Looking to reduce operating costs during a severe economic downturn, four higher education institutions in Atlanta decided to capitalize on their geographic proximity. They formed a consortium and built a central power plant that produces electricity and steam for all the member institutions, as well as providing heating and cooling.
The year was 1930. And 87 years later, the Atlanta University Center Consortium (AUCC) and its now-modernized power plant are still going strong. Over time, AUCC has weathered a few membership changes—including the merger of two of its founding institutions—and expanded its shared operations by, among other initiatives, building the Robert W. Woodruff Library to serve all students and faculty within the consortium.
“The consortium started with the understanding that the institutions could do some things better as a group than as individual institutions,” recounts Robert D. (Danny) Flanigan, vice president of business and financial affairs for Spelman College, one of AUCC’s founders. “For example, if Spelman had to buy all of its power from utility companies in Georgia, we’d spend about twice what we pay now for the power plant, even with the debt service and overhead that go with it.” Similarly, he says, Spelman’s library spending would probably double without a shared facility.
Another economic crisis, the 2008 recession, prompted six private colleges in upstate New York to explore shared approaches to achieving cost savings and greater efficiencies. Following the creation of the New York Six Liberal Arts Consortium in 2010, the colleges initiated development of Health4Edu, a shared self-funded health plan that includes membership in a prescription drug purchasing coalition. “Our institutions are small enough that one catastrophic illness or injury could cause all kinds of havoc with their health-care premiums,” says Amy Cronin, executive director of the New York Six. “The collaboration has made their health-care expenditures more predictable by reducing a lot of volatility and has resulted in significant savings—close to $4 million over the last three-plus years.”
Given the unrelenting financial pressures under which colleges and universities now operate, shared efforts to produce such savings are likely to proliferate. Equally important to most institutions, particularly smaller colleges, is improving student services. As an example, Colleges of the Fenway—a Boston-based consortium that recently celebrated its 20th anniversary—has always had a two-pronged mission to save money as well as enhance student offerings. Because the consortium’s six members are located within walking distance of one another, their collective undergraduate population of approximately 13,000 students can easily participate in shared academic and co-curricular activities.
“The consortium’s job is to make these colleges more attractive by offering the same opportunities a student would find at a university. As small colleges, for instance, none of them had an orchestra—and that was one of the first activities we undertook,” explains Claire Ramsbottom, executive director of Colleges of the Fenway, which comprises five private and one public institution.
The joint orchestra is part of the consortium’s performing arts program, which also includes a jazz band, a dance program offering instruction and performance opportunities, a chorus, and a theater program. Colleges of the Fenway also manages intramurals and recreational activities for its campuses, enabling more than 3,000 students annually to participate in soccer, flag football, and softball leagues. In addition, it built a fiber optic network shared by all six institutions, manages cross-registration, sponsors an annual environmental research symposium, and offers cohort-based leadership training programs for faculty and staff, including department chairs. The consortium’s 11 employees include shared positions such as an emergency planner, who is working with each institution to customize emergency procedures and operations.
“Our goal is to ensure the colleges are stronger together than they are individually,” Ramsbottom notes. “In this case, our campuses are so close together that an emergency on one will probably impact the others. The institutions would need to work in concert with each other anyway, and the shared positions just makes it easier.”
Sharing Means Changing
Ramsbottom has witnessed increased interest in institutional collaboration and believes that it will play a big part in higher education’s future. Still, she acknowledges the inherent challenges. Ramsbottom, who also serves as president of the Association for Collaborative Leadership, observes, “When institutions start to collaborate, they lose a little bit of individual control. It’s usually much easier to undertake something new, which the colleges are not doing but have a need for, rather than changing something that is already embedded in the institutions.”
Bob Keasler, vice president of finance and administration at Shenandoah University in Winchester, Va., puts it more bluntly. “The only drawback to collaboration is that we’re just stubborn,” says Keasler, who is also president of the fledgling Higher Education Systems & Services Consortium (HESS). “Everybody wants to hang onto those things that are distinctive about their institutions. Well, our locations are distinctive, as are our campuses, alumni, and programs—but our business operations really aren’t.”
Keasler describes HESS as a “dating service” that facilitates interaction among institutions interested in sharing products or services they otherwise couldn’t afford or wouldn’t have access to, such as a general counsel, a Title IX coordinator, or a sustainability expert. With the vast majority of smaller institutions doing the same administrative functions, he sees enormous potential for reducing operational redundancies and sharing costs.
“The potential to save money or reduce risk may be enormous,” agrees Diane Dimitroff, executive director of the Lehigh Valley Association of Independent Colleges (LVAIC) in Pennsylvania, “but everything done collaboratively represents a change initiative. The big question is how much you’re willing to change your processes—and get people to change their behaviors—to take advantage of an opportunity.”
That question isn’t restricted to small private colleges. Large, public institutions grapple with it as well, including the 23 campuses within the California State University (CSU) system. Seven years ago, the campuses stepped up efforts to better serve their students by working more closely with one another on procurement and operations. In most cases—particularly the move to a common CSU financial system—doing so has called for a healthy dose of change management.
“Everybody would like every collaborative project to save millions, but savings are often incremental and more about lean process improvement. When people in individual areas are able to save $30,000 or $50,000, it adds up,” says Mike Redmond, assistant vice chancellor of strategic initiatives and support services in the CSU Office of the Chancellor. Case in point: In 2015–16 alone, the CSU system saved $7.5 million on bank card services, office supplies, printers, and shared services.
On a larger scale, Redmond adds, the CSU campuses have joined the 10 University of California (UC) campuses and more than 100 California community colleges in a statewide collaboration to improve administrative performance, service, and outcomes on behalf of their combined 2.7 million students. In addition to providing process improvement training, the group sponsors an annual conference on collaboration, highlights innovative practices throughout the three systems, and looks for opportunities to jointly address common problems.
The three systems scored a collective win by working with a state assembly member to develop enabling legislation that makes their collaboration easier. A change in California’s education code now gives community colleges the ability to make purchases under the same terms and conditions as specified in any contract lawfully awarded by the CSU or UC system. The three systems now connect and share best practices utilizing UKNOWLEDGESHARE.com. “In the public environment, bidding and requirements get pretty complicated. UC had a contract for computers that community colleges took advantage of to immediately begin documenting savings,” reports Redmond.
Making It Work
Traditionally, geography has provided the starting point for collaboration within higher education; consortia often comprise institutions located in the same city, state, or region. That’s changing, however, as evidenced by geographically diverse consortia such as HESS, whose 85 member institutions cover 15 states, ranging from Oregon to Pennsylvania.
“Most other industries have understood for a long time that you can transcend geography, particularly through the use of technology, and higher education is waking up to that realization as well,” says Michael Horowitz, president of Chicago-based TCS Education System. The consortium has five member institutions representing five states and several professional disciplines, including law, nursing, integrative health care, management, education, and psychology. For TCS, which is shorthand for The Community Solution, the unifying factor is institutional mission.
“The idea was to create a system of colleges that are each connected to their own communities and committed to the service of those who reside within them, which in turn powers student success,” explains Horowitz. “The colleges all have autonomy and strong local leadership, with TCS providing the backbone of support of a community and shared services. They may not always save a dollar, but they’ll receive better systems and services so they can thrive.” The shared services include finance, IT, financial aid, marketing, and legal support, all of which are centralized at TCS. In other areas, such as admissions, a hybrid approach prevails: The colleges handle student-facing interactions and TCS takes on the back-office functions.
“Collaborating with TCS allows the colleges to focus on their students and academics. We also provide them access to expertise such as financial analytics and state-of-the-art platforms,” says Mehul Patel, chief financial officer at TCS. He notes that two schools had deficits exceeding $1 million when they joined the system; after several years, both began generating an annual surplus and increased the size of their graduating classes.
Clearly, collaboration can produce impressive results both financially and academically. So what do successful shared ventures have in common? For starters, says Diane Dimitroff, institutional representatives must value and trust one another enough to take risks together—and nurturing such relationships can’t be rushed. Next, she advises, “Agree on the purpose of your collaboration. Give it good attention and energy before allowing yourself to become distracted by the administration of it.”
Additional success factors include:
A designated point person. Not every collaboration calls for paid staff support—but someone has to pay attention to a collective project to ensure it moves forward as planned. The bigger or more complex the endeavor, the more likely it will overwhelm a volunteer who already has a full-time job. “Collaborations are very easy to put on the back burner because of the increasing demands on senior leadership at institutions,” observes Claire Ramsbottom of Colleges of the Fenway.
The point person can also provide stability when institutional turnover occurs. In Dimitroff’s five years at the LVAIC, for example, five of the six colleges’ presidents, plus numerous vice presidents, have changed. As executive director, she says, a big part of her job is to facilitate introductions and continually build the personal relationships on which collaborations rest.
Agreed-upon guidelines. When deciding whether to pursue a collaborative project, LVAIC’s six member colleges often refer to the consortium’s 12 guiding principles. These include: “Collaboration maintains distinctive institutional cultures and strengths,” and “Member outcomes must be win-win or win-neutral.” Taking a less formal approach, the New York Six Liberal Arts Consortium applies a three-or-more rule. “If three or more schools are interested in collaborating on a project, we’ll move ahead with it. Not expecting 100 percent participation takes the pressure off the schools,” explains Amy Cronin.
Adaptability and openness. Institutions with similar priorities at the start of a joint project may ultimately head in different directions. That reality should be expected and accommodated. Ramsbottom, for example, remembers researching a joint food services bid for all six colleges and the hiring of a shared planned giving specialist to work with donors and alumni; neither project ever came to fruition because the interested members changed their direction.
On the other hand, some projects need to be retired once they’ve outlived their collective usefulness. LVAIC’s members used to share a contract for Title IX consulting services; the program ended when each campus determined the need for its own Title IX coordinator. Danny Flanigan recalls an AUCC research program that maintained its own lab and published its own research. Over time the member institutions felt their distinctive research identities fading, so they eventually disbanded the joint program in favor of branding and distributing their own research.
LVAIC evaluates each of its programs every five years, assessing the results achieved, resources invested, and future potential. In 2012, the evaluation process prompted the closing of the consortium’s long-standing program for summer study abroad. “LVAIC initially launched the program because our campuses didn’t have the resources and expertise—but a lot had changed over the years. So LVAIC was duplicating efforts, which is not the way to optimize resources,” says Dimitroff. “We still believe collaborative trips have value, so each school now ‘owns’ and hosts one of the summer programs rather than having LVAIC run everything.”
LVAIC’s goal, says Dimitroff, is to identify the best arrangement for its campuses, even if that means directing them to another group that already offers the needed product or service. “We don’t have enough resources to duplicate efforts, so we try to avoid direct competition with other consortia,” she notes. “We preach collaboration, so we had better practice it.”
Documented results. CBOs won’t find it difficult to track the cost savings attributed to collaborative activities, but other benefits can be more elusive. That’s one reason Colleges of the Fenway occasionally conducts student surveys. According to one recent survey, more than 50 percent of new students said that the opportunities offered through the consortium factored into their decision to attend one of the colleges. They appreciated being able to pair the small college experience with programs characteristic of a larger university.
Sometimes, simply engaging in conversations about shared activities is reward enough. Flanigan and Keasler both enjoy the idea exchange with other CFOs that often accompanies consortium business and appreciate having a network of collaborative-minded colleagues to whom they can turn for information and recommendations. And Ramsbottom has witnessed numerous instances of members teaming up on their own, independent of the consortium, because they have built relationships through the formal organization. Since Colleges of the Fenway was established more than two decades ago, for example, three of its members—one public and two private—now share a dining service and a health center; and two of them—one public and one private—share a student bookstore.
“Collaboration is not a new song—people in higher education have been singing it for years,” observes Bob Keasler. “But the institutions that are more open to collaborations today will have better services, at lower costs, and set themselves up to be winners.”
SANDY R. SABO, Mendota Heights, Minn., covers higher education business issues for Business Officer.