Michael Townsley

Cash Defines Survival Michael Townsley

While demographic, technological and industry changes have been pressuring schools for a decade now, the pandemic has forced many schools into weakened financial positions, especially as it relates to cash available to support operations. Examining IPEDS data from a select group of private not-for-profit institutions between 2015 and 2019, we put forth three major arguments:

1. That the ability of many schools and colleges to cover both direct and indirect expenses through their main revenue source, tuition, has been substantively weakened by the COVID pandemic and the adverse decline in birth rates.

2. That traditional financial reporting and monitoring systems often do not provide enough of an optic into a school's cash position.

3. That CFOs, management teams and boards must improve their focus and understanding of the forces impacting cash flow and cash position.

While the financial impact of the pandemic might slowly subside, other industry changes and innovations will continue to present disruptive financial challenges. The next tide will certainly flow and the ebb that follows may not be as severe as today's, but it's time now to work on limiting our exposure, for the next tide will inevitably ebb once more.