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Tuition Model - Public Colleges

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Ever wonder how public colleges and universities determine next year's tuition increase? This is your chance to find out.

This tool incorporates a model of the revenue streams and expenditures at a typical public college. The models assume that this year's budget was balanced, and asks you to specify how each budget area will change in the upcoming year. For example, instruction expense will likely increase because of faculty raises. It then calculates the impact of these changes on tuition.


Percentage of Students Receiving Aid

This is the percentage of the student population that receives financial aid from the school's institutional funds. In 1992-93 the figure at public colleges was 29.1% and in 1995-96 it was 34.2%.

Percent Aided:

Average Aid Percentage

This is the average percentage tuition discount received among students receiving financial aid. It is the average ratio of aid received to tuition and required fees, for students receiving the school's institutional aid. In 1992-93 the figure at public colleges was 65.7% and in 1995-96 it was 63.9%.

Aid Ratio:

FTE Fall Enrollment

This is the full-time equivalent (FTE) number of students enrolled at the start of the fall semester. Public college enrollments do not change much from year to year. In 1992-93 the change was 0.6%. In 1995-96 the change was -0.4%. The average change from 1990 through 1997 was 0.5%.

Annual Change:


Revenues

Federal Government

This is revenue received from the federal government, in the form of appropriations, restricted and unrestricted grants and contracts, and federally-funded research and development centers. The annual change is typically 5.3%, with a low of 3.6% and a high of 10.4%. Recent changes have tended toward the lower end of the scale.

About 11% of public university revenues come from the federal government.

Annual Change:

State Government

This is revenue received from the state government, in the form of appropriations, unrestricted grants and contracts, and restricted grants and contracts. The annual change is typically 3.3%, with a low of 1.8% and a high of 5.7%.

Public colleges are heavily dependent upon revenues from the state government, with about 36% of their revenues coming from the state government. Unfortunately, state support for higher education has been declining steadily and is one of the first budget items to be cut during a recession. Changes in support from the state government have a direct and immediate impact on changes in tuition.

Annual Change:

Local Government

This is revenue received from the local government, in the form of appropriations, unrestricted grants and contracts, and restricted grants and contracts. The annual change is typically 6.0%, with a low of 0.2% and a high of 11.6%. Recently, however, annual increases have tended to be slightly above flatline. Luckily, only 4% of public university revenues come from the local government, so changes in local government support of higher education have negligible impact on tuition.

Annual Change:

Private Gifts and Grants

This is revenue received from private gifts, grants and contracts, including donations from alumni, other individuals, corporations, foundations, religious and other organizations. The annual change is typically 6.6%, with a low of 4.4% and a high of 10.6%. Gifts tend to increase when the economy is doing well and to decrease during and immediately after a recession. About 4% of public university revenues come from private gifts and grants.

Annual Change:

Endowment Income

This is revenue received from the college's endowment, and includes income from restricted and unrestricted funds. The annual change varies considerably, depending on the performance of investments and the growth of the endowment. It averages around 6%, with a low of -4.2% and a high of 12.4%. About 0.6% of public university revenues come from endowment income.

Annual Change:

Sales and Services - Educational Activities

This is revenue received from sales and services relating to educational activities. The annual change varies considerably from year to year. It averages around 5%, with a low of -2.4% and a high of 10.4%. About 2.9% of public university revenues come from sales and services relating to educational activities.

Annual Change:

Sales and Services - Auxiliary Enterprises

This is revenue received from sales and services relating to auxiliary enterprises. The annual change is fairly volatile. It averages around 5%, with a low of 1.9% and a high of 6.8%. About 9.5% of public university revenues come from sales and services relating to auxiliary enterprises.

Annual Change:

Sales and Services - Hospitals

This is revenue received from sales and services relating to university-affiliated hospitals. The annual change is fairly volatile. It averages around 3%, with a low of -2.0% and a high of 13.6%. About 10% of public university revenues come from sales and services relating to hospitals, but this percentage has been declining recently.

Annual Change:

Other Sources

This is revenue received from other sources. The annual change is fairly volatile. It averages around 10%, with a low of 4.7% and a high of 19.1%. About 3% of public university revenues come from other sources, but this percentage has been increasing recently.

Annual Change:


Expenditures

Instruction

This is expenditures relating to instruction, such as faculty and instructor salaries. The annual change is fairly steady, averaging around 4.3% with a low of 2.8% and a high of 5.4%. This is a major cost center for public universities, with approximately 33% of public university expenditures coming from instruction. The percentage has been decreasing slightly as universities try to control costs.

Annual Change:

Research

This is expenditures relating to research. The annual change is fairly steady, averaging around 5.3% with a low of 2.1% and a high of 6.6%. Although the public often blames research costs for the increase in tuition, research expenses represent only about 10% of a public university's expenditures.

Annual Change:

Public Service

This is expenditures relating to public service. The annual change is fairly steady, averaging around 6.2% with a low of 3.9% and a high of 7.8%. Public service expenses represent about 4.5% of a public university's expenditures.

Annual Change:

Academic Support

This is expenditures relating to academic support, including the university library. The annual change is fairly steady, averaging around 6.1% with a low of 4.7% and a high of 7.0%. Academic support expenses represent about 7.4% of a public university's expenditures.

Annual Change:

Student Services

This is expenditures relating to student services. The annual change is slightly volatile, averaging around 5.2% with a low of 2.7% and a high of 10.3%. Student services expenses represent about 4.9% of a public university's expenditures.

Annual Change:

Institutional Support

This is expenditures relating to institutional support. The annual change is fairly steady, averaging around 5.8% with a low of 3.1% and a high of 7.9%. Institutional support expenses represent about 8.7% of a public university's expenditures, but have recently climbed to around 9.0%.

Annual Change:

Operation and Maintenance of Plant

This is expenditures relating to operation and maintenance of the university's physical plant. The annual change is fairly steady, averaging around 3.8% with a low of 2.0% and a high of 5.0%. Operation and maintenance of plant expenses represent about 6.7% of a public university's expenditures, but have been declining recently as colleges try to control costs.

Annual Change:

Financial Aid

This is expenditures relating to financial aid. It is the cost of grants given to students from institutional funds. The average growth in financial aid is 13%, but it has been declining recently, with 10% more reflective of recent trends. The change ranges from a low of 9.1% and a high of 21.1%. Financial aid represents about 4.3% of a public university's expenditures. This percentage has been growing.

Rather than ask you to specify the growth in the financial aid budget, this model calculates it based on the percent aided and aid ratio figures provided above.

Mandatory Transfers

Expenditures relating to mandatory transfers are being held at 1.2% of other expenditures (not including retained revenues) in this model.

Auxiliary Enterprises

This is expenditures relating to auxiliary enterprises. The annual change is somewhat volatile, averaging around 4.8% with a low of 0.7% and a high of 6.7%. Auxiliary enterprises expenses represent about 9.7% of a public university's expenditures.

Annual Change:

Hospitals

This is expenditures relating to hospitals. The annual change is somewhat volatile, averaging around 3.1% with a low of 0.7% and a high of 12.0%. Hospitals expenses represent about 10.3% of a public university's expenditures.

Annual Change:

Independent Operations

Expenditures relating to independent operations (federally funded research and development centers) are being held at 0.2% of other expenditures (not including retained revenues) in this model.


Retained Revenues

Public universities typically retain 2/3 to 3/4 of private gifts and endowment income to increase the size of the endowment. This is intended to act as a hedge against inflation eroding the value of the endowment. Retained revenues typically represent about 3.3% of the rest of a public university's total expenditures, and the annual increase averages 3.9%, from a low of 1.2% to a high of 7.7%.

Rather than ask you to supply the annual change, however, in this case the model asks you to specify the retention percentage.

Retention Percentage:


 

 
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