Fitch Ratings is a national credit rating agency that provides independent evaluations of an organization’s credit risk and ongoing viability. Each year, it evaluates the financial stability of businesses and higher education institutions, which means that understanding what Fitch Ratings says about the education sector gives you a good idea of the financial state of higher ed.
So, what does Fitch say about the upcoming 2025 school year?
Unfortunately, analysts do not see relief in sight, forecasting deteriorating financial conditions for many institutions. They cite a long list of challenges that finance and procurement teams know all too well:
Even if inflation eases and interest rates drop, Emily Wahwani, Fitch Senior Director, says these challenges will “continue to chip away at more vulnerable higher education institutions in 2025.” This is particularly challenging for schools that have put off critical spending. Moody’s estimates that colleges and universities have deferred more than $950 billion in maintenance and capital needs.
So, optimizing every dollar will be even more critical in the new school year as colleges and universities navigate this increasingly challenging landscape.
Cooperative procurement helps meet these challenges, saving you time and money. A cooperative contract, meaning an agreement that pools demand across multiple institutions, produces significant volume discounts. Cooperative agreements standardize terms and conditions for colleges and universities that participate.
This relationship produces significant benefits, saving time and money for procurement and finance teams involved in purchasing.
Cooperative purchasing organizations conduct competitive solicitations and negotiate cooperative contracts, reducing the administrative burden on procurement teams. This enables colleges and universities to procure the goods and services they need quickly by opting into pre-negotiated agreements.
By pooling the purchasing needs of multiple institutions, coop agreements are able to provide discounts and favorable terms from suppliers because of large volumes. Schools see important benefits from cooperative contracts, meaning individual colleges and universities can get significant discounts and better deals than they could likely negotiate on their own.
Cooperative procurement agreements are designed to meet federal and state compliance requirements for competitive sourcing and solicitation. An education-focused sourcing cooperative like E&I Cooperative Services has insight into the unique needs of higher education and its complex compliance requirements. As such, cooperative agreements are structured to align with regulations, ensuring compliance is met while simplifying the process for schools.
Transparency and accountability within cooperative contracts also make reporting easier.
Academic institutions get access to a broader cross-section of suppliers. Because of the volume involved, suppliers are more likely to respond with best-of-class pricing and service with coop agreements. In many cases, colleges and universities get access to top-tier suppliers who may not respond to individual RFPs.
Institutions save time by avoiding the need to research and evaluate suppliers themselves. In addition, academic institutions have greater leverage as suppliers are incentivized to maintain quality and consistency across the cooperative to maintain strong business ties.
In today’s environment, where procurement and finance teams are dealing with smaller staffs and tighter budgets, reducing administrative overhead has become crucial. Schools can no longer rely on “growing their way” out of budget problems by increasing tuition or attracting more students to bridge the gap.
Shared procurement efforts reduce overhead costs associated with managing individual contracts, negotiating terms, and performing due diligence. This allows higher education institutions to focus their resources on strategic priorities rather than operational details.
Without being tied up with transactions, procurement and finance teams can be more strategic, examining spending at a higher level. For example, working with E&I Cooperative Services, member schools get a no-cost Strategic Spend Assessment (SSA) to look for ways to consolidate spending, bring more spend under contract, and lower costs.
One thing is clear. There is no magic solution on the near horizon to solve the big-picture funding challenges in higher education. Finance and procurement teams must look for every opportunity to maximize their spending without sacrificing quality and service delivery.
Cooperative procurement can help optimize spend and save you time, helping you find tangible solutions in today’s economic environment.
See how E&I Cooperative Services can save time and money with cooperative agreements. E&I is the only member-owned nonprofit that focuses exclusively on the education sector. Membership is free, and there are no minimum spending requirements.