Leaders of Modern Finance Ep. 19 – Intangible Returns in Higher Education ft. Shahrooz Roohparvar

On this episode of the Leaders of Modern Finance podcast, host Ken Boyd is joined by Shahrooz Roohparvar, CFO at Cal Poly Humboldt.

Getting Acquainted with Higher Education

Shahrooz’s current stint at Cal Poly Humboldt was not his first foray into higher ed. Prior to this role, he worked as the CFO at Arizona Western College in Yuma, Arizona. There he was able to experience much of what makes managing the finances of such an institution unique.

The most striking difference compared to private business is higher education’s funding structure. For public colleges and universities, much of the funds are acquired through local property taxes. In Arizona especially, this put Shahrooz in a unique position. The money that he was responsible for stewarding was coming from his neighbors and community members. 

This dynamic was displayed in the makeup of Arizona Western’s board, which was locally elected. As a smaller city, many of these board members were familiar to Shahrooz from his local community. It was in working with them that Shahrooz learned to value some of the intangible assets present within higher education. In a smaller community like Yuma, these assets were easier to see. Community well-being, passion for youth and education, and student mental health were all factors that Shahrooz saw the importance of in Arizona. 

An invaluable learning experience, Shahrooz would carry these community values with him as he transitioned to becoming the CFO at Cal Poly Humboldt. 

Dealing with Intangibles

Cal Poly proved to involve an extension of many of the obstacles that Shahrooz faced in Yuma. The challenges facing financial management in higher education were perhaps exacerbated by the larger student body.

In a university setting, change is an inherent part of the system. A new student body cycles through every four years, bringing with it its own unique needs. That change also happens on a slightly smaller scale every year, as a new incoming class joins and an outgoing class leaves. In this configuration, generational differences are starkly apparent. 

Shahrooz noticed these differences early in his tenure. Generation Z, which has always been more familiar and reliant on technology, was beginning a college career at the height of the Covid-19 pandemic. This only increased the need for better technological infrastructure, as classes continued to be held online.

The desirability for more accessible online coursework had a cascading effect on student housing. The high cost of living associated with California (which only worsened during the pandemic), coupled with the ability for students to take classes virtually, meant that many students were opting not to live on or near Cal Poly Humboldt’s campus. The students who were on campus were often stuck in their dorms or homes due to the pandemic.

Students being unable to leave home while watching the growing problems mounting around the world created a mental health crisis of sorts. Mental health was already a striking problem on college campuses and the pandemic only made it worse.

Looking at these growing complications, Shahrooz was facing a difficult problem. How much does the college experience affect a school’s desirability? Plus, as a financial manager, what should he do with such an intangible metric?

Understanding ROI

It’s difficult to quantify something as nebulous as “the college experience,” and it wasn’t something Shahrooz attempted. What he could do, however, was look at the way these intangible assets and liabilities affected the more concrete metrics.

The most pressing numbers relevant to Shahrooz’s role were his retention, graduation, and enrollment rates. How many students applied and were accepted each year and how many of them stayed at Cal Poly long enough to graduate? It was clear that a more enjoyable college experience encouraged students to seek out Cal Poly Humboldt and to stay enrolled through graduation. With this in mind, Shahrooz set about to invest his tangible asset—money—to bring about an intangible return on these investments—student well-being.

The most pressing need was increased funding for campus mental health services. Most of the other student needs contributed to worsening mental health. To address other issues successfully, this university service first needed attention. Money invested into this area would not create an immediate return or revenue stream. It would appear as a sunk cost. Over time, however, coupled with other campus improvements, Shahrooz trusted in the word of mouth about the college experience he was creating to lead to increased enrollment.

Shahrooz also worked with local developers to try and create more affordable student housing. It’s difficult to have a college experience worth sharing when students aren’t on campus. Creating more housing options would lead to increased student presence at Cal Poly Humboldt.

Lastly, Shahrooz would build out a more robust technology infrastructure. He had learned the value of this asset in Arizona, where he made sure that Wifi extenders allowed students to access the internet through the comfort of an air-conditioned car outside of campus buildings. At Cal Poly Humboldt, this internet capability was equally valuable. Mental health services and campus housing would ensure an ideal college experience for in-person students. Better technology tools would go a long way towards ensuring that same quality of experience for virtual students.

Despite not having an immediately quantifiable return on his investment, these efforts were money well spent by Shahrooz. In the field of higher education, increased revenue and funding often comes as a result of intangible assets, like the enjoyment of the college experience. It was these intangible returns that Shahrooz sought to maximize in his financial management. 

Making Time for Complexity

The work that Shahrooz engaged in on behalf of the student body was often complicated and overwhelming. It was no easy task to understand the qualitative metrics used to manage Cal Poly Humboldt’s finances. To make space for the massive amount of work such a job entails, Shahrooz offers some advice to future CFOs.

As a part of his daily routine, Shahrooz dedicates an hour in the morning to, as he puts it, “playing catchup.” Before beginning any new tasks, the first part of his morning consists of answering voicemails and emails. He never gets through all of them, but he makes headway. Committing to catching up ensures he never gets too far behind.

In addition, he encourages CFOs in higher education to maintain an innovative and entrepreneurial spirit. To see the possible returns on intangible assets requires a creative mind. By seeing himself as an operations manager as much as a CFO, Shahrooz allowed himself to think up creative solutions to difficult problems. It’s a mindset he thinks all CFOs could find valuable.

In his time at Cal Poly Humboldt, Shahrooz has stretched the limits of what it means to be a CFO. He not only manages numbers. He is a creator and innovator, and his organization is all the better for it.

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