The rich and famous are much in the news these days–colleges and universities that is, the ones with endowments in the hundreds of millions or more and whose run-up in assets has raised questions about their non-profit status from both state and federal lawmakers. The U.S. Senate Finance committee wants to know, for example, why institutions that are reported to average 20 percent annual increases in the market value of endowments of $500 million or more still need to raise tuition and fees every year. And the Internal Revenue Service is preparing for intensive audits of more than 400 institutions, looking at revenue-generating activities housed within them and how those activities fulfill the public or charitable purposes of the institutions. Meanwhile, legislation has been proposed in Massachusetts to levy state taxes on the Commonwealth’s wealthiest non-profit private institutions.
Colleges and universities are extraordinarily stable institutions, in part due to their mission and role in our society and in part due to how they operate and are managed. Nonetheless, the current financial downturn is impacting higher education institutions in a wide variety of ways.
The financial challenges described below are among the most pressing in recent times and will call on presidents, chief financial officers (CFOs) and boards to work together to address the near-term fiscal impact on the institution’s operations as well as longer term consequences.
Following the narrative is a series of questions that decision makers are asking of themselves and colleagues as they work through the current uncertain environment. Not all questions will apply to every institution equally. However, effective oversight, management and stewardship mandate that institutional leaders are able to assure themselves and their constituencies that thorough analysis and full consideration have been applied in posing questions, providing answers and making decisions.
College costs–how money is spent as opposed to where it comes from–have received relatively little attention compared with other aspects of higher education finance. Instead, most media and policy attention has been focused on rising tuitions, the intense competition for admission to selective institutions, the complex system of financial aid, and the eroding share of public revenues going to higher education. These concerns are leading to a renewed focus on institutional spending–and whether more can be done to manage costs without compromising quality or access.
Source: Jane V. Wellman, Donna M. Desrochers, Colleen M. Lenihan, Rita J. Kirshstein, Steve Hurlburt, Steve Honegger, Delta Cost Project, January 2009
From the summary:
The report, the second from the Delta Project on Postsecondary Costs, Productivity, and Accountability, examines revenue and expenditure data for nearly 2,000 public and private non-profit colleges and universities (representing more than 75 percent of higher education enrollment) and analyzes recent trends, focusing on the period from 2002 to 2006. It is the most up-to-date and comprehensive assessment of higher education finance in the nation.
– Presentation Summary
– Recommendations for Action
– Frequently Asked Questions
– State Data
University administrators are asking library directors to demonstrate their library’s value to the institution in easily articulated quantitative terms that focus on outputs rather than on traditionally reported input measures. This paper reports on a study undertaken at the University of Illinois at Urbana-Champaign that sought to measure the return on the university’s investment in its library. The study sought to develop a quantitative measure that recognizes the library’s value in supporting the university’s strategic goals, using grant income generated by faculty using library materials. It also sought to confirm the benefits of using electronic resources and the resulting impact on productivity over a 10-year period. The results of this study, which is believed to be the first of its kind, represent only one piece of the answer to the challenge of representing the university’s total return from its investment in its library.
Twenty-seven states have cut education because they face massive, devastating budget deficits in this recession.
The combination of rising unemployment, declining consumer spending, declining asset values, and foreclosures has led to declining state revenues. And the number of people in poverty is growing, adding costs to state budgets for programs such as Medicaid and social services.
From the press release:
New report describes the current condition of state higher education accountability and provides a set of guidelines for designing a model system.
Today’s colleges and universities are plagued by a host of problems: low graduation rates, high tuition rates, and poor student performance. But higher education has surprisingly few incentives to address these problems and to provide an affordable, high-quality education to all students. Funding is based on how many students enroll, not how many graduate. Prestige is tied to how smart students are when they begin as freshmen, not how much they learn before they leave. As a result, policymakers who want to fix the problems of American higher education need to create stronger accountability systems.
This report presents information from the Winter 2007-08 Integrated Postsecondary Education Data System (IPEDS) web-based data collection. Tabulations represent data requested from all postsecondary institutions participating in Title IV federal student financial aid programs. The tables in this publication include data on the number of staff employed in Title IV postsecondary institutions in fall 2007 by primary function/occupational activity, length of contract/teaching period, employment status, salary class interval, faculty and tenure status, academic rank, race/ethnicity, and gender. Also included are tables on the number of full-time instructional faculty employed in Title IV postsecondary institutions in 2007-08 by length of contract/teaching period, academic rank, gender, and average salaries.
This purpose of this paper is to promote a discussion, especially within the public research university community, about tuition, the relationship of tuition to cost and program quality, the nature of university funding, and the prospects for controlling both tuition increases and program quality in the future.
Measuring Up 2008 is the most recent in the series of national and state-by-state report cards for higher education that was inaugurated in 2000. The key findings this year reveal that the nation and most of the 50 states are making some advances in preparing students for college and providing them with access to higher education. However, other nations are advancing more quickly than the United States; we continue to slip behind other countries in improving college opportunities for our residents.