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"MANAGING MONEY IN HIGHER EDUCATION" (WILLIAM VANDAMENT).
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Critical review of work aimed at school administrators with little fiscal experience.... More...
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Paper Abstract:
Critical review of work aimed at school administrators with little fiscal experience.

Paper Introduction:
Introduction Institutions of higher learning operate in unique financial environments which balance the needs of nonprofit institutions (in most cases) with the need to provide a high quality education to students. Administrations in higher education must bring together the often conflicting requirements of students, faculty, alumni and the community at large in order to meet their obligations to the various stakeholders of the institution. In some cases, research is conducted at the institution and the faculty's reputation is critical to the long-term success of the organization; in other cases, one (or more) schools in the university may greatly influence the school's reputation. Still other schools have outstanding and highly visible athletic programs which serve to market the school to both athletes and nonathletes. All colleges

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In some cases, research is conducted at the institution andthe faculty's reputation is critical to the long-term success of theorganization; in other cases, one (or more) schools in the university maygreatly influence the school's reputation. The inclusion of case studies demonstrating how otherinstitutions have failed at particular tasks reinforces the importance ofthe material, and also reassures the reader that mistakes can be made inthis area without destroying an institution. The author's assumption is that increasing numbers ofnonfinancially trained administrators, faculty and others are responsiblefor making financial decisions, often on the advice of financialprofessionals, and that without some rudimentary understanding of financialconcepts, these administrators will not be able to make wise decisions(Vandament, 1989, p. All schools are alsoaccountable to students, who are the ultimate consumers of the education,and those that engage in research or who otherwise operate under grantsmust be accountable to the source of those grants. This book may beeven more important today than when it was written since many institutionsare under increased financial pressure to keep costs down and make maximumuse of available resources. For basics, Vandament recommends usingfinancial statements and information technology to increase knowledge aboutthis field (Vandament, 1989, pp. All colleges and universities,regardless of their areas of expertise, must balance limited funding withthe many demands placed on that funding. Introduction Institutions of higher learning operate in unique financialenvironments which balance the needs of nonprofit institutions (in mostcases) with the need to provide a high quality education to students.Administrations in higher education must bring together the oftenconflicting requirements of students, faculty, alumni and the community atlarge in order to meet their obligations to the various stakeholders of theinstitution. For example, by trying the make the planning effort participativerather than dictatorial, Vandament takes an approach which not only makessense from a financial standpoint, but which also can help improve theoverall support of the financial plan. 32). Vandament takes a logical approach to the issue of financialmanagement in higher education, beginning first with an overview of thefinancial environment in which institutions of higher learning function,and then narrowing his focus to include the various financial functionswhich are performed at institutions, and which administrators can expect tocome upon in the course of their duties. Vandament also suggests that once the plan is developed using the bestinformation available, and implementing with attention to making sure thatit is carefully administered, it must be monitored and adjusted based onactual events. Vandament offers guidance in this area whichmay well assist administrators through difficult financial times. Instead, the author suggests thatindividual program administrators should be involved in the financialplanning which affects their programs, and the entire planning processshould be one that is built on participation (Vandament, 1989, p. 44). Summary and Analysis Vandament's work is meant to be an introductory text for thoseadministrators who do not have a strong background in business or finance,but who are faced with fiscal responsibility within an institution ofhigher learning. Vandament focuses the firstchapter on putting forth the purpose of financial management in general,and financial management in higher education in particular. Instead,the reader is left to figure out where the administrators in the exampleswent wrong, and what they could have done differently in order to avoid thesituation. 115-116). Observations Vandament's overall treatment of the subject, which includes taking astep-by-step approach to financial planning, provides the reader with alogical process by which financial planning in the academic environment canbe understood. E. In many cases, Vandament has provided tools and examples(such as flow charts) which aid the presentation of material which mightotherwise be difficult to understand. This approach provides backgroundmaterial which can help the reader more readily identify with the conceptspresented later in the book, and provides a sense of familiarity to readerswho might otherwise be put off by the technical discussions which follow. In some academic environments, this approach will require asignificant shift in the organizational culture in that power (in the formof information) will pass from central administrators to programadministrators. Vandament notes that thearea of managing resources in higher education is expanding rapidly, whichresults both in more information available, but greater difficulty inorganizing that information. Still other schools haveoutstanding and highly visible athletic programs which serve to market theschool to both athletes and nonathletes. xiv). This is an important topic because it is nearlyimpossible to maintain a financial plan exactly as it is originallydeveloped, and schools must reallocate resources based on changingcircumstances. This research examinesWilliam Vandament's book, Managing Money in Higher Education, whichattempts to guide school administrators through the often confusing area offinance in this environment. If a financial program is imposedfrom central administration, program administrators are likely to befrustrated because some information critical to the plan may have beenomitted, ignored, or misinterpreted. If,on the other hand, the program administrators have input into the financialplan, the plan is likely to be developed with better information, whichenhances the probability that it will be of value to the administrators.In addition, administrators are likely to be more supportive of a planwhich they helped to create than one which is developed outside theirpurview. To help avoid these problems, Vandamentsuggests separating one-time costs from ongoing funding requirements andnoting when some funding comes from one-time sources (Vandament, 1989,p. 8). Vandament also has a philosophywhich is more proactive than many analysts in this field, and thisseparates the work from other writings on financial planning in highereducation. Vandament also uses case studies to illustrate his points, although noactual schools are named in these brief (several paragraph) anecdotes.While these case studies are interesting to read, and can be illuminatinggiven some of the background material that the author presents previously,Vandament could have made better use of this technique if he had used fewercase studies and provided greater analysis of those he includes. In this way, Vandament is encouraging hisreaders to become entrepreneurs and market their schools with a focus onraising funds as the marketing goal (Vandament, 1989, p. Managing Money in Higher Education. The tipsthat Vandament includes in this chapter are intended to help thenonfinancial professional through the difficulty of administering the plan;it is hoped that those more familiar with financial practices would alreadybe aware of the suggestions that Vandament puts forth here. Public schools must providerecords and be accountable to the states which finance them; privateinstitutions must answer to the various donors. 94). The book concludes with a glossary of financial terms, which is likelyto be helpful to Vandament's intended audience of nonfinancialadministrators. Vandament then turns his attention to gathering information criticalto determining the financial plan appropriate to the institution. Reference Vandament, W. The overall organization ofthe book, the step-by-step approach which Vandament uses in developing thefinancial plan, and the proactive philosophy which permeates the materialmakes this book valuable for most program administrators. (1989). The last chapter in the text is dedicated to giving thereader additional sources of information which may prove useful as thereader expands his knowledge of this topic area. SanFrancisco: Jossey-Bass Publishers. As a result, the financial planitself may not represent the best opportunity for individual programs. The creation, implementation and monitoring of the financial plan arethe focus of the next three chapters. At the heart of Vandament's text is the financial plan, which is theculmination of chapters two through five. Here,Vandament departs from many conventional approaches to strategic managementby suggesting that this is best taken not as a top-down exercise in whichthe institutional administration heads up the planning effort and imposesits view on the rest of the school. 78). Conclusion Readers who have a strong financial background are likely to bedisappointed by this work which may be too simplistic for them. Here, Vandament again departs fromconventional approaches by suggesting that administrators can take aproactive approach to raising money, for example, instead of being left inthe position of waiting for traditional donors to come through for aparticular program or service. If the plan is not administeredwell, it matters little how much effort went into developing it. Issues here range from preventing anddetecting embezzlement to avoiding paying for goods or services notreceived (Vandament, 1989, pp. However, the long-term benefit of having plans which moreaccurately reflect the situation of particular programs is likely tooutweigh the temporary problems associated with this shift inresponsibility. Once the budget has been constructed, Vandament helps readersunderstand that it must be carefully administered in order to ensure thatit maintains its integrity. The inclusion of these cases is informative, but less effectivethan they could have been. Of this,Vandament suggests that there are three purposes which financial managementin higher institutions serves: the long-range protection and enhancementof the school to accomplish its goals; making sure that sufficientresources are available to support current activities; and the creation andmaintenance of a system of accountability through which those who have astake in the school's services also have a way of monitoring how thoseservices are provided (Vandament, 1989, p. 66-67). In the last two chapters of the text, Vandament focuses on "real-world" situations which arise, including how to reallocate funds from oneprogram to another, and how to determine the effect of such reallocation(Vandament, 1989, p. Events which may have an impact on financial plans includeunforeseen expenditures or projects which arise, perhaps due to naturalcircumstances (such as fire or earthquake), or which are a result of budgetcuts in funding sources; this latter is a particular problem for publiclyfunded schools which encounter financial crises when the states themselvesencounter financial difficulty. For thevast majority of nonfinancial program administrators, however, the bookprovides useful information presented in a format which is easy to followand understand.

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