Strength in Numbers: Demonstrating Leadership Through Budget Management

It was a terrible time to be interrupted. It was her first week as acting director of education abroad and exchanges at the University of Kentucky in 2016, and Miko McFarland was in the middle of an interview. She hoped the finalist would be the answer to her most pressing priority: filling the office’s financial manager vacancy. 

Then came the knock at the door. When McFarland opened it, she found the university's internal audit team waiting to conduct a surprise audit on the department. “I'm a study abroad professional, in an interim leadership role, without a financial support person,” McFarland remembers thinking. “This is not what I signed up for!" 

Although it was not the ideal way to begin learning about financial management, she realized in hindsight that the experience was invaluable. She says she learned more during that “trial by fire” than at any other point in her career, and it ultimately motivated her to understand and embrace financial leadership. 

Why Fiscal Leadership Matters More Now Than Ever

It is no secret that many professionals enter managerial roles without adequate training. A 2018 survey of U.S. managers revealed that 34 percent had no prior training—and this number jumps to 59 percent for managers supervising one or two people. This lack of preparation is common in many industries, and international education is no exception. Particularly worrying, given the weight of the responsibility, is the inadequate financial management training that leaders in the field obtain.

Sometimes viewed as a tedious chore—or worse, a competitive landscape where departments scrabble over scarce resources—financial competence has not always been viewed as a top priority in international education. Anyone browsing today’s international education job openings can attest that financial competence is not consistently listed among the required skills.  

“Anytime you are stewarding funds on behalf of donors, students, or employees, you need to recognize the importance of that role. The livelihood of your community relies on you getting it right.” —Miko McFarland

McFarland, now the director of university relations at Barcelona Study Abroad Experience (SAE), is familiar with this attitude. She says many leaders are fearful about their fiscal responsibilities or see them as a burden. She remembers how daunting this work can be at first but believes firmly in its “untapped potential to grow leadership qualities,” she says. “Anytime you are stewarding funds on behalf of donors, students, or employees, you need to recognize the importance of that role. The livelihood of your community relies on you getting it right.”

Elizabeth Strong, director of education abroad at Missouri State University, believes that the need for fiscal leadership in international education is especially important at this time because pandemic-related personnel changes have ushered in many newcomers to the field. “Those new to the field are future leaders,” she says. The time to invest in their financial skills, she argues, is now.  

There may be signs that financial management is getting more attention among international educators. The sudden volatility introduced by the pandemic in 2020 forced many to take budgeting responsibilities more seriously. Even in the most mundane budgeting environments, the wildly fluctuating conditions required unprecedented financial decision making without adequate time, data, or precedent. In a 2020 AIEA survey, international education leaders ranked “budget and finance management” as the third most important skill needed by senior international officers (SIOs). Likewise, NAFSA named “business acumen” as one of the 12 International Education Professional Competencies in 2022, giving it more visibility than it had in previous editions.

For some leaders in international education, this is nothing new. Paulo Zagalo Melo, associate provost at the Haenicke Institute for Global Education at Western Michigan University, has long been a vocal proponent of fiscal management in international education. He points out that it is not merely a nicety, but rather a critical component for the survival of an organization. He has an adage that captures this sentiment nicely: “Running an organization without understanding the budget is like driving a car blindfolded.”

Budget Management as a Vehicle for Leadership Success

Any financial leadership journey begins with an understanding of the environment. An institution’s choice of budgeting model reflects its management philosophy and will invariably shape the decisions of its leaders. Zagalo Melo believes that the model impacts not only how leaders think and strategize but how organizational culture forms. 

In a traditional centralized budget model, departments receive a set allocation of funding each year and are responsible for predicting, tracking, and making a case for any new spending. On the other end of the spectrum, a responsibility centered model (RCM) calls for each department to operate as a business unit that must balance its own revenue and spending to support its operations and financial goals. 

Financial management, like any other essential skill, reflects leadership style. Successful professionals will use it as an opportunity to strengthen their overall leadership profile.

Another important distinction is whether a leader works within a self-sustaining department that generates revenue (typically education abroad offices and intensive English programs) or one that does not (typically admissions, recruitment, and marketing offices). The challenges and opportunities professionals face will differ according to the model they are working within, but many of the basic leadership principles are the same.  

Financial management, like any other essential skill, reflects leadership style. Successful professionals will use it as an opportunity to strengthen their overall leadership profile. Among the components that comprise financial management:

Strategic Planning

A budget provides an opportunity for leaders to exercise their strategic-planning skills. In effect, it serves as a roadmap, allowing an organization to set goals, establish priorities, allocate resources, and monitor their progress as they go. McFarland argues that a budget is a strategic plan. “The allocation of funding tells you tells a story about an organization’s priorities,” she says.

Strong realizes that it may surprise some newcomers to learn that budgeting does not begin and end with a spreadsheet. For those approaching a budget for the first time, she recommends starting with an articulation of the program’s vision and mission, followed by key priorities. 

“Wanting the best for internationalization at your institution means focusing on a budget. You align the budget with your institutional priorities, and you align your goals with available resources.” —Jill Blondin

“Just as a leader will budget their time based on KPI (key performance indicators), so too should a director allocate funds that align with program goals,” she says.

Jill Blondin, associate vice provost for global initiatives at Virginia Commonwealth University (VCU) agrees. She believes that international education is no different than any other sector in that a fundamental leadership principle is recognizing that goal attainment is dependent upon resource availability.  “Wanting the best for internationalization at your institution means focusing on a budget,” she says. “You align the budget with your institutional priorities, and you align your goals with available resources.”

Crisis Response

Strong strategic planning allows flexibility when necessary—like when the COVID pandemic hit. Perhaps fewer areas of campus were impacted as severely as financial-planning operations. With sudden drops in revenue and shifts in spending patterns, many leaders were left scrambling to manage operations amid the uncertainty. For even the most seasoned financial professionals, it was an unprecedented challenge that required creativity and quick thinking.

At University of Kentucky, the pandemic initially compelled McFarland to be more direct and unilateral in her decision-making. Her first order of business was to place their organization on a “spending diet.”  Then, she redirected her team toward a new primary mission—what she calls their north star. Their longstanding goal had been to grow enrollment in study abroad programming, but during the pandemic, it shifted to maintaining core operations and avoiding layoffs.

After the initial phase of the crisis, she led the team through an exercise of mapping out financial plans for the best- and worst-case scenarios for student enrollment. If enrollment was steady, they could proceed with business as usual. If enrollment faltered significantly, they would employ more serious cost-saving measures. With these plans in place, the team had a menu to draw from as circumstances developed. 

Lastly, McFarland emphasized routine transparency by providing the team weekly updates on the financial situation of the organization. She may not have been able to influence the trajectory of the crisis, but she believes the authenticity and consistency provided “some peace of mind in an otherwise chaotic situation,” she says. 

Collaboration

Collaboration is a vital instrument in the leadership toolbox, and there is perhaps no better motivation to work together than the potential to save money. By cooperating, teams are able to make the most of limited resources. 

At University of Maryland, Will Biddle has seen the financial value of collaboration firsthand. Having begun his professional journey on a traditional business path, culminating in an MBA, Biddle found numerous opportunities to leverage his financial expertise when he made the transition into international education. 

As a result of their effort to nurture relationships and advocate for international education internally, their office partners with campus stakeholders on numerous initiatives, such as matching scholarship funds, co-funding study abroad programs, and collecting residual funds at the close of the fiscal year for scholarship donations.

Leadership Development

Financial leadership development works best when everyone is given an opportunity, appropriate to their level, to be involved with the organization’s fiscal operations, says Zagalo Melo. He recommends cultivating a culture of strategic budget management that includes every member of the team, starting with the basics. His team at Western Michigan University began by hosting in-house training sessions that covered the fundamentals of budgeting.  

“Start by introducing terminology,” he says. “If there is a not culture of strategic budget management, the terms are not there. Explain why this is important. Introduce the idea of ‘one team, one budget.’” 

Financial leadership development works best when everyone is given an opportunity, appropriate to their level, to be involved with the organization’s fiscal operations

Learning opportunities do not have to be limited to staff. Biddle views financial interactions with students as a chance to provide financial literacy education. Recognizing that students may not immediately comprehend the billing language use on a website or during advising sessions, his department tries to use consistent language across all platforms to ensure clarity and understanding. One way they achieve this is by soliciting student feedback on new content before it is published. Another option that institutions may consider is to provide students with a glossary of financial terms, which has the added bonus of providing students with a learning opportunity.  

Commitment to Access 

A mandate to increase access for traditionally marginalized student groups is central to the strategic plans of many international education operations. Allocating funds in support of these groups is a powerful way to advocate for their success. 

At Missouri State, Strong’s team worked with the university’s institutional research department to compare academic outcomes of students who have studied abroad with those who did not. Replicating what several large scales studies have found, they observed an increase in retention and GPA for study abroad returnees compared with students who did not study abroad. These findings provided the justification necessary to fund a new initiative at Missouri State focused on increasing study abroad access for first-generation students. 

VCU found another creative approach to leverage funds and increase access to study abroad programming. After receiving an Institute of International Education (IIE) grant to help offset the cost of students’ passport application fees, Blondin’s department matched the money with their own operating expenses to make the funding go further. With the help of their campus TRIO program, they identified first-generation, low-income students who might benefit from this resource. 

Part of financial leadership is creating clarity and efficiency in students’ financial interactions with the institution.

At their first passport event, 44 students attended, and three of them are planning to study abroad this year, with an additional six planned for next spring. Blondin says she is pleased with the speed of these results. In this example, advocacy efforts were enhanced through effective collaboration, ultimately enabling VCU to realize one of its primary objectives.

Student advocacy doesn’t always come in the form of direct funding. Part of financial leadership is creating clarity and efficiency in students’ financial interactions with the institution. Even small administrative obstacles can impact student participation. At University of Maryland, Biddle and his team carefully reviewed their operation in search of possible access barriers. As a result, they adjusted the timing and frequency of bills, including spacing out payment deadlines and flight booking dates. This avoided the burden on students of having two major expenses to pay in a short period.

Tips for Growing your Financial Leadership Skills 

Whether new to financial management responsibility, hoping to improve existing efforts, or looking to build a skill set for a future role, the following recommendations will provide best practices for financial leadership.

Learn from the experts. 

Many international education professionals can take advantage of benefits available at their organizations. Colleges and universities often offer free or low-cost professional development courses, access to MOOCs, and tuition benefits. Professional development can be as simple as a workshop on Microsoft Excel or as advanced as a graduate course in finance.

NAFSA also offers a wealth of resources for those who wish to develop their business acumen. Members will find conference sessions, webinars, and network resources on the topics such as budget management, funding models, and financial aid for students. (See list of NAFSA Resources at the end of the article.) 

“You don’t have to be an expert in accounting and finance yourself—just know who is. Many on our campuses already have this knowledge.” —Miko McFarland

Sometimes, the best resource is just around the corner. McFarland improved her financial skills by developing relationships with campus colleagues who work in finance. She recommends that new managers do the same. “You don’t have to be an expert in accounting and finance yourself—just know who is,” she says. “Many on our campuses already have this knowledge.” 

Strong suggests the following questions as a starting place for new budget managers:

• When is the fiscal year (or the budget cycle)? 
• What are the sources of my operational budget? 
• Which budget funds (if any) can roll over into the next year? 
• What costs are fixed by the institution?

Another recommended resource is HEIBO: Higher Education International Business Officers, a membership organization where individuals share a wealth of data, collective expertise, and tips for navigating of different budget models. Data from the organization can also be helpful for benchmarking. 

Plan for the future.

It can be tempting to view budget development as an annual standalone project, but financial decisions made throughout the year can have far-reaching effects. While staying within budget may be the highest priority, Strong cautions that underspending can be just as damaging as overspending. 

“If leaders do not spend their budget funds, they risk signaling to their supervisor that they do not need all resources that they were allocated,” she says. Worse yet, at some institutions, the remaining funds are effectively lost when they are reabsorbed into the central budget at the end of the year. 

If the budget model allows for it, saving funds for future spending can be a powerful way to align with larger university missions and achieve long-term goals. According to McFarland, “we must always remember, our decisions must not only serve the best interests of our current students, they must also serve our future students. You have to think about how today’s budget, today’s decision, will impact future operations and future students.” Building budgets into a multi-year plan will better support long-term growth and sustainability. 

Match the funding to the project.

When managing a budget, the type of funding is just as important as the volume. Aligning the appropriate funding type to the appropriate project helps to ensure financial stability. While this basic principle may seem obvious, it is not uncommon for organizations to rely on unstable funding sources for long-term needs. 

Zagalo Melo points to a familiar example: the expansion and collapse of intensive English programs (IEPs) over the last two decades. In the early 2010s, many international offices expanded, adding permanent positions and structures, using new ESL programming revenue sourced largely from Saudi and Brazilian government scholarships. But these funding streams were outside of institutional control, and when they shrunk very suddenly, the permanent structures of these offices were compromised. Zagalo Melo considers these missteps a cautionary tale of what can go wrong when short-term funding is used to support long term financial plans.

Promote access and transparency.

For those already in roles with financial responsibilities, leadership development begins by being transparent about financial matters and providing visibility into the budget for the team—even when financial transparency is often lacking in higher education. 

“It’s a missed opportunity for professional development on every level,” says Blondin. “It’s incumbent on leaders to make sure that people understand why resources are being used where they are.” 

In her team, budget access is proportional to level of responsibility. Every member of the team is familiar with the fundamental aspects of the budget, such as the total dollar amount, sources of funding, revenue and spending patterns, and short and long-term financial goals. Unit heads have full access to their own budgets and are given autonomy to make many decisions independently.

“It’s incumbent on leaders to make sure that people understand why resources are being used where they are.” —Jill Blondin

For professionals who do not yet have access to a budget, a few suggestions for self-advocacy may be a good place to start. Blondin and Zagalo Melo both recommend approaching the budget manager with targeted information requests that are pertinent to the job. They suggest framing the conversation as a professional development opportunity and an effort to be more effective in the role. Starting small is key; this increases the chances of a request being accepted, and provides an opportunity to hone one’s budgeting skills with a starter project. 

Strong suggests additional measures for professionals who are eager to be more involved in the fiscal matters of their organization: tracking expenses for individual projects, proactively reporting costs to leadership, and proposing revenue-generating projects (especially if they align with the organization’s strategic goals.) Practicing and demonstrating financial responsibility now may pave the way for greater access in the future.  

Leading the Way

As McFarland experienced in her first week, leaders can certainly build their business acumen through trial by fire. However, intentionally understanding and embracing financial leadership is a preferable path. In today’s turbulent economic climate, financial acumen is not an auxiliary skill. It is critical that leaders serve as responsible financial stewards of institutional funds in order to ensure successful student outcomes. 

In order to have sustainable and affordable programming for future generations of international students, it is incumbent upon leaders to sharpen these skills and share their knowledge with future leaders.  •