Higher Education Costs and Cost Drivers

Looking forward – by revisiting the past….

Canadian Institutional Research and Planning Association Fredericton, New Brunswick, October 23-25, 2011

Ken Snowdon

This presentation is based on a paper available at http://www.snowdonandassociates.ca/presentations.htm

Purpose

shed some light on the challenges associated with developing estimates of higher education costs… to

help identify key cost drivers

help inform the debate about cost-containment… “ greater differentiation”

illustrate the problems/challenges associated with ‘targeted’ envelopes

Overview

Costs and complexity Definitions Challenges

Cost studies & Formula program weights

Major Cost Allocation Drivers Faculty time Student / Faculty norms

Data challenges

Concluding remarks

Perspectives on cost• student• government• institution

Complexity – a typical department• multiple activities, multiple ‘programs’ • “joint products” = teaching, research, service

Costs and Complexity

Cost studies

Historical perspective

Key issue – “joint products” Canada – most faculty time funded from

operating (department) funds U.S. faculty time for sponsored research

funded by sponsor U.K. faculty time for sponsored research

funded by sponsor

Cost studies and formula weights

Nova Scotia, Quebec, Ontario, Saskatchewan

Ohio, Texas, and the Delaware Project (Middaugh)

United Kingdom - England

Peter Leslie’s view of cost studies…

“… the real importance of costs studies has been to take a formula derived by trial-and-error and clothe it in fancy dress. The need to avoid goring oxen is a politically powerful motive, and in practice the most important consideration in setting formula weights has been to devise a rule which endorses, in the main, the existing distribution of funds between recipient institutions.”

Actual, Estimated and Imputed Formula Weights

Nova Scotia Ontario Texas Quebec U.K Saskatchewan Middaugh - Delaware ProjectTotal Cost Total Cost Total Cost Instruction Instruction Instruction Cost Instruction Cost

Department / General & Upper Cost Cost (implicit) By Type of InstitutionDiscipline Ist Year Years Lower Upper Undergrad Masters Doctoral Research Doctoral Comprehensive

Social Science 1.00 1.00 1.50 1.07 1.0 Social Sciences Sociology 1.00 1.00 1.50 1.07 1.0 0.99 2.37 5.00Psychology 1.00 1.00 1.50 1.07 0.99 2.37 5.00Political Science 1.00 1.00 1.50 1.07 1.0 0.99 2.37 5.00 1.2 1.2 1.1Economics 1.00 1.00 1.50 1.07 0.99 2.37 5.00 1.1 1.2 1.1Geography 1.00 1.00 1.50 2.11 0.99 2.37 5.00Human Ecology / Nutrition 1.25 1.00 1.50Child & Youth Study 1.25 1.00 1.50Social Work 1.50 1.00 1.50 1.07 1.03 2.63 -Journalism 1.75 1.00 1.50 1.07 1.09 - -

Math and Physical SciencesPsychology B.Sc. 1.00 2.00 1.29 3.36 6.07Mathematics 1.00 1.00 2.00 1.41 1.29 3.36 6.07 1.1 1.0 1.0Geography B.Sc. 1.00 2.00 2.11 1.29 3.36 6.07Recreation & Phy.Ed. 1.25 1.00 1.50 2.11 1.21 3.13 4.54Computer Science 1.25 1.00 2.00 1.41 1.7 1.29 3.36 6.07 1.9 1.5 1.6Biology 1.50 1.00 2.00 1.74 2.95 2.11 1.7 1.21 3.65 6.11Chemistry 1.75 1.00 2.00 2.11 1.7 1.29 3.36 6.07 1.8 1.9 1.6Geology/Earth Sciences 1.75 1.00 2.00 2.11 1.29 3.36 6.07 1.7 1.5 1.3Physics 1.75 1.00 2.00 2.11 1.29 3.36 6.07 1.9 1.7 1.5Oceanography 2.00 1.00 2.00

Law 1.25 1.50 1.50 3.92 3.92 1.41 1.33 3.00 - Excluded

Pharmacy 1.50 2.00 2.00 1.27 4.53 1.41 1.7 1.99 3.71 6.43Nursing 1.75 2.00 2.00 1.96 2.35 1.77 2.06 3.88 - 2.8 2.9 2.8Physiotherapy 1.75 1.50 1.50 2.32 1.87 - -Occupational Therapy 2.00 1.50 1.50 2.32 1.87 - -Medicine 4.00 5.00 5.00 4.07 4.0 8.33 5.58 10.67 ExcludedLife Sciences 4.00 1.00 2.00Dentistry 5.50 5.00 5.00 7.96 4.0 8.33 5.58 - Excluded

HumanitiesPhilosophy 1.00 1.00 1.50 1.07 1.0 1.01 2.38 4.63 0.9 1.0 1.0Classics 1.00 1.00 1.50 1.07 1.0 1.01 2.38 4.63History 1.00 1.00 1.50 1.07 1.01 2.38 4.63 1.1 1.1 0.9English 1.00 1.00 1.50 1.00 1.70 1.00 1.0 1.01 2.38 4.63 1.0 1.0 1.0Religious Studies 1.25 1.00 1.50 1.07 1.01 2.38 4.63

Illustration of Formula Weights by Discipline Area

The full table is available in the paper http://www.snowdonandassociates.ca/presentations.htm

Cost studies – findings

Differences in methodologies total costs, instruction costs, faculty time Units of student activity

Similarities in relative costs at the discipline level

Acknowledgement that cost studies provide ‘gross estimates’….

the ‘core’ funding mechanism is (usually) block grant

Cost studies – findings

Middaugh’s Delaware project 80% of “instructional” cost differences

among institutions is due to discipline ‘mix’

…it is possible to examine a research university and a baccalaureate college, each focused on the social sciences and humanities, and find no difference in overall unit instructional costs ….

Middaugh’s – findings

Costs are highest in engineering and nursing.

Instructional costs in the physical sciences are in the next highest level and are comparable to those in education, business, and art.

Service departments (e.g., English and mathematics) are among those with the lowest instructional costs, and their costs are comparable with those in the social sciences.

Middaugh, et.al., p.18

Program / Department Cost Studies – allocation drivers

Faculty time

Salary differentials by discipline

Program norms Student to faculty ratio

Cost Studies - Key Allocation DriversAllocation of Faculty Time

0% 10% 20% 30% 40% 50%

Teaching

Research

Service

Administration

Other

Canada United Kingdom United States

Changing Academic Profession Survey, 2007, Canada n=~1000

Allocation of Faculty Time

Cost Studies - Key Allocation Drivers- Faculty Compensation by Discipline

90% 95% 100% 105% 110% 115% 120% 125% 130%

Agric & Biological Sc.

Education

Engineering & Appl. Sc.

Fine Arts

Health Professions

Humanities

Math & Physical Sc.

Social Sciences

All Subjects

Full Professor Associate Professor Assistant Professor Lecturer All Ranks Combined

Source: Statistics Canada, as reported in the CAUT Almanac 2010-2011, Table 2.7

Data Challenges Numerators – cost / expenditures

Jurisdictional differences in financial practices and PSE structure

Institutional differences in organization and financial practices

No or limited department/discipline data

Denominators – enrolment No standard unit of FTE enrolment Differing program requirements/standards Need department counts by year-level and identified

concentrations

Faculty Alignment of CIP and discipline codes Need faculty data by department/discipline

Further Research

Determining to what extent the discipline salary differential explains differences in institutional cost comparisons by region, and/or by type of institution;

Exploring the concept of discipline teaching norms and, using appropriate data, determine if there are differences in teaching norms in Canada; and

Determining an estimate of how much faculty time, and resource, is devoted to sponsored research where faculty time is not reimbursed by the sponsor.

Concluding remarks - CIRPA

Numerators and Denominators Recognize data limitations, question data sources “contextual interpretation”

historical, institutional

Questions

DiscussionThis presentation is based on a paper available at http://www.snowdonandassociates.ca/presentations.htm