Loooong! Sorry about that...
A friend's comment that he doesn't know anything about college or university economics prompted me to explain where all our student's money goes here at Knox...
First, I don't know anything about large public research universities; mostly they emphasize the research and they exist to get grant monies. At least if you are a faculty member that seems to be your main job. For many of the large public universities undergraduate education is the burden they have to carry to do research. That said, public universities have been caught between a rock and a hard place in recent years because the states that support them have been reducing the fraction of their budgets that are supplied by the state. The only way for the public universities to make up the shortfall is to raise tuition. The state of Illinois has slashed their support for the U of I system by about 35% over the last few years, so U of I has raised tuition.
I work at a small liberal arts college. I've been the faculty observer to the Board of Trustees for the last four years and I'm currently the chair of the Faculty budget committee, so I've got a pretty good clue at least into Knox's budget. It ain't pretty.
We are a heavily tuition-driven institution. Why? because our endowment is too small - about $85M. We're in a consortium of 14 similarly sized liberal arts colleges called the Associated Colleges of the Midwest. The top endowed colleges in our consortium all have huge endowments - for example, Grinnell College's endowment is about $1.3 BILLION.
Several other schools in the consortium have endowments that are north of $500M. Suffice it to say they are not as heavily tuition driven as we are. (BTW, despite the sentences above, Grinnell charges more for tuition than Knox by several thousand dollars. Go figure.) When you look at faculty salaries for the consortium, at all four grade levels (Instructor, Assistant Professor, Associate Prof. and Professor) Knox ranks either 12th, 13th, or 14th out of 14. So we're not rich. Out of our $40M annual budget, the endowment contributes just about 10%. Nearly all the rest is from tuition.
When you think about Knox's $40M operating budget for about 1400 students, think of it this way. We run a town of about 1800 people.
We occupy about 20 square blocks of Galesburg. We have about 60 buildings ranging in size from a 1200 sq ft. bungalow (the Alumni Affairs office) to the 80,000 sq. ft. Science Building. The oldest of our buildings was built in 1857, the newest in 1996.
All those buildings need electricity, water, sewage, HVAC, etc. All those buildings need roofs, windows, tuckpointing, foundation work, sump pumps, etc. We have to abide by rules that normal towns and individuals in their houses don't need to. For example, the State of Illinois in 2008 mandated that all residential and classroom buildings on college campuses (public and private) must have modern sprinkler systems by 2013. So we've had to spend about $5M to install sprinklers around campus over the last few years (we already had smoke detectors and fire alarms in all buildings).
We have roads, sidewalks, storm sewers, landscaping, etc. We have a football field, a practice field, a track, a soccer field, a baseball field and a softball field and 2 tennis courts. All of which need maintenance.
We have a telephone system, a computer network that accommodates about 2000 computers, office machines, and a satellite TV system.
We have a security force of about 8 that works 24 hours a day.
Of the 1800 people in our little town, we have to feed about 1400 of them three meals a day, seven-days a week. (Don't get me started on variety of meals, local vs trucked-in food, sustainability, vegetarians, vegans, etc.) Nearly all of our students live on campus.
We have a health center with one full-time professional and a full-time and 2 part-time mental health professionals on staff.
We have 350 or so staff, of whom 100 are faculty. They all get salaries and benefits - and they all contribute to both retirement and health care (I pay $479/month for the family plan health insurance; thankfully because of the Affordable Care Act we can keep Patrick on our insurance until he's 26. That is only 1/3 the total cost of the health insurance; the College pays the other 2/3 of the monthly cost. We are self-insured, but we contract with a service in Chicago to manage the plan. It's cheaper than going with one of the large insurance companies.) We have very few adjuncts and we're proud of that; nearly all of our courses are taught by full-time faculty.
Some disciplines on campus don't have large expenses (hey, what do you need for Classics? ;^). In computer science our biggest expense is for (duh) computers. Luckily, we spend practically $0 on software every year because we're very aggressive about using open source software for nearly all our classes. We also spend $800 per year to belong to the Microsoft Academic Alliance which gives us free copies of MS Visual Studio for all our students when we use it in a class (not often, but occasionally). We keep our lab computers for 3 or 4 years before we replace them. Our old computers go to staff members for their office machines. I do have complaints - we don't have money for mobile devices or robots that we'd love to use in several of our classes. We make do with free emulators instead.
In CS our biggest expense (aside from salaries) is the library - As a senior member of the IEEE (one of CSs professional societies) I personally pay about $125 a year for electronic access to ALL the IEEE journals (about 50 journals and conference proceedings). The Knox library - for five (5) IEEE journals, pays over $5,000 per year - for electronic access; we don't get printed journals anymore. If it weren't for inter-library loan (for which we also pay) my students wouldn't have access to lots of journals and conference proceedings.
Knox starts every fiscal year with a deficit. This year it was $3.6M. The goal over the year is to eliminate the deficit and break even by the following June 30. (Sorry, we're not a for-profit college.) My departmental budget has not gone up in 11 years.
As I've said before, one of Knox's primary missions is to serve first-generation and low income students. Our discount rate is 48% this year, so the $32K tuition is really about $17K for many students. Our tuition has increased about 3-4% per year over the last decade. Our room fees have only recently gone up about 5% after being held flat for about 6 years and board goes up to match projected food costs. Room and board are supposed to break-even, and not be cash cows. Our students leave Knox with an average debt of about $23,000. Not great, but manageable IMHO.
About 50% of our students have an off-campus study experience. Some in the U.S. and many of them abroad. There are no extra fees for study-abroad at Knox except for airfare to get you there and home. Your regular Knox tuition (including all your financial aid) pays for the study-abroad program. Study-abroad students typically get a break on room and board while they are overseas. This costs Knox money, but is usually a terrific experience for the students.
Our Board has done a very good job of managing and increasing the endowment over the past decade. The endowment has more than doubled in that time and we've been able to ratchet down an unsustainable yearly draw of 16% in 1999 to a sustainable 5% draw from the endowment/income this year. Still, that won't get us rapidly to the $300M or so endowment we really need to be able to breathe easily and start each year with a balanced budget.
I'm really not whining here. I really love it here; I've got some great students and some good students. I've got interesting colleagues. I love my work; while I work 50-70 hours a week during the school year, I get to make my own hours and do research during the summer. We've got a great, energetic new president (our first female president) and there's a lot of hope floating around campus. Our students do very well nationally and, at least in computer science, they all either have jobs or are in grad school. Given our very limited resources, I think we have a very good CS program here and we compare very favorably with lots of liberal arts colleges with a lot more money. Just don't call us greedy or inefficient.
I think that over the last 40 years, the education "business" has swung from a system where there were more scholarships and grants and government money available for both colleges and for individual students to a system where you're basically on your own. Where there is less government funding available for everyone and more dependence on borrowing for education. Republicans would call it "individual accountability". I call it a shame.
My $.02.
cheers,
john
