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Colleges seek creative solutions to budget woes

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The Follett Corp. manages bookstores at all Ivy Tech Community College campuses in Indiana, including this one at the Fort Wayne Campus.
With state funding and other financial resources for higher education continuing to decline, community colleges are exploring ways to add revenue and cut expenses through such means as outsourcing, bulk procurement deals, entrepreneurial initiatives and more aggressive outreach to donors.
 
Ivy Tech Community College in Indiana is saving about $22.5 million over five years by contracting with the Follett Corp. to operate the bookstores on its 29 campuses. As a result, the college has been able to reduce the number of textbooks offered by encouraging the standardization of books for the same courses across all campuses, said Jim Hudson, head of the statewide procurement office.
 
Higher-volume purchases translate to better deals for the college, he said, and also make it easier for students to sell their used books. 
 
Outsource services
 
The bookstore arrangement is part of a sweeping cost-cutting program that has helped Ivy Tech save more than $75 million over the last three years, said President Thomas Snyder. The college’s somewhat unique arrangement as a single accredited statewide entity makes it conducive to statewide purchasing, he noted. But other colleges could adopt similar arrangements on a smaller scale.
 
Ivy Tech has also saved $20 million through statewide procurement of furniture, copiers, Dell computers and the Blackboard classroom management system, Snyder said. In addition, the college has generated $10 million through an energy-savings contract and saved $2.5 million by moving its data center to the Indiana University Data Center.
 
Ivy Tech saved another $400,000 annually by getting rid of its aging IBM mainframes and outsourcing the data and personnel for that system to the state of Indiana. Additional savings were realized by setting up a statewide call center, which handles calls for all campuses regarding registration, billing, financial aid and other services.
 
“We have been faced with the challenge of providing increased resources for our students during a time when our funding did not keep up with our growth,” Snyder said. “In order to fund additional faculty, more counselors to assist students and more space to accommodate the growth, we needed to aggressively look for ways to save money and reinvest it in our students so we could keep the tuition affordable.”
 
Standardizing computer purchases—and convincing staff they don’t need computers with all the bells and whistles—has also reduced Ivy Tech's expenses, Hudson said. 
 
“People want to protect their budget. They do that by spending what they have so their budget won’t be cut next year,” Hudson said. “We promoted cost savings as a way to hire additional faculty. People will accept less-exotic PCs that meet their needs if that eliminates the need for staff cuts.”
 
Entrepreneurial activity
 
Lane Glenn, who’s been president of North Essex Community College (NECC) in Massachusetts for just a few weeks, plans to follow in the footsteps of former President David Hartleb, who retired in June. Glenn, who previously served as vice president of academic affairs at NECC, will retain a program Hartleb developed several years ago that encourages departments to form their own entrepreneurial relationships. For example, the business education department provides a course on entrepreneurship that is presented at Newburyport High School. The school district pays NECC $6,000, and the business department keeps the profits after the instructor is paid and other expenses are covered.
 
Other NECC departments have similar contracts with local high schools to provide courses in psychology, sociology and other subjects. These arrangements bring in $10,000 to $20,000 to the college annually.
 
“It’s a good deal for the high school, which has underutilized classroom space, and it also allows NECC departments to generate some additional revenue during a time of cutbacks,” Glenn said.
 
NECC also nets about $30,000 a year by renting unused classrooms in its workforce development department to Suffolk University, which offers its MBA program at the community college.
 
This fall, NECC is launching a program with a private company called Higher Education Partnerships, which leased a building at the college, hired its faculty and purchased the equipment to develop a new health education program. The program offers accelerated training with flexible scheduling—mostly online—geared to adults in the allied health professions, including medical billing and coding, phlebotomy, emergency management and advanced cardiac life support.
 
Glenn estimates the partnership will generate a few hundred thousand dollars, which will be invested in NECC’s regular health programs.
 
“Profit is sometimes a dirty word in our business,” Glenn said, but he noted that colleges need to raise money to invest in their programs and students.
 
The proportion of NECC’s budget from state funding has shrunk from 75 percent to 40 percent over the past several years, Glenn said. In the last five years, enrollment has climbed 20 percent, while state support has declined 20 percent. NECC has had to make up the difference with private funding, grants and tuition increases, he said.
 
Engage board members
 
Glenn said one of his major tasks as president is to aggressively pursue private donations. He said he has “at least one appointment a day, and sometimes two or three, with people in the community with whom I can tell our story and build relationships that could generate the revenue the college needs."
 
“Local entrepreneurial activity, private fundraising and partnerships—those are the three things colleges need not just to survive, but to thrive during the economic downturn,” Glenn said.
 
Community colleges can raise significant amounts of money through advancement efforts, but developing new resources requires an investment, and the president has to be involved, said Polly Binns, executive director of the Council for Resource Development, an organization affiliated with the American Association of Community Colleges. She said colleges should devote 5 percent to 9 percent of their operating budgets to advancement, but she suspects most only allocate about half a percent of their budgets to fundraising.
 
“Community colleges should look at advancement not as a little appendage, but as an integral part of the culture of the school—like student development and academics,” Binns said.
 
One community college that has taken an aggressive approach to fundraising is Tallahassee Community College (TCC) in Florida. 
 
“An effective foundation finds ways to get its board members actively soliciting on behalf of the college,” said TCC Foundation Executive Director Robin Johnston, who also serves as TCC vice president for institutional advancement.  
 
“The challenge is engaging the board in building a culture of engagement and accountability,”  he said. The TCC Foundation’s approach to is to “align the donor’s interests, the board member’s personal skills and passion and the college’s needs.”

In one example described by Johnston, foundation board President Mary Pankowski, an assistant state attorney who prosecutes juvenile cases, wanted to raise money to create a college scholarship for youths who have broken the law but have not committed serious crimes.
 
These youths might have made two or three mistakes, like knocking over mailboxes, said Johnson. Higher education could turn their lives around, but they have been put in the same category as serious criminals and thus are barred from receiving financial aid, he said.
 
The foundation helped Pankowski establish the New Start Scholarship for Juvenile Justice-Involved Youth. Because Pankowski was passionate about her cause and had many contacts who were willing to support it, she was able to raise $133,000 for the scholarship program in  two years, Johnson said.
 
Another foundation board member, Allison Tant Richard, has a passion for helping youths with disabilities. She has worked with the foundation to create the Eagle Connection program, which is aimed at accelerating the educational process for kids with severe developmental disabilities, so they will be able to take care of themselves.
 
Johnston asks his board members to “choose their passion” and helps them become an effective advocate for it. He calls board members a “huge untapped resource” and says colleges are missing a signficant opportunity by not fully engaging them.
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