How Leading Universities Balance Mission and Financial Sustainability
In today’s higher education environment, where institutions face funding volatility, increased regulatory scrutiny, and shifting learner expectations, program review and optimisation has evolved into core strategic functions. These processes are no longer solely about quality assurance or academic benchmarking; they now serve as vital tools for aligning academic offerings with institutional mission and economic sustainability.
Professor Emeritus William F. Massy, in his seminal book Resource Allocation in Higher Education (2003), emphasises that effective universities operate on what he calls a “responsible academic stewardship model,” which integrates mission-driven planning with financial discipline. Building on this framework, contemporary program review practices should explicitly evaluate the revenue and cost structure of academic programs in relation to their strategic importance.
In an episode of the Pilbara Insights podcast, Professor Massy reiterates that ignoring financial data in program management is no longer tenable. In his words:
“You can’t manage what you don’t measure. And if you’re not measuring the cost-effectiveness of your programs, you’re managing in the dark.”
Understanding Traditional vs Modern Program Review Approaches
Historically, program reviews have been guided by qualitative markers, curriculum coherence, student experience, and external accreditation. However, these inputs fail to provide insights into the true resource implications or return on investment (ROI) of academic programs.
Professor Massy, in Reengineering the University (2016), critiques this narrow view, proposing instead a systems-level framework that models cost, margin, and mission simultaneously. He stresses that modern institutions must view program performance through an integrated academic-economic lens.
Johnston County Community College (JCCC), for instance, implemented a strategic review that combined academic metrics with a bottom-up analysis of direct and indirect costs. Through their partnership with Pilbara Group, JCCC was able to allocate overhead costs to particular departments and programs to give more precise information as to the relative operating margins for programs across the university. The institution could then carry out academic program review from a single source of truth and reconcile this to the college mission.
The Case for Portfolio-Level Program Review
An isolated focus on individual programs obscures the broader dynamics of institutional interdependence. Shared teaching, faculty FTEs, infrastructure, and administrative support often span multiple programs, meaning that decisions affecting one unit have downstream impacts elsewhere.
Professor Massy’s book, featuring the Pilbara Insights model, showcases how institutions can map these interdependencies to avoid missteps, such as cancelling a low-enrolment program without realising it supports core subjects in high-enrolment degrees.
Example tools to support this include:
- The Academic Portfolio Matrix (University of Melbourne, 2019)
- Activity-Based Cost Modelling software, such as Pilbara’s Insights model
Measuring Program Importance and Economic Performance
To optimise an academic portfolio, institutions must consider both qualitative and quantitative dimensions. The two most common axes of analysis are:
- Mission centrality – How essential is the program to the institution’s identity, public value, and strategic goals?
- Economic contribution – What margin does the program generate after accounting for both direct and indirect costs?
Professor Massy’s 2×2 scatterplot framework, described in Reengineering the University, is a practical tool for visualising this balance. Programs with high mission value and high financial performance are ideal candidates for investment. Programs with low mission alignment and negative margins warrant redesign or retirement.
The Impact of Microcredentials and Lifelong Learning
Short-form learning and microcredentials are transforming how institutions deliver value to learners. As noted in the OECD Trends Shaping Education report, adult learners now expect modular, stackable credentials that can evolve with their careers.
However, many institutions have yet to integrate these offerings into their financial and academic planning frameworks. Professor Massy suggests experimenting with “continuous learning bundles”, akin to Netflix subscriptions, where learners gain access to a sequence of upskilling opportunities over time.
In the 2023 EDUCAUSE Horizon Report: Teaching and Learning Edition, Educause described how microcredentials programs are gaining momentum and maturity.
Conclusion: Program Review as Strategic Infrastructure
Effective program review and optimisation demand a blend of academic insight, financial literacy, and systems thinking. Institutions that build internal capabilities to assess program margins, model portfolio interdependencies, and anticipate emerging learner behaviours will be best placed to lead in an increasingly disrupted education market.
A truly strategic program review is not just about discontinuing low-enrolment courses; it is about reshaping the academic portfolio to ensure long-term relevance, resilience, and impact.
Share this article with academic leaders in your network to elevate strategic conversations across the sector.
Listen to the Pilbara Insights Podcast – S01E02 – Program Review and Optimization