Comparison of UPR with a Public Research University and a Private Research University in the United States

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1 Comparative Analysis of the Financing of Different Types of Universities: Latin American University; Private University in Puerto Rico; Two Research Universities in the U.S. (Public and Private); and UPR Preamble To understand the financial model of the UPR, it is important that its finances are compared with different financial models of other universities in the world that are comparable to UPR in key input and output metrics. The UPR is a public university with three graduate studies and research campuses that aspire to be among the best public institutions in the United States in this category of universities. At the same time, there is a group of faculty that would like UPR to be cast in the Latin American mold (Universidad Autónoma de ). Furthermore, two thirds of the system of higher education in Puerto Rico is dominated by private institutions that are financed and driven by tuition. For this reason, we are comparing UPR with this wide category of universities. We have also added the best research university in the world, Harvard University, as the type of university that UPR should aspire to emulate, even if we know that we will never reach that degree of performance. The comparison will include the following metrics: total enrollment; total budget; total faculty; number of students per faculty; cost per student; graduation rate; faculty average annual salary; and tuition and fees. In addition, when possible, we try to get an approximate ranking of the comparable universities in the world ranking of universities that is run by Elsevier and called QS World University Rankings ; the SCImago Ranking of Ibero American Universities; and Ranking of American Universities. In this manner, the methods of financing can be correlated with input, output, and international standing of the universities with which we will compare UPR. Comparison of UPR with a Public Research University and a Private Research University in the United States Table I compares UPR with the largest public research University of the State of Kentucky: University of Kentucky (UK). The table also compares UPR with Harvard University, ranked as the best research university by the QS World University Rankings (2009). The pie charts give a distribution of sources of funding for the financing of these three institutions. The fairest comparison is between UK and UPR, both public research universities in jurisdictions that have comparable population (3.8M for Puerto Rico, vs. 4.1M for Kentucky); for this reason, we will first analyze these two institutions. UPR, with 54% of its budget coming from State funds, has the highest percentage of its finances provided by the States (about $700M); while the State of Kentucky only provides 15% of its finances (about $331M), typical of public American research universities. The University of Kentucky has a large university hospital that generates 34% of its income, while UPR has a university hospital (at Carolina) that only generates losses.

2 Furthermore, the university enterprises of the UK generate an additional 16% of its income. Thus, 50% of the financing of the UK comes from university enterprises; while UPR practically does not generate any income from its enterprises. Obviously, this is something that UPR has to analyze and correct in its business model. Tuitions and fees at UPR provide only 8.3% ($116M) of its income from this source, while in the State of Kentucky tuition and fees provide 12% of its income ($264M). Notice that in Kentucky tuition and fees provide almost as much funding as the funds provided by the States. Federal grants and contracts generate 10% of the UK income ($220M), while UPR federal grants and contracts generate 18% of its income ($253M). In this category, both institutions appear to be comparable; but, in the case of UPR, only $100M come from research grants, while in UK the amount is closer to $180M. Actually the numbers of UK for research funding in 2008 place UK in the 31 st in external research funds among US research universities; this funding is driven by its excellent research hospital. The conclusion of this analysis is consistent with what the Committee recommends: that UPR has to actively diversify its sources of funding while retaining the contribution it gets from State Funds. The UK occupies the 124 th position in the quality of undergraduate research in the US (data from US News Ranking of Universities) and it occupies position number 31 among the top 200 US Research Universities as measured by Federal Research Funding. Of course, Harvard is another matter. Its biggest source of funding is its endowment that contributes 31% of its income, followed by tuition and fees that contributes 21%. This is why the tuition at Harvard exceeds $50,000, while tuition and fees in UK is about $7,500 more than three and a half times the $2,000 tuition of UPR. The Committee is clear that it cannot emulate Harvard in its finances, but it can strive to emulate UK. Harvard s standing as the best research university in the world is confirmed by the QS World University Rankings (2009). Comparison of UPR with a Latin American Large University and a Private University in Puerto Rico Table II compares UPR with a large Latin American university and a private institution in Puerto Rico. The financing of these three institutions could not be more different. The Latin American university (Universidad Autónoma de México) is almost totally financed by the State, but in doing this it has to pay a price. The cost per student is a dismal $6,000 per student, less than a private institution of higher education in Puerto Rico, and it has an open door admission policy which results in graduation rates of less than 20% (estimated; no good reliable statistics exist). Furthermore, of the 34,000 faculty reported for the Latin American universities only 33% are full time faculty and the annual average salary for a professor is estimated to be

3 $25,000. This analysis indicates that the investment per student fails to compare with UPR and the American research universities and it is only comparable to a private institution of higher education in Puerto Rico. The Latin American university ranked in the 190 position among the best 200 world universities, according to QS World University Rankings (2009). While UPR is among the best university in the Iberian Peninsula, when its scientific productivity is compared with these universities and it outperforms all Latin American universities in this category (SCImago ranking, 2010). The private universities in Puerto Rico financial model is tuition driven, where 94% of the financing comes from tuition and fees; the tuition and fees almost equal the maximum allowed by the Pell Grant ($5,400). They are also, essentially, open admission institutions and, as a consequence, its graduation rates are less than 30%. In conclusion, UPR can and should not be compared with these two extreme financial models. It should look to the American Multiversity with Graduate Research Campuses for its financial model, as is recommended by the Committee

4 Table I Comparison of UPR with American Research Universities UK - Public Harvard - Private Hospital Income, 34% Donations and Gifts, 13% 15% Private Donations, 4% Other Income, 19% Fees, 21% Gifts, 7% Fees, 12% and Contracts, 18% University Enterprises, 16% Endowment, 31% 10% University of Kentucky Enrollment 26,913 $2,205M Total Faculty 2,057 Students per Faculty 13 Cost per Student $81,930 Graduation Rate 58% Faculty avg. annual salary $88,787 Fees $7,494 Occupies position 124 among the best 200 undergraduate universities in the US and position 31 among the top 200 Research Universities in the US. UPR - Public Fees, 8.3% Harvard University Enrollment 21,225 $2,700M Total Faculty 2,497 Students per Faculty 8.5 Cost per Student $127,208 Graduation Rate 94% Faculty avg. annual salary $110,000 Fees $50,000 First among the top universities in the world. (QS Ranking, 2009) Other Income, 11% 18% Donations and Gifts, 8.5% 54% University of Puerto Rico Enrollment 60,000 $1,407M Total Faculty 4,805 Students per Faculty 12 Cost per Student $23,450 Graduation Rate 50% Faculty avg. annual salary $65,000 Fees $2,000 Among the best universities in the Iberic Peninsula in terms of Scientific Productivity. (SCI mago, 2010)

5 Table II Comparison of UPR with Latin American University and Private Institution in PR Latin-American Institution - Public Institution in PR - Private Other Income, 2% Other Income, 6% 98% Fees, 94% Latin-American Institution Enrollment 300,000 $1,800M Total Faculty 34,000* Students per Faculty 26 Cost per Student $6,000 Graduation Rate Estimated: 20% Faculty avg. annual salary Estimated: $25,000 Fees Nominal Ocupies position 190, one of the last positions among the best 200 universities of the world (QS Ranking, 2009). The only one in Latin America that appears in this list *only 33% are full-time UPR - Public Other Income, 11% Fees, 8.3% Private Institution PR Enrollment 49,000 $297M Total Faculty 2,755 Students per Faculty 17.7 Cost per Student $6,061 Graduation Rate 32% Faculty avg. annual salary Estimated: $35,000 Fees $5,700 Does not appear in any world ranking. 18% Donations and Gifts, 8.5% 54% University of Puerto Rico Enrollment 60,000 $1,407M Total Faculty 4,805 Students per Faculty 12 Cost per Student $23,450 Graduation Rate 50% Faculty avg. annual salary $65,000 Fees $2,000 Among the best universities in the Iberic Peninsula in terms of Scientific Productivity. (SCI mago, 2010)