Magazine article University Business

Match Stimulus Funding with Your Vision of the Future: Kevin Hegarty, Chief Financial Officer and Chief Information Officer at the University of Texas, Austin, Offers Insight into How Colleges and Universities Should Use Money Available to Them from the American Recovery and Reinvestment Act

Magazine article University Business

Match Stimulus Funding with Your Vision of the Future: Kevin Hegarty, Chief Financial Officer and Chief Information Officer at the University of Texas, Austin, Offers Insight into How Colleges and Universities Should Use Money Available to Them from the American Recovery and Reinvestment Act

Article excerpt

What are the key takeaways regarding ARRA and higher ed?

Leaders at colleges and universities have to understand the nature of the financial challenge at their schools. Are you dealing with something of a temporary nature, meaning revenues have declined and expenses have not declined at the same rate, but when the economy recovers you'll be back where you were before the recession? That's one view. We have a different view, which is that there has been a fundamental reset within higher education, and that things won't go back to the way they were. Schools will need to resize themselves to match an ongoing reduced level of revenue.

How does that analysis relate to the federal stimulus package?

Stimulus monies are one-time monies. So if you believe you've got a one-time aberration in revenue, the cumulative difference might be gapped with some of this stimulus money for operations. If you believe in the fundamental reset model, then while stimulus monies can help lengthen the time that you have to take more permanent action, it doesn't diminish the need for permanent action.

What's the risk of being wrong in your analysis?

The challenge is that if your revenue picture does not return to pre-recession levels, and you've pegged stimulus funding into recurring expenses such as hiring that additional faculty member or even paying a modest salary increase, then you may find yourself very surprised when stimulus funding is no longer available. …

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