Finding the Sweet Spot Between Short-Term Budget Decisions and Long-Term Goals

Imagine with me for a minute: It’s after dinner, your sweet tooth is kicking in, and you really want to dip into that ice cream in the freezer. It seems harmless, and while your heart-healthy diet may cross your mind momentarily, the desire that is right in front of you feels much stronger. One scoop of ice cream can’t be that bad, right?

This familiar phenomenon of human nature drives many of us, and therefore the organizations we are part of, to react to the situation in front of us, choosing to solve an immediate need, even if it is at odds with our long-term vision. Everyone wants the proverbial scoop of ice cream, but we all know the better option: Approach short-term budget decisions in a way that positions us for future success.

If you’re a visual person like me, it can help to imagine drawing two circles – one around the short-term budget decisions you need to make and another around your long-term goals. Then, create a Venn diagram of the two circles. Now, how can you maximize the amount of time you spend in the middle zone, where the short-term and the long-term meet?

Short-Term Budget Decisions vs. Long-Term Goals

Trimming the Edges: Service Changes

For institutions that are facing or modeling budget cuts, it is important to consider the service level impact of those reductions and how the resulting changes could impact your long-term vision. Look for opportunities to reduce costs with minimal impact to service by cutting areas that are overstaffed to reduce waste, increase efficiency or leverage technology. You may consider a lower frequency of cleaning offices and emptying trash, more energy conscious temperature set points, maintaining fewer manicured landscape beds around buildings or designating low-mow areas on the grounds.

These along with other potential changes could certainly impact service output levels, but open communication will help you identify where service changes are acceptable to the campus community. It will be easier for users to stomach service reductions if they are aware how the changes will contribute to the financial viability of the institution. Recruit a diverse group of stakeholders to help test the boundaries of acceptable changes. This input will help generate user buy-in around short-term budget decisions and champion the message. If you know who your toughest critics of a suspected change will be, they should be the first people you include as key stakeholders.

Taking on a Bigger Piece of the Pie: Space

But what if potential cuts will create an unacceptable negative impact on service levels? While the strategies above can help trim costs at the margins, the real driver for facilities cost is space. The amount and type of space you have determines a target level for your facilities spending; And if you’re currently lacking the funds to meet that target line, you need to consider strategies to lower the line. To put it plainly, you need to divest from space.

While it may feel like you need extra space to accommodate this season’s social distancing guidelines, it is critical to keep your eyes on the financial limits you have now and the long-term financial impact of short-term budget decisions. Our utilization data suggests that the extra space you need is already available on your campus.

 

Before the COVID-19 pandemic occurred, our database showed that teaching spaces had an average utilization of 60% across higher education. While your classrooms may be full on a Tuesday at 10:30, walking through campus at 8:00 AM, in the late afternoon or on a Friday will give evidence to support these low utilization numbers. Though students and instructors may note these times as undesirable times to have class, they present potential solutions for continuing operations during trying times.

In addition, our space utilization data also shows an average position utilization of 62%. That means, while teaching spaces are in use, only 62% of chairs are filled with students. If models are based on classroom capacity alone, considering position utilization may unveil different parameters to work with when planning for social distancing in the classroom.

Utilization data can help justify space consolidation, which creates opportunities for divesting. When weighing divestment decisions, consider spaces that will also solve your operating budget woes, such as spaces with high deferred maintenance and high reactive maintenance demands. You can also consider small buildings that hamper your economies of scale and increase travel time for your facilities team. When a building becomes a candidate for divestment, remember to evaluate the value of the building to your institution’s programs and mission. Taking this into account helps protect long-term goals as you make space decisions.

The Sweet Spot: Future-Minded Short-Term Budget Decisions

Living in the middle of the Venn diagram may require sacrifices and a change in approach, but it creates a scenario where you will be better equipped to meet immediate budget needs while still working towards long-term vision. And just like our after-dinner dessert choices, taking a moment to think through the consequences of shot-term budget decisions and make plans accordingly will position us to enjoy a more sustainable future.

Lindsay Demczko

About Lindsay Demczko

As Regional Director of Member Services, Lindsay Demczko is responsible for the day-to-day operations of the team serving institutions in the Mid-Atlantic and Southeast regions. Since joining Gordian in 2009, Lindsay has led consulting engagements within higher education, providing independent data and perspective to help university leaders make decisions regarding facilities and capital investment. In addition to working with clients directly, Lindsay manages the team to provide consulting services, focusing on quality assurance of Facility Planning solutions. Lindsay earned a B.A. from Franklin & Marshall and an M.S. in Higher Education from Drexel University.