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

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Trends In College Spending Where Does the Money
Come From? Where Does It Go? Donna
Desrochers Director of Economic and Education
Research Delta Cost Project IES Research
Conference Washington, DC June 8, 2009
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Policy Reasons for Focusing on College Costs

• Economic competitiveness
• State budget deficits and eroding state funding
• Rising tuitions and declining affordability

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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 Variables

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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

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Six Metrics for Monitoring Costs

• Revenues - Where does the money come from?
• Expenditures - Where does the money go?
• ER, EG, total operating
• Within ER
• Spending and tuition increases - What is driving
  tuitions?
• Spending and Subsidies What portion of
  education spending paid by students and the
  state?
• Outcomes Spending and completions - What does
  the money buy?
• Spending vs. Enrollments

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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
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Metric 2 Measuring the Cost of Education

• How much money is going to core academic/
  educational programs?
• Education and related spending (ER)
• Instruction, student services, and share of
  overhead (academic, administrative, and
  operations/maintenance costs)
• Education and general spending (EG)
• ER plus sponsored research and public service
  (and their portion of shared costs)
• Total operating expenses
• EG spending plus auxiliaries and hospitals

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Metric 2 Where Does the Money Go?Focus on top
line spending overstates resources that pay for
the core academic program
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Metric 2 Education and Related SpendingIn
Publics, overall costs quite steady since 2002
instructional share is down
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Metric 2 Education and Related SpendingIn
Privates, spending is increasing but instruction
share is down
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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 EG spending increases

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Metric 3 Tuitions and Spending

• Between 2002 and 2006, the percent of the tuition
  increases attributable to increased EG 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

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Metric 4 Cost/Price/Subsidy

• What are the student and subsidy shares of ER
  costs?
• Cost Education and related spending per student
• Price Portion of ER spending paid for with
  tuition revenues
• Subsidy Costs paid from other institutional
  revenues

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Metric 4 Cost/Price/SubsidyIn Publics, student
share of cost is increasing
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Metric 4 Cost/Price/SubsidyIn Privates, student
share of cost is increasing in non-research
institutions
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Metric 5 Completions and DegreesIncreases in
spending/completion but in Publics, decreases
since 2002
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Metric 6 Enrollment and SpendingSpending per
student greatest in institutions with the fewest
students
Source Delta Cost Project IPEDS dataset.
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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

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For more information

• To access reports and data, visit
  http//www.deltacostproject.org
• Or contact
• Donna Desrochers
• donna_at_deltacostproject.org