a management tool for reallocating college resources

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A MANAGEMENT TOOL FORREALLOCATING COLLEGERESOURCESDonald A. Dellow a & Regina Losinger ba University of South Florida , Tampa, Florida, USAb Broome Community College , Binghamton, NewYork, USAPublished online: 17 Aug 2010.

To cite this article: Donald A. Dellow & Regina Losinger (2004) A MANAGEMENT TOOLFOR REALLOCATING COLLEGE RESOURCES, Community College Journal of Research andPractice, 28:8, 677-688, DOI: 10.1080/10668920390254681

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A MANAGEMENT TOOL FOR REALLOCATINGCOLLEGE RESOURCES

Donald A. DellowUniversity of South Florida, Tampa, Florida, USA

Regina LosingerBroome Community College, Binghamton, New York, USA

Community college administrators frequently need to deal with program enroll-ment shifts resulting from economic and demographic shifts. Reallocatingresources between areas of the college to adjust to those enrollment shifts canbecome a difficult process if there isn’t a careful monitoring of enrollment patternsand program costs. The authors describe their use of an enrollment and cost trendsreport that is published and distributed to the campus yearly. The report, with tenyears of trend data on enrollments and credit hour costs, is utilized to provide abasis for planning, budgeting, and prioritizing personnel decisions. The authorscontend that the public nature of the report is necessary to educate the campus tothe importance of controlling program costs. The resulting campus awarenessassists administrative efforts to reallocate funds within and between programareas and provide benchmarking comparisons. The usefulness of the data inlegislative lobbying and fund raising also is described.

One of the oft-heard comments about community colleges is that theyare flexible and responsive to change. Most community collegeadministrators would readily admit that the perception of flexibilityand responsiveness is largely due to the highly successful andresponsive corporate training programs of community colleges, andnot the responsiveness of our more traditional academic programming.Certainly, community colleges do try to respond to new occupationaland technical programming needs, but they do so by adding newprogramming on top of existing programs. Most community collegeadministrators would acknowledge that our institutions tend to suffer

Address correspondence to Donald A. Dellow, Associate Professor of CommunityCollege Leadership, University of South Florida, Tampa, FL 33620-5650. E-mail: [email protected]

Community College Journal of Research and Practice, 28: 677–688, 2004

Copyright # Taylor & Francis Inc.

ISSN: 1066-8926 print/1521-0413 online

DOI:10.1080/10668920390254681

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from the same tendency to change our academic programming byaccretion rather than program modification or deletion based onsystematic program review. Dickeson (1999) noted this trend, sug-gesting that it has exacerbated the spiraling cost of higher education.

Dickeson (1999) has an excellent model for completing a systematicreview of all campus programs to insure a better prioritization ofbudget dollars, particularly as we enter an era where public highereducation funding is most assuredly going to be reduced. He recom-mends a thorough study of mission, purpose, enrollment trends, pro-gram costs, and societal needs. The process he recommends appears tobe very logical and useful, but costly in both time and funding toimplement frequently enough to be practical.

In the authors’ experience, community college enrollment trendsare very sensitive to local and national economic factors, creatingsudden and significant enrollment cycles. The resulting low-enrolledand overstaffed programs or oversubscribed and understaffed pro-grams cause major budget challenges. The college administrationneeds to have information that will assist in prioritizing scarce budgetdollars on a yearly, not a periodic basis.

This article reports our experience in using an annual enrollmentand cost analysis report (BCC Enrollment and Cost Trends) as a way ofcreating greater campus awareness of funding issues related toenrollment and initiating decisions about academic programming.

A CASE IN POINT

Broome Community College (BCC) is located in Binghamton, NewYork with an enrollment of approximately 6500 full-and part-timestudents. The college has extensive programming in business, tech-nology, the health sciences, and liberal arts. Approximately half of thegraduates enter the workforce directly, with the other half transfer-ring to baccalaureate programs.

In the early 1990s our region went into an economic tailspin as thedefense industry declined and many of our local high-tech manu-facturing jobs were eliminated. This had several effects on our collegeenrollments. Initially there was an enrollment increase as displacedworkers came back for retraining. There also was a shift in enroll-ments in the technology areas, with computer studies increasing inenrollment and most of the other programs declining in enrollment. Inaddition, enrollments in the health sciences increased significantly, asdid those in the liberal arts area. There was a marked movement awayfrom programs preparing people for jobs that were dependent on the

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local defense-industry manufacturing segment of our economy thathad just experienced major job reductions.

The programmatic shifts at the college were then complicated by anensuing five-year decline in enrollments that resulted in a loss of over20% of our full-time equivalents (FTEs), impacting our revenues sig-nificantly. This was judged to be the result of a nearly 6% out-migra-tion of our local population and diminished high school graduatingclasses. The demographic shifts created, almost overnight, an imbal-ance in our programming resources. We needed to not only reallocateresources, but also make some decisions about program priorities.Which programs do we eliminate, which do we pare down hoping for arevitalization, and where do we get the resources to support thoseprograms that were now bursting at the seam?

The process of prioritizing programs and reallocating resources isnever an easy task on a college campus. As Dickeson (1999) points out,faculty members feel an intense sense of stewardship toward theirprograms, particularly when the programs have been highly visibleand successful in the past. At the same time, faculty in departmentsneeding resources are reluctant to challenge others who may have anover-abundance of resources; that would go against the egalitarianculture on our campuses. So there is a significant and long establishedpattern of resistance to the reallocation of resources between pro-grams. In an attempt to deal with this age-old problem, we made adecision to analyze enrollment and cost trends and share them withthe campus. We needed trend data to assist in our decision-making,and we hoped the data would enhance the chances of obtaining facultyunderstanding and support in reallocating resources.

As a result, we developed a departmental-based enrollment andcost-per-credit hour analysis that would be updated annually andshared widely across the campus in hard copy (BCC Enrollment andCost Trends) and electronically, providing ten years of data. Wehoped that publishing this report would encourage campus facultyand staff to be more aware of the factors that impact enrollmentsand costs and provide a greater understanding and support whenresources needed to be reallocated between programs. Additionally,we made it clear at the outset that the cost analysis data was onlyone of many elements that would be taken into consideration whendecisions about reallocation of resources were made.

Ten years later we feel that sharing the cost analysis data with thecampus has assisted our administrative team in reallocating resourcesduring some difficult budgeting years and program enrollment shifts. Ithas become an integral part of our planning, budgeting, and resourcereallocation processes.

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WHAT IS INCLUDED IN THE ENROLLMENT AND COSTANALYSIS MODEL?

We knew there would be many who would be skeptical of our attemptsto use a business model-like cost analysis. We also knew that ifdetractors were able to attack the veracity of the data used in thereport, the resulting report would be viewed as highly suspicious andunreliable. As a consequence, the source documents used for theanalysis were primary source documents that were a matter of publicrecord and verifiable by anybody.

Cost Data

All costs are allocated to departments in accordance with the NationalAssociation of College and Business Officers, (NACUBO) educationalreporting recommendations, and close attention is paid to accuratelycharging them to the appropriate department. Teaching faculty costsare allocated to departments via the campus human resources systembased upon load carried per the student information system and theVice President for Academic Affairs release time reports. Non-teachingpersonnel costs are charged to departments based upon the percentageof time spent in each department as determined by the appropriateDean, Associate Vice President, or Vice President.

The BCC Enrollment and Cost Trends report is prepared by thecampus budget officer, who also allocates salaries to appropriatedepartments, reviews payrolls twice a year to ensure that they arebeing charged to the proper department, and performs a year-endanalytical cost review to ensure that costs are being charged to theappropriate departments.

Enrollment Data

Figure 1 provides a sample display of enrollment trend data, similar informat to that in the enrollment and cost analysis. The report containsten years of full-time equivalent (FTE) trends for each department orcost center. Enrollments are tallied based upon the department inwhich the courses are taught, as opposed to program major. The one-year and ten-year change for each department is shown, and materialchanges are discussed in a comment section. The department numbersare summed up to divisional totals, and the divisional totals aresummed up to campus-wide totals.

In addition, recent enrollment trends from the current fall semesterare compared with the prior fall semester, and explanatory commentsare included where needed. Several division and campus-wide


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summary pages with charts and graphs also are included to enhanceunderstanding of the enrollment changes.

Cost per Credit Hour Data

In Figure 2 the cost per credit hour is presented for a sample ofcampus departments. Cost per credit hour is much more meaningfulfor trend analysis and making comparisons than cost or enrollmentanalysis alone. It is calculated by dividing each department’s costs byits enrollment. Non-instructional department costs are included in thepresentation, with campus-wide enrollments as the denominator.

HOW HAS COST ANALYSIS BEEN UTILIZED?

One goal of BCC was to educate the campus to program and servicecosts as they relate to demographic changes. A major objective forcompleting a cost analysis study was to educate the administrationand the faculty about the costs of all programs and services. We, theadministrators, knew that we needed the information to make betterdecisions, but the faculty weren’t so sure they wanted to know about

FIGURE 1 BCC department enrollment trends.

FIGURE 2 BCC cost per credit hour trends.


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costs. We often heard comments from faculty members that budget-ing and finance were the administration’s problem, not their’s. Webelieved everyone on campus needed to have more information aboutenrollments and costs. The cost analysis study has been published anddistributed annually to all administrative staff members down to thedivision chair level, and the division chairs were asked to share thematerial with everyone in their divisions.

When the first cost analysis was distributed, there was a mixedreaction on campus. Faculty members in high cost programs werealarmed that everyone could now see this information and worriedabout the reactions of the administration and faculty members inareas with high enrollments and low program costs. When the firststudy was shared at a board of trustees’ meeting, the faculty unionmade sure there was a significant faculty presence, exhibiting a tone ofstrong displeasure. There was general concern that the administrationwould make cuts and redistributions solely on the basis of the coststudy, despite the administrations assertions to the contrary.

After many years experience with the cost study, we feel we havebeen able to demonstrate to all constituencies the strong relationshipsamong program enrollments, program requirements, equipmentneeds, and costs per student semester hour. The cost study also hasdemonstrated that programs that have highly regulated clinicalexperiences, like in the health sciences, tended to be several times thecost of the general liberal arts programs. It also highlighted thoseprograms that were excessively costly due to enrollment losses.

Cost Analysis Data and Reallocation Decisions

It took several years of assurance and reasonable practice by theadministration to convince the campus that the enrollment cost ana-lysis information was not going to be used as the only source in makingprogram cuts or resource allocations. It also was necessary to explainrepeatedly that some programs were higher cost by virtue of theirrequirements, such as more clinical experiences or more laboratoryexperiences with high-cost equipment. We found it necessary toreassure high-cost program managers that we understood that thecommunity needed those programs and it was our responsibility to beefficient in the use of resources, not eliminate programs simplybecause they were high cost.

After a decade of use, there is general knowledge that the admin-istration uses the information to prioritize personnel decisions, budgetallocations, and programming planning. At least down to the level ofdivision chairpersons, there is a general knowledge that budgeting


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decisions are based more on good data rather than political decisions.But still, there are those who challenge the use of a ‘‘business model’’in higher education.

Over the years, we feel we have been successful in winnowing downresources from some departments that were still relevant to theworkforce, but had an overabundance of resources. Being very muchaware of the need for continued harmony and cooperation on campus,we made a conscious decision to implement program changes gradu-ally, thereby avoiding serious conflict with program managers, deans,and the faculty union. In addition, we believe that the cost analysisdata raised the awareness level of program chairs and instigatedgreater concern for better marketing, more concern for programrelevancy, and an understanding of the need for a sensitivity to costs.In several instances, program managers concluded that programswere no longer viable as degree programs and converted them tocertificate programs.

In the last decade, most programs have made significant changesto become more cost effective and more relevant to local workforceneeds or better articulated with transfer programs at colleges anduniversities. In several cases after seeing the cost analysis results,program managers agreed to use the long-established DACUM(Developing A Curriculum) process to re-examine how well theirprograms were meeting local industry needs. This process brings localindustry representatives in for a one and a half day session where afacilitator elicits from the participants the knowledge, competencies,and skills needed for their jobs (Norton, 1997). The results of thisfocused analysis is then compared to the actual curriculum to deter-mine the fit between the program and industry needs. In each casewhere this process has been used, we have seen faculty energized andprograms modified. The cost and enrollment analysis was the triggerthat seemed to initiate action by the program managers to do some-thing to improve enrollments and reduce costs.

Only one program had to be completely eliminated. Even when theprogram chair and faculty members acknowledged a long-termdownward trend and consequent escalation of program costs, therewere no significant efforts to refocus the program. The program hadbeen very robust because of quality faculty and the potential of highpaying local jobs for graduates. As the job placement opportunitiesevaporated, locally and nationally, we were left with a strong programand few students. The president finally authorized the termination ofthe program when the applicant pool for the program was reduced to apotential of five students. In this particular case, the cost analysisdata were useful to the administration in making the decision, but,


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unfortunately, was ineffective in creating a willingness in the depart-ment to seek alternative programming options.

The Use of Cost Analysis Data for Policy Changes and FundRaising Efforts

The cost analysis data has proven useful in two other areas; namely, inlobbying for policy changes and in local fund raising efforts. New YorkState is one of many states that does not provide differential fundingfor high cost programs. The college administration is now lobbying thestate university board and the legislature to reinstate a differentialfunding for high cost, high demand programs. So far, the lobbyingefforts have not been successful, but the cost analysis data has pro-vided well-documented longitudinal data on the problem. We areconfident that persistence and effective lobbying will provide relief forinstitutions that have many high cost programs that are in demandand meet the needs of the local labor market.

In terms of fund raising, the college has been able to convince thelocal health care community that increasing enrollments in the highcost health science programs create a major fiscal challenge for thecollege. The hospitals have been willing to provide additional fundingto support capital campaigns and operating costs for certain programs.

Additionally, the cost analysis data has been used to convincefoundation donors that the funding of scholarships alone may not bethe best way to assist the college in providing more health careworkers. It has gotten to the point where the student financial assis-tance in those programs is covering most of the students’ out of pocketexpenses and scholarships may be a substitute for federal or statefinancial assistance. At the same time, every additional nursing stu-dent accepted into the current program requires the college to divertadditional resources to cover the costs of the program not covered bytuition, state, or local funding. What the college needs is additionalfunding for personnel, equipment, and supplies. The accurate costanalysis study data have been used successfully to focus more atten-tion on the non-scholarship needs of high cost programs.

IMPLICATIONS FOR PRACTICE

Cost Analysis is a Useful Fiscal Management Tool forAdministrators Who Need to Reallocate Resources

The cost analysis process we have used at Broome Community Collegehas been a useful fiscal management tool. We believe it has created a


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greater campus awareness of the cost of our programming and servicesand the impact of fluctuating program enrollments, personnel, andother operating costs. We also believe it has lessened some of thediscord that goes along with the reallocation of resources. Anincreasing number of campus constituencies understand and acceptthe need for greater efficiency in the management of college resources.The cost study is not a panacea, but it is a helpful tool for adminis-trators in making decisions based upon financial and enrollment data.It is a necessary early step in any attempt to prioritize programs andreallocate resources. The cost analysis process we have used hasworked for us, but each campus should find the approach that bestworks for its situation.

Enrollment and Cost Information Should be Routinely Sharedwith the Campus

We believe it is necessary to communicate to the campus on an annualbasis the cost and enrollment data if it is to be an effective fiscalmanagement tool. A hard copy of BCC Enrollment and Cost Trends issent to campus administrators, academic department heads, and non-academic department heads. In addition, a copy is given to members ofthe campus-wide strategic planning committee and each collegetrustee.

An EXCEL-based electronic copy of BCC Enrollment and CostTrends is kept in the campus Microsoft Outlook public folders so allcampus employees can use it in their own analyses. In addition, manyin-depth departmental and program analyses are kept in the publicfolders and also are accessible to all campus employees.

The campus budget officer, who prepares the analysis, is availableat any time to discuss how costs are allocated, how student enroll-ments are counted, and allocated, what methodology is used for theanalysis, and to explore and resolve any concerns her colleagues mayhave about the analysis.

Enrollment and Cost Analysis Information Needs to beInstitutionalized into the Decision Making Processes if it is tobe a Useful Fiscal Management Tool

Dickeson (1999) recommends maintaining the enrollment and costanalysis data on a continuous basis. We agree. We have learned,anecdotally, that many campuses maintain some form of cost analysisdatabase, but do not share the information and have not utilized theinformation in decision making on a systematic basis. The information


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must be integrated into campus decision making if it is to be useful.For instance, at BCC, members of the campus planning committeesare routinely provided with copies of the BCC Enrollment and CostTrends document for use in internal environmental scanning. Asanother example, two of the factors that are routinely considered whenfilling full-time instructional positions are enrollment trends anddepartmental costs per credit hour: internal forms and summarieshave been modified to include this required information. The more thedata from cost analysis are integrated into the fabric of decision-making, the more useful the cost analysis becomes as a managementtool.

Communicate Clearly that the Enrollment and CostInformation Are Not the Only Criterion Used to MakeAcademic Program Decisions

The cost and enrollment analysis process we have described here is afiscal management tool that prepares an institution to assess pro-grams and reallocate resources. At times, the cost analysis is sufficientto allow administrators to reallocate some financial and personnelresources without making major changes to a program or eliminatingit altogether. In effect, the cost analysis can assist in a redistribution ofresources with a minimum impact on programming.

The recommendations of Dickeson (1999, p. 54) are very helpfulwhen reviewing programs with the intention of making major changesor in making a decision for their elimination. He recommends that acombination of qualitative and quantitative factors should provemeaningful in making those decisions. He suggests using ten criteria:

1. History, development, and expectations of the program2. External demand for the program3. Internal demand for the program4. Quality of program inputs and processes5. Quality of program outcomes6. Size, scope, and productivity of the program7. Revenue and other resources generated by the program8. Costs and other expenses associated with the program9. Impact, justification, and overall essentiality of the program

10. Opportunity analysis of the program

Dickeson’s criteria provide a good basis for institutions to prioritizeprograms and make difficult decisions that may be necessary toreallocate resources for the good of the institution.


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Allocate Only Direct Costs to Departments to FacilitateCampus-Wide ‘‘Buy In’’

By trial and error, we have found that by using only the direct costs ofeach department in the cost analysis we were able to facilitatecampus-wide ‘‘buy-in’’ of the information. Indirect costs are not addedin the published document, but are added later in more in-depthanalyses where desired. For example, when the intent is to show whatit costs to graduate one nursing student, the overhead costs areincluded.

In the 1980s, a cost analysis model was created at BCC whereindirect costs were allocated to all academic departments. Although theindirect cost allocations appeared reasonable, the utility of the costanalysis was lost when the department chairs balked at being‘‘charged’’ for things that they had no control over, and focused theirattention on debating the appropriateness of the indirect cost alloca-tion bases rather than on the accuracy and utility of the direct costinformation.

Provide Context with Comparative Information from PeerInstitutions

Users of BCC Enrollment and Cost Trends analyses need context inorder to better understand the data—they need to see how the col-lege’s numbers compare with peer institutions. We suggest bench-marking against other similar institutions. BCC routinely providescomparative cost information with other New York State communitycolleges for several key indicators, drawing a conclusion in each area.

Ensure That Data are Accurate and Automate Data Collectionto Minimize Costs

Any cost analysis will only be as accurate as one’s data. Inaccuraciesidentified by critics can create extra work and considerable dissensionwithin the faculty ranks. We have had to go to great lengths to makesure salaries are allocated via our campus human resources softwareand based upon where load is carried. In addition, year-to-datedepartmental payroll charges are reviewed two times a year foraccuracy, and at year-end, an analytical review of departmental costsis performed explaining material cost changes and making necessarycorrections before the books are closed. Close attention is paid tomatching departmental costs with enrollments credited to thedepartment so that the cost per credit hour is accurate. The list of


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courses credited to each department also is reviewed to make sure thatit is accurate. We suggest controlling the cost of collecting, analyzing,and preparing data by automating the use of financial, humanresources, and student information systems in this process.

CONCLUSION

We consider our use of cost and enrollment analysis to be a majorfactor in our being able to manage institutional budgets that have toooften challenged our attempts to fund institutional goals. All of highereducation must to some extent view itself as a business enterprise. Itbehooves administrators to utilize more fiscal management tools tobetter analyze the academic enterprise. We would encourage our col-leagues to begin the process now, for there are few who believe ourbudgets will improve in the near future. As Dickeson (1999) and Barr(2002) suggest, the major new source of funding may well be thereallocation of resources within our existing budgets.

REFERENCES

BCC enrollment and cost trends. Broome Community College, 1992�2003.Barr, M. J. (2002). Academic administrators guide to financial management. San

Francisco: Jossey-Bass.Dickeson, R. C. (1999). Prioritizing academic programs and services: Reallocating

Resources to achieve strategic balance. San Francisco: Jossey-Bass.Norton, R. (1997). DACUM handbook. Columbus, OH: Center on Education & Training

for Employment, Ohio State University.


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a management tool for reallocating college resources

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