Creating a Crystal Ball for College Finances

As they searched for the right combination of changes to put their institution on course to fiscal sustainability, the members of the Commission on Shaping the Future of Wilson College relied on an intricate model of the college’s future finances that was assembled by Brian Ecker, the college’s vice president for finance and administration.

Mr. Ecker worked with consultants from Stevens Strategy in creating the model, primarily in Excel. Starting with several years’ worth of audited financial statements, he added revenue and expense assumptions based on an in-depth admissions survey the consultants had conducted. Regression analysis allowed him to forecast how different combinations of changes would affect the college’s annual budget as far out as 2020, the year Wilson hopes to reach the break-even point.

“It was complicated to build all the formulas in,” says Mr. Ecker. To predict the effects of coeducation on full-time undergraduate programs, he studied the experience of other colleges that had gone coed in recent years, including Hood College in nearby Frederick, Md. To evaluate proposals for new academic programs, he analyzed potential revenues and costs, including salaries for new faculty members and administrators, spending on marketing and equipment, and start-up costs like accreditation.

Mr. Ecker admits that “there were some nonscientific guesses,” like estimates of how spending on facilities would affect admissions. There were also unknowns, including the future rate of inflation and the effect any tax-code changes might have on giving. For the most part, he was conservative—"We didn’t want to model either the best or worst cases,” he says.

“The commission came up with an awful lot of suggestions,” says Mr. Ecker. “The model filtered some that wouldn’t have added enough revenue.” And while no one at Wilson expects each and every one of the model’s forecasts to be proved accurate, Mr. Ecker says “it gives us a good tool to use going forward.”