Do you know what they are selling you ?
A SHORT COURSE ON UNIVERSITY ACCOUNTING Spring 2009
by
Charles Schwartz, Professor Emeritus, University of California,
Berkeley
schwartz@physics,berkeley.edu
http://ocf.berkeley.edu/~schwrtz
For the fiscal year ending 6/30/2007, the University of California
reported a total Expenditure of Current Funds for INSTRUCTION that
amounted to
>>>>>[Number 1]: $3,570,000,000
What does that mean? Here are some submerged components of that
accounting:
University Extension & Summer School …
$259,000,000
Health Sciences Instruction …
$1,325,000,000
Other Professional Schools Instruction
… $209,000,000
Subtracting those, along with $121,000,000 of restricted funds, we have
the Adjusted Expenditure for Instruction of:
>>>>>[Number 2]: $1,656,000,000
But let’s ask more questions, because we want to find the expenditure
for UNDERGRADUATE INSTRUCTION -- that’s where most students are.
It turns out that the accounting rules used by universities say that
the full academic year salaries of the professors should be recorded as
expenditures for INSTRUCTION, regardless of the fact that they work at
their own research throughout the academic year, in addition to their
undergraduate teaching and graduate teaching. How can one disaggregate
that bundle of costs?
A Faculty Time Use Study conducted by UC earlier lets one allocate
faculty costs to the separate missions. The result of the detailed
calculations (see my web site) is that the portion of Instruction
expenditures attributable to Undergraduate Instruction is a mere
>>>>>[Number 3]: $490,000,000
That is only 30% of Number 2 and only 14% of Number 1.
This result should also be relevant for any comparable research
university, whether public or private. For four-year or two-year
colleges, this critique does not apply.
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NOTES. The federal government has a huge data repository
for higher education, called IPEDS; and they give data on Expenditures
for Instruction (per student) based on Number 1. Many respected
researchers don’t know how distorted those numbers can be.
When universities say that the unit cost of Undergraduate Instruction
is so-many dollars per student per year, they follow the prescription
of the National Association of College and University Business
Officers, which says: use Number 2. That is very misleading for
research universities
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BOTTOM LINE: At public research universities, undergraduate student
fees are now about 100% of the institution’s actual
expenditure for undergraduate education, averaged per-student.