Furman will change its business model and budgetary practices through the adoption of four new principles and practices involving enrollment management, the creation of a strategic improvement fund, a change in the use of annual fund contributions, and the enhancement of the reserve fund.
1. Enrollment management strategy
(a) Enrollment management net revenue targets. Enrollment management practices, involving the management of tuition rates, financial aid discount rates, and student body size, will transition over a five-year period to significantly increase net tuition revenue. This revenue will be divided between contributions to the Reserve Fund and reinvested in strategic quality enhancements through the creation of a new Strategic Improvement Fund.
(b) New financial aid structures. A more disciplined financial aid system will be implemented in which controls will be put in place to prevent overspending the unfunded financial aid budget (that portion of the financial aid budget not backed by endowment or annual gift resources). Simultaneously, the entire approach to need- based and merit-based financial aid will be revamped through an "award to mission" strategy, so that aid is repurposed and repackaged to the end of attracting a diverse and engaged student body.
(c) Student body size. One critical variable in the enrollment management picture is the size of the student body. At some universities, a strategic plan may include a hard "target number" for increasing the student body size. But modest upward increases in the size of the student body, accompanied by appropriate commensurate increases in faculty and staff positions (to maintain, for example, the student/faculty ratio at strong levels), will put Furman in a stronger financial position and generate resources that may be reinvested in quality enhancements. There are two critical variables that will need to be tracked as Furman engages in an ongoing effort to arrive at an "optimal" future student body size:
- The admissions market and application numbers. Perhaps the most critical variable in enrollment management is the admissions market itself, including the number of quality applicants. Furman will not increase the student body size at the expense of quality. Thus a principle variable is "what the market will bear." As marketing efforts and application numbers increase, Furman will be able to modestly increase student body size, while maintaining the goal of attracting a vibrant, engaged, and diverse student body.
- Housing stock. Furman is committed to a policy of remaining 100% residential. Thus housing stock capacity acts as a hard upper ceiling on student body size. That ceiling is not itself an absolute, however, because it may be influenced by the spillover capacity at The Vinings (which Furman treats as an extension of campus housing), as well as by the changes, upward or downward, in existing capacity in Furman's current residential housing stock as that stock is remodeled, particularly in the new "Freshman Village" or "Residential College" models being considered for South Housing.
2. Creation of a strategic improvement fund
A Strategic Improvement Fund, consisting of a blend of a share of the additional net revenue resources generated through new enrollment management strategies and contributions from new approaches to annual fund budgeting, will be created. A rational and transparent process will invite proposals for strategic improvements, to be prioritized and funded through a University-wide committee consisting of the President's Cabinet and additional faculty, staff, student, and alumni appointments, to make annual strategic improvement expenditure recommendations for the annual budget submitted to the Board of Trustees for review and approval.
3. Changing Annual Fund Contributions
Annual fund contributions to Furman will not be included in the underlying operating budget resources, but will be segregated and principally earmarked for the newly created Strategic Improvement Fund, with the annual fund contributions to the Strategic Improvement Fund reserved for non-recurring strategic improvements only.
4. Reserve Fund
Furman will increase its allocation to the Reserve Fund as contingency and buffer for future economic contingencies, with a near-term goal of creating a fund of approximately 1.5% of budget.