Academic Costing and the Alignment with Institutional Effectiveness. October 21, 2014

Transcription

1 Academic Costing and the Alignment with Institutional Effectiveness October 21, 2014

2 Speakers Academic Costing and the Alignment with Institutional Effectiveness Michael Leardi President Strategic Business Advisory (SBA-LLC) Edward J. Steinmetz, Jr. Senior Vice President for Finance & Administration The University of Scranton Stephen J. Lightcap Vice President for Finance & Administration The University of the Arts David A. Gilmore Vice President for Accounting & Treasury Management Roger Williams University Robert Cole Associate Provost Roger Williams University 2

3 Located in Scranton, PA on a 58-acre campus Founded in 1888, the University of Scranton is a private Catholic and Jesuit university. Operating Budget ~$213MM Total Assets ~$520MM ~4,000 undergraduates (17 countries); 1,086 incoming class ~1,600 graduate and professional study students ~202 Tenured Faculty ~11-1 Student to Faculty ratio Average class size is ~20 3

4 Located in Scranton, PA on a 58-acre campus The academic experience at Scranton offers a range of undergraduate and graduate degree programs. There is a choice of 66 bachelor s degree programs, 44 minors and 38 concentrations in addition to 26 master s degree programs and a Doctor of Physical Therapy Program. College of Arts & Sciences School of Management College of Professional Studies College of Graduate and Continuing Education 4

5 Located in the heart of downtown Philadelphia, PA Founded in 1868, The University of the Arts is one of the only Universities in the United States solely dedicated to educating creative individuals in the visual and performing arts and design. Operating Budget ~$71MM Total Assets ~$151MM ~2,060 undergraduate and graduate students ~113 Tenured Faculty ~ 8-1 Student to Faculty ratio Average class size is ~14 5

6 Located in the heart of downtown Philadelphia, PA The University of the Arts offers 41 programs of undergraduate and graduate study. College of Art, Media & Design School of Art School of Design School of Film College of Performing Arts School of Dance School of Music School of Theater Arts Liberal Arts Creative Writing Film and Media Studies 6

7 Located in Bristol, R.I. on 130 acres with a satellite campus in Providence, R.I. Founded in 1956, Roger Williams University is a private, coeducational university with programs in the liberal arts and the professions and is also home to the Roger Williams School of Law. Operating Budget ~$160MM Total Assets ~$316MM ~4,000 undergraduates (55 countries); 1,086 incoming class ~1,200 graduate and law school students ~ 215 Tenured/Tenure Track Faculty ~ 14-1 Student to Faculty ratio Average class size is ~19 7

8 Located in Bristol, R.I. on 130 acres with a satellite campus in Providence, R.I. Roger Williams University offers more than 40 programs of undergraduate study as well as thirteen graduate programs. College of Arts & Sciences School of Architecture, Art and Historic Preservation School of Engineering and Construction Management School of Education School of Justice Studies School of Business School of Continuing Studies School of Law 8

9 Goal To lead to recommendations regarding the possibility to reduce expenses, increase revenues and facilitate the management of information to support the reallocation of academic and non-academic resources across the University. 9

10 The Financial Review Model While the financial statements and budget spreadsheets that are prepared by colleges are necessary and useful, they typically do not provide enough information to provide the underlying data for academic program prioritization. By determining revenue and expenses for each academic subject the goal is to answer the question of what does it actually cost to educate a student by major or by program? 10

11 The Financial Review Model Gathering the Underlying Data Total student credit hours by term and course description. Student specific information (level, degree, major). Faculty course information (credit hours taught, etc.). Student net tuition revenue NTR (course charges & financial aid). Faculty pay and benefit information (courses taught). Finance/general ledger information (fund hierarchy, actual revenues & expenses). Home subject information (to deposit NTR for each student). Allocation methodology to allocate OH (square feet, FTE). 11.

12 The Financial Review Model Initial Questions Subject Summary (Course Info) What are the Revenues and Expenses of the Subject - Regardless of the Major of the Student Who Takes Classes in that Particular Subject? E.g., What are the Revenues and Expenses for teaching Undergraduate Accounting classes? Major Summary (Student Info) What are the Revenues and Expenses of the Major - Regardless of Where the Students Take Their Classes? E.g., What are the Revenues and Expenses for teaching Undergraduate Accounting Majors? 12

13 By Program Follows the Student Academic Costing and the Alignment with Institutional Effectiveness Profitability by Different Views of the Financial Review Course Offerings View 13

14 The Financial Review Model Brings together information from across the University Course Information Student Information Space Information Cost of Education Financial Information Faculty Information Student Billing 14

15 Common questions to be answered with the Financial Review Model Program/Subject Surplus and Deficit Which programs and departments require a subsidy and which generate a surplus? How can we allocate resources appropriately? Which programs and departments are becoming less financially sustainable? Program Growth/Strategic Enrollment Management What programs can be grown without adding additional costs? What are the interdependencies of adding to particular programs? Capacity Analysis? Targeted Tuition Discounting Is the demand for programs tied in to the discounting strategy? Are we making the best use of discounting dollars? Can we use discounting to fill-in programs that are under capacity? 15

16 Common questions to be answered with the Financial Review Model Program/Subject Surplus and Deficit Which programs and departments require a subsidy and which generate a surplus? How can we allocate resources appropriately? Which programs and departments are becoming less financially sustainable? Program Growth/Strategic Enrollment Management What programs can be grown without adding additional costs? What are the interdependencies of adding to particular programs? Capacity Analysis? Targeted Tuition Discounting Is the demand for programs tied in to the discounting strategy? Are we making the best use of discounting dollars? Can we use discounting to fill-in programs that are under capacity? 16

17 Sample Undergraduate Acct Subject (Follows the Courses) Adjustment for balance of trade Credit Hours Taught in UG Accounting 2,549 Net Tuition Revenue from UG Accounting Program 3,003,787 Net Transfer of Credits To/From Other Departments (1,303,848) Net Tuition Revenue 1,699,939 Credit hours taught in UG Accounting to students in any major Includes Costs for faculty who taught UG Accounting courses (regardless of distribution) Other Direct Revenues 15,684 Total Direct Revenues 1,715,163 Direct Expenses 978,087 Allocated Direct Expenses (Acad. Admin, Library, Other) 101,355 Contribution Margin 636,180 Contribution Margin % 37.08% Other Revenue (Auxiliary, Student Activities) 638,932 Overhead (Admin, Development, Student Services) (1,211,125) Total Net from the Department 63,987 17

18 Sample Undergraduate Accounting Program (Follows the Students) Credit Hours Taken by UG Accounting Program 4,903 Net Tuition Revenue from UG Accounting Program 3,003,787 Other Direct Revenues 30,862 Total Direct Revenues 3,034,649 Total credit hours taken by UG Accounting majors in all departments Direct Expenses 1,666,983 Allocated Direct Expenses (Acad. Admin, Library, Other) 197,551 Contribution Margin 1,170,115 Contribution Margin % 38.56% Other Revenue (Auxiliary, Student Activities) 1,186,526 Overhead (Admin, Development, Student Services) (2,275,353) Total Net from the Program 81,288 Based upon the total direct expenses for all credits taken by UG Accounting Program Students 18

19 Example of Contribution Margin by Major Example of Contribution Margin by Subject 19

20 Findings: Return on Investment Why does the contribution margin and discount rates vary widely between the schools? Why does the credit rate for a school not necessarily fit the total cost to teach the student? What is the role of research? How does overhead impact the contribution margin? Further study is needed to determine exactly why certain schools appear to be generating more margin than others. 20

21 Next Steps Academic Affairs and Finance discuss and evaluate the results as partners. Widespread discussions with the Deans and the faculty to interpret the data. Feedback loop to Academic Affairs and Finance for further data analysis. Jointly Academic Affairs and Finance create plan of action, mindful of Hiring Cycles/Inelasticity of faculty expertise. Need for transparency with faculty opinion leaders. Financial data needs to be reviewed with other qualitative factors. Review results with governance. 21

22 Questions 22