As I meet with leaders at private colleges and universities around the country, I hear a common refrain: “We need to boost our enrollment numbers, but don’t have the money to invest in outside services.” When resources are tight, spending money you don’t have seems foolish, but former college financial executive Paul Greiving offers a different perspective. During his tenure at Colorado State University and Florida College, Greiving crafted five questions to help administrators make critical spending decisions with limited funds. It’s my pleasure to welcome Paul as this week’s guest blogger:
Is there any chief financial officer of a small, private college who hasn’t faced the daunting task of balancing an unending list of spending requests against a limited budget? As a former CFO of a small school, that challenge seemed to occupy a lot of my time. While there are no simple shortcuts for the problem, every CFO needs to look for creative ways to fund projects that will provide long-term benefits to the institution.
As in any business, the areas that often get most of the CFO’s attention—and resource allocation—are the “fires” that can’t be ignored: building maintenance, equipment replacement, critical staffing needs, student services projects, faculty demands, and so on. Almost all of these tend to be reactive spending decisions, rather than proactive. That’s not to say they ought to be ignored, but so often the opportunity to make the best decision is bypassed because of the urgency with which they’re presented.
Then there are other important spending decisions that don’t always appear to have the same sense of urgency. These might include capital projects, new academic programs, and enrollment growth-related projects. In institutions with a strategic-minded, forward-looking administration, these funding demands will also challenge the CFO who operates within a tight budget and competing spending requests.
As you are faced with these challenging spending demands, here are some questions you should ask:
1. What areas of discretionary spending can be delayed or suspended to fund a more important one-time (as opposed to ongoing) project?
2. Are there reserve funds available in a flexible earmarked account that can be used?
3. Is the development office aware of a potential donor that would take a special interest in—and therefore fund—a particular project?
4. Can a hiring decision be delayed to free up funds for an important project?
5. What is the likely future revenue impact if the project is approved? And conversely, what will the negative revenue impact be if the project isn’t approved?
Raising these kinds of questions might provide an answer—and thus the funding—to allow an important project to move forward. The simple answer, “Sorry, there’s no money in the budget,” just won’t fly. Chief financial officers should work closely with the executive team to prioritize the most important funding needs, and commit to finding the scarce resources every institution requires to provide for those needs and invest in its future.
Paul W. Greiving is President of CFO Advisory Services. Until recently, he also managed the finance and accounting operations of Colorado State University – Global Campus. Prior to his work at CSU-Global, Mr. Greiving served as Vice President of Operations for Florida College, Temple Terrace, Florida. In that role he served as the College’s chief business officer, responsible for the development and management of the annual operating budget; the effectiveness and accountability of the College’s business functions; oversight of the campus construction and maintenance activities; and provided administrative oversight for the College’s compliance and audit requirements. Earlier in his career, Mr. Greiving worked for a number of commercial enterprises in the financial services, software, telecommunications and oil & gas industries from 1983 to 2003. He began his career in 1980 as an auditor with Price Waterhouse in their Denver office. Mr. Greiving received his B.S. in accounting from California State University – Long Beach. He has been a licensed Certified Public Accountant in the state of Colorado since 1981.