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Opportunities to Improve Service and Outcomes

Don’t stop BELIEVING

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Opportunities to Improve Service and Outcomes

Presenters: Robert Sommers: Regional Director, Midwest; Edfinancial Services Al Hermsen: Director of Financial Aid; Wayne State University

Learning Objectives: State of the union Understanding your options Elements of a good evaluation Outsourcing considerations Practical Experience

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State of the UnionWhere are we now?: Increased volume at our institutions:

o FAFSA Application Processing Statistics

Data obtained from Department of Education Data Center on IFAPhttp://federalstudentaid.ed.gov/datacenter/

Overall Applications0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2008 - 20092009 - 20102010 - 2011

Michigan0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2008 - 20092009 - 20102010 - 2011

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State of the UnionWhere are we now?: Increased volume at our institutions:

o Pell Grant Disbursements

* 2010 – 2011 data as of 3rd Quarter

Data obtained from Department of Education Data Center on IFAPhttp://federalstudentaid.ed.gov/datacenter/

Overall Pell Disbursements$0

$5,000,000,000

$10,000,000,000

$15,000,000,000

$20,000,000,000

$25,000,000,000

$30,000,000,000

$35,000,000,000

2008 - 20092009 - 20102010 - 2011 *

Michigan$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

2008 - 20092009 - 20102010 - 2011 *

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State of the UnionWhere are we now?: Increased volume at our institutions:

o FAFSA Application Processing Statisticso Pell Grant Disbursements

Decrease in Budgetso State Funding Reducedo Operating Budgets Decreasing or Stagnant

Increased Regulatory Burden

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2010 NASFAA Administrative Burden Survey

Executive Summary Two-Thirds indicate financial aid office facing

a moderate or severe resource shortageo 80% identify shortage as permanent in natureo 88% impact their obligation to assist and counsel

students Major Cause:

o Greater regulatory compliance workload

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2010 NASFAA Administrative Burden Survey

Executive Summary Major Shortage Areas Identified

o Operating Budgetso Staffing Levels (include Counseling, Administrative, and

Support)o Insufficient Technology and Lack of

Technology Training

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2010 NASFAA Administrative Burden Survey

How much additional productivity may be extracted from an industry that has seen remarkable increases in

demand?

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Regulatory RequirementAdministrative Capability

o 34 C.F.R. §668.16(b)(2) - administrationo 34 C.F.R. §668.16(h) - counseling

Provided as a guide for responses to certain questions in the 2010 NASFAA Administrative Burden Survey

Referenced in a letter to College and University Presidents by Federal Student Aid COO, William J. Taggart (electronic announcement dated 4/6/11)

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Regulatory Requirement34 C.F.R. §668.16(b)(2)(2) Uses an adequate number of qualified persons to administer the Title

IV, HEA programs in which the institution participates. The Secretary considers the following factors to determine whether an institution uses an adequate number of qualified persons—(i) The number and types of programs in which the institution participates;(ii) The number of applications evaluated;(iii) The number of students who receive any student financial assistance at the institution and the amount of funds administered;(iv) The financial aid delivery system used by the institution;(v) The degree of office automation used by the institution in the administration of the Title IV, HEA programs;(vi) The number and distribution of financial aid staff; and(vii) The use of third-party servicers to aid in the administration of the Title IV, HEA programs;

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Understanding Your Options

3 Basic OptionsStatus Quo

Do nothing, continue business as usualAdd to internal operations

Increase staff and automate processesOutsource

Partner with third-party service provider to increase process efficiency and staff effectiveness

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Weighing the OptionsDetermine the scope of work

o Pinpoint Issue Peak Processing vs. Everyday Processing

o Automation an option? If yes, do you have access to IT resources? How quickly can system be changed and

testedo Specialized knowledge base situation?o Timing – How quickly does a solution need

to be implemented?

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Weighing the OptionsIdentify Costs – Internal Operations

oQuantitative Costs Salaries & benefits Initial training & continual training Impact of staff turnover Space, equipment and supplies needed

oQualitative Costs Staff morale Service levels impacts Institutional knowledge base

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Internal Operations Cost Example

Internal OperationsStaff

$15,200 Salaries and benefits equal to $19,00080% of time spent on processing verifications

 

Training1,000Staff person training time and quality control review

Initial training, anticipated update training, additional training due to staff turnover 

Equipment/Supplies/Space

1400Equipment (computer, phone)Office SuppliesOffice Space build outAllocated at 80% of cost

 

Estimated Cost per FT Equivalent Employee $17,600

Estimated FTE 2.0

Total Estimated Cost $35,200 

# of Verifications 1800

Cost per verification file $20

Opportunity CostsService level impacts with additional employees and shifting responsibilities toward walk-in/phone trafficImpact on audit findingsTurnaround time on verification and awarding processesImpact on enrollment goals and decision timelinesStaff morale with responsibility changes, reduced or eliminated overtime, and overall job satisfaction

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Weighing the OptionsIdentify Costs - Outsourcing

oQuantitative Costs Fees for services RFP creation and evaluation time Initial training & continual training

oQualitative Costs Staff morale Service levels impacts Experience and knowledge base

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Outsourcing Cost ExampleOutsourcing

Staff$2,500

Allocation of staff for creation and review of RFP

 

Training500Staff person training time and quality control review

Initial training, anticipated update training, additional training due to staff turnover

 

Total internal costs $3,000

# of Verifications 1800

Estimated internal costs per verification $2

Outsourcing fee per verification $11

Cost per verification file $13

Opportunity Costs

Service level impacts with additional employees and shifting responsibilities toward walk-in/phone traffic

Impact on audit findings

Turnaround time on verification and awarding processes

Impact on enrollment goals and decision timelines

Staff morale with responsibility changes, reduced or eliminated overtime, and overall job satisfaction

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Elements of a Good Evaluation

Clearly defined scopeRegulatory requirements outlinedMandatory elements definedCosts identified and measured

oActual and OpportunityRealistic timeline determinedMechanism for analysis and

evaluation

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Outsourcing Considerations Improve or maintain service levels

o Possibility of immediate impactKnowledge-base

o Higher education experienceReputation/References

o Current and previous client referenceso Talk with your colleagues

Capacityo Appropriate staffing levelso Systems and technology

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Outsourcing ConsiderationsFlexibility

o Adaptive to institutional requestso Multi-service opportunities

Institutional matcho Partner should match goals/mission

Write a good contracto Outlined expectationso Accountability and performance measureso Clearly stated contract length and

renewability criteria

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Outsourcing ConsiderationsRequest for Proposal (RFP)

oDon’t recreate the wheelo Set clear expectations/timelinesoDon’t ask for more than you needo Know the rules/regulations for your state

and institutionoDevelop evaluation teamo Interviews for finalists

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Outsourcing ConsiderationsManage the relationship

o Ensure communication flows continuallyoReview/monitor established standardsoMonitor billing activity and payments

Successful partnershipo Treat partners as part of your teamoManage expectations within the officeoCommunication flow

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Practical Experience

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Questions