Challenge – Finding a way to improve finances after a cut in state funding
Oklahoma State University Institute of Technology (OSUIT) was initially founded in 1946. The school is part of the Oklahoma State University system. It had over 2,300 students attend the college in 2019. While the school serves a wide range of students, getting the necessary funding proves to be a challenge each year. State funding declined 34% over the past five years. The school was in desperate need to find a way to improve its finances.
OSUIT primarily relies on two revenue streams. These include tuition revenue and state appropriations. However, tuition revenue surpassed state funding as the primary income for the last four years. Leaders at OSUI were concerned that the school’s success depended more on the students instead of the state of Oklahoma. Looking at ways to improve the financial outlook was a top concern for the college. Finding ways to save money in specific areas was a big challenge.
Software Solution – BKD Analytic Tool
Eventually, the CFO of the college found a way to identify specific cost savings by using cost and margin tools from BKD. OSUIT received less state funding each year. They needed to find a way to create a more considerable margin on net tuition. Choosing to implement an analytic tool from BKD made it possible for them to identify specific deficit areas while also making data-driven decisions to boost profitability.
Initially, BKD created the economic analysis tool for OSUIT using three years of historical data near the end of 2017. After evaluating the tool, the president and vice president for financial services decided that a transparent rollout was needed for the best results. Creating ownership in making these decisions was also important. They informed all of the budget managers for the various schools on how to use this software tool. They challenged each manager to improve their financial performance by developing cost-saving strategies.
Using BKD software made it possible to eventually phase out six high-expense and low-producing programs after the budget managers from each program met with each other in mid-2018. By performing this simple action, the college had significant cost savings. Because of this, they were able to provide long-overdue raises to faculty and staff members.
The Results
Implementing this software allowed the college to track the contribution margin for each student per credit hour. The college was losing $37 per credit hour in 2014-2015, as using the BKD tools made it possible to make $24 per credit hour by the end of 2020. These changes created a total margin improvement of $4.49 million, as OSUIT nearly had a $3 million negative contribution margin in 2015. The goal of the college is to reach $8 million in annual improvement from 2015, as they are still working on achieving this goal.
As of fall 2020, OSUIT has invested around $50,000 for the initial BKD product and updates. The combination of increased revenue and cost savings has totaled $8.96 million for the last three years. The leadership team at OSUIT believes that the results were well worth the initial costs and effort of using BKD products.
Using BKD software made it possible to raise staff salaries for the first time in several years, which helped boost morale throughout the entire campus. Successfully implementing these BKD tools also earned them recognition at the 2019 annual meeting at the Southern Association of Colleges and Universities.
OSUIT was able to improve its reputation and financial performance by using BKD products and services. Using this technology will also help them prepare for the future, as state funding drops each year. Implementing these tools made it possible for OSUIT to turn its financial situation around and become much more successful. Now the future is looking much brighter at OSUIT.
