<p>In a Q&A session recently, somebody asked Rebecca Chopp – the new President of Swarthmore who started last July – what one piece of experience she brought with her had been the most valuable. She said that it was the decades of experience in administration because the budget challenges this year were so demanding and having direct knowledge of what each of those lines in the budget actually means was invaluable to her.</p>
<p>How is it that Dartmouth spends so much more per student ($100,000) than Swarthmore?</p>
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<p>What muscle? Did they they cut even a single faculty position? The layoffs came in management administrative positions and blue collar staff positions. Dartmouth is trying hard to keep its academic muscle intact.</p>
<p>In today’s WSJ interview with Dartmouth President Kim, he said that Dartmouth’s costs to educate a single undergraduate student are $100,000. Can someone help explain what goes into this number and how much of that cost is fixed and how much is variable?</p>
<p>Page 5…</p>
<p><a href=“Dartmouth Finance”>Dartmouth Finance;
<p>Dartmouth has what 4 or 5,000 students total and a budget of $700M so you can get past $100,000 per student pretty quick. My guess is Princeton, Yale, Harvard are well past $250,000. Mainly paid for with their (formerly) massive endowments.</p>
<p>[Hilda</a> Ochoa-Brillembourg: The Fatal Flaws of Illiquidity: The Financial Crisis is Not Over Yet for America’s Top Colleges and Universities](<a href=“HuffPost - Breaking News, U.S. and World News | HuffPost”>The Financial Crisis Is Not Over Yet for America's Top Colleges and Universities | HuffPost College)</p>
<p>This person has it right-the endowment crisis is far from over-in my mind it seems to be getting more serious. My guess is Harvard was in for a rude awakening when it tried to sell some of its real estate investments. Sad when you consider that if they had been invested in equities with their 70% increase over the past year they would almost be back where they started from.</p>
<p>I work at an Ivy League university, and we have had staff layoffs, layoffs and more layoffs since Dec. 2008 – and they’re still happening, with no end in sight. Private and public universities are suffering in this recession. In my opinion, we’re still on the downward slide … just more slowly, perhaps. The days of job security at a university (for staff, at least) are long gone.</p>
<p>It’s not possible, from any university’s financial reporting, to get an accurate per student spending number for undergrads. For example, 30% of Dartmouth’s students are grad students, business school students, engineering grad students, or medical school students. Spending is disproportionately higher (per student) on grad students because of student/faculty ratios, the stipends that are PAID to grad students, and the cost of professional schools (especially medical schools).</p>
<p>44% of its faculty teaches in the professional schools. The 56% of the faculty in the school of arts and sciences is teaching graduate students and undergrads. Darthmouth operates the Dartmouth-Hitchcock Medical Center which is New Hampshire’s major health facility and associated physicians practices. It’s just impossible to break that all apart and figure out what percentage is undergrad. In general, universities spend up to double on grad students than on undergrads.</p>
<p>If you subracted the contracted research and used percentage of total faculty teaching in the college of arts and sciences as a proxie for spending in the arts and sciences, Dartmouth is spending $71,200 per student in the arts and sciences. That includes 4200 undergrads and 600+ grad students. That’s a little high because it ignores that professional school faculty earn higher salaries and that the spending on the 600 grad students in arts and sciences will be disproportionately higher than undergrades (maybee 1.5 to 1), but it sounds about right.</p>
<p>We know they spend less that the top LACs per undergrad because their class sizes are significantly bigger. 64% of Dartmouth’s undergrad course sections are less than 20 students compared to 78% at Swarthmore. 78% under 30 students compared to 93% under 30 at Swarthmore. 8% of Dartmouth’s undergrad course sections are 50+ students compared to 2% at Swarthmore. Faculty is the overwhelming cost of higher education, no matter how you slice it. It’s a totally labor-intensive business.</p>
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<p>I have no idea where Kim is getting his $100,000 number and he probably doesn’t either! Many times, school officials will include financial aid “spending” in that number even though, from reporting standpoint, financial aid is not treated as spending at all, but as a price discount (it’s money that was never received, like KMart counting the amount of the Blue Light Special price cut as “spending”). Sometimes college officials also include various categories of capital spending in this figure, essentially looking at spending from a total cash flow standpoint rather than operating expenses excluding the cost of the building construction in a given year. You’d have to ask Kim.</p>
<p>I don’t even track university financials on a per student basis. It’s never apples and apples. For example, Emory’s revenues (and spending) from their health care businesses dwarf their spending on education. It’s basically a hospital chain with colleges as a side business.</p>
<p>Another nice link, sm74…</p>
<p>rcdmom…I hope things turn around soon…</p>
<p>“It’s not possible, from any university’s financial reporting, to get an accurate per student spending number for undergrads.”</p>
<p>Which makes the endowment per undergrad student metric a silly metric…</p>
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<p>Not silly if you are interested in residential undergrad education and the schools that specialize in it and focus all of their financial resources on it.</p>
<p>The reason you can’t get an accurate number from universities is that they don’t want you to see the breakdown. They want you to believe that all the faculty teach more than a token undergrad course and that TA are not used to teach undergrads and so on and so forth. I don’t blame 'em. I’d blur the numbers, too.</p>
<p>All you have to do is look at the class sizes.</p>
<p>idad,
You confirm a lot of my suspicions, ie, that the administrators are often just making numbers up or grossly inflating them to position themselves in a discussion. Not that most of us wouldn’t do the same thing, but I truly would love to understand what all of the costs are for running a university and how you would properly allocate. If it truly is anywhere close to $100k per undergraduate student, then I think we need to call “Chainsaw Al” and put him to work.</p>
<p>The nice thing about Dr. Kim is that because he is new to the job we are seeing a level of honesty and frankness from him that we have not seen from others. He inherited the problem, he was not part of the team that created the problem. </p>
<p>What I think he is saying is that the day of reckoning is upon us and we can’t continue to offer 2,000 courses for 4,000 students. Either we have to dramatically increase the number of students or decrease the number of courses offered. Going after back office staff people and paper clips is not going to solve their problem.</p>
<p>And Dartmouth’s income and expense numbers aren’t made up.</p>
<p>Maybe the detail isn’t to everybody’s liking. </p>
<p>But how do you allocate a professor’s cost…between undergrad and grad when a professor works in both?</p>
<p>How do you allocate the fixed costs?</p>
<p>I wonder if Dartmouth even has those numbers.</p>
<p>And does it matter? You either like the product Dartmouth delivers or you don’t.</p>
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<p>That one wouldn’t actually be that difficult. I believe that all schools have an expected course load for professors, formalized by granting course releases for research, administrative positions, etc. I think universities **could **know how much of their faculty payroll is allocated to undergrad teaching.</p>
<p>I’ve never seen a university provide that kind of information. The class size detail is probably the best available proxie. It doesn’t really matter how many professors you claim to have in the university if the class sizes don’t reflect it.</p>
<p>As you say, though. It’s difficult when undergrad education is just one (small) business unit of a large conglomerate. I don’t track university financials for that reason.</p>
<p>sm74:</p>
<p>I agree that Kim’s outsider perspective probably has some advantages in a cost-cutting environment. I think his perspective on the challenge has been interesting. I was intrigued to hear that he had brought in outside consultants to recommend the budget cuts. In watching his presentations on the subject, I had the sense that the cuts being made with somewhat greater distance than has seemed to be the case at other schools. The outside budget-slasher model would certainly explain that.</p>
<p>The most interesting thing about Darthmouth, financially, is that they have forced their undergrad students to attend at least one summer-school session in a move towards year-round utilization of their facilities. In theory, this should be a big money saver, but I don’t know if it has been in practice or not. It’s one of those fasciating experiments that would be fun to know more about.</p>
<p>I’d agree dstark 10-15% is about what Kim said he needed which is $100M. But letting go 60 staff people (which gets you about $4M) and $250k savings in paper clips and office supplies isn’t going to make much of a dent.</p>
<p>sm74…No…it doesn’t. make much of a dent.I deleted my post…I didn’t want to sound too gloomy…but your response was too quick. :)</p>
<p>Anyway…since you responded sm74…Dartmouth’s situation doesn’t look too good to me.</p>
<p>Some major alumni donations would be nice. :)</p>
<p>[peHUB</a> Private Equity: The Cause of, and Solution to, All of Life?s Problems](<a href=“http://www.pehub.com/67201/private-equity-the-cause-of-and-solution-to-all-of-lifes-problems/]peHUB”>http://www.pehub.com/67201/private-equity-the-cause-of-and-solution-to-all-of-lifes-problems/)</p>
<p>Excellent analysis of PE. States that PE backed companies have some advantages that help it deal more effectively with bankruptcy issues. I would agree with that but I think their main advantage is that they can use capital calls to get more equity from their LP’s and use that to help renegotiate debt. I also think PE companies want to do all they can to hold onto companies and avoid complete write downs of their investment.</p>
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Works out to $66k/person. That sounds like salary plus benefits for secretaries. I suspect administrators and low-level manages are paid more, and upper level bureaucracy perhaps double.</p>
<p>The reason to do the cutting, however, is a matter of fairness. Students will be outraged by cost increases directed only at them. I don’t blame them.</p>
<p>I can just see the marketing possibilities.</p>
<p>" Private equity-sponsored companies are more likely to default, yet theyre also more likely to recover from default. Its a leveraged catch-22."</p>
<p>Looks like something I would be looking for in an investment. :)</p>