Patients and their loved ones expect a certain bedside manner of their doctors. Yet, doctors are in many ways laboratory scientists whose training is not focused on social skills. They likely began their studies with organic chemistry, and have spent hours studying medical journals in solitude. But physicians know that adequate treatment requires a trusting patient-doctor relationship. It is essential that patients understand the doctor’s diagnosis and what is required of them during treatment and recovery.
Sometimes, it’s jargon that gets in the way of that relationship and erodes trust. Not only can too many medical terms confuse a patient, but they might perceive condescension, even if unintentional, or simply find their doctor to be curt, inconsiderate, and perhaps even untrustworthy. The dubious patient might not take orders or might even experience high blood pressure, countering the healing intentions of the physician.
Medical professionals have come to fully recognize that personal interaction is an important factor in their ability to explain and deliver effective health care.
Clarity and Connections
Just as doctors need to find a way to communicate effectively, so too must college and university business officers, from the treasurer’s office to the investment office to student financial services. Accountants, tax directors—and especially the chief business officer—need to consider the importance of being able to effectively communicate to students and the general public their roles, responsibilities, and the ways that their institution works.
Jargon fills the air in most industries and sectors—and the higher education business office is no exception. Business officers across campus routinely use acronyms, such as FASB, GASB, R2T4, ITIN, F&A, UPMIFA, or FERPA, and terms like “composite score,” “perpetuity,” “liquidity,” “credit balance refund,” “component unit,” or “defeasance.” Most college business officers will immediately recognize these terms, but if used at a social function, individuals might find themselves facing blank stares—or perhaps even accusations of using negatively charged terms.
In recent years, policymakers, students, and others have been calling on colleges and universities to make publicly available more information on issues from endowments to bank relationships and more. Not only has media interest in higher education swelled in recent years, but social media has changed the level of that interest in and scrutiny of college costs, student debt, and the way colleges operate. The Internet offers a platform to anyone who may want to compose an argument, present a case, and perhaps even make the issue go viral.
For their part, many business officers report concerns with the public’s ability to fully understand both the details and the strategic finance context of certain policies and decisions. But, what is the proper expectation—that the public, media, and lawmakers be well-versed in the strategic, financial, and operational components of operating a postsecondary education institution or that colleges become practiced at explaining all those things in a relatable and straightforward manner? Perhaps both expectations are valid.
Spreadsheets and revenue and expense tables may speak volumes to accounting and finance professionals, but others may view them as efforts to hide the real story. To many, disclosure is not equivalent to transparency.
For example, a white paper explaining intergenerational equity may not satisfy a critic who accuses a college of hoarding its endowment. Do investment managers have to find snappy ways to explain that, if an endowment shrinks, the annual payout becomes smaller, and tuition and fees are likely to go up? The white paper may be important and necessary, but it will not work for all audiences—especially those accustomed to the character limits of Twitter.
A Case in Point
In a real-world example, NACUBO is currently participating in the borrower defense negotiated rulemaking process at the Department of Education, as ED revisits the financial responsibility regulations.
In a 2017 letter to ED, NACUBO stated, “Current rules under 34 CFR 668.172 need to be updated to address a not-for-profit accounting standard released by the Financial Accounting Standards Board (FASB) in 2016 that upends the current formulas used in calculating composite scores for nonprofit institutions … . Significant changes to the net asset classes will impact the definition of expendable net assets and alter the substance of the net income ratio—making it impossible for ED analysts to calculate ratios using terminology and formulas under the current regulations.”
Accounting professionals at private colleges and universities will immediately understand the problem at hand—and that a miscalculation of the score could be costly to the institution and result in few dollars available for scholarships, academics, or student services. Unfortunately, some observers of the borrower defense negotiations are staking a position that the effort to revisit the financial responsibility rules is doing little to defend students and will instead exploit them.
Words are powerful and, in this moment in time, college and university business officers need to find ways to better explain how well-crafted policies—even if they are complex—do, indeed, benefit students.
Facing Off on Tax Reform
Business officers were put to the test as Congress released, debated, and passed the most comprehensive tax reform legislation to emerge in 30 years. Numerous provisions were on the table that would have driven up costs rather than boosting affordability—and many of them focused on issues that only business officers or tax experts are familiar with, such as “unrelated business income,” “private activity bonds,” “advance refunding,” and more. Sections 117(d) and 127 might be household names in certain human resource and tax offices, but to the lay person, these sections of the tax code sound more like stadium seating sections.
In the face of proposals to alter or eliminate many of these provisions of the federal tax code, many colleges and universities and their advocates found effective ways to communicate their concerns. Furman University, for example, shared “Ray’s Story,” a two-minute and 40-second video that allowed Ray, a university employee, to explain what eliminating Section 117(d) would have meant to him. Marist College, the Rochester Institute of Technology, and Randolph-Macon College also created and shared videos that were brief, to the point, and online, enabling them to be shared widely on Twitter and Facebook. They were important contributions to the successful campaign to prevent Congress from eliminating important employer-provided education benefits. In another video, Vanderbilt University conveyed in 71 seconds what an endowment excise tax would mean to students supported by its Opportunity Vanderbilt scholarship program.
These personal and poignant stories are a way to incorporate the human factor into the issues that truly hold tremendous life-changing impact on institutions, individuals, and society.