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Procurement and finance teams in higher education are entering 2025 with a unique set of challenges. From fluctuating prices to the growing role of automation and AI, the landscape is increasingly complex. Coupled with shrinking budgets and uncertainty about the future of higher education, these hurdles require innovative strategies.
In this article, we explore some of the biggest challenges, strategies to manage and optimize purchasing, and how procurement cooperatives can help.
Balancing a budget requires you to bring in more revenue than you’re sending out the door. This is becoming more challenging than ever in higher education. Fall enrollment in 2024 for first-year students dropped 5.8% after growing 2.9% the previous year. Such a shift could have a long-term impact over the next several years, with a lack of incoming tuition.
The Philadelphia Federal Reserve notes that such a trend could be devastating to a significant number of colleges and universities. The Fed’s models show that a gradual 15% drop in enrollment over time could increase the annual closure rates by more than 8%.
The Fed said colleges are facing “unprecedented fiscal challenges in today’s economic climate.”
Stagnant or declining budgets come at a time when prices continue to rise and fluctuate, making forecasting extremely difficult. Some schools with contracted price resets are seeing significant increases. Goldman Sachs forecasts a 2.4% inflation rate for 2025. However, analysts note the potential impact of increased tariffs on foreign goods proposed by the incoming administration could cause higher prices in multiple categories.
While all this is going on, state education budgets are mostly flat, although the loss of federal stimulus dollars—which has funneled $190 billion into education over the past four years—is limiting any gains made over the last few fiscal cycles.
Schools also have ground to make up. A Moody’s analysis reports that schools need between $750 and $950 billion over the next decade for campus projects. On average, colleges and universities spent more last year on infrastructure projects, but maintaining that level of spending will be increasingly challenging. Yet, as Moody’s points out, colleges that fail to update their facilities risk losing a competitive edge in luring students, creating a downward spiral. Aging infrastructure is an issue for K–12 facilities as well, where the average age of buildings is now about 50 years.
Challenging, to say the least.
Administrators, procurement leaders, and finance teams will need innovative solutions to navigate these rough seas and squeeze the most out of every dollar spent on campuses.
Streamlining systems and cost control will be key to overcoming these challenges, which is where procurement cooperatives excel.
Cooperative procurement enables you to benefit from the aggregated purchasing power of multiple organizations. Combining demand from a significant number of schools lets you tap into greater volume discounts.
With an education-focused procurement cooperative like E&I Cooperative Services, you get:
Another way to answer the question of what is cooperative procurement is that it’s a time saver. Procurement cooperatives offer pre-negotiated contracts with standardized terms. This eliminates a lot of the back-and-forth during negotiations. Many contracts provide broad pricing and terms, allowing you to tailor them to your needs.
When you have strong relationships with key suppliers, you can better manage uncertainty. Transparency and collaboration can lead to innovative solutions and influence product development. This helps you stay agile when things change.
By saving time on procurement, you can focus your efforts more on strategic initiatives to produce greater savings. Many schools are investing in AI and data analytics to better forecast demand and market trends.
Another strategy is to analyze spend data to look for areas for improvement. For example, E&I Cooperative Services offers a no-cost Strategic Spend Assessment (SSA) to find areas where you can reduce costs, consolidate suppliers to achieve greater volume discounts or reduce management, and bring more spend under contract for greater cost control.
E&I Cooperative Services is the only nonprofit member-owned sourcing cooperative that focuses solely on education. By understanding the unique needs of school districts, colleges, and universities, E&I crafts cooperative agreements with pricing and terms to help you overcome procurement challenges.
View available contracts and learn more about the benefits of becoming a member of E&I Cooperative Services.
