Understanding College Costs and Price through Delta Metrics Education Writers Association National Seminar Steve Hurlburt May 17, 2012

The Delta Cost Project Mission: to improve college affordability by helping policy makers and higher education administrators understand higher education costs and productivity Focus: how colleges and universities spend money; how tuition (price), other revenues, & spending relate to one another Tools: reports and briefs; online analysis system; website with available resources

Cost vs. Price Cost: what institutions spend to provide an education to students Price: what students pay to receive the education Sticker price Net price

Why do college tuition prices keep rising? Other revenues decline (“Cost shifting”) State appropriations for publics Private gifts, grants, and endowments Spending increases

Tuition revenue increases as state appropriations decline Net tuition revenues and state and local appropriations revenues per FTE student, AY 1999-2009 (in 2009 dollars)

Making sense of spending Major expenditure categories Education & related (E&R) spending: Core educational mission Education & general spending: All core operating expenditures Total operating expenses: All spending Focus on E&R spending: Spending for E&R versus other functions Spending within E&R: Instruction and student services vs. administration Education and related (E&R) expenses Total spending on direct educational costs. Education and related expenses includes spending on instruction, student services, and the education share of spending on academic support, institutional support, and operations and maintenance (i.e. "overhead"). Student services share of E& Education and general expenditures includes all core operating expenditures, including instruction, research, public service, academic support, student services, institutional support, operations and maintenance, and net scholarships and fellowships. Expenditures; Equity Auxiliary enterprises Expenses for essentially self-supporting operations of the institution that exist to furnish a service to students, faculty,

Total spending outpaced spending on core educational mission (E&R) Total expenditures per FTE student by grouped categories, AY 2004 and 2009 (in 2009 dollars)

E&R spending has increased more in private institutions than publics Average E&R spending per FTE student by component, AY 2004 and 2009 (in 2009 dollars)

Understanding costs, price, & subsidies in higher education For not-for-profit colleges, price is generally less than costs Subsidy: difference between costs & price Price + Subsidy = Cost Costs Subsidy Price

Tuition revenues are covering a larger share of costs Net tuition and subsidy shares of E&R costs, AY 2004 and 2009 (in 2009 dollars)

Explaining rising tuitions: Cost-shifting or increased spending? Changes in net tuition, state and local appropriations, and education and related spending per FTE student, AY 2008-2009 (in 2009 dollars)

Using data to improve oversight of college spending Focus on patterns in spending for E&R Is spending for instruction and student services being protected? How are subsidies changing over time? Education and related (E&R) expenses Total spending on direct educational costs. Education and related expenses includes spending on instruction, student services, and the education share of spending on academic support, institutional support, and operations and maintenance (i.e. "overhead"). Student services share of E& Education and general expenditures includes all core operating expenditures, including instruction, research, public service, academic support, student services, institutional support, operations and maintenance, and net scholarships and fellowships. Expenditures; Equity Auxiliary enterprises Expenses for essentially self-supporting operations of the institution that exist to furnish a service to students, faculty,

Website (www.deltacostproject.org) Delta Cost Resources Website (www.deltacostproject.org) State profiles (www.deltacostproject.org/data/state) Annual trends report Issue briefs and other products Trends in College Spending (TCS) Online (www.tcs-online.org) Education and related (E&R) expenses Total spending on direct educational costs. Education and related expenses includes spending on instruction, student services, and the education share of spending on academic support, institutional support, and operations and maintenance (i.e. "overhead"). Student services share of E& Education and general expenditures includes all core operating expenditures, including instruction, research, public service, academic support, student services, institutional support, operations and maintenance, and net scholarships and fellowships. Expenditures; Equity Auxiliary enterprises Expenses for essentially self-supporting operations of the institution that exist to furnish a service to students, faculty,

Delta Cost Resources: Helpful Staff Rita Kirshstein, Project Director rkirshstein@air.org (202) 403-5410 Steve Hurlburt, Deputy Project Director shurlburt@air.org (202) 403-6851