A Plea for Help and Anecdotal Evidence about US University Teaching Costs

A reader was curious where the money in US universities is going. The perception is that they have huge budgets that increase faster than inflation. The problem with providing insight into this is that I am not an accountant. So this post is part plea for help part anecdotal evidence contradicting the impression. 

Plea for help: I like to consider myself a reasonably intelligent person with a reasonable head for numbers, but I really find the financial statements of many US universities too difficult to understand. There are exceptions. For example, the Massachusetts  Institute of Technology  does a pretty good job, as does the University of Washington, but many State supported Universities, I simply can’t get my head around.

So help please. The 2011/12 annual report for UCLA  is here (useful part starts on page 24). The 2010/11 equivalent for UC Berkeley is here (useful part starts on page 18). If anyone can provide the following for US State supported Universities including any substantiating links, it would be appreciated: 

      1)      Total income and expenditure

a.       Broken down by: teaching, research, and other.

b.      Broken down by State funds and other.

      2)      The total number of full time equivalent students.

Anecdotal evidence that university education costs are not increasing in excess of inflation: The first page of the University of Washington report is great. Using this as an example:

      1)      State appropriations supporting the University have declined over the period 2000/1 to 2010/11 both in terms of absolute dollars and even more precipitously in terms of dollars per student. In 2000/2001, net appropriations for operating expenses were $341.5 Million ($8,699/student). In 2010/11, the equivalent figures were $296.8 Million ($6,051/student).  

  

      2)      Overall per student cost (assuming the cost to students is the state appropriations plus tuition and fees) increased from $15,482 (2000/1) to $18,181 (2010/11). This corresponds to a yearly increase of 1.6%/year over the decade. According to the data here, the average rate of inflation over the period was in the range of 2.4%/year to 2.5%/year. 

 

       3)      The perception of increase cost relative to inflation is due to the state providing less support to education and shifting the cost onto parents and students. For example, between 2005/6 ($8,255/student) and 2010/11($12,130/student) there was an 8%/yr increase in tuition and fees (the part students and families see). However, overall the University lost substantial ground to inflation. 

This particular case is anecdotal (only one university in a very large number of state run universities). Looking at broad numbers can mask many trends and this does not take into account any changes in the distribution of out of state students. However, it illustrates a general problem of perception. The teaching mission of universities is being squeezed at the same time that cost to students and families is increasing. (Note: the UK situation is more nuanced – some subject areas are seeing an increase per student).

Any assistance with the more complex balance sheets would be appreciated.

If I have misinterpreted the UW figures or made any computation errors, please correct me.