1. Higher Education Costs and Cost Drivers Looking forward – by revisiting the past…. Canadian Institutional Research and Planning Association Fredericton, New Brunswick, October 23-25, 2011 Ken Snowdon This presentation is based on a paper available at http://www.snowdonandassociates.ca/presentations.htm

2. Purpose  shed some light on the challenges associated with developing estimates of higher education costs… to  help identify key cost drivers  help inform the debate about cost- containment… “ greater differentiation”  illustrate the problems/challenges associated with ‘targeted’ envelopes

3. Overview  Costs and complexity Definitions Challenges  Cost studies & Formula program weights  Major Cost Allocation Drivers Faculty time Student / Faculty norms  Data challenges  Concluding remarks

4. Perspectives on cost student government institution Complexity – a typical department multiple activities, multiple ‘programs’ “joint products” = teaching, research, service Costs and Complexity

5. Cost studies Historical perspective Key issue – “joint products”  Canada – most faculty time funded from operating (department) funds  U.S. faculty time for sponsored research funded by sponsor  U.K. faculty time for sponsored research funded by sponsor

6. Cost studies and formula weights  Nova Scotia, Quebec, Ontario, Saskatchewan  Ohio, Texas, and the Delaware Project (Middaugh)  United Kingdom - England

7. Peter Leslie’s view of cost studies…  “… the real importance of costs studies has been to take a formula derived by trial-and-error and clothe it in fancy dress. The need to avoid goring oxen is a politically powerful motive, and in practice the most important consideration in setting formula weights has been to devise a rule which endorses, in the main, the existing distribution of funds between recipient institutions.”

8. Illustration of Formula Weights by Discipline Area The full table is available in the paper http://www.snowdonandassociates.ca/presentations.htm

9. Cost studies – findings  Differences in methodologies total costs, instruction costs, faculty time Units of student activity  Similarities in relative costs at the discipline level  Acknowledgement that cost studies provide ‘gross estimates’….  the ‘core’ funding mechanism is (usually) block grant

10. Cost studies – findings  Middaugh’s Delaware project 80% of “instructional” cost differences among institutions is due to discipline ‘mix’ …it is possible to examine a research university and a baccalaureate college, each focused on the social sciences and humanities, and find no difference in overall unit instructional costs ….

11. Middaugh’s – findings  Costs are highest in engineering and nursing.  Instructional costs in the physical sciences are in the next highest level and are comparable to those in education, business, and art.  Service departments (e.g., English and mathematics) are among those with the lowest instructional costs, and their costs are comparable with those in the social sciences. Middaugh, et.al., p.18

12. Program / Department Cost Studies – allocation drivers  Faculty time  Salary differentials by discipline  Program norms Student to faculty ratio

13. Cost Studies - Key Allocation Drivers Allocation of Faculty Time Changing Academic Profession Survey, 2007, Canada n=~1000

14. Allocation of Faculty Time

15. Cost Studies - Key Allocation Drivers - Faculty Compensation by Discipline Source: Statistics Canada, as reported in the CAUT Almanac 2010-2011, Table 2.7

16. Data Challenges  Numerators – cost / expenditures Jurisdictional differences in financial practices and PSE structure Institutional differences in organization and financial practices No or limited department/discipline data  Denominators – enrolment No standard unit of FTE enrolment Differing program requirements/standards Need department counts by year-level and identified concentrations  Faculty Alignment of CIP and discipline codes Need faculty data by department/discipline

17. Further Research  Determining to what extent the discipline salary differential explains differences in institutional cost comparisons by region, and/or by type of institution;  Exploring the concept of discipline teaching norms and, using appropriate data, determine if there are differences in teaching norms in Canada; and  Determining an estimate of how much faculty time, and resource, is devoted to sponsored research where faculty time is not reimbursed by the sponsor.

18. Concluding remarks - CIRPA  Numerators and Denominators Recognize data limitations, question data sources “contextual interpretation”  historical, institutional

19. Questions Discussion This presentation is based on a paper available at http://www.snowdonandassociates.ca/presentations.htm