Increasing Stakeholders’ Role in Finance Innovations
By Vicki Maxa, a member of DCCL Cohort 2 and Assistant Professor and Counselor at Grand Rapids Community College, Grand Rapids, Michigan.
In the State of Michigan, community colleges rely on three traditional areas for their funding: property taxes, governmentally provided revenues, and tuition. Scrutinizing this fiscal triumvirate leads to an understanding of the difficulties community colleges face in financing the work of the college. Property taxes have decreased with declining property values, and foreclosures recently reached an historical high (Wilson, 2011). Governmental coffers are at an all-time low, as state governments face similar budgeting problems across the nation (Douglass, 2010, Kelderman, 2010). Inflation driven by recession increases the cost of goods and services for all, students and colleges included. The very mission of democracy’s colleges relies on affordable tuition for community colleges, so that asking students to bear the brunt of increased costs becomes the least preferred method of increasing revenue. Yet, tuition is also the only funding source in the triumvirate directly under the community college’s control. Thus, community colleges have the unenviable task of annually setting policy regarding tuition, knowing that increases will impact students heavily, but empowered to do little else to effect change and guide innovation if traditional funding sources are seen as their only option. For many colleges, the current economic conditions dictate financial struggle, leading to the need for innovation and new funding options.
As community colleges look beyond the three areas of funding and imagine innovative funding ideas to support the goals of the college, efforts that involve the stakeholders to provide a strong investment in the community’s college must be explored in more detail. There are some highly creative minds within community colleges engaged in this activity; reviewing them here may be helpful in suggesting courses of action to look beyond the traditional triumvirate to fund projects necessary for student success, in the face of decreasing revenues.
Looking for New Financing Avenues
Creativity in finance, the development of new revenue streams through fund-raising efforts, innovative programming, land acquisition, and entrepreneurial endeavors to meet the needs of stakeholders are avenues which innovative community college leaders have explored and have found additional support for their organizations. Recognition of key stakeholders to increase investment, both financially and as a value proposition, is another successful approach, and may have an additional bonus of creating a historical context for future generations. In reviewing each of these areas, the college must consider the stakeholder’s role carefully and recognize and identify ways of engaging the community for the benefit of the college.
The Michigan New Jobs Training Program provides conditions for an agreement between employers and community colleges in which colleges can issue bonds, borrow, or use reserves for training students (Mich. Dept. of Treasury, 2012; AACC, 2011). Employers have committed to hiring the completers in new jobs. Once hired, the State allows payroll taxes to shift to the college to reimburse expenses incurred. Alternatives include permitting the employer to assume the financial burden, such as GRCC’s agreement with Energetx Composites, so that the college may concentrate more fully on the training aspect (Durisin, 2010). The program has the advantage of creating jobs within the district, so that workers remain in the locale in which training was provided (MCCA, n.d.).
Colleges may be asked in these times of economic hardship “what have you done to help yourselves?” and the answer, for Grand Rapids Community College (GRCC), lies in the attempt to raise funds so that taxpayers are not asked to shoulder the entire burden in perpetuity. Fund-raising is an immediately identifiable method of offsetting financial constraints to work toward achieving goals and improving the college experience for students. In an eighteen-month campaign, which concluded in September 2011, GRCC raised over $15,000,000 in an effort entitled, “GRCC Works…Ask Anyone.” Creating stakeholder investment was critical in this endeavor; it was a precursor to seeking an increase in a millage requesting time-limited support from taxpayers. Cultivating stakeholder support allows the college to create conditions for future support since it increases community involvement and investment (Grover, 2009). Direct interaction and communication with the community about the college’s goals may provide unrealized dividends as efforts become more transparent to the community.
Innovative Programming: Homeland Security
Community colleges have a natural fit within the context of homeland security: 80% of the personnel responding to crisis situations received their specialized training there (AACC, 2006). In addition, campuses often play a large role in the aftermath of emergencies, as witnessed during the attack on the World Trade Center, Hurricane Katrina, and a myriad of other crisis situations. Community college campuses may play a role in planning or training, or may serve as community shelters or communication centers (AACC, 2006). Such a natural partnership can evolve into a well-thought-out measure of a three-pronged mission: planning, training, and sharing resources or facilities (AACC, 2006). Thoughtful consideration to integrating existing programs such as EMT/Paramedic training, nursing, law enforcement, information technology, and fire-fighter training into immediate response from the campus itself would allow colleges to compete for federal funds and become partners in the larger mission. Advanced training, credentialing, and creating awareness are further goals for community colleges desiring a higher level of preparedness for emergencies or disasters (NSF, 2002).
Macomb Community College has taken full advantage of this emerging area, offering an Associate degree which “provides students with a foundation of private and homeland security knowledge to build upon as a transfer to a specialty degree” (Macomb Community College, 2012). With foresight to both the need for entry-level training and continuous upgrade of skills for employed professionals, the program’s objectives are stated as “to prepare students for full-time employment” and to “upgrade personnel employed in the security industry” (Macomb, 2012). Neighboring Oakland Community College offers a certificate of achievement in homeland security, which prepares students to work knowledgably in disaster planning “relevant to both man-made and natural threats” (Oakland Community College, 2012).
As recent history has shown, community colleges will respond to a disaster within their community with haste and with compassion; thus, it seems fortuitous to plan and fund such objectives from the outset. Stakeholder benefits are increased when the there is an awareness that the college is intentional and ready to respond to tragic events, using knowledge and education to combat loss of life and property within the community the college serves.
Acquisitions and Development
As colleges cast an innovative eye toward funding the work of the institution, land use is an area that may be scrutinized. Colleges may already own properties, may receive them through charitable bequests, or may actively pursue acquisition. Determining the most advantageous land use for such properties requires an intensive review to ensure all ramifications fall within the college’s strategic plan; when land is viewed as a capital asset, revenues may quickly follow (McDowell & Lindner, 1989). Schoolcraft College in Livonia, Michigan, purchased land near a major highway and has since leased unused portions of it to create a revenue stream. While some of the land was developed for the college’s use in creating a new center called VisTaTech (which combines the terms vision, talent and technology) other portions of the land are leased to a developer of office buildings and restaurants (Schoolcraft College, 2012).
VisTaTech is a college building that houses culinary arts, meeting rooms often used for corporate training, and a banquet facility. While additional funding for VisTaTech was procured from other sources, such as federal technology grants and fundraising efforts, the revenue stream created by the property management agreement continues to provide resources for the college (Schoolcraft College, 2012) and was instrumental in funding other building projects. An example is the McDowell Center, which houses student services, business services, and classrooms; funds from development were used for the college’s match portion of the state’s capital outlay. One last example of a development- sponsored building project is the Biomedical Technology Center at Schoolcraft, which houses an imaging and analysis lab that features a scanning electron microscope. Such technology and opportunity for study adds immeasurable skills and experiences to the repertoire of a community college student.
Schoolcraft College’s original development project will net $24,271,454, in the 25th year of its inception, based on projected payments and an average of 8% investment interest (McDowell & Lindner, 1989). Dr. McDowell states, “A unique part of this process was the role the board played, not only in deciding to lease rather than sell the property, but at the same time [creating] some guidelines for future development, which were used on the additional 40 acres the college developed recently” (February 5, 2012, personal communication). During an interview for this article, Dr. McDowell stated that current realization from the development projects is around $1,000,000.00 per year. He further underscores that it is important to realize that the financial benefits derived from the development are set aside for physical plant use based on the campus master plan rather than being folded into the operational budget.
There are several lessons to take from Schoolcraft’s example of land development; research of this revenue stream brings the realization that each phase of the development process was fraught with intentionality. The creation of a “non-profit, tax-exempt” development authority to “shield the college from liability” and to ease the burden of taxation was followed by stipulations for project abandonment and land use appropriate for the adjacent college (McDowell & Lindner, 1989, p. 69). A quorum of five of the nine members of the authority were college trustees or administrators, again leaving little to chance in making decisions that could impact the college.
The most fascinating aspect of scrutinizing Schoolcraft’s development was the careful consideration of the institution, its future, and resistance of the temptation for quick returns. Dr. McDowell engenders, in his discussion of creating revenue streams through land acquisition and development, a sense of strategic planning and long-term stewardship of the college’s assets. Such an activity may take extensive exploration but clearly has the potential to generate perpetuating revenues for the college as well as enhance stakeholder participation and collaborative efforts within the community.
Entrepreneurial Endeavors: Outreach Services
An innovative idea encountered in northern Michigan is that of an Institutional Research office farming out services to create new revenue streams. At Northwestern Michigan College (NMC), under the umbrella of the Office of Research, Planning, and Effectiveness (ORPE), the Research Services department offers services for external social and market research. A director runs a call center, bids on research projects, and is expected to generate revenue for the college (Dr. Hiller-Freund, personal communication, March 19, 2012). Research Services is an individual and autonomous unit, with a separate budget; this is a requirement of the office’s role as a profit-generating sector of the college. Research Services tracks expenditures and sets overhead to retain a clear record of revenue generated. While the office has been in operation for approximately twenty years, it has only been within the last two to three years that Research Services has separated from other offices to manage its own budget and become more autonomous within the institution.
The external research services generated by this office creates a new revenue stream for NMC, and, in doing so, it also increases the institutional research staff’s contacts and knowledge about local initiatives and organizations and sharpens the skills of researchers within the institution through contact with a broader research context relevant to the community. Cathlyn Sommerfield, Director of Research Services at NMC, sums it up by saying, “We are able to promote the college’s partnerships in the community by being involved in the biggest projects impacting our [geographic] area so we are viewed as a community partner” (Sommerfield, personal communication, August 6, 2012).
Research Services offers assistance to their clients that can include targeted surveys, interviews, or even focus groups that elicit attitudes or opinions critical for successful functioning of an organization. Maintaining their own call center allows Research Services to maintain a higher level of data security and lessens the need for contracted services. Such research can also aid the client organization through market development or analysis to enhance profitability. Data analysis is conducted, and can be “link[ed] with business results and community research” (Northwestern Michigan College, 2012).
Research Services offers assistance with the development of action plans, which include recommendations gleaned from the research data. Several of the local governing bodies develop their Master Plan in conjunction with data obtained from Research Services. NMC has worked with governmental units, including Traverse City, Leelanau County, the Northwestern Michigan Council of Governments, and Peninsula Township; several healthcare organizations; utility companies such as Traverse City Power & Light; human service entities; and organizations that fall into both the private and the non-profit sectors (Northwestern Michigan College, 2012).
The efficacy of Research Services, outlined by Sommerfield, is illustrated in a project they completed with Munson Medical Center. This longitudinal research project generates data from a phone survey; the survey of 1,000 adults tracks community awareness of diabetes and has clear indications for the health of the local populace. Because it vacillates from year to year, it is difficult for Sommerfield to put numbers to the revenue generated by Research Services; however, NMC’s unique Research Services office is clearly an innovation that brings stakeholders into the educational arena. Stakeholder benefits are realized by the strong partnerships, the ability to outreach to the community to collect data for a wide variety of community organizations, and the collaborative effort to build a stronger community through education.
Entrepreneurial Endeavors: Recognition of Donors and Alumni
Those tourists who have observed the Vietnam Memorial or the 9/11 Memorial understand the power of name recognition; as Americans, it is imperative to us that ceremony and remembrance include the individual. The power of name recognition can be used to honor membership in educational groups, as well. Alumni support is engendered with a “Hall (or Wall) of Scholarly Fame” which, when alumni return to the college, bears witness to their vested interest in the community college. Such projects can be designed by art or design students, and have the effect of increasing solidarity of recognition of accomplishments. Graduates and alumni could be encouraged to become a donor to participate in the “Hall of Fame” as well as learning the importance of giving back to their college financially as they become successful community members.
An innovative example of such recognition is Southwestern Michigan College’s (SMC) Alumni Plaza and Clock Tower, which “add[s] an element of ‘en plein air’ to the 240-acre campus” (Southwestern Michigan College, 2012). The circular plaza is “a gathering place for students and a site [for] outdoor performances and academic activities” which provides a “visible memorial tribute” through selection of clay pavers or limestone bands that are purchased and engraved with the donor’s verbiage. Recognizing that stakeholders extend past immediate students and alumni, SMC encourages support for the college through purchase to “honor graduate’s accomplishments…recogniz[e] the support provided by family members, community members and businesses” (Southwestern Michigan College, 2012). The artistic perspective that SMC holds regarding this project is nuanced by the realization that, in time, the concentric character of the plaza will eventually document the expanding history of the college; this is similar to the bands found within trees which provide the learner with information and history within the natural setting.
While most fund-raising activities tend to focus on large-dollar donors, there is power in soliciting those who benefit directly from the college. Working-class families often have multiple members attending or planning to attend the community college. Creative thinking of how to include other stakeholders, such as the supporters of first-generation students, would enhance investment in such a project. For graduates whose families struggled so that they would have better opportunities, there may be a wish to recognize parents, grandparents, or others as contributors or “friends” of the college, even though they did not complete their own education. Placement of an artistically designed commemoration of the names of graduates and supporters near the graduation refreshment area would provide families with the opportunity to recall other graduations, contribute immediately for their current graduate to be included, or plan for future family members to be so recognized. This allows stakeholders to realize a stronger feeling of integration with the college and its goals.
Within the traditional three areas of finance for Michigan community colleges, government revenue, taxes, and tuition, colleges are scrambling to gain a toehold as costs rise and revenues decrease. Many leaders are seeking alternative, creative measures to hold down tuition costs. Creative and innovative thinking can stimulate college leadership to define other sources of funding appropriate to their institution. Stakeholder investment can position the community college to reach out and create reciprocal relationships within the community. This reframes the question, “how may revenue streams be created” to “how may the college strengthen collaboration and investment while working toward mutual goals with our stakeholders?” As senior leadership attempts to strategically position the college for the future, these relationships become increasingly important and have the potential to provide the community college with the support needed to continue the work to make college graduation an accessible goal for the members of the community it serves.
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