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Higher Education Works for New Hampshire – October 2012
(Download the full report here in PDF)
While there are a myriad of reasons why individuals pursue degrees in higher education, the vast majority of students plan to pursue meaningful employment after graduating. New Hampshire’s four-year public colleges and universities—the University of New Hampshire, Plymouth State University, Keene State College, and Granite State College—proudly graduate over 6,500 people into the workforce each year. These graduates are our engineers, nurses, teachers, farmers, law enforcement officials, business leaders and taxpayers. Each year, we contribute more than $2 billion to the economy in employment, direct expenditures, and workforce development. Having individuals that are ready to contribute to our workforce and become engaged in our communities is a key economic driver.
In short, higher education works for New Hampshire.
The University System of New Hampshire (USNH) took a comprehensive look at itself from a structural standpoint during FY12, to determine what changes would help increase its ability to educate our workforce in the most efficient and effective way possible. There were many reasons why such an introspective review at this time was critical. Two key reasons were the severe cut in state appropriations and a legislative initiative that would have altered the core structure of USNH if approved. The USNH Board of Trustees believed it was a crucial time to conduct this review of governance and structure. The intent of this effort was to make sure that USNH’s four institutions were as nimble and as efficient as possible.
Nationally, the public is increasingly questioning the value of higher education, despite facts that clearly show in aggregate that earning a college degree leads to greater economic opportunity, more career choices, and personal growth. In addition, unemployment rates for four-year college graduates were almost 50 percent lower than the nation’s unemployment rate in May 2012, according to the US Labor Department. Yet, the high costs of college, the high debt levels of graduates, and a challenging economy and job market are troubling to students, parents, administrators and policy-makers. In New Hampshire, these issues are being debated in living rooms, boardrooms and legislative chambers.
USNH, as compared to its peers, continues to be a model for efficiency. Institutional support (another term for administrative overhead) as a percent of total operating expenses at USNH was 6.1 percent in FY11. Comparators in New England ranged from 7.0 percent at the University of Massachusetts to 9.9 percent at the University of Rhode Island. If USNH had the same average level of “administrative overhead” expense as other public New England universities, an additional $16 million would need to be spent annually to operate USNH.
USNH began FY12 by taking a forward-thinking approach and focusing on creating greater operating effectiveness and efficiency across the University System. In the fall of 2011, the USNH Board unanimously passed a resolution to provide greater operating autonomy to its four institutions while continuing to meet its overall statutory obligation to be a “well-coordinated system of public higher education.” The resolution noted that “any legislation to amend these statutes (regarding USNH or its institutions) during the upcoming 2012 session would be premature, would undermine the current efforts of the Board, and would risk undermining the quality of the institutions and their financial status.”
In early 2012, legislation that called for amending the statutes was introduced in the New Hampshire House of Representatives. The bill proposed many significant changes, including eliminating the chancellor’s office, capping system office staff at 12, and reducing the size of the Board of Trustees from 27 to 21. While it did pass the House, it did not garner the support of the House or Senate Finance Committees based on their detailed review of costs versus savings. The bill ultimately failed, but it received significant attention during the legislative session. Members of the Board and all four presidents weighed in on a regular basis to oppose the bill and reported on the Board’s current work to review USNH functions and structure.
One key component of the Board’s review occurred in April 2012 when a set of recommendations supporting increased autonomy for the campuses was approved. Prominent among these changes were having the four presidents report directly to the Board instead of the chancellor, and elimination of Board-level approval for many decisions, including academic programs and employee compensation.
The Board’s work also included establishing a Change Management Task Force charged with overseeing the implementation of the restructuring of the USNH governance system; engagement of a management consultant to assist with the restructuring; and regular reporting on the status of the project. Through a competitive bid process, the Task Force engaged Huron Consulting Group to conduct the review and provide advice on developing and implementing changes to the USNH organizational structure.
At the end of FY12, Huron made its recommendations. The broad themes included:
- Having the Board elevate its focus and activity to become more strategic and less operational in its work with the campuses and the System Office.
- Having the System Office continue its role as a provider of shared services, but become less involved in directing the development and assessment of academic programs.
- Having each president annually provide the Board with an integrated strategic and financial plan that includes the academic and financial priorities for the next fiscal year.
The report’s executive summary concluded as follows: “University systems are, by design, complex organizations. A well-established governance set forth by the Board of Trustees is the first important step in creating an environment where individual campuses can thrive and the collective set of campuses can operate collaboratively and in a cost-efficient manner to best serve the State’s citizens. Our proposed organizational model confers more autonomy on the presidents in the areas involving campus strategies, while clarifying the assignment of responsibility for coordination, improved efficiency, and cost savings for shared administrative services. The model maintains the current centralized System Office responsibility for financial control, audit, treasury, bonded debt, and legal and regulatory compliance.” Huron further estimated that “if USNH ceased providing its current portfolio of services, the increased system-wide annual cost could be between $6 million and $9 million.”
The Huron report and all of its recommendations were vetted by the Board and approved on September 11, 2012. Changes are in the process of being implemented in early FY13, and along with the changes adopted in April, the new levels of campus autonomy will further advance the forward-looking activities of the University System during a time when efficiency and flexibility in higher education has never been more important.
To help guarantee that higher education continues to work for New Hampshire, USNH will be making a concerted effort in FY13 to gain legislative support to return state funding to the $100 million level that USNH received from FY09–FY11. This reinvestment will directly affect USNH’s ability to provide opportunity for needy New Hampshire students, address the workforce needs of New Hampshire businesses, and generate economic activity for the state.
New Hampshire’s public colleges and universities already have good measures of their affordability and accessibility, and they understand the enormous economic activity they generate. They are working hard to develop New Hampshire’s 21st century workforce, and have committed to substantially grow the number of students in the science, technology, engineering and mathematics (STEM) disciplines that New Hampshire businesses need.