We had an excellent day of collaboration and learning at our Higher Education: Current Issues and Trends event held at Northern Kentucky University on March 23, 2017. Topics throughout the day covered everything from new accounting standard implementation to risk management and cybersecurity. We hope this overview of the day provides some insight into common areas of interest within the higher education community.

Higher Education Issues and Challenges with Practical Solutions

Presented by: Dr. Kenneth L. Hoyt, Ph.D., The Higher Education Practice, LLC

Dr. Hoyt’s presentation, “Higher Education Issues and Challenges with Practical Solutions,” focused on identifying the top issues that face public and private institutions in our region. Attendees were asked to come to the front of the room and identify the issues and challenges they consider most significant in the current higher education landscape, regardless of whether they were from a private or public institution. Through this exercise it was quickly noticeable that private and public institutions face many of the same issues and challenges. Click here for more details.

Among the most significant issues that were discussed were:

  • Student retention and enrollment management: This was identified as a key factor of success for all institutions. The attendees nearly unanimously agreed that this was one of the biggest issues facing public and private institutions. Attracting the right students and keeping them engaged for the entire life of a program of study is one of the best ways to secure an adequate revenue stream.
  • Access versus tuition discounting and the cost of education: Controlling the price of tuition was a significant hurdle discussed for all institutions. However, private institutions ranked this particularly high. All institutions strike a delicate balance between discounting tuition enough to ensure access for students that may not otherwise be able to attend, while at the same time having adequate revenue to cover the costs of education.
  • Endowment management and resource allocation: For private institutions, fighting the pressures of keeping tuition affordable, proper management of investments within the endowment, and use of funds become more important.
  • Speed of making decisions: Participating universities mostly agreed that the speed of making decisions was a hurdle for their organizations as they attempt to react to the swiftly changing environment of higher education.
  • Facilities upgrades: It seems that the war is on to compete for students by upgrading facilities to be state of the art. Schools are getting creative to find ways to fund new facilities and those that can’t are finding it harder to attract students.

The event attendees also discussed ideas to help institutions figure out how to be more successful. They explored the concept of ensuring that the strongest programs with the best retention and least cost were given more focus than any programs with lower retention and higher cost. Focusing organizational resources on the lower-cost, more successful programs is a great way to increase retention and help ease the challenge of enrollment management.

Dr. Hoyt has helped a large number of institutions identify which programs are working and which are using more resources than they might be worth. Key indicators include the number of program inquiries, percentage of applications, graduation rate of the program, cost per student, and geographic demand measure, among many other items.

Ultimately, the income of an institution is greatly benefited by improving graduation and retention rates and focusing on programs central to the mission of the institution that also provide the best student engagement.

Dean Dorton Publication: State of Higher Education in KentuckyLegal Issues Update

Presented by: Jim Newberry, Steptoe & Johnson

As they say, there is an elephant in the room — the Trump administration. Many current hot higher education legal topics include:

  • Title IX
  • Legal Issues Generated by Financial Distress
  • Rapidly Evolving Compliance Environment
  • Unions/Employment Issues
  • Free Speech v. Hostile Environment
  • Cybersecurity Threats
  • Risk Management
  • Emotional Support Animals
  • Concealed Carry Laws
  • Emergency Management Obligations

The best way to manage these hot topics and others are to stay informed and be proactive. Consider utilizing legal audits for campus-wide issues and selected areas of concern. Identifying levels of contract materiality for involving counsel and employing effective risk management techniques can also help ensure your institution is staying up-to-date with regulations.

Many institutions are working toward more combined approaches such as purchasing services collaboratively with other institutions, creating geographic alliances, or substantive issue alliances. Last but not least, when in doubt, insure against significant risks when possible.

HR Issues, Risks, and Best Practices

Presented by: Jeff Ricketts, Dean Dorton

Higher education is not immune to its own set of human resources challenges. Some of the top noted HR challenges among institutions include:

  • Compensation and Benefits: As the largest expenditure for institutions, encompassing roughly 60% of total operating budgets, they have the daunting task of reducing labor costs and managing benefit cost increases. To accomplish this, HR departments have to review hiring practices, be creative with and carefully review benefit renewals, and be constituents with leadership to strategically address these issues.
  • Staff vs. Faculty: The separation of staff and faculty, and faculty among multiple departments, can lead to morale issues and concerns on campus. HR has the role to be ambassadors for fair treatment, bringing all staff and faculty together, by evaluating policies that separate the two parties, develop committees to bring all parties together and to publically promote the successes of both groups.
  • Succession Planning: An item facing a wide array of organizations, with the baby boomers retirement, is succession planning. The transfer of institutional knowledge can be vast depending on the level of position and tenure with the institution. HR has the opportunity to develop policies and procedures, especially through performance management, to lead their institutions through the succession planning process.

Regulatory changes and updates are also impacting HR departments across the country. And with DOL audits on the rise, organizations need to be proactive in their compliance approach. HR departments need to conduct annual audits of their HR functions, carefully reviewing compliance, processes and procedures.

Accounting Update

Presented by: David Richard, Dean Dorton

David reviewed the changes to nonprofit accounting and reporting that will be brought about by the recently issued ASU 2016-14, Not-For-Profit Entities (Topic 958): Presentation of Financial Statements for Not-For-Profit Entities. The Financial Accounting Standards Board issued this statement as a result of their efforts to enhance the usability of not-for-profit entity financial statements.

The update seeks to:

  • Address the complexity of the three net asset classes
  • Improve transparency in the relation to liquidity issues
  • Create consistent guidelines for the presentation and disclosure of expenses
  • Simplify the statement of cash flow presentation requirements

Read the full description of the changes required by the ASU.

Risk Management: Financial Fraud, Cybersecurity Update, and Panel Discussion

Presented by: Elizabeth Woodward and Jason Miller, Dean Dorton; Jacob Rhode, Kearting Meuthing & Klekamp PLLC


Cybersecurity is our new reality. Cyber threats grow in volume and sophistication every day. It is no longer just an IT responsibility. It is the responsibility of everyone in a leadership role. It is up to all users to become more aware and help avoid exposing the organization to a potential attacker.

The Department of Education continues to warn colleges and universities of their legal obligation to protect student data. Letters from the DOE have gone out the past two Julys. They point out the requirements apply to both public and private institutions.

Reviewing the annual Verizon Data Breach Incident Report (DBIR) can help you stay up to date on the latest threats and risks in cybersecurity. Key points from the 2016 DBIR:

  • User Awareness is a critical point for organizations to focus on helping reduce risks in areas classified as Crimeware, Miscellaneous errors, Physical theft and loss, and Insider and privilege misuse. Attackers are constantly targeting users with more and more sophisticated phishing attacks. We need to challenge our users to be more alert and skeptical.
  • Top threats (breaches) for 2016 in the Education sector were:
    • Web Application Attacks (30%)
    • Miscellaneous errors (17%)
    • Stolen assets (17%)
  • Multi-factor Authentication is a critical additional line of defense. Even if user’s passwords are compromised, outside threats would be stopped by the required secondary authentication.
  • Continual Risk Management is critical to keep your organization’s cybersecurity current and effective.

Are you actively engaging with your IT resources to ensure your institution is actively considering risks and continually improving your security posture to mitigate those risks?


Financial Fraud in Colleges and Universities

It is a new day for administrators of colleges and universities. On many campuses, the historical atmosphere of openness and collegiality has been replaced with the fear of budget cuts and lost jobs. This shift creates an important warning for financial professionals charged with preventing and detecting fraud – the decline in resources creates financial pressure; the personal disappointment and frustration with institutional pressures can encourage rationalization (“It’s ok for me to inflate this expense report, the University owes me.”)

In order to combat these effects (two prongs of the “Fraud Triangle”), college and universities need to focus on strong internal controls, to insure potential fraudsters do not have the “opportunity” (third prong of the Fraud Triangle) to steal.

Some factors to be aware of when considering internal controls for colleges and universities include:

  • Decentralized control environments can lead to lack of segregation of duties and independent oversight
  • Personnel with relatively low-compensation may have autonomy over high-dollar contracts
  • Faculty members’ involvement in businesses outside the University increases risk of conflict of interest
  • Funding sources are inherently complex, with different reporting requirements and rules
  • Boards and high level management may lack financial sophistication
  • Faculty and staff may have access to various forms of expense reimbursement, from various sources

In addition to periodic re-evaluation of internal controls, colleges and universities should remember that a strong ethical tone (which begins at the top of the organization) is the cornerstone of its environment.Student Financial Aid Update and Reminders

Presented by: Crissy Fiscus and Megan Crane, Dean Dorton

Federal student financial aid (FSA) compliance remains a significant risk area for all institutions as the Department of Education (DOE) has increased the number of program reviews in recent years and the penalties seem to be increasingly harsh. Two schools in Kentucky have closed their doors in recent years after having a DOE program review that resulted in severe findings and ended with the school being placed on HCM2. The board and management of all institutions need to be made aware of the risks of noncompliance with FSA requirements and develop a system of monitoring compliance. Maintaining FSA compliance is a campus-wide responsibility; however the President’s Office, the Student Financial Aid Office and the Business Office carry the majority of the responsibility for maintaining compliance. Best practices for each of those offices were discussed and a few are listed below:

  • Develop a relationship with representatives from the DOE office in your region – go visit them if you have to.
  • Hire a Director of Student Financial Aid (SFA Director) that understands the compliance requirements and will actively communicate those requirements to other departments across campus.
  • The SFA Director should be included in all discussions about new programs, new locations, etc.
  • Review the list of top 10 audit and program review findings annually.
  • Invest in training for SFA staff annually.
  • Engage an auditor that understands student financial aid.
  • Utilize internal audit to aid in FSA compliance (if you have internal audit).