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Evaluating the Financial
Contribution of Academic Programs
1
Ross Koenig, AVP Budget & Financial Planning
Rochester Institute of Technology
September 22, 2014
About RIT . . .
2
Upstate NY University with 13,600 FTE
students across 9 colleges:
Computing Sciences
Engineering
Imaging Arts & Sciences
Applied Science & Technology
Business
Science
National Technical Institute for the Deaf
Liberal Arts
Health Sciences & Technology
About RIT Budget . . .
3
Budget is managed centrally:
Tuition revenue budgeted / managed centrally
Expense budget for Financial Aid to manage unfunded
student aid awards
Colleges & divisions manage to an net expense budget
(some ancillary revenues, but not tuition)
Budgets are permanent / Annual cycle to request
incremental funding
Pooled employee benefit rates for budgeting
Financial Analysis Math
4
What is 2 x 2?
Mathematician
Statistician
Accountant (Financial Analyst)
RIT History of Program Level Analysis
5
“Academic Cost Model” – bottom line
financial result by academic department
Allocated revenues & expenses to “academic
department” with some sophistication
Cost exchanges between colleges for “service”
courses (e.g., physics for engineering students)
Referenced by Senior Management
New Call for Program Analysis
6
Provost initiated “Academic Program Review”
Five-Year rotational look at all program offerings
Each is evaluated on Five Dimensions:
Unique Features
Marketability
Quality & Accomplishments
Vision and Long-Term Viability
Financial Viability How to measure?
Goals for new APR Cost Model:
7
1. Transparent relation to RIT’s published/audited
financial statements – ties to our SOA
2. Reasonably quick to prepare – table driven
3. At program level (e.g., both BS and MS in
Electrical Engineering)
4. Includes all colleges (NTID not included in the
former model)
Relationships on Campus
8
Academic Departments
Students
Faculty
Specific Course Sections
Academic Programs
Depts
create
curricula
Students register
for course sections
Faculty
assigned to
course
sections
Depts
hire/deploy
faculty
Students
matriculate
into
programs
Courses
Common Denominator?
9
Student Credit Hours (SCH)
SCH can tie or relate:
Faculty to course sections
Students to course sections
Departments to course sections
Can sum SCH in multiple ways:
All courses delivered by an Academic Discipline
All students matriculated in a given program
SCH Data – Starting Point
10
2D matrix of all credit hours attempted in the
academic year.
Horizontal Dimension = Course Discipline:
ACCT, MATH, CHEM, PHYS, ECON, etc.
(n = 177)
Vertical Dimension = Academic Plan:
ACCT-BS, MECE-MS, COMPSCI-BS, etc.
(n=257)
ENGL MATH PHYS MECE CSCI TOTAL
MATH-BS UG 337 1,558 312 - 389 2,596
MECE-BS UG 1,378 2,480 1,654 7,303 965 13,780
MECE-MS GR - - 73 1,312 73 1,458
PHYS-BS UG 216 288 1,116 - 180 1,800
COMPSI-BS UG 1,675 2,198 837 - 5,756 10,466
COMPSI-MS GR - 186 93 - 1,581 1,860
TOTAL 3,606 6,710 4,085 8,615 8,944 31,960
SCH Data – Example University
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Academic Plans Course Disciplines
Where to Start on the Financials?
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Start with Everything!
All SOA accounts from our trial balance
33,970 SOA Account combinations for FY13
Our G/L Account Structure (24-digit):
Entity (2)
Department (5)
Object Code (5)
Functional Expense Code (2)
Project (5)
Program (5 – reserved)
Step 1: Parse TB Data to Department
13
Table of all G/L Departments (n=2,655)
assigned to groups, either:
College/Division:
COE, COS, StudAff, F&A, etc.
College/Division + Department:
COE/MECH, COS/MATH, etc.
Use the table to assign each SOA account to
a department group
Step 1a: Academic “Cost” Department
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Course disciplines do not line up neatly with our G/L
departments. For example:
Anthropology (ANTH) and Sociology (SOCI)
courses taught within the same department in
College of Liberal Arts
All foreign languages are taught within the same
department
Introduced the concept of a “Cost Department” to
combine the credit hours across the course disciplines.
Step 2: Account Overrides
15
Re-categorize selected accounts:
Depreciation
Interest
Utilities
Tuition Revenue
Student Aid
Data table for Object Code overrides, for example:
If Object = 50000, then include in Tuition Revenue pool,
irrespective of department.
If Object = 86900, then include in Building Depreciation
pool, irrespective of department.
Step 2a: Other Account Overrides
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Four additional account code
segment override tables:
Project (e.g., Gift, Endowment)
Project/Object
Department/Object
Entity
Step 3: Reconcile
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Tie out the sum of revenue &
cost pools to the operating
change in net assets
Lends transparency to the model
Increases buy-in by community
Resulting Revenue/Cost Pools
18
College/Cost Depts (77)
College (9)
Gross Tuition
Unfunded Student Aid
Equipment Deprec
Plant Deprec
Interest
Student Fees
Endowment Activities
Gift Activities
Facilities Expenses
Utilities
Academic Affairs
Non-Academic Div’s (5)
Research Admin
Auxiliaries
Secondary Analyses
19
Tuition Revenue and Student Aid – Used SIS data
(by student) to summarize by academic plan
Faculty Salary Analysis - Separate faculty salary
expense between graduate & undergraduate courses
Equipment Depreciation Assignment
Space Cost Analysis to distribute “O&M” cost pool
(= building depreciation, utilities, interest, and
facilities costs)
Remaining Revenue/Cost Pools
20
College/Cost Depts (77)
College (9)
Gross Tuition
Student Aid
Student Fees
Endowment Activities
Gift Activities
Academic Affairs
Non-Academic Div’s (5)
Research Admin
Auxiliaries
Step-Down Methodology
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Cost Pool Allocation Basis
Research Administration Sponsored Program
Revenues
Non-Academic Divisions and
Other Cost Pools
Combination of Credit Hours
generated and Direct Expense
College Expenses (Deans) Direct Expense of
departments within college
Academic Affairs Expenses Direct Expense of all
academic departments
Student Affairs Expenses Credit Hours generated by
academic department
Pools We Are Left With
22
Gross Tuition Revenue (by Plan)
Unfunded Student Aid (by Plan)
All other expenses (net of other
revenues) fully-allocated to course
discipline
A B C=A+B D E F G H I J K= Sum(C:J)
Faculty
Salaries Other
Total
Direct
Equip
Deprec O&M
Spon
Res
Non-
Acad Div College
Acad
Affairs
Student
Affairs Summary
ENGL 320 30 350 13 74 2 291 51 100 139 1,020
MATH 1,035 68 1,103 19 74 5 610 84 205 265 2,365
PHYS 1,035 208 1,243 13 111 5 484 84 196 164 2,300
MECE 2,662 656 3,318 156 1,075 75 979 296 620 341 6,860
CSCI 3,241 599 3,840 91 1,038 72 1,016 329 770 354 7,510
Instruction Subtotal 8,293 1,561 9,854 292 2,372 159 3,380 844 1,891 1,263 20,055
Stud Affairs 781 781 32 297 2 151 - - (1,263) -
Acad Affairs 1,743 1,743 13 37 2 96 - (1,891) -
College Admin 650 650 6 37 - 151 (844) -
Non-Acad Div's 2,730 2,730 91 927 - (3,748) -
Endow/Gift Activity 30 30 - - - (30) -
Spons Res Admin 120 120 6 37 (163) -
Utilities 300 300 - (300) -
Interest 600 600 - (600) -
Bldg Deprec 850 850 - (850) -
Facilities Exp 1,750 1,750 207 (1,957) -
Equip Deprec 647 647 (647) -
Gross Tuition (30,254) (30,254) (30,254)
Unfunded Aid 9,634 9,634 9,634
Non-Instruct Subtotal - (10,419) (10,419) (292) (2,372) (159) (3,380) (844) (1,891) (1,263) (20,620)
Total University 8,293 (8,858) (565) - - - - - - - (565)
Cost Pool Step-Down Example
23
Academic Cost Responsibility “Tiers”
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Calculate UG and GR cost per credit
hour generated at three levels:
College = Deans expenses and below
Academic Affairs = College
responsibility plus Provost Expenses
Full Cost = AA responsibility plus all
institutional overhead
Cost Pools – Example U - $ 000’s
25
Total Costs - $ 000's ENGL MATH PHYS MECE CSCI TOTAL
College UG 490$ 1,200$ 1,390$ 4,080$ 4,150$ 11,310$
GR -$ 85$ 66$ 840$ 1,220$ 2,211$
490$ 1,285$ 1,456$ 4,920$ 5,370$ 13,521$
Acad Affrs UG 590$ 1,400$ 1,580$ 4,600$ 4,770$ 12,940$
GR -$ 90$ 72$ 940$ 1,370$ 2,472$
590$ 1,490$ 1,652$ 5,540$ 6,140$ 15,412$
Full Cost UG 1,020$ 2,250$ 2,200$ 5,700$ 5,890$ 17,060$
GR -$ 115$ 100$ 1,160$ 1,620$ 2,995$
1,020$ 2,365$ 2,300$ 6,860$ 7,510$ 20,055$
ENGL MATH PHYS MECE CSCI TOTAL
Credit Hours UG 3,606 6,524 3,919 7,303 7,290 28,642
GR - 186 166 1,312 1,654 3,318
3,606 6,710 4,085 8,615 8,944 31,960
Cost/CrHr
College UG 136$ 184$ 355$ 559$ 569$ 395$
GR 457$ 398$ 640$ 738$ 666$
Acad Affrs UG 164$ 215$ 403$ 630$ 654$ 452$
GR 484$ 434$ 716$ 828$ 745$
Full Cost UG 283$ 345$ 561$ 781$ 808$ 596$
GR 618$ 602$ 884$ 979$ 903$
Cost/SCH – Example
26
Physics College UG Cost = $1,390 K
ENGL MATH PHYS MECE CSCI TOTAL
CrHr Consumed 1,378 2,480 1,654 7,303 965 13,780
College Cost/CrHr 136$ 184$ 355$ 559$ 569$ 425$
Full Cost 187,249$ 456,162$ 586,645$ 4,080,000$ 549,348$ 5,859,404$
Acad Affr Cost/CrHr 164$ 215$ 403$ 630$ 654$ 483$
Full Cost 225,463$ 532,189$ 666,833$ 4,600,000$ 631,420$ 6,655,905$
Full Cost/CrHr 283$ 345$ 561$ 781$ 808$ 628$
Full Cost 389,784$ 855,303$ 928,502$ 5,700,000$ 779,678$ 8,653,267$
Cost of a “Program” (MECE-BS)
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Bottom Line for MECE-BS
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FT PT Total $/SCH
Student Headcount 400 20 420
# SCH 13,600 180 13,780
Tuition Rate 30,000$ 1,200$
Gross Tuition K$ 12,000$ 216$ 12,216$ 887$
Student Aid 33% 3,960$ -$ 3,960$ 287$
Net Tuition K$ 8,040$ 216$ 8,256$ 599$
College Responsibility Costs - K$ 5,859$ 425$
Net Result - K$ 2,397$ 174$
Academic Affairs Responsibility Costs - K$ 6,656$ 483$
Net Result - K$ 1,600$ 116$
Fully Allocated Costs - K$ 8,653$ 628$
Net Result - k$ (397)$ (29)$
Gross Aid Net College Acad Affr Full College Acad Affr Full
MATH-BS UG 2,443$ 888$ 1,555$ 664$ 770$ 1,122$ 891$ 785$ 433$
MECE-BS UG 12,216$ 3,960$ 8,256$ 5,859$ 6,656$ 8,653$ 2,397$ 1,600$ (397)$
MECE-MS GR 1,751$ 432$ 1,319$ 923$ 1,032$ 1,275$ 396$ 287$ 44$
PHYS-BS UG 1,800$ 648$ 1,152$ 581$ 665$ 932$ 571$ 487$ 220$
COMPSI-BS UG 9,871$ 3,168$ 6,703$ 4,206$ 4,849$ 6,352$ 2,498$ 1,854$ 351$
COMPSI-MS GR 2,172$ 538$ 1,634$ 1,288$ 1,440$ 1,720$ 346$ 195$ (85)$
TOTAL 30,254$ 9,634$ 20,620$ 13,521$ 15,412$ 20,055$ 7,099$ 5,208$ 565$
Tuition Cost Net Result
Bottom Line Summary - Example
29
Program Comparison - Example
30
ENGL MATH PHYS MECE CSCI TOTAL
Consumption of CrHr
MATH-BS 13% 60% 12% 0% 15% 100%
MECE-BS 10% 18% 12% 53% 7% 100%
Full Cost / CrHr 283$ 345$ 561$ 781$ 808$
Program Weighted Average Cost / CrHr
MATH-BS 37$ 207$ 67$ -$ 121$ 432$
MECE-BS 28$ 62$ 67$ 414$ 57$ 628$
RIT’s Learnings - Process
31
Focus on your educational mission
Analyze before complicating your model
with other suggestions, e.g.:
Contact vs. Credit Hours
Expenses funded with gifts
Allocation of Spons Pgms Admin
RIT’s Learnings - Process
32
Start with disaggregated data and
summarize yourself
Be intentional / specific / constant
about what “academic program” means
Course Disciplines <> General Ledger
Departments
RIT’s Learnings - Results
33
The 80/20 rule applies
We have some small programs, but
size is not the only relevant factor
Net Tuition / SCH not so different
between programs
RIT’s Learnings - Results
34
PhD programs might need to be
evaluated differently
Full vs. Marginal Cost - Consider
multiple levels of responsibility
Wrap Up
35
Questions?
