HE14
1. Choose a state within the US that you are familiar with.
2. Assess the financial health of its higher education funding model and reflect on the impact it has on the public institutions that rely on the funding.
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!