Framing Your Finances as

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Framing Your Finances as Opportunities for Growth
Lou Woodruff NCTA National Conference Salt Lake
City Friday, August 3, 2007
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• The Financial Challenge We Face

• Telling The Financial Story

• Taking Credit for Revenue

• Managing Bottom Line Perceptions

• Controlling the Budget Presentation

• Defining the Measures of Success

• Demonstrating Financial Competence

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In the 1980s colleges began to find it more
difficult to cover expenses in the face of
escalating costs and faculty salaries.
Seeing an opportunity, business consultants
descended upon the colleges, offering proven
business models as silver bullets for achieving
and sustaining financial stability.
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Business processes were adopted, targeting
measurable objectives and imposing more formal
staff evaluation models.
College supported services, such as Campus
Security, the Book Store, Food Services, and
Facilities and Grounds management, were
increasingly in-sourced.
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Wherever possible, internal departments were
converted to profit centers, responsible for
covering operating expenses through revenue
generated for the services they offered.
Testing Departments that escaped that burden are
still pressured to hold expenses down and
increase revenue as an important measure of
their success.
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The Financial Challenge We Face
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• The Financial Challenge We All Face

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The solution to every problem is inherent
within the problem itself.
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By reordering the components of the problem
the . . . solution will emerge.
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Dont Defend Your Finances
Seriously . . .
Celebrate Them!!
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You have faced some challenging situations over
the past year . . .
Seriously . . .
and you have handled them in an exemplary, even
heroic manner !
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Tell The Financial Story
Tell Your Story
Success
Services
New Business
Improvements
Volumes
Customers
Partnerships
Projects
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Tell The Financial Story
Tell Your Story
Events unfold the plot.
Your actions add the drama.
And your numbers tell the story!
Success
Services
New Business
Through the Numbers!
Improvements
Volumes
Customers
Partnerships
Projects
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Tell The Financial Story
Tell Your Story
Events
actions
numbers
story
Through the Numbers!
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Revenue
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If your Testing Program is NOT a Profit Center
your Revenue may be disappearing into the
mysterious the black hole called
The General Fund.
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But there is often no public
accounting of this revenue . . . and no
associated political gain!
Administrators love this set up since it gives
them unallocated Revenue to use!
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Take credit for your Revenue . . .
even if it's outside your budget !
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If they are not formally reporting your Revenue
to you
then YOU should be reporting it to THEM!!
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Prepare Your Own Testing Revenue Report
Report what the General Fund should have received!
For Test Fees Collected
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Prepare Your Own Testing Revenue Report
For Payments from Testing Vendors
Report all Honoraria as Revenue . . .
even if it is paid directly to a proctor!
Whether the payments are for standardized testing
done on Saturdays or from computer delivered
testing done during the week . . .
Honoraria paid is Revenue . . .
generated by services you provide . . .
as part of your testing program operation.
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Present Your Revenue in Detail to Support Your
Financial Story
Unit Per
Source
/Unit
Units
Total
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The Bad News
The Good News
An Opportunity
They dont really understand what testing is
all about !
They dont really understand what testing is
all about.
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Manage Bottom Line Perceptions
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Control the Presentation
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Control the Presentation
Re-categorize expense lines with sub-totals to
highlight the points in your financial story.
Breakout administrative and operational costs to
highlight an operations message.
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Control the Presentation
Breakout expenses for special projects or new
work, creating multiple bottom lines to carry
your message.
Total Operational Expenses
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Control the Presentation
Differentiate among cost types to highlight
what happened
shape perceptions
explain changes
maintain or reduce
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So . . . your numbers are a given
And you can manage how people view the bottom
line about what occurred and even why it happened
But if you cant control the Measures of
Success you still dont have control
You can put them in the context of a story
You can even control how the numbers are
presented to support that message
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Controlling the Measures of Success
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Traditional financial measures of success are
OK if your financials work well with them !
Introduce Another View!
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Traditional financial measures of success are
OK if your financials work well with them !
Introduce Another View!
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Highlight Measures of Efficiency Productivity
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Highlight Measures of Efficiency Productivity
First, clean out your expense lines. Leave only
the costs related to the work you are going to
measure.
Set Aside
- Administrative Costs
- Costs for Special Projects
- All Non-Operational Expenses
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Highlight Measures of Efficiency Productivity
Next, identify Units of Measure taken from the
work performed within your area of
responsibility.
Examples
- Test Volume
- Scanning Volume
- Service Hours
- Other Measures
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Highlight Measures of Efficiency Productivity
Divide both your Staff Expenses and your
Operating Expenses by a Unit that measures the
work.
If there is more than one Unit that can be used
to measure the work, try each of them to see
which one delivers the message you want best.
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Highlight Measures of Efficiency Productivity
Efficiency
Productivity
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If your Staff Cost per Unit has decreased
Your Productivity has gone up !!
If your Operating Cost per Unit has decreased
Your Efficiency has improved !!
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If Operating Cost per Unit has decreased . . .
If Staff Cost per Unit has decreased . . .
Efficiency has improved !
Productivity is up !
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Demonstrating Financial Competence
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Credibility is a function of the values and
perspectives held by the person who is making the
judgment.
Credibility
If you want your financial story to be viewed as
credible, you will need to play to the people
making that judgment.
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NUMBERS
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Test Volume Report

• counts recorded by test by day

• sub-totaled by day, by month,

• summary totals by year

• graph trends by test by month

• show comparisons across years

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Test Revenue Report

• volumes of revenue generating tests

• revenue per-unit (test, hour, session)

• total revenue

• comparison to plan

• comparisons across years

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Special Project / Unplanned Work Report

• breakout project expenses

• separate costs for unplanned work

• compare work level to expense

• compare to plan (by and/or )

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Reports for Profit Centers
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Profit-Loss Report

• expenses (minus unplanned work)

• revenue

• Profit / Loss for the Plan (by and )

• Expenses (including unplanned work)

• P L at the Bottom Line (by and )

• Comparisons to plan and across years

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Additional Reports for Profit Centers
Return on Expense (ROE)
Return on Investment (ROI)
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Return
Revenue
Recruitment
Retention
Academic Support
Whole

• Per Unit Measure

• Percent

Expense
Investment
staff salaries
staff benefits
facilities costs
operating costs
other overhead
capital / equipment
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The Big Four to Remember

• Tell The Story Behind Your Dollars

• Take Control of Your Presentation

• Define Your Measures of Success

• Demonstrate Your Financial Competence

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But there may be a specific bullet right for
each problem
There may not be a silver bullet to fix every
problem.
Finding the right solution ?
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for a copy of this presentation contact Lou
Woodruff woodruff_at_bucks.edu 215-968-8467
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for a copy of this presentation contact Lou
Woodruff woodruff_at_bucks.edu 215-968-8467
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for a copy of this presentation contact Lou
Woodruff woodruff_at_bucks.edu 215-968-8467