1. Trends In College Spending: Where Does the Money Come From? Where Does It Go? Donna Desrochers Director of Economic and Education Research Delta Cost Project IES Research Conference Washington, DC June 8, 2009

2. Policy Reasons for Focusing on College Costs Economic competitiveness State budget deficits and eroding state funding Rising tuitions and declining affordability 2

3. Delta Cost Project IPEDS Database IPEDS Data, Academic years 1987-2006 –Institutional Characteristics (Carnegie group, sector) –Enrollment (headcount, FTE, ft/pt by level, age, and race) –Finance (revenues, expenditures, balance sheet) –Completions (degrees and certificates awarded, graduation rates) –Human Resources (ft/pt by position, faculty salaries) –Student Financial Aid (first-time, full-time students – number and average amount) FISAP Data, 1998-2006 (aid recipients by income range) 500 Variables 3

4. Data Development Harmonization –Reconciling changes across reporting standards and survey instruments as much as possible –Consistency in treatment of parent/child institutions Panel Construction –Three analysis panels (5, 10, and 20 years) Requires reporting for: FTE, instruction expenses, completions Roughly 2,000 institutions in the 20-year panel Other Data Improvements –Derivation of Metrics –Provide variables/code to standardize by enrollment and adjust for inflation –Imputations for missing data 4

5. Six Metrics for Monitoring Costs 1.Revenues - Where does the money come from? 2.Expenditures - Where does the money go? –E&R, E&G, total operating –Within E&R 3.Spending and tuition increases - What is driving tuitions? 4.Spending and Subsidies – What portion of education spending paid by students and the state? 5.Outcomes: Spending and completions - What does the money buy? 6.Spending vs. Enrollments

6. Metric 1: Where Does the Money Come From? Privatization of finance continues; biggest growth among publics in tuition; among privates, in PIE followed by tuition 6

7. Metric 2: Measuring the “Cost of Education” How much money is going to core academic/ educational programs? Education and related spending (E&R): –Instruction, student services, and share of “overhead” (academic, administrative, and operations/maintenance costs) Education and general spending (E&G): –E&R plus sponsored research and public service (and their portion of shared costs) Total operating expenses –E&G spending plus auxiliaries and hospitals

8. Metric 2: Where Does the Money Go? Focus on top line spending overstates resources that pay for the core academic program 8 Education and General (E&G) Total Operating Expenditures

9. Metric 2: Education and Related Spending In Publics, overall costs quite steady since 2002; instructional share is down 9

10. Metric 2: Education and Related Spending In Privates, spending is increasing but instruction share is down 10

11. Metric 3: Tuitions and Spending Are tuitions rising because spending is increasing? What proportion of tuition increases is attributable to increased spending? –Compare “sticker price” increase… –with increases in Education and General spending, and ask… –“What if…” tuition had only increased enough to accommodate E&G spending increases 11

12. Metric 3: Tuitions and Spending Between 2002 and 2006, the percent of the tuition increases attributable to increased E&G spending: –Public Research: 8.4% –Public Masters: n/a –Public Community Colleges: n/a –Private Research: 72.0% –Private Masters: 12.8% –Private Bachelors: 15.0% 12

13. Metric 4: Cost/Price/Subsidy What are the student and subsidy shares of E&R costs? Cost: Education and related spending per student Price: Portion of E&R spending paid for with tuition revenues Subsidy: Costs paid from other institutional revenues

14. Metric 4: Cost/Price/Subsidy In Publics, student share of cost is increasing

15. Metric 4: Cost/Price/Subsidy In Privates, student share of cost is increasing in non-research institutions

16. Metric 5: Completions and Degrees Increases in spending/completion; but in Publics, decreases since 2002

17. Metric 6: Enrollment and Spending Spending per student greatest in institutions with the fewest students Source: Delta Cost Project IPEDS dataset.

18. Data Availability Raw data files –SAS, SPSS, Stata files –available for download on website: www.deltacostproject.org www.deltacostproject.org Data web –Web portal to provide quick access to standard reports on the six metrics –Data for 2002-06, updated annually –User selected institutions, peer groups, Carnegie group; export tables and graphs –Expected completion in Summer 2009 Delta reports –Trends report, policy reports 18

19. For more information… To access reports and data, visit: http://www.deltacostproject.org http://www.deltacostproject.org Or contact: Donna Desrochers donna@deltacostproject.org 19