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Making the Grade

May 2018

By Jamie Stanesa

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As college and university finances play a more critical role in institutional accreditation processes, business officers need to ensure that financial operations score highly and meet all requirements.

Accreditation of colleges and universities may be seen as a concern primarily of academic affairs, but business officers play an important role in the institutional review process.

“An institution’s financial planning is reflected in its mission, goals, and strategic planning,” says Jacalyn Askin, senior fellow, finance and campus management, at NACUBO and member of the Peer Corps of the Higher Learning Commission (HLC) for the past 14 years. “We are seeing growth away from traditional budgeting to the integration of budget with planning. The synergies created by this are gained by all.”

Higher education is also facing funding challenges across the United States, prompting accreditors to take a closer look at the financial health of institutions. Accreditors consider it essential for business officers on campus to be aware of accreditation, as an institution’s ability to deliver quality educational programs depends on its financial health.  

“The standards for accreditation are an excellent guide for training governing boards and others about what holds the institution together and understanding the business,” says Lee Johnson, senior vice president and treasurer, Siena Heights University, Adrian, Mich., and an HLC peer reviewer for more than 20 years. “Issues at a higher education institution may be nonfinancial, but they still may have a financial impact.”

Given this connection between an institution’s resources and its educational programs, accreditors across the country recognize a growing need for business officers’ expertise to serve as peer reviewers who can evaluate colleges and universities.

Serving as a peer reviewer enhances business officers’ ability to prepare for accreditation reviews on their own campuses, as they gain knowledge of innovations and best practices at other institutions.  

“The value of peer review is the experiences that you have at different institutions,” says Jeff Slovak, former deputy vice president for finance and administrator (retired), Governors State University, University Park, Ill., and HLC Peer Corps member. “Being able to go through complicated data and then be able to boil them down to an enlightening story is neat; it is neat to see what makes a good institution good, and that you can explore trying those strategies at your own institution.”

Financial Health Standards

The Higher Learning Commission—the largest of the six regional accreditors in the United States—considers the financial health of institutions at many points in the accreditation relationship. Expectations regarding an institution’s financial practices and policies are built into HLC’s standards of quality and determine whether a college or university merits accreditation. 

While this article focuses on HLC’s specific processes, those of the six other regional accrediting bodies are similar but not identical. In other words, their missions are similar, but the precise structure and processes may vary.

As the finances of an institution impact all aspects of the higher education offerings, all components of HLC’s Criteria for Accreditation may apply. The following components specifically reference finances at the institution. More information is available at

Institutional plans anticipate the possible impact of fluctuations in the institution’s sources of revenue, such as enrollment, the economy, and state support.

Institutions are assessed against accreditation standards every four to six weeks. In addition, HLC collects financial data for each institution annually and conducts follow-up reviews with institutions that show certain financial indicators. 

Financial Indicators

HLC has identified Composite Financial Index (CFI) ratio zones that indicate a need for further review.

Above the zone

No additional follow-up is required for institutions with a CFI that falls above the zone.

In the zone

If an institution reports a CFI that falls within the zone for the first time, HLC will issue a Letter of Concern. If an institution reports a CFI that falls within the zone for the second consecutive year, HLC will require the institution to undergo a panel review process. The process will require the institution to submit additional financial documents that will be reviewed by peer reviewers.

Below the zone

If an institution reports a CFI that falls below the zone, HLC will require the institution to submit a report and undergo a panel review process. The process will require the institution to submit additional financial documents that will be reviewed by peer reviewers.

The CBO Role

For each of these reviews, a college or university’s chief financial officer and other business officers would be involved in providing data and developing reports. Being familiar with HLC’s Criteria and other requirements help the business officers present a picture of their institution’s finances that directly addresses HLC’s expectations. 

“Tell your story in the accreditation process, be clear,” advises Slovak. “Everybody has reasons for what they do. You need to communicate that to the peer reviewers.”  

In addition, there are inherent benefits to engaging in the self-study process that institutions must go through in order to prepare for accreditation reviews. HLC’s standards are intended to not only ensure quality, but also to help institutions improve continuously. 

“I was introduced to accreditation when I was working at Pima Community College, Tucson, and was asked to be involved in developing the self-study and participate in meetings during the on-site visit,” says Askin. “I saw there wasn’t a financial person on our team, so I was intrigued and had support from my chancellor to apply to HLC’s Peer Corps.”

Prepare to participate. “Leaders should encourage people at [their institutions] to be involved in peer review,” says Slovak. “Peer review is at the heart of accreditation. It is the justification we have for institutions to define their own missions. We are obliged to contribute to peer review to keep that part of the business in mind.”

Accreditors rely on a corps of trained volunteers to conduct most of their reviews, including CFOs, business officers, and budget directors at many types of institutions. Peer reviewers are responsible for ensuring that colleges and universities are complying with HLC’s Criteria for Accreditation, as well as for helping them advance within the context of their own mission. 

“By being involved [in peer review], you understand about why these things are done in a structured way, with the end goal of improvement,” says Johnson. “It is important for financial people to expand their careers by participating in accreditation and understanding higher education more holistically.”

Time commitments. Different types of peer review require different levels of time and commitment for reviewers:

Value and challenges for both sides. Reviewers at HLC receive a small honorarium and travel expenses for each review conducted. 

The effectiveness of the Peer Corps—and the benefit to the peer reviewer—is enhanced by education and training programs. Prior to participation in any institutional evaluation, a peer reviewer participates in training on the application of HLC’s Criteria for Accreditation, policies, and the specific processes integral to conducting successful evaluations. 

Business officers serving in HLC’s Peer Corps cite many benefits of their service on review teams, as they apply their financial expertise to help other institutions advance and improve. 

“The biggest challenge is telling institutions when they are in trouble,” says Slovak. “But doing that motivates institutions to address [ their issues]. Peer review makes certain that higher education does not lull into complacency.” 

Financial reviewers have also helped many institutions detect and avert factors that, left unattended, could lead to financial distress. 

“One institution I visited was really struggling financially. It was a difficult situation, because the people working at the institution were so dedicated and caring. Our peer review team had to be firm and objective, because it was important to help them understand the severity of the problem,” says Askin.

Finally, peer review service offers business officers the opportunity to develop a greater understanding of accreditation processes and best practices at peer institutions. 

“Being a peer reviewer is an opportunity to understand the diversity of the higher education landscape. I really enjoy working with new peer reviewers. It is a mentoring role and it puts me back in the classroom,” says Johnson. “The Higher Learning Commission has helped me learn how to look at things and ask questions. And, how to work with people. This work has improved my leadership and communications skills.”

Thus, the perspective reviewers gain by visiting other institutions aids their ability to secure the sustainability and continuous improvement of their own institutions.

“Since becoming a peer reviewer, my understanding of the accreditation process helped me see the big picture of higher education. I am able to look at my work outside of the silos,” says Askin. “I recommend that business officers make sure that they are engaged in the accreditation process at their own institutions, because they will learn so much about areas outside their own. Being a peer reviewer also allows you to pay back the industry and gain perspective.”

JAMIE STANESA is associate vice president, Member Education and Peer Corps Service, Higher Learning Commission, Chicago.

Related Topics

"Tell your story in the accreditation process. Everybody has reasons for what they do. You need to communicate that to the peer reviewers.”

Jeff Slovak, HLC Peer Corps member