By Donna Desrochers and Mike Daly
Public higher education systems are being asked to do more with less—and to prove the value of every dollar along the way. States want greater access and affordability. Employers want stronger workforce alignment. Students want credentials of value. Policymakers want better outcomes and clearer accountability for public investment.
At the same time, systems are operating in a harsher environment marked by demographic shifts, enrollment volatility, constrained public resources, and growing skepticism about the value of a degree. For many systems, stressed business models are no longer a cyclical challenge, they are structural.
What is needed now is not simply cost containment, but system-focused transformation. Longstanding approaches that make incremental budget adjustments while preserving the basic model are becoming harder to sustain. Flagship institutions may continue to benefit from strong student demand and brand recognition, but many regional universities and community colleges are more exposed to local population declines, labor market shifts, and financial pressure. That imbalance can make it difficult for systems to operate as cohesive, financially sustainable portfolios.
rpk GROUP will be launching a toolkit in fall 2026 that will provide system leaders with a framework to help take needed first steps, along with tools, case studies, and artifacts to guide the way.
A system-level ROI lens
Higher education business models reflect how institutions generate revenue and allocate resources in ways that align with their mission. But too often, those models do not focus clearly enough on the outcomes achieved through the use of current resources.
System-level alignment matters because systems frequently remain organized in ways that reward institution-level independence over coordinated action. A strong system should be able to align programs to student and labor market demand, reduce unnecessary duplication, build shared infrastructure where scale matters, and make investment decisions with the long-term health of the whole academic and services portfolio in mind. Yet many systems still struggle to fully realize those advantages.
While some systems have pursued efficiencies and a subset have achieved real savings, incremental efforts rarely change the underlying model because:
- When reform happens one campus at a time, duplication persists.
- When savings are not tied to a reinvestment strategy, they are often experienced as cuts rather than good stewardship of resources.
- And when leaders cannot clearly connect investments to outcomes, it becomes harder to build trust with faculty, staff, students, legislators, boards, and the public.
A more durable path begins with a return-on-investment lens—one that asks not only what something costs, but what students, institutions, systems, and states gain from the people, time, and money invested.
Adopting a system-level ROI perspective can help leaders evaluate whether academic offerings align with student and employment demand, whether shared services can lower administrative cost, whether student success investments are producing measurable returns, and where resources should be reinvested to strengthen long-term financial sustainability.
Importantly, this does not mean every activity must generate positive net revenue. It does mean leaders should make deliberate choices about where subsidy is warranted, where redesign is needed, and where coordinated action can produce better outcomes at lower cost.
The opportunity for state systems
Public higher education systems have a choice: continue preserving models built for a different era, or use this moment to intentionally redesign. For many systems, the first question is likely: where to begin? A practical roadmap starts with a clear vision and metrics that guide decisions and shape the public narrative. This includes:
- Creating motivation for change. Helping leaders and stakeholders understand the external pressures, market shifts, and financial risks facing the current model.
- Assessing the academic portfolio and services. Identifying the right mix of programs and service models that align with student and labor market demand, while surfacing unnecessary duplication and redesign opportunities.
- Realigning resources and support. Redirecting capacity toward reducing administrative burden, supporting innovation, and cutting unnecessary duplication.
- Developing metrics that tell the story. Setting goals, tracking progress, and showing clearly what is changing, why it matters, and what returns it delivers.
- Reinvesting in capacity change. Using the time, talent, and dollars freed through optimization to strengthen or launch transformation efforts.
Systems best positioned to thrive will be those willing to ground academic decisions in both mission and market demand, assess the value and viability of their program portfolios, and pursue coordinated operational efficiencies.
This is the work of strategic finance and, increasingly, the work of leadership. The question is no longer whether change is coming. It is whether systems and leaders will shape that change deliberately—or be forced to react to it later under pressing financial or political strain.
