Minnesota State Colleges and Universities
System-level Accountability Framework
Design and Definition of Components

The accountability framework was designed with the Board of Trustees as the primary audience. As the governing board for the Minnesota State Colleges and Universities, the Board of Trustees is responsible for balancing the various and sometimes competing interests of system stakeholders. Accordingly, the board is uniquely positioned to provide a comprehensive vantage point for serving the information needs that stakeholders have about system performance.

The Board of Trustees has adopted the following purpose for this project:

Emanating from the system mission and vision, the purpose of the system-level accountability framework is to inform stakeholders and enable the Board of Trustees to evaluate system performance and direct strategic improvements by aligning (1) assurances that the system meets expectations of statutes, laws, policies, and ethical standards, (2) planning assumptions and scans of higher education’s external environment, and (3) assessments of the system’s progress on strategic directions and goals relative to benchmarks, targets, and stakeholder satisfaction.

The “Assumptions” and “Assessment” Components of the purpose were developed from standard principles of strategic planning and are concerned with performance outcomes. These two components of the scorecard are intended to place performance issues at the foreground of the board’s attention. The “Assurances” component of the purpose is concerned with process issues that are not governance responsibilities, but that the board has delegated to management. It is intended to bring only exceptions to the board’s attention. If the board has assurance about management carrying out its responsibilities properly, then it is able to focus primary attention on matters of governance and strategic importance.

I. ASSUMPTIONS: Strategy Alignment with External Environment

The “Assumptions” component focuses on the external environment that is outside of the direct control of the system. It illustrates whether system management believes that existing strategies are aligned with the macro-environmental and competitive forces that influence the system. In essence the indicators in this component show management’s response to the question, “Does the system have the right strategies in place to address threats and opportunities presented by the external environment?” This component has an external focus for judging performance. The strategic plan was based on assumptions about the conditions that would exist in the external environment. When these environmental conditions change significantly and deviate from planning assumptions, management must rethink strategies.

The first four indicators are standard macro-environmental elements used in strategic planning. Macro-environmental elements are primary indicators of opportunities and threats facing an industry. The fifth indicator from the external environment is competition present in the higher education industry. The strategies and actions of other higher education providers may have a dramatic impact on the expectations of students and other stakeholders. Some of the considerations for analyzing each of these five indicators are as follows:

• Demographics – Population growth and geographic location. Race, ethnicity, gender, age, education, and income levels of the population. Attitudes toward higher education. Cultural preferences. Leisure interests. Entrepreneurial spirit.
• Economics – Stability of state tax base. Growth of state economy. Availability of jobs and unemployment rate. Inflation rate. Interest rates. Labor costs. Discretionary income.
• Government – Legislative constraints on system decisions, e.g. tuition rates, construction plans, contracting, etc. Stability of political leadership. Availability of state and federal budget resources. Other legislative mandates related to matters such as intellectual property, labor regulation, and health and safety factors. Regulatory considerations.
• Technology – Recent technological developments. Impact on program and service offerings. Impact on cost structure. Rate of technological usage and availability.
• Competition – The most widely accepted model related to competition is the five forces model advanced by Dr. Michael Porter . The five forces are:
• • Barriers to entry. If competitors may freely enter and exit a market, competition can be fierce. Higher education has some significant barriers that constrain competition, such as accreditation standards, eligibility to offer federal financial aid programs to students, and reputations for quality programming. The availability of on-line courses, though, is eroding the barriers associated with capital construction.
  • Buyer power. Customers of higher educational programs include both students and employers who seek future employees. Buyers with concentrated power heighten the competitive environment.
  • Supplier power. Important suppliers to higher education include faculty members and providers of instructional management software. Similar to buyer power, suppliers with concentrated power heighten the competitive environment.
  • Competitive rivalry. Rivalry strategies may center on pricing, quality, proximity, or any combination. Programs similar in price, quality, and proximity evoke the fiercest rivalries.
  • Availability of Substitutes. Competition increases if customers have other alternatives to satisfy their needs. Some alternatives to higher education programming include in-house corporate training, seminars offered by professional organizations, and on-the-job training.

The Chancellor has assigned responsibilities for judging the condition of environmental indicators to members of his cabinet.

The condition of each environmental indicator should be reassessed at least annually, following an analytical scan. The condition of an indicator may be changed more frequently, though, when warranted.

II. ASSESSMENTS: Progress toward Strategic Directions

The “Assessments” component showcases the system’s strategic plan and the critical priorities of the annual work plan. It illustrates whether system management believes that existing strategies are being implemented appropriately. In essence the indicators in this component show management’s response to the question, “Is the system making sufficient progress toward its strategic directions?” This component has an internal focus for judging performance. It may use internal benchmarks and targets as a basis for determining whether expectations are being met, but professional judgment is also required.

This component is the heart of the scorecard. It is organized according to the four strategic directions contained in the system strategic plan. Twelve composite indicators have been created to assist management and the board with developing common expectations for the adequacy of progress toward implementing the strategic plan. Indicators were developed by asking the question, “How will we know if a strategic direction is being attained?” Each indicator is a composite in that it is supported by one or more core measures of quantifiable data and the subjective judgment of management about the sufficiency of progress. The core measurement data is being developed by system institutional researchers and being added to the scorecard on a scheduled basis.

In addition to the twelve composite indicators, this section includes an indicator for each of the priority area identified in the annual work plan. While the composite indicators are intended to be enduring and long-term in nature, the work plan indicators are shorter term and subject to change each year. To the extent possible, the system should adopt quantifiable targets and milestones for monitoring the sufficiency of progress toward meeting the work plan priorities.

The Chancellor has assigned responsibilities for judging the condition of each composite and work plan indicator to a member of his cabinet. The condition of an indicator is denoted by the following coloring convention:

Color	Meaning
White	Data has been presented to the Board of Trustees and either is available on the web site or is in the process of being formated for access on the web site
Grey	Scheduled for development

The condition of each composite indicator should be reassessed at least annually when its core measurement data is replenished. The work plan indicators should be reassessed as periodic progress reports are developed for the board during the year. The condition of an indicator may be changed more frequently, though, when warranted.

III. ASSURANCES: Meeting Legal & Policy Expectations

The assurances component of the scorecard is intended to have a much more muted presence. It is concerned with process responsibilities that the board has delegated to the Chancellor through board policies. While it is important that the board have assurances that these management responsibilities are being executed effectively, it does not need extensive evidence. Thus, the component is designed to bring matters to the board’s attention only on an “exception” basis. Then the board is free to focus primarily on strategic and governance matters and only secondarily on process issues when an exception merits their attention.

This component concentrates on monitoring activities required by board policy and state and federal laws. It will include a reference listing of mandatory board and legislative reports. As warranted this component will use indicators to communicate exception-based judgments to the board. Exceptions may be either negative matters such as significant non-compliance with board policy or positive matters such as innovations or special accomplishments.

The exception indicators would be activated by Cabinet members as circumstances warrant.

For further information on this project, contact John Asmussen, Executive Director of Internal Auditing for the Minnesota State Colleges & Universities, at john.asmussen@so.mnscu.edu.

-