Evaluating the Financial

Contribution of Academic Programs

Ross Koenig, AVP Budget & Financial Planning
Rochester Institute of Technology
September 22, 2014

About RIT . . .
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
2

About RIT Budget . . .

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

What is 2 x 2?
Mathematician
Statistician
Accountant (Financial Analyst)
4

RIT History of Program Level Analysis

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

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?
6

Goals for new APR Cost Model:

1. Transparent relation to RITs 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
Depts
create
curricula

Academic
Programs
Students
matriculate
into
programs

Academic
Departments

Depts
hire/deploy
faculty

Faculty
Faculty
assigned to
course
sections

Courses

Students

Specific Course
Sections
Students register
for course sections
8

Common Denominator?
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

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)
10

SCH Data Example University

Course Disciplines

Academic Plans

MATH-BS
MECE-BS
MECE-MS
PHYS-BS
COMPSI-BS
COMPSI-MS
TOTAL

UG
UG
GR
UG
UG
GR

ENGL
337
1,378
216
1,675
3,606

MATH
1,558
2,480
288
2,198
186
6,710

PHYS
312
1,654
73
1,116
837
93
4,085

MECE
7,303
1,312
8,615

CSCI
389
965
73
180
5,756
1,581
8,944

TOTAL
2,596
13,780
1,458
1,800
10,466
1,860
31,960

11

Where to Start on the Financials?

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)
12

Step 1: Parse TB Data to Department

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
13

Step 1a: Academic Cost Department

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.
14

Step 2: Account Overrides

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.
15

Step 2a: Other Account Overrides

Four additional account code

segment override tables:
Project (e.g., Gift, Endowment)
Project/Object

Department/Object
Entity
16

Step 3: Reconcile
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

17

Resulting Revenue/Cost Pools

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 Divs (5)
Research Admin
Auxiliaries

18

Secondary Analyses
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)
19

Remaining Revenue/Cost Pools

College/Cost Depts (77)
College (9)
Gross Tuition
Student Aid
Student Fees

Endowment Activities
Gift Activities
Academic Affairs
Non-Academic Divs (5)
Research Admin
Auxiliaries

20

Step-Down Methodology
Cost Pool

Allocation Basis

Research Administration

Sponsored Program
Revenues

Non-Academic Divisions and Combination of Credit Hours

Other Cost Pools
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
21

Pools We Are Left With

Gross Tuition Revenue (by Plan)
Unfunded Student Aid (by Plan)
All other expenses (net of other
revenues) fully-allocated to course
discipline
22

Cost Pool Step-Down Example

A
Faculty
Salaries
ENGL
MATH
PHYS
MECE
CSCI
Instruction Subtotal

320
1,035
1,035
2,662
3,241
8,293

Stud Affairs
Acad Affairs
College Admin
Non-Acad Div's
Endow/Gift Activity
Spons Res Admin
Utilities
Interest
Bldg Deprec
Facilities Exp
Equip Deprec
Gross Tuition
Unfunded Aid
Non-Instruct Subtotal
Total University

B
Other

C=A+B
Total
Direct

D
Equip
Deprec

30
68
208
656
599
1,561

350
1,103
1,243
3,318
3,840
9,854

13
19
13
156
91
292

74
74
111
1,075
1,038
2,372

2
5
5
75
72
159

291
610
484
979
1,016
3,380

51
84
84
296
329
844

100
205
196
620
770
1,891

139
265
164
341
354
1,263

1,020
2,365
2,300
6,860
7,510
20,055

781
781
1,743
1,743
650
650
2,730
2,730
30
30
120
120
300
300
600
600
850
850
1,750
1,750
647
647
(30,254) (30,254)
9,634
9,634
(10,419) (10,419)
8,293 (8,858)
(565)

32
13
6
91

297
37
37
927
37
(300)
(600)
(850)
(1,957)

2
2

151
96
151
(3,748)
(30)

(844)

(1,891)

(1,263)

(3,380)
-

(844)
-

(1,891)
-

(1,263)
-

(30,254)
9,634
(20,620)
(565)

6
207
(647)

(292)
-

E
O&M

(2,372)
-

F
Spon
Res

G
H
NonAcad Div College

(163)

(159)
-

I
J
Acad Student
Affairs Affairs

K= Sum(C:J)
Summary

23

Academic Cost Responsibility Tiers

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
24

Cost Pools Example U - $ 000s

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 $
GR $
$

590 $ 1,400 $ 1,580 $ 4,600 $ 4,770 $ 12,940

$
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

25

Cost/SCH Example
Physics College UG Cost = $1,390 K
ENGL
Credit Hours

UG

3,606

GR

MATH

3,606

PHYS

MECE

CSCI

TOTAL

6,524

3,919

7,303

7,290

28,642

186

166

1,312

1,654

3,318

6,710

4,085

8,615

8,944

31,960

Cost/CrHr
College

UG $

136

GR
Acad Affrs

UG $

164

GR
Full Cost

UG $
GR

283

184

355

559

569

395

457

398

640

738

666

215

403

630

654

452

484

434

716

828

745

345

561

781

808

596

618

602

884

979

903
26

Cost of a Program (MECE-BS)

CrHr Consumed
College Cost/CrHr
Full Cost

ENGL
1,378

MATH
2,480

PHYS
1,654

MECE
7,303

CSCI
965

TOTAL
13,780

$
136 $
184 $
355 $
559 $
569 $
425
$ 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
Full Cost

$
283 $
345 $
561 $
781 $
808 $
628
$ 389,784 $ 855,303 $ 928,502 $ 5,700,000 $ 779,678 $ 8,653,267

27

Bottom Line for MECE-BS

FT
Student Headcount
# SCH
Tuition Rate
Gross Tuition K$
Student Aid
33%
Net Tuition K$

$
$
$
$

400
13,600
30,000
12,000
3,960
8,040

PT

$
$
$
$

Total
420
13,780

20
180
1,200
216 $ 12,216 $
$ 3,960 $
216 $ 8,256 $

$/SCH

887
287
599

College Responsibility Costs - K$

Net Result - K$

$
$

5,859 $
2,397 $

425
174

Academic Affairs Responsibility Costs - K$

Net Result - K$

$
$

6,656 $
1,600 $

483
116

Fully Allocated Costs - K$

Net Result - k$

$
$

8,653 $
(397) $

628
(29)
28

Bottom Line Summary - Example

MATH-BS
MECE-BS
MECE-MS
PHYS-BS
COMPSI-BS
COMPSI-MS
TOTAL

UG
UG
GR
UG
UG
GR

Gross
$ 2,443
$ 12,216
$ 1,751
$ 1,800
$ 9,871
$ 2,172
$ 30,254

Tuition
Aid
$
888
$ 3,960
$
432
$
648
$ 3,168
$
538
$ 9,634

Net
$ 1,555
$ 8,256
$ 1,319
$ 1,152
$ 6,703
$ 1,634
$ 20,620

College
$
664
$ 5,859
$
923
$
581
$ 4,206
$ 1,288
$ 13,521

Cost
Acad Affr
$
770
$ 6,656
$ 1,032
$
665
$ 4,849
$ 1,440
$ 15,412

Full
$ 1,122
$ 8,653
$ 1,275
$
932
$ 6,352
$ 1,720
$ 20,055

College
$
891
$ 2,397
$
396
$
571
$ 2,498
$
346
$ 7,099

Net Result
Acad Affr
$
785
$ 1,600
$
287
$
487
$ 1,854
$
195
$ 5,208

$
$
$
$
$
$
$

Full
433
(397)
44
220
351
(85)
565

29

Program Comparison - Example

ENGL

MATH

PHYS

MECE

CSCI

TOTAL

Consumption of CrHr
MATH-BS
MECE-BS

13%
10%

60%
18%

12%
12%

0%
53%

15%
7%

Full Cost / CrHr

283 $

345 $

561 $

781 $

808

Program Weighted Average Cost / CrHr

MATH-BS
$
37 $
207 $
MECE-BS
$
28 $
62 $

67 $
67 $

$
414 $

121 $
57 $

100%
100%

432
628

30

RITs Learnings - Process

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
31

RITs Learnings - Process

Start with disaggregated data and
summarize yourself
Be intentional / specific / constant
about what academic program means
Course Disciplines <> General Ledger
Departments
32

RITs Learnings - Results

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
33

RITs Learnings - Results

PhD programs might need to be
evaluated differently
Full vs. Marginal Cost - Consider
multiple levels of responsibility

34

Wrap Up

Questions?
35