The uncertainties created by recent world events have made it difficult for higher education institutions to determine how they will deliver classes in the fall, and also see the potential budget impacts of changing their academic model. Schools addressing budget cuts face the possibility of further reductions in tuition revenue, financial aid, and other revenue sources due to a projected decrease in enrollment and student attendance. To gain a better understanding of the possible financial impact, higher education schools can use scenario planning to assess the best case scenario, worst case scenario, and everything in-between to create a plan that will help them respond effectively, when the only thing certain about the fall semester is that it won’t be business as usual.
Scenario planning results in informed decision-making
Budget planning before COVID-19 already took into account unknowns, but it becomes even harder to build a budget when there is an ongoing crisis with no end in sight. Scenario planning requires examining every possible situation that could occur and determining the most effective course of action for the school to take in response. With the likelihood it will take months for the pandemic to run its course, higher education institutions need to prepare for the challenges that lie ahead.
Even with a controlled virus scenario, a McKinsey report predicts that 25% of public four-year institutions and nearly half of private four-year institutions could suffer budgetary shortfalls of more than 5%. If classes remain online, the budget shortfall increases to 57% for public schools and 77% for private schools. Faced with even tighter budgets, scenario planning provides insight into how schools can quickly reallocate funds, find cost savings and manage cash flow better.
Using scenarios can also help higher education institutions make informed decisions related to enrollment, teaching, research, staffing, athletics, housing, and student activities. Understanding how each potential scenario could play out will ensure schools respond effectively to significant changes in how they operate, deliver courses, and manage their finances, with the ability to adjust as the crisis evolves. Better planning will result in better preparation, and allow schools to navigate any disruptions to providing quality education to their students while keeping them safe.
Prepare for uncertainty with Questica Budget
To plan for multiple scenarios higher education institutions need to have accurate and reliable data to comprehend how the school will perform in each scenario. Many schools don’t have the technology that can provide the data and insights that would allow them to make decisions quickly. Software that enables schools to analyze data, create models, and calculate the costs of different scenarios would empower them to find answers to tomorrow’s questions.
Questica Budget is a cloud-based budgeting solution that houses budget data in one secure and accessible place for users. Higher education schools can budget to the lowest level and drill-down through the details to understand how their budgets can be developed. Questica Budget’s forecasting features and what-if scenarios permit users to analyze an unlimited number of scenarios, while the Advanced Calculation Engine (ACE) general-purpose calculation system can help them create complex modeling for revenue and expenses. Higher education institutions can gain important insights from their budget data that lead to informed decisions for their academic community.
While it’s difficult to know what the future holds for higher education, one certainty is that it won’t be business as usual. By using scenario planning, higher education institutions can make informed decisions about how to manage the financial impact of COVID-19 and develop budgets that enable them to adjust as the crisis evolves. With a better understanding of how they will perform under each scenario, schools can plan more effectively to navigate through the challenges that arise. Predicting the future may not be possible, but using Questica Budget can enable schools to prepare today and feel confident that they can continue delivering high quality education to their students tomorrow.
To learn more about the Questica Budget Suite’s software solutions for higher education schools, read one of our blogs or white papers, sign-up for one of our free monthly informational webinars or request a personal demo.