Presentation for FAMU Board Meeting August 2020 CONFIDENTIAL AND PROPRIETARY. Any use of this material without specific permission of the owner is strictly prohibited The information included in this report will not contain, nor are they for the purpose of constituting, policy advice. We emphasize that statements of expectation, forecasts and projections relate to future events and are based on assumptions that may not remain valid for the whole of the relevant period. Consequently, they cannot be relied upon, and we express no opinion as to how closely the actual results achieved will correspond to any statements of expectation, forecasts or projections.
Agenda Forward-looking trends in higher education Key themes in COVID response for HBCUs Financial and strategic COVID response at FAMU 2 | tmcf.org
9 durable higher education trends amplified by COVID-19 1 The demographic cliff 2 The Diversity, Equity and Inclusion 3 Affordability and value are imperative misunderstood The year 2026 will bring a peak in high school graduates then an aggressive Universities struggle to close a double-digit Cost-to-attend is slightly higher, but debt decline, marked also by a decline in achievement gap while the next 10 years levels have risen while repayment rates international student demand. will bring increasingly diverse incoming have fallen. Meanwhile, completion rates undergraduate classes. have stagnated. 4 Increasing recognition of student 5 Higher education goes remote 6 EdTech brings new enablers and mental health needs overnight competitors Mental and emotional health issues such COVID-19 forced rapid remote learning Tech has been gaining traction across as anxiety and depression, have been on adoption within weeks and acceptance of higher education, providing HEIs with the rise and are anticipated to increase remote and online learning appears to be enablers as well as new sources of even more sharply in the COVID-19 period. increasing and accelerating. competition and disruption. 7 The Future of Work is now - and in 8 Interdisciplinary research becomes 9 Financial instability brings an unprecedented downturn the norm in the battle for funding consolidation and stressors Automation is expected to impact ~30% of Federal govt. R&D investments lessen on a Financial pressures are increasing amidst tasks in ~60% of roles and graduates will relative basis, while the research landscape state funding declines (pre-COVID-19) now search for jobs in what could be the is re-organizing to focus on and industry consolidation and closures, largest downturn post- WWII. interdisciplinarity and new capabilities. largely of for-profit institutions. 3 | tmcf.org
Agenda Forward-looking trends in higher education Key themes in COVID response for HBCUs Financial and strategic COVID response at FAMU 4 | tmcf.org
We have been working to support FAMU in its COVID-19 response Goals of the Partnership An enhanced governance and operating model to make decisions more quickly and effectively, both during the crisis and through reopening A clear understanding of current & projected financial situation , along with immediate student, faculty, & staff needs post crisis A roster of enrollment and retention initiatives to stabilize during COVID-19 and beyond This document is subject to the disclaimers covered on the cover page. 5 | tmcf.org This document is subject to the disclaimers covered on the cover page.
We partnered with FAMU over twelve weeks to deliver impact The twelve week engagement had a three phased approach Implement and refine Assess and diagnose Design and decide 2-3 weeks 3-4 weeks 4-6 weeks Assessed readiness across Determined critical areas of Implement new initiatives / governance, finances, enrollment, impact (e.g., finance, enrollment, roadmap, holding regular check- retention, technology and retention, reopening) ins across workstreams to maintain reopening progress and remediate observed Set aspiration for impact and risks / obstacles Identified high impact areas to aligned on goals and targets boost near term performance Embed new habits and Designed initiatives and clear capabilities to lay the foundation Adjusted crisis management roadmaps to ensure progress for continuous improvement, response governance and across critical impact areas including mechanisms to monitor operating model to ensure adoption and progress of initiatives coordinated response across near, medium, and long- term Mid May Late May Late Now June 6 | tmcf.org This document is subject to the disclaimers covered on the cover page.
Five top-of-mind topics guided our support to FAMU through its COVID response Governance & operating Students Financial Technology Faculty & academics model Immediate Student safety Cash on hand Online teaching platform technology Employees safety Governance process shifts assessment – delivery, grading Are the correct safety measures, Debt service implications Are the correct safety measures, Board requirements/procedures infrastructure, and protocols in place? Faculty remote teaching capabilities infrastructure, and protocols in place? Extend cash on hand Student financial security Financial consolations to students, Staff remote work capabilities Faculty and staff skills for large shifts Organizing a decision-making cadence staff (e.g., community building, tactical) for emergency situation Job loss, work-study loss Access to wifi and equipment Infrastructure for remote operations Student learning Tuition revenue impact Student access to technology: laptops, Workforce size and capabilities for Orienting the board for rapid decision- broadband internet ongoing and future remote/ socially making now, and going forward Student access to technology, internet Non-academic revenue impact distant environment Faculty access to technology Online learning portal effectiveness Student engagement Auxiliary revenue Sustain learning quality, student support and success over time, Sense of community remotely Quick closure impact Medium-term (3-6 months) Student success Reducing costs and financial liabilities Milestone achievement: course completion, requirements, graduation New student enrollments Increasing revenues and sources of funding to close persistent gaps Existing student retention This document is subject to the disclaimers covered on the cover page. 7 | tmcf.org This document is subject to the disclaimers covered on the cover page.
Agenda Forward-looking trends in higher education Key themes in COVID response for HBCUs Financial and strategic COVID response at FAMU 8 | tmcf.org
We have supported FAMU across finances, crisis management, and enrollment, and several activities can ensure maintained momentum Deep dive to follow Not yet started Complete Underway Progress to date Forward-looking opportunities Shared outside-in perspective on cost opportunities Continue to update model to ensure accuracy Finances Shared and discussed levers for savings across personnel and as the fall semester unfolds Implement select initiatives (e.g., section non-personnel spend and prioritization of highest potential levers to prioritize for action, including considerations for implementation consolidation) with high reward vs cost to Built a comprehensive cash flow model, including three specific implement COVID scenarios, to understand financial implications and size potential shortfalls Conducted a program profitability analysis to inform strategic decisions on where to grow programs Shared outside-in perspective on enrollment and retention track Continue student pulse checks and outreach Enrollment and record versus peers to minimize attrition Shared best practices and levers to improve enrollment and Retention retention, including an enrollment dashboard Shared best practices on crisis management, including team Crisis Manage- structure, key priorities, and activities ment 9 | tmcf.org This document is subject to the disclaimers covered on the cover page.
Example: We worked with FAMU to develop a cash flow model and prioritize initiatives to promote financial health Note: FAMU team continuing to work with model to finalize sizing of surplus / deficit across scenarios. Numbers below may not reflect final assumptions used by team 10 | tmcf.org This document is subject to the disclaimers covered on the cover page.
Example: We worked with FAMU to assess profitability by program 11 | tmcf.org This document is subject to the disclaimers covered on the cover page.
Beyond the completed engagement, FAMU can assess its programs based on a set of metrics in order to optimize the program portfolio FAMU can build a responsive academic enterprise that seeks to have a portfolio of high- quality program offerings aligned with the demands and trends of the workforce To assess FAMU’s current program portfolio and set up a discussion around the strength of its program, we can examine programs across four dimensions: Workplace relevance 1 Student interest 2 Student satisfaction and outcomes 3 4 Research productivity 5 Program profitability 12 | tmcf.org
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