Trends In College Spending: Where Does the Money Come From? Where Does It Go?

Donna DesrochersDirector of Economic and Education Research

Delta Cost Project

IES Research ConferenceWashington, DC

June 8, 2009

Policy Reasons for Focusing on College Costs

• Economic competitiveness

• State budget deficits and eroding state funding

• Rising tuitions and declining affordability

2

Delta Cost Project IPEDS Database

• IPEDS Data, Academic years 1987-2006– Institutional Characteristics (Carnegie group, sector)

– Enrollment (headcount, FTE, ft/pt by level, age, and race)

– Finance (revenues, expenditures, balance sheet)

– Completions (degrees and certificates awarded, graduation rates)

– Human Resources (ft/pt by position, faculty salaries)

– Student Financial Aid (first-time, full-time students – number and average amount)

• FISAP Data, 1998-2006 (aid recipients by income range)

• 500 Variables3

Data Development

• Harmonization– Reconciling changes across reporting standards and

survey instruments as much as possible– Consistency in treatment of parent/child institutions

• Panel Construction– Three analysis panels (5, 10, and 20 years)

• Requires reporting for: FTE, instruction expenses, completions• Roughly 2,000 institutions in the 20-year panel

• Other Data Improvements– Derivation of Metrics– Provide variables/code to standardize by enrollment

and adjust for inflation– Imputations for missing data 4

Six Metrics for Monitoring Costs

1. Revenues - Where does the money come from?

2. Expenditures - Where does the money go? – E&R, E&G, total operating– Within E&R

3. Spending and tuition increases - What is driving tuitions?

4. Spending and Subsidies – What portion of education spending paid by students and the state?

5. Outcomes: Spending and completions - What does the money buy?

6. Spending vs. Enrollments

Metric 1: Where Does the Money Come From?Privatization of finance continues; biggest growth among publics in tuition;

among privates, in PIE followed by tuition

6

Metric 2: Measuring the “Cost of Education”

How much money is going to core academic/ educational programs?

•Education and related spending (E&R): – Instruction, student services, and share of “overhead”

(academic, administrative, and operations/maintenance costs)

•Education and general spending (E&G): – E&R plus sponsored research and public service (and

their portion of shared costs)

•Total operating expenses– E&G spending plus auxiliaries and hospitals

Metric 2: Where Does the Money Go?Focus on top line spending overstates resources that pay for the core

academic program

8

Education and General (E&G)

Total Operating Expenditures

Metric 2: Education and Related SpendingIn Publics, overall costs quite steady since 2002; instructional share is down

9

Metric 2: Education and Related SpendingIn Privates, spending is increasing but instruction share is down

10

Metric 3: Tuitions and Spending

Are tuitions rising because spending is increasing?

•What proportion of tuition increases is attributable to increased spending?

– Compare “sticker price” increase…– with increases in Education and General

spending, and ask…– “What if…” tuition had only increased enough

to accommodate E&G spending increases

11

Metric 3: Tuitions and Spending

• Between 2002 and 2006, the percent of the tuition increases attributable to increased E&G spending:– Public Research: 8.4%– Public Masters: n/a– Public Community Colleges: n/a– Private Research: 72.0%– Private Masters: 12.8%– Private Bachelors: 15.0%

12

Metric 4: Cost/Price/Subsidy

What are the student and subsidy shares of E&R costs?

•Cost: Education and related spending per student

•Price: Portion of E&R spending paid for with tuition revenues

•Subsidy: Costs paid from other institutional revenues

Metric 4: Cost/Price/SubsidyIn Publics, student share of cost is increasing

Metric 4: Cost/Price/SubsidyIn Privates, student share of cost is increasing in non-research institutions

Metric 5: Completions and DegreesIncreases in spending/completion; but in Publics, decreases since 2002

Metric 6: Enrollment and SpendingSpending per student greatest in institutions with the fewest students

Source: Delta Cost Project IPEDS dataset.

Data Availability• Raw data files

– SAS, SPSS, Stata files– available for download on website:

www.deltacostproject.org

• Data web – Web portal to provide quick access to standard reports

on the six metrics– Data for 2002-06, updated annually– User selected institutions, peer groups, Carnegie group;

export tables and graphs– Expected completion in Summer 2009

• Delta reports– Trends report, policy reports 18

For more information…

• To access reports and data, visit: http://www.deltacostproject.org

• Or contact:

Donna Desrochers

donna@deltacostproject.org

19