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![Page 1: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/1.jpg)
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Understanding and CommunicatingCost Drivers in Postsecondary
Education
SHEEO Professional Development
Boston, Massachusetts August 16, 2007
Jane Wellman, Delta Project on Postsecondary Costs
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Understanding Cost “drivers”
• Need to look at ‘Brand’ cost determinants (mission, sector, revenue), versus inflationary pressures on elements of spending over time (cost shifting)
• Major brand determinants:– Revenue availability– Discipline mix– Mission – research, service – Curriculum/course enrollment patterns – Student economic circumstances– Admission selectivity
![Page 3: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/3.jpg)
Public
Private NFP
Specialty
Associates
Baccalaureate
Doctoral
Research
Specialty
Associates
Baccalaureate
Doctoral
Research
FTE: Bottom Third FTE: Middle Third FTE: Top Third
Bottom Third | Middle Third | Top Third Bottom Third | Middle Third | Top Third Bottom Third | Middle Third | Top Third
FTE Expenditure
Matched Sample Institutional Counts by Primary Segmentation
![Page 4: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/4.jpg)
Public
Private NFP
Associates
Baccalaureate
Doctoral
Research
Associates
Baccalaureate
Doctoral
Research
FTE: Bottom Third FTE: Middle Third FTE: Top Third
Bottom Third | Middle Third | Top Third Bottom Third | Middle Third | Top Third Bottom Third | Middle Third | Top Third
FTE Expenditure
FY 2005 Average Expenditure per FTE by Primary Segmentation
![Page 5: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/5.jpg)
Public
Private NFP
Specialty
Associates
Baccalaureate
Doctoral
Research
Specialty
Associates
Baccalaureate
Doctoral
Research
FTE: Bottom Third FTE: Middle Third FTE: Top Third
Bottom Third | Middle Third | Top Third Bottom Third | Middle Third | Top Third Bottom Third | Middle Third | Top Third
FTE Expenditure
FY 2000 to FY 2005 Average Net Change in Expenditure per FTE by Primary Segmentation
![Page 6: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/6.jpg)
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Cost of the “brand” - Public Institutional Spending-2005
Median Spending/FTE by Function
0
5000
10000
15000
20000
25000
Research Comp 2-Year
Public Institutions
$/S
tude
nt/M
edia
n O&M
Institutional Support
Student Services
Academic Support
Public Service
Research
Instruction
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Changes in Total E&G Spending/FTE Student* 1987 2005
Average Annual % change , 1987-2005
Public 4-year Mean 7298 14483 +5.5%
Median 4652 9293 +5.5%Private 4-year Mean 8045 20935 +8.9%
Median 5835 15965 +9.5%2-year Mean 3929 7675 +5.2%
Median 3542 7008 +5.4%
Access to Capital (average spending/fte) mean private/public 4 1.1 1.45 +32%median private/public 4 1.25 1.72 +38%
Educational Spending (All Revenue Sources) Per Student – 1987 – 2005 (current dollars)
IPEDS preliminary analysis; “Educational spending” =direct spending/FTE for instruction+student services, plus instructional share of remaining categories less auxiliaries and hospitals.
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Research Private
Research Public
Master’s Public
Master’s Private
Bachelor’s Private
Bachelor’s Public
Cumulative Growth in Educational Cost per Degree Conferred by Broad Carnegie Classification and Control – in 2005 CPI Adjusted Dollars
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Inflationary pressures on costs
• Competition
• Administration
• Cost of Capital
• Benefits
• Student/academic support (co-curriculum) including technology
• Student financial aid
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Composite Average Annual Percent Change – FTE Median
Composite Average Annual Percent Change – FTE Mean
Composite Average Annual CPI Adjusted Percent Change in FTE Expenditures by Broad Carnegie Classification and Control: Fiscal Years 1993-96, 1998-01 and 2002-05
![Page 11: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/11.jpg)
Composite Average Annual Percent Change – FTE Median
Composite Average Annual Percent Change – FTE Mean
Composite Average Annual CPI Adjusted Percent Change in FTE Expenditures by Broad Carnegie Classification and Control: Fiscal Years 1993-96, 1998-01 and 2002-05
![Page 12: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/12.jpg)
Composite Average Annual Percent Change – FTE Median
Composite Average Annual Percent Change – FTE Mean
Composite Average Annual CPI Adjusted Percent Change in FTE Expenditures by Broad Carnegie Classification and Control: Fiscal Years 1993-96, 1998-01 and 2002-05
![Page 13: 1 Understanding and Communicating Cost Drivers in Postsecondary Education SHEEO Professional Development Boston, Massachusetts August 16, 2007 Jane Wellman,](https://reader036.fdocuments.us/reader036/viewer/2022062409/5697c0301a28abf838cda890/html5/thumbnails/13.jpg)
Evidence of cost cutting? • Instruction –
– Growing use of part-time faculty– Marginal costs lower in times of growth– Growing use of technology v. personnel
• Energy efficiency/utilities costs
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Institutional Solutions• Core instructional program
– Faculty renewal and reinvestment– Curriculum management
• Student-centered investments– Reduce freshmen attrition– Increase success in ‘killer courses’– Invest in student success (first-year programs; bridge programs;
learning communities)• Reduce overhead • Improve institutional efficiency
– Energy efficiency– Reduce cost of capital– Distance learning
• Improve management and oversight of costs: data; accountability strategies; governing board roles
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Suggestions for SHEEOS
• Look at ways that state policies can support institutional solutions
• Benchmark costs – develop better cost data, and use it– Faculty salary comparisons – split compensation
and benefits– Cost per degree, not just cost per input– Look at core unrestricted revenues; educational
costs per students • Engage governing boards – piloting better use
of cost indicators to focus conversations• Look at outcomes and access - and cost per • Promote best practices to increase productivity