Talking Stick - September/October 2008 - 50

Think Globally, React Locally Being Responsive and Proactive The economic influences on campus housing offered here provide only a snapshot of the variety of factors that can impact the housing budget in any given year. These influences are complex and sometimes unpredictable, creating an uncertainty that requires flexibility and creativity in budget planning and forecasting. Achieving a successful outcome does not occur in a vacuum. Frequent communication with members of finance and administration will promote support for department initiatives and are the most predictable and most valid and can evaluate how robust the estimates are within acceptable margins of error. Smith and Kenny suggest other ways that collaboration can lead to best practices for financial and risk planning: “Know the cash flow drivers for campus housing, including occupancy trends, enrollment growth plans, room rates compared to peers and local market options, and other local market influences; build and maintain operating and capital budgets for a rolling time horizon of three to five years from the current fiscal year; synchronize capital needs with the academic and enrollment plans and needs of the institution; identify maintenance capital expenditure needs; Regardless of the catalyst and even under prioritize the capital the best circumstances, financial planning budget based upon the following factors: must balance the competitive advantage of safety, institutional goals, student the convenience of campus housing with demand, department factors that will influence affordability and goals, and financial resources; and work room rate elasticity. with your institution’s facilities planning and construction and insight regarding institution-wide priorities. finance/treasury departments, in advance, to Brian Smith, director of treasury and risk develop project cost estimates, identify funding management services, and Steven Kenny, sources and determine financing needs, identify director of risk management services, both at terms and conditions of financing, and obtain the University of North Carolina in Chapel Hill, necessary approvals.” emphasize how a strong partnership can facilitate Utility costs, debt service, and local market more sophisticated modeling techniques, such as conditions are just a few factors that have an “performing a sensitivity analysis on key factors impact on the economics of student housing. such as utility expense growth rates, occupancy/ Regardless of the catalyst and even under the enrollment levels, housing fees, inflation rates on best circumstances, financial planning must costs for future capital projects, and debt service balance the competitive advantage of the on complete or partial capital plans.” Given the convenience of campus housing with factors unpredictability of these parameters, a sensitivity that will influence affordability and room rate analysis can offer insight into which variables elasticity. A productive partnership with senior 50 Talking Stick
Talking Stick - September/October 2008

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