HE14

LEAS 833 Higher Education in America

Lecture 8 Weeks 14-16

Finance/Fiscal Affairs & Physical Plant Operations

State, Local, and Tuition Revenue Supporting Higher Education for 2018

2018: $207.4 Billion • Net Tuition - $98.7 Billion or 47%

• All State Support - $96.1 Billion or 47%

• Local Taxes - $12.6 Billion or 6%

Revenue Supporting Higher Education

Net Tuition $98.7 B

47%

Local Taxes $12.6 B

6%

All State Support $96.1 B

46%

Source: State Higher Education Executive Officers

Net Tuition as a Percentage of Public Higher Education Total Educational Revenue FY 1993 - 2018

Source: State Higher Education Executive Officers

Source: State Higher Education Executive Officers

College/University Financial Categories

Expenditures – • Capital Outlays - accounts for 10% of total expenditures land, buildings,

and equipment

• Annual Operating Expenses - accounts for 90% of total current-fund expenditures in four distinct areas: educational and general expenses, auxiliary enterprises, hospitals, and independent operations

Revenues - • Federal Support • State & Local Support • Tuition Support • Auxiliary: Sales of Services, Private Giving, Endowment, & Other

Support

College/University Financial Categories

Expenditures – • Capital Outlays (10%) - land (4%), buildings (60%), and

equipment (36%)

• Operating Expenses (90%) - occur in four distinct areas: • Education and General Expenses (70%) - items such as instruction,

research, libraries, administration, campus operations and maintenance, institutional scholarships and fellowships

• Auxiliary Enterprises (10%) - residence halls, food services, book stores, & athletics, etc.

• Hospitals (10%) • Independent Operations (10%) - research and development centers.

College/University Financial Categories

Revenues – • Federal Support – Provides student financial aid and grants

for research and special projects

• Local & State Support - Nationally roughly 50% of revenues comes from state and local support

• Tuition Support – Nationally roughly 38% of revenues

• Sales of Services, Private Giving, Endowment, & Other Support - Nationally roughly 10% of revenues

• Federal Pell Grant ▪ Maximum Federal Pell Grant award is $6,345 for the 2020-21 award year ▪ Targeted at the nation's neediest students (those from families making less than

$36,000 per year).

• Federal Supplemental Education Opportunity Grant (FSEOG) ▪ Receive between $100 and $4,000 a year depending on financial need.

• Federal Teacher Education Assistance for College & Higher Education (TEACH) Grant ▪ Provides grants of up to $4,000 a year to students who are completing or plan to

complete course work needed to begin a career in teach

• Federal Iraq & Afghanistan Service Grant ▪ Provides $5,550 to college or career school students ▪ Parent or guardian was a member of the U.S. armed forces and died as a result of

military service performed in Iraq or Afghanistan after the events of 9/11.

Financial Support for Students

Source: US Dept. of Education

• Federal Direct Stafford Loans ▪ Subsidized Loans to eligible undergraduate students who demonstrate financial

need to help cover the costs of higher education at a college or career school.

▪ Direct Unsubsidized Loans to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan.

▪ Direct Plus Loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.

▪ Direct Consolidation Loans allow one to combine all eligible federal student loans into a single loan with a single loan servicer.

▪ Perkins Loans are low-interest federal student loans for undergraduate and graduate students with exceptional financial need.

• Federal Work-Study Program – A work program administrated by the College to allow students to earn money in a College job.

Financial Support for Students

Source: US Dept. of Education

• Federal Taxpayer Relief Act of 1997 ▪ This legislation, which created the Hope and Lifetime Learning tax credits

for college tuition, the tax credits were made available to families with incomes of up to $100,000.

• State Hope Scholarships - For students that have demonstrated academic achievement and that are seeking a college degree. There are several ways to become eligible for the HOPE Scholarship, either by graduating from high school as a HOPE Scholar or by earning it while in college. Amounts vary by State.

• State Need Based Scholarships - helps financially needy undergraduate students attend eligible public and private colleges and universities, proprietary schools, and technical colleges. Qualification and amounts vary by State.

Financial Support for Students

Source: Stateuniversity.com

• Local Scholarships – Amounts and qualifications vary by localities.

• College/University Foundation Endowment Scholarships – Amounts and qualifications vary by Institution.

• College/University President’s Authority for Waive Tuition – Amounts and authority vary by States.

Financial Support for Students

Source: Stateuniversity.com

Source: Stateuniversity.com

Federal Support for Research • Federal support for research at educational institutions grew to reach a level

of more than $35 billion. ▪ Tightly coupled with national priorities established by the federal

government. ▪ Highly targeted, so that academic researchers need to adjust their

research programs to attract federal dollars. ▪ Have Direct Costs and also bring with them support for indirect costs,

those expenses associated with operating a large, complex university that cannot be directly attributed to specific research projects. ➢ Included in indirect costs are such items as library operations, plant

maintenance, repair and operations, administrator salaries, and the costs of managing sponsored research on the campus.

State Support for Research • Priorities, Amounts, and programs vary by State.

Federal Financial Support for Research

Physical Plant Operations

Physical Plant is responsible for the operation and maintenance of the college-owned physical facilities including the following:

• Building maintenance and repairs • Building alterations and renovations • Maintenance of mechanical, electrical, and plumbing systems • Custodial services and related activities • Operation of warehouse & management of all furniture &

equipment • Maintaining roads and grounds landscaping • Operation of Shipping & Receiving Services & Postal Services • Operation of Work Management Center (Work-Order Desk) • Campus Police Force

Source: Stateuniversity.com

Physical Plant Operations

Physical Plant is responsible for the operation and maintenance of the college-owned physical facilities including the following:

• Human Resource Office • Accounting and Budget Services, Payroll, & Purchasing • Operation of Energy Plant which is responsible for utility

systems • Facilities operation and maintenance generally includes the

building envelope (roof, wall, windows, and doors) ▪ Utility systems (electric, gas, water, and sewer) ▪ Heating and air conditioning systems ▪ Pest control, custodial services, and grounds maintenance ▪ Refuse collection

• Support for special activities

Source: Stateuniversity.com

Physical Plant Operations

Source: Stateuniversity.com

• Physical Plant costs are classified into two categories: o Routine Service and o Special Service Requests.

• The maintenance budget supports operation, maintenance, and repair of university facilities.

• Typically, these are costs not charged to a department or activity, but to the Physical Plant account.

• Higher Ed spending is growing but not through government appropriations; funded increasingly through tuition and thus affected by many factors, e.g., changes in federal loans/grants, interest rates, jobs, personal income.

• Federal funds may become more important as state differences grow in higher education revenues are privatized.

• Federal support for higher education is, at best, vulnerable to: ▪ Sequestration process. ▪ Political gridlock. ▪ Focus of budget balancing efforts on discretionary programs (federal education

programs except some student loans are non-defense discretionary and thus subject to caps).

• Biggest problem, however, is state fiscal systems: ▪ Shrinking and volatile revenue base. ▪ Competition for resources from health care programs. ▪ Persistent regional patterns, which raise hard issues for funding

Looking Forward

Looking Ahead

Due This Week (Week 14) • Read Assigned Web Site Articles • Participate in Discussion Forum 7

Due Next Week (Week 15) • Read Assigned Web Site Articles • Participate in Discussion Forum 7 (peer responses)

Due Final Week (Week 16) • Practical Connections Assignment (due Wednesday)

Reminder - The term ends Friday of Week 16

Thank you for a great class!