BulletinJulyAug16cover
THE
BULLETIN
Volume 84 | Issue 4
July/August 2016

Black & Red: Current Challenges and Considerations for Budgeting and Finance

Ann M. Gansemer-Topf, Peter D. Englin, and Karen Couves

During the past decade, colleges and universities have experienced economic recessions, student financial aid policy changes, changes in student demographics, and record enrollments for some institutions while others are considering closing. Higher education institutions have a reputation for changing slowly—if at all. However, according to the Center on Budget and Policy Priorities, state legislatures decreased funding to public institutions by an average of 28% between 2008 and 2013. This downward trend in state support is likely to continue. To stay “in the black,” today’s fiscal landscape both within and external to colleges and universities requires institutional leaders to reconsider decisions on where money should be spent or how to generate revenue. Such internal competition for dollars means that union and activities professionals must be able to make a case for financial resources.

An examination of the recent history of higher education expenditures provides situational context for understanding today’s financial landscape. During the past 10 years, there have been categories of expenditures where all institutions, regardless of size and mission, allocate at least some portion of their budgets. This analysis provides background for understanding patterns of behavior that impact or are impacted by decision-makers’ behavior. From this broader scope attention can be turned to current challenges that impact financing and budgeting within the smaller divisions, such as unions and activities departments.

Background

The Integrated Postsecondary Education Data System (IPEDS) is a national dataset, sponsored by the U.S. Department of Education National Center for Education Statistics, that captures data on a significant number of institutional activities. Institutions that participate in federal student aid programs are required to provide data from their campus. The dataset is publicly available and is a good resource for higher educational professionals; however, many are unaware of its existence.

Among the valuable applications for IPEDS data is to illustrate trends in expenditures for the areas of instruction, academic support, student services, and institutional support. Instruction is “a functional expense category that includes expenses of the colleges, schools, departments, and other instructional divisions of the institution and expenses for departmental research and public service that are not separately budgeted,” according to the National Center for Education Statistics. Academic support includes expenses of activities and services that support the institution’s primary missions of instruction, research, and public service. It includes the retention, preservation, and display of educational materials; organized activities that provide support services to the academic functions of the institution; media such as audio-visual services; academic administration; and formally organized and separately budgeted academic personnel development and course and curriculum development expenses. Student services activities include expenses for admissions, registrar activities, and activities whose primary purpose is to contribute to students’ emotional and physical well-being and to their intellectual, cultural, and social development outside the context of the formal instructional program. Institutional support expenses include “expenses for the day-to-day operational support of the institution. Includes expenses for general administrative services, central executive-level activities concerned with management and long-range planning, legal and fiscal operations, space management, employee personnel and records, logistical services such as purchasing and printing, and public relations and development,” the National Center for Education Statistics notes on its website.

In reviewing how higher education institutions allocate expenses, expenditures were calculated in two ways: percentage of expenditure and amount per student. Percentage of expenditure was determined by adding the total of instruction, academic support, student services, and institutional support expenditures and then dividing the individual expenditure category (i.e., instruction) by this total. Amount per student was calculated by dividing the amount of money in a specific category by the number of full-time equivalent (FTE) students within the institution. It is also worth noting that while IPEDS total expenditures include items such as public service, research, and auxiliary expenditures, this analysis focused only on categories to which institutions devoted a significant amount of resources.

Tables 1 and 2 reveal differences in expenditures between public and private institutions. The IPEDS data were further organized according to the Carnegie classification. Institutions were grouped into four classification types: associate’s, baccalaureate, master’s, and doctoral. The years 2004, 2009, and 2014 were used to illustrate expenditures over 10 years in the categories of instruction, academic support, student services, and institutional support.

Although instruction is the largest category in both public and private institutions, in the 10-year period surveyed, the percentage of total expenditures in both public and private institutions declined slightly. Public doctoral institutions dedicated the highest percentage of total expenditures to instruction than other classification types, but this percentage also included expenditures dedicated to graduate and undergraduate education. Although it is their largest expenditure category, in comparison, private institutions spent less on instruction as a percentage of their total expenditures than did public institutions. Doctoral private institutions consistently spent more than twice as much per FTE in each time period surveyed than did public institutions.

 
Table1PublicInstitutions     Table2PrivateInstitutions

Differences in expenditures between public and private institutions. Click images to enlarge.


Academic support was another expenditure category examined. For public institutions, the academic support expenditures remained consistent in both the associate’s and baccalaureate schools respectively at 11% and 13% from 2004–14. Master’s and doctoral public institutions experienced a slight increase during the 10-year period. Within private institutions, the academic support expenditures remained constant during the decade with regard to the baccalaureate (10%) and master’s (11%) schools. Again, the only slight increase in expenditures was evidenced with doctoral institutions during the 10 years.

Overall, for both public and private institutions, the percentages of total expenditures in student services increased from 2004–14. Within the realm of student services expenditures in public and private institutions, baccalaureate institutions spent a higher percentage of their resources on student services while doctoral institutions spent significantly less. For instance, in 2004 and 2014 public associate’s institutions spent 13% and 14% of their resources on student services expenses while public doctoral institutions spent 9% and 10% respectively. Among private institutions, the discrepancy is increasingly evident as in 2004 and 2014 associate’s institutions’ expenditures on student services progressed from 20% to 22% while doctoral institutions’ expenses increased from only 11% to 13%.

Across all categories and the time frame surveyed, private institutions spent a greater percentage of their resources on institutional support than did public institutions. The percentage of total expenditures remained consistent during the 10 years in both public and private institutions with the exception of a slight increase in the institutional expenditures of doctoral public institutions and a slight decrease at master’s institutions. Private institutions revealed a slight decrease in spending on both master’s and doctoral institutions.

Departmental Budgeting and Finances

As expenditures change, so too do the challenges of departmental budget managers. The current higher education environment demands both high-quality learning environments and a sensitivity to the rising costs of tuition. Budget managers are challenged to balance the need to provide services with the increasing costs of doing so. This 10-year analysis provides insight for union and activities professionals based on institution type. Those working at doctoral institutions will have greater competition for budget dollars as a smaller percentage of funds are allocated to student services. Additionally, it can be helpful to understand which areas of institutions receive the greatest funding so that opportunities for partnerships can be sought to leverage resources. Prepared with this background information, union and activities budget managers can more successfully vie for funding if they know and inform decision-makers, explore alternative revenue sources, and assess their programs and services.

Know and Inform Decision-Makers

Changes in leadership at the institutional, board, or state level can influence budgets. For public institutions, changes in state government leadership can impact funding priorities, and at all institutions, changes in governing boards and institutional leadership influence budgets. These changes may be a shift of priorities or processes. Often professionals, especially new professionals, are not aware of who makes decisions or how decisions are made. It is important to focus not only on the amount of money allocated, but also understand the broader picture in terms of how this money was allocated and who had a role in this decision, according to New Directions for Student Services: Budgeting and Financial Management in the Midst of Financial Crisis.

Many institutional decision-makers have only a cursory knowledge of the service missions and functions within student affairs units, Budgets and Financial Management in Higher Education reported. When contributing to or leading budgetary conversations and decisions, it is essential to educate all those involved on the importance of such allocations. Those making the decision might not appreciate the role of a student union or campus activities department in the overall experience of students. If leaders understand that the ultimate success of the university in fulfilling its educational mission fundamentally requires a partnership with these units, resource allocation becomes more egalitarian and based less on an uninformed self-interest that can underfund student affairs. Additionally, even individuals who are not new to higher education need to be cognizant of how leadership changes may influence their budgets. This work of educating and persuading decision-makers is never finite.

Explore Alternative Revenue Sources

With limited budgets, institutions have looked for other sources for revenue to stay out of the red, according to New Directions for Student Services: Budgeting and Financial Management in the Midst of Financial Crisis. Institutions may choose to add or raise fees. Services such as program attendance or equipment use, which once were included as a part of tuition, may now require a user fee. Student affairs and auxiliary units are also engaging in fundraising efforts. The out-of-classroom experience at many institutions contributes to students’ sense of belonging and allegiance to the institution. Students may view their involvement in these organizations as critical to their collegiate and career success and subsequently may be willing to financially contribute to scholarships, spaces, or program development in these areas.

Additions and renovations to student unions and other student affairs units are capitalizing on the relationships established with current and former students. Absent state or university resources, current students who understand the role and importance of cocurricular opportunities will collaborate to establish student fees to finance not only facility improvements but also to add mission-critical positions. Alumni affinity to an institution, often developed through cocurricular experiences, can lead to substantial contributions to facilities and services that are relevant to them.

For example, one university secured a million-dollar gift from two married alumni to renovate a ballroom. The ballroom was special to these former students as it was where they originally met during a university dance. They attribute their success to the education received and the life partnership formed at their alma mater. They wished to that sustain that legacy for current and future students.

In another instance, student leaders began to question why they were being asked to frequently serve on staff search processes. When low staff salaries were offered as one of the challenges leading to frequent attrition, these student leaders realized losing staff negatively affected the quality and continuity of the student experience. They advocated for and received new student fee monies to offset general fund money within the student affairs unit’s budget. General fund money was then freed up and reallocated to elevate salaries within the student affairs unit. Salaries within the unit, on average, increased just more than 8%, resulting in higher staff satisfaction and lower attrition.

In the past, fundraising efforts have been focused on academic and athletic facilities. However, for many students, time spent in the student union, participating in clubs and organizations, and interacting with advisors and staff was just as memorable and valuable. Alumni may be willing to donate their time and money to support these continued efforts.

Assess

Engaging in assessment—the process of collecting and analyzing data and using this information to inform decisions—can aid in budgetary decision making. Similar to budget decisions, the assessment process should account for an institution’s mission and purpose, according to Budgets and Financial Management in Higher Education.

Collecting quantitative data, developing benchmarks or key performance indicators, and systematically collecting qualitative data highlighting student voices and experiences can assist budget planning by demonstrating what programs are effective, how programs could be improved, or what programs could be discontinued. Good assessment also requires investing in data systems or processes that allow for data to be organized, retrieved, and analyzed.

For example, some institutions are utilizing maintenance management systems that generate current and predictive facilities benchmarking data with easy-to-understand charts, tables, and graphs. Central university facilities departments have used management systems of this type historically. Today, recreation facilities, student unions, university housing, and other units with large capital investments and facilities footprints manage the collection of maintenance information as they strive to control labor costs and develop facilities investment strategies based on specific needs and square footage. Decision-makers and stakeholders assign higher credibility when strategies and data are aligned. Stewardship is enhanced when student affairs units are able to clearly demonstrate that the goal of providing safe, clean, welcoming, and vibrant facilities is verified. The accounting of the dollars invested and staff hours dedicated within the maintenance management system leads to an understanding that efficiency and quality are provided and validates the wise use of university and student resources by student affairs staff.

Making decisions on “Where should I spend money?” requires an understanding of “What were the results of past spending?” Engaging in assessment is critical to making effective data-driven decisions, New Direction for Institutional Research reported in its article “Driving Decision Making with Data.” Developing, sustaining, and utilizing data systems are critical for budget and finance decisions, according to the fourth edition of A Guide to College and University Budgeting: Foundations for Institutional Effectiveness.

Staying Out of the Red

The process of budgeting, balancing spreadsheets, and applying basic accounting principles has remained fairly consistent. Yet the fiscal environment in which this process is completed continues to change. Having an awareness of this broader environment, paying attention to shifts in priorities and leadership, exploring alternative revenue streams, assessing effectiveness, and focusing on the institutional mission help to meet today’s challenges and provide direction for the future, enabling unions and activities departments to stay out of the red and in the black.

 

Ann M. Gansemer-Topf, Ph.D.Ann Gansemer-Topf, Ph.D., anngt@iastate.edu
Ann Gansemer-Topf is an assistant professor of higher education and program coordinator for the student affairs program in the School of Education at Iowa State University. Prior to becoming a faculty member, Gansemer-Topf worked in admissions, institutional research, academic advising, and residence life. She also has expertise in program evaluation and assessment. Her research interests focus on examining the micro and macro factors that impact student success. She has her doctoral and master’s degree from Iowa State University and her bachelor’s degree from Loras College in Dubuque, Iowa.


Peter Englin, Ph.D.Peter Englin, Ph.D., penglin@iastate.edu
Peter Englin serves as the director for the Department of Residence at Iowa State University after spending five years as the dean of students. He also has a faculty appointment in the School of Education. As a member of the Iowa State University Student Success Task Force and Chair of the Division of Student Affairs Student Success Committee, student persistence, graduation, and personal development have been an emphasis. As dean of students and director of residence, he has accumulated significant experience in financing student affairs’ efforts through general fund allocations, student fees, and generated revenues. Englin has been involved in several professional organizations and served as president of the Iowa Student Personnel Association.


Karen CouvesKaren Couves, kcouves@iastate.edu
Karen Couves joined the Center for Excellence in Learning and Teaching at Iowa State University in March 2015 as primary fiscal officer. She has a joint appointment with the center and the Office of the Senior Vice President and Provost. For the latter, Couves coordinates the Department Chair Workshops, Early Career Faculty Events, Faculty Mentoring Program, the Emerging Leaders Academy, and the Advance program. Previously, she worked for two years as an administrative specialist with the School of Education. Couves holds a B.A. in psychology from McGill University. She is currently a master’s student in higher education at Iowa State in the School of Education with a concentration in leadership and learning.