difficulty or meet unusual needs. These schools will continue in financial aid programs with additional monitoring.

If greater than 1.5, the institution has margin for adversity, is funding capital and human needs is financially responsible and able to continue in federal aid programs . The closer it is to 1.5, the more the school itself should monitor itself.

Ron Saluzzo from KPMG was their lead player. He provided a new KPMG summary booklet of ratios that KPMG had assembled on a variety o institutions. This should be a good summary report to provide to trustees and financial affairs committees to use as a basis for understanding financial viability. It can be a good way to monitor standing from year to year and perhaps compare with some related peers.It wouold make a useful additionaal analysis in annual financial reports to boards

3. Moodys / S&P As usual both hada presence and passed out helpful materials on college financial information. Moodys is much more negative than S&P in their overall outlook. That was reflected in their ratings of manyschools last year.

I. Digital textbooks

check out web site http://www.wizeup.com for information on a new digital textbook site about the future of digital textbooks .

J. Investment management

1. Dow $18,000 A risky forecast ? - Deborah Allinson - Wellington Management

In this optimistic look at the future of the US markets, the Wellington VP outlined a scenario in which the Dow could keep its bullish movement for some time. Her spin was the that big risk is that of missinga major market move and that the market is not necessarily going to revert to past tendencies.

What could move this higher ? She noted::

Demographics ( baby boomers ( now are 51.. aging ) will save more), Their demographic caused a housing boom in the early 80s. Now it’s time for this group to save more and cause a financial boom

Rising preference for equities in investment accounts. 81% of investors in mutual funds are over 33. Pensions are now allocated 62% to equities . Individual accounts only 40%. There is therefore room for growth.

Social Security privatization will be a major boom for equities as funds are released for investment into equities Perhaps as much as $150 billion. This is now supportedby 71% of the public. Even a small allocation would mean a big infusion of funds.

Prosperity and technological advances will themselves fuel market growth.. present boom is 86 months old, Some were longer.

Technology is a new factor. A networked economy, growth of wireless technologies, new handwriting and voice recognition are just around the corner for wider use. Simultaneous language translation is another major new capability for our global economy and the continuing reduction in cost per mouse click are all positive factors for economic growth.

Continued low inflation ( normal US inflation is around 3%) and combined with the govt. budget surplus and lower bond yields will reduce competition from bonds and send equity valuations higher In booms in other countries, equities have moved over 400%. . US growth is only at 147% since 1994.

So is Dow $18,000 risky ? Her scenario says not as equity mutual fund flows top $350 billion, bond yields fall below 5%, and citizens get a personal social security statement in the mail with a choice to invest some funds as desired . Tine will tell.

K. Implementing change

1. Eagle and Monk embracing successful change

Bill Jenkins, Vice Chancellor for admin at Vanderbilt and Richard Oliver consultant are authors of a new book entitled The Eagle and the Monk ..embracing successful change. Some of its major points.

Seven principles of successful change

Accept and acknowledge worth - foundation of successful change -enshrine role of individual

2. Generate trust- centerpiece of successsful change

3. Learn by Empathy ,be a learning organization

4. Value and embrace a change principle ..expect change and promote fact of constant change

5. Unleash synergy - teams create effectiveness as multiplier effect takes over

6. Discover champions

- find a sage - reward and promote them

7. Liberate decision making - empower individuals

To do this, ask question in group sessions about how your organization approaches change and discover attitudes about how the change process is viewed. Manage change !!

2. Blended Student Service Depts - Finance VPs Jay Kahn - Keene State College and Jonas Cook Central Michigan led this session- see companion article in NACUBO Business for Officer) Some key elements are :cross-training , focus on customer service , upgrade clerical positions to professional, separate high volume public services from appointment services, maximize technology investments through a shared , integrated data base, share the big picture with al l staff, shift staff to busy functions at critical$ times, evaluate customer satisfaction

3 NACUBO award winner - Nebraska Health system - High performance organizations - Winning organizations win because they have good leaders who nurture the development of other leaders at all levels of the organization " Nick Tichy - the Leadership engine 1997

Some concepts from the Nebraska approach : Renewal days, Education sessions, networking, resources, book club,investment club,monitoring. the result is less turnover More informal leaders have emerged.- stars identified

Dave Hornfischer

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