FORECASTING TUITION REVENUE: ENROLLMENT MANAGEMENT AND TUITION DISCOUNTING. Agenda

Transcription

1 FORECASTING TUITION REVENUE: ENROLLMENT MANAGEMENT AND TUITION DISCOUNTING Eileen G. McLoughlin 2014 Managerial Accounting and Decision Support The Omni Charlotte, NC November 13 14, 2014 Agenda Determination of enrollment policies and tuition rates Incorporating policy and rates in forecasting tuition Review of Indicators/data/models/analyses to use in forecasting and measurement Improving understanding and accuracy in projections 1

2 Student Revenues Tuition and Auxiliary Need to Know Indicators Net tuition revenue growth slowing - know your Brand Program Offerings Undergraduate, graduate, professional, outreach compelling? Price Cost of Attendance Tuition Rate Fees Housing and Board Rates Discount financial aid Student Revenues Need to Know Indicators Enrollment New students freshman, transfers, graduate, professional In state, out of state enrollment International enrollment Retention of existing students Both at the Institution and in housing and board programs Credits registered for part timers 2

3 Student Revenues Cost of Attendance and Enrollment Planning and Student Success Committees (or corresponding groups with same authority) Analyzes, presents and recommends to the President and then Board of Trustees Cost of Attendance, tuition, fees, room and board Discount Enrollment goals Program offerings Liaison to Deans on Academic Policy impact Significance of Committee Planning Committees debate vital issues which have substantial impact on student revenues Price, financial aid, enrollment policy and strategy issues Maximize What? Net tuition or enrollment goals Graduate tuition support and cost sharing policies, fellowship opportunities, target mix of the graduate program Program Offerings Relevance, demand, academic distribution 3

4 Significance of Committee Planning Retention issues Academic policy Cost Goal of Membership is to be inclusive of all campus constituents and therefore issues Faculty, Provost, Finance, Student Life, Institutional Research, Auxiliary Services, Enrollment Management, Institute Advancement Price Setting Focusing on Tuition External factors Economy Resultant pressure on prospective (freshman, transfers) and currently enrolled students (retention) Impact on desirability of graduate school Effect on availability of professional development opportunities For publics, reduction of state subsidy of in-state students 4

5 Price Setting Focusing on Tuition External factors Public/Market perception Value of the degree you offer matches tuition rate Value pricing Influence of the tuition rate on the perception of value Prestige pricing More savvy consumers For publics, relationship between in-state and outof-state prices and enrollment (acceptance and yield) Price Setting Focusing on Tuition External factors Continued. State and Federal Government influence Legislature Higher Education Opportunity Act (HEOA) Cost increase as compared to the CPI Net price calculator Lists of highest rates and largest increases Peer groups Annually complete a comparative analysis with Peers Are you positioned correctly within the price range 5

6 Rensselaer Comparative Price Analysis UG Tuition $30,000 $29,400 $27,500 $27,700 $25,000 $22,500 $20,000 One Two Three Four Five Six Seven Eight Nine RENSSELAER Ten Eleven Twelve Thirteen Fourteen Fifteen Rensselaer Comparative Price Analysis Tuition, Fees, Room & Board $39,000 $37,000 $35,000 $33,000 $31,000 $29,000 $38,310 $37,629 $27,000 $25,000 One Two Three Four Five RENSSELAER Six Seven Eight Nine Ten Eleven Twelve Thirteen Fourteen Fifteen 6

7 Discounting Revenues versus Enrollment Goals Pool of Undergraduate Applicants - Trade Offs High A B C Financial Need/Scholar -ship Medium D E F Low G H I No Need J K L Low Medium High Enrollment Goals Quality, diversity, quantity -Students who fall into the L box or lower right quadrant of boxes, meet all enrollment goals and have no financial aid need or scholarship -Students who fall into the C box or upper right hand quadrant of boxes, meet all enrollment goals and have significant financial aid need or scholarship Undergraduate Discounting Revenues versus Enrollment Goals Undergraduate Applicant pool consists of Financial need/scholarship mix Quality and diversity mix Program demand, number of applicants Undergraduate Enrollment Goals (quality, diversity, quantity) determine selection mix generates estimate of financial aid needed for new students Financial aid need versus revenue requirements Scenarios created, compromises made, gaps exist A discount rate for new students is estimated 7

8 Undergraduate Discounting Need vs Merit Based Financial Aid Dependent on philosophy, position and affordability to a particular Institution: Is it a goal to meet all demonstrated need? What is the typical need of your application base? Are you able to attract the desired balance of students with only need based, do you need merit based aid? Can you meet revenue goals and meet the need of all of your students? Impact on Total Undergraduate Tuition Revenues Calculating the impact of the new tuition rate and discount rate for new students on overall undergraduate tuition revenues Tuition Rate Impact on enrollment attracting new students and retention of existing (factors previously discussed) Discount Incorporate discount rate on new students Financial aid policy/practice for existing students and transfer students Data on financial aid packages offered to existing students 8

9 Impact on Undergraduate Enrollment New Students Fall Fall Enrollment Enrollment Year one Year Two STUDENT ENROLLMENT 1st time Freshmen 1,356 1,337 2nd Year 1,219 1,232 3rd Year 1,123 1,160 4th Year 1,044 1,078 5th Year-Regular th Year-Co-Terminal 67 6th Year Transfers - new Transfers - continuing Navy Spring Admits & Delayed grads Subtotal 5,357 5,534 Coop & Non-credit Students TOTAL FALL ENROLLMENT 5,233 5,445 Enroll conversion factor (due to spr melt) 97.9% 96.6% FTE effect Enrollment FTE 5,124 5,262 Impact on Undergraduate Enrollment - Retention Factors As a % of previous Fall enrollment Fall One Fall Two Regular Students: Returned 2nd Year 93.33% 91.10% " 3rd Year 95.16% 95.35% " 4th Year 96.01% 94.75% " 5th Year 25.97% 29.50% " 6th Year 13.93% 10.22% Transfers: Returned 2nd Year 83.54% 94.91% " 3rd Year 51.85% 60.76% " 4th Year 27.08% 20.83% 9

10 Discount Impact and Total Undergraduate Revenue Calculation Fall Fall Enrollment Enrollment Year one Year Two TUITION RATE Tuition Rate 36,950 38,100 FINANCIAL RESULTS Gross Tuition for Fall Enrollment 197, ,898 Less for Coop / spring melt -8,609-10,523 Total Gross Tuition 189, ,375 5th Week Financial Aid 80,800 87,364 Year End Financial Aid 82,926 85,062 Year End Net Tuition Revenue 106, ,313 overall discount rate 43.9% 42.5% Auxiliary Program Revenue Administration and Student Life uses same enrollment model Residence Program Net down total enrollment to students that participate in room and board Know policies all freshmen and sophomore required to participate Use retention rates in the room and board program Small residence program for graduate students Know Market rates for off campus housing, define value add, partner Student Union and Health Center participation required both undergraduate and graduate students 10

11 Graduate Tuition Pricing and Enrollment Policies Overall concepts on undergraduate tuition pricing and enrollment apply to the graduate program Concepts on competitiveness and compelling programs apply, however market audience is different Net yield on the tuition revenue different Graduate Tuition Pricing and Enrollment Policies Enrollment management and recruitment for full time graduate programs is shared between central offices and departments Graduate financial aid policies tuition remission, stipend and scholarship are at the Institute level Recruitment activity and restricted funding availability at department level with marketing support at Institute level Part time professional programs Fee based or credit hour based 11

12 Full Time Graduate Enrollment Fall Fall Enrollment Enrollment Year one Year Two # of Self Paid-non Scholarship # of Students on Scholarship Plan MBA 0 7 # of Students supported on Slots # of Students supported on Research # of Students supported on Endow/Gift External Support Self Paid Net $2,906 $3,462 Research $6,954 $7,298 Gifts & endowment $782 $565 $10,642 $11,325 Internal Support Graduate Scholarships (MBA/Arch/MS) $0 $102 Slots $16,702 $18,625 Research Cost Share $4,424 $4,702 $21,126 $23,429 Gross Revenue: $31,768 $34,754 Less: Institutional Support $21,126 $23,429 Total Net tuition $10,642 $11,325 Tuition Rate $34,900 $36,950 Part Time Graduate Programs Part Time Cohorts Fiscal Years Revenue in Dollars Headcount Credits Rate $ WEMBA 21 $ $ $ $ $ ,287 WEMBA ,410 WEMBA ,326 SEMBA ,410 WEMBA ,410 SEMBA ,410 TRUMBA ,410 WEMBA ,410 SEMBA ,410 TRUMBA ,459 WEMBA ,459 SEMBA ,459 TRUMBA ,510 WEMBA ,510 SEMBA ,510 TRUMBA ,563 WEMBA ,563 SEMBA ,563 TRUMBA ,618 WEMBA ,618 SEMBA ,618 TRUMBA ,618 New PT MBA

13 Fee Based Program Worksheet Scenario I ARCH - CAD/CAM Technologies # Days 0 # Students 0 Per Student Rate $0 Income $0 Promotion F List Rentals $0 F Advertising $0 F Printing $0 F Postage $0 Total Promotion $0 A program needs to break even after covering the Institute s Overhead Hurdle Rate Direct Expenses Cost Per Cost for Day Course F RPI Instructor $0 $0 Comp F Emp Benefits $0 $0 F Contracted Instruction $0 $0 F Grad TA/Shop Monitor $0 V Computing Services $0 F Travel for invited spkrs $0 V Parking in Visitor's Lot $0 F Transportation $0 F Media Dev (students) $0 F Classroom Tech Support $0 F Distributed Delivery Costs $0 V Progam Materials $0 V Supplies $0 V Catering $0 $0 V Student Housing $0 V Student Meals $0 V Special Events $0 V Special Event: Welcome $0 V Special Event: Farewell $0 Total Direct Expenses $0 Total Program Expenses $0 Overhead on Program Expenses (xx% OH to Institute) $0 TOTAL EXPENSES $0 NET: Revenue less Total Expenses $0 Measuring Actual versus the Projection Measure the actual against each indicator or projection model identified Example freshman class on budget, but net undergraduate revenues are lower Why? Discount rate Upper Class retention rates Review data, determine miss and causes Bring back to Committee 13

14 Measuring Actual versus the Projection Understand variances by indicators Identify what was projected inaccurately Determine cause and effect questions to consider earlier slides Modify projection models or information gathering if necessary Balance measurement/indicators against Institute priorities Inform decision making, recommend changes in action or strategy ANY QUESTIONS? 14