It was just a tidbit of information, offered toward the end of a presentation slotted in that sleepy, after-lunch-at-a-jampacked-conference hour. But the nature of the tidbit caught the audience’s attention: On average, full-time faculty members at the University of New Mexico’s Gallup campus were being subsidized to the tune of $10,554 apiece.
“Subsidized” meaning here that if a certain English professor needs to teach 10 composition courses a year, with 30 students a class, for 300 total students, in order for that professor’s revenue generation to “break even” with what that full-time professor’s labor costs, “For every student they were short they were being subsidized X dollars" (with $10,554 adding up to the average total subsidy). Clint Ewell clarified the calculation in an interview following up on his presentation, titled “‘Non-Profit’ Does NOT Mean ‘Lose Money,’ ” at last month’s Society for College and University Planning (SCUP) conference  in Montreal.
Ewell, now executive director of planning, budget and institutional research at Central New Mexico Community College, and Kathryn Moore, a financial officer in UNM Albuquerque’s provost’s office, were in Montreal to describe a budget analysis instrument they’d developed while working together at UNM Gallup.
The “Financial Sustainability Analysis” can be applied to determine to what degree specific programs, courses and, yes, even individual professors, are profit-generating or subsidized.
“It’s OK to have programs that have subsidy,” Moore stressed to the SCUPers. “But let’s understand what we’re subsidizing and to what degree.”
Understanding the Analysis
The Financial Sustainability Analysis boils down to revenues minus expenses -- for instance, incoming state appropriations plus tuition, minus expenses and overhead -- though in practice it’s far more complicated than that. For one, setting the model’s assumptions (what proportion of tuition revenue goes to instruction, for instance) is a major challenge. And such a model would look different at every college, Ewell and Moore stressed. For instance, any formula to determine faculty revenue-generation at a research university would look very different from that used at UNM Gallup, a teaching-oriented branch campus with a community college mission.
In a phone interview, Moore contrasted the tool to two popular budget analysis techniques out there: budget variance and student credit hour analysis. The former – determining the difference between what a department is allocated and what it spends – is "a good tool because you certainly want to make sure that you don’t overspend your budget,” Moore explained. But, at universities that use incremental budgeting systems -- meaning that there is a base budget that’s tweaked slightly up or down each year -- the amount allocated may reflect a historical moment more so than current needs.
Meanwhile, as far as student credit hours go, “Very often people are assuming that your biggest programs are the ones that are generating the most revenue, and are probably the most profitable,” Ewell explained. “What we’ve found is [being] bigger may or may not have anything to do with whether or not the program is financially sustainable. Some large programs are making lots more revenues than expenses. Some are basically breaking even, and some are losing money.”
For instance, in applying the analysis at UNM Gallup, Ewell and Moore were surprised to find that the liberal arts – assumed to be the financial core that was carrying the college – were in fact being subsidized by some smaller, but less expensive programs. (Ewell explained one reason the cost structure for liberal arts was comparatively high at the college: UNM Gallup, located in a rural area and without a large pool of potential part-time instructors, relied heavily on full-time faculty).
Drilling down from the program to the individual course level is where Ewell and Moore say the action is, and the power of the tool can be more fully realized. Why is this particular course losing money? Are there too many sections? Is this class running with eight students even though the break-even number -- where revenues would equal the costs of offering it -- would be 13?
Is it an equipment or space issue? Would moving a course to a larger classroom, or adding an extra computer work station, help? Moore recalled, by way of example, being surprised to find that a pottery class was costing a lot of money. “We were like, ‘What is going on with this?’ ” Turns out a limited number of pottery wheels artificially deflated the class size; so they purchased more wheels. “We were able to easily correct that, it was low-cost to us, and we saved quite a bit of money in the long run,” Moore said.
Yet, pottery wheels aside, one far more potent issue the analysis can raise has to do with the blend of full-time and part-time faculty (the latter being "the ones who make us financially sustainable," Ewell said). When a position becomes vacant, should the college hire a full timer or a part timer? “These are not easy conversations to have."
“Are there things that we can do to improve the financial sustainability and either not hurt or improve student success?” asked Ewell, adding that he was proud of low average class sizes at his current institution, Central New Mexico Community College. “If you go to a freshman or sophomore class at a major university, that’s when you end up with those huge lectures with 200 people sitting in Psych 101. I’m not advocating that. I’m advocating, ‘Let’s understand how our teaching methodology and how we set the system up is causing us perhaps to subsidize programs when we don’t need to.' ”
The tool is intended, he continued, to help people "make conscious choices. If I’m subsidizing this program, does that make sense given who we are, given what our mission and our vision is and our strategic direction? Is that where we want to be investing our money? If so, great. If not, maybe we don’t need to eliminate the program, maybe we just downsize it,” Ewell said -- subsidize Russian studies, say, to the tune of $50,000 a year, instead of $200,000.
“Certainly there are a lot of pedagogical reasons why you would keep subsidizing a certain program. Maybe they’re developmental courses, and we know from research that having a low student to faculty ratio works,” Moore said. “OK, that’s great. But let’s know that’s what we’re doing.”
Revenue Production, the Public Good and Shared Responsibility
Would it surprise you to know that the analysis seems to have rankled some faculty members at UNM Gallup?
“Of course, it's very hard to object to the production of knowledge, because the real issues are what choices you make on the basis of the knowledge you gain," said Marc Bousquet, an associate professor of English at Santa Clara University who has written about the corporatization of the university and the increasing reliance on adjunct faculty. "On the other side, I’m not surprised, personally, that eyebrows are being raised when tools are being developed essentially asking faculty to be compared to one another on the basis of their revenue production."
"You really have to ask the question: 'In what sense is it useful to be looking at courses as revenue-production instruments as opposed to a service and a public good?' And there are all kinds of educational activities, especially in the core, especially in the liberal arts and humanities, that are conceived of and engaged in for the purpose of bettering society, not for increasing revenue.”
And while Bousquet acknowledged the twin concerns about constricting state appropriations and spiraling college costs that often drive these types of conversations, he said that tuition's not rising because of issues of faculty productivity -- adjuncts, he pointed out, "teach 20 to 30 students a time for a few thousand dollars a class. That's dirt cheap." (On this point, a recent analysis of how colleges spend their money  conducted by the Delta Cost Project  found that direct instructional costs constitute a minority of colleges' spending, and that spending on instruction has basically flattened out.)
Yet, one UNM Gallup faculty leader said that while professors had fears and concerns, they generally appreciated the tool (which was, as the college's dean explained in an interview, implemented in partnership with the college's curriculum and budget committees).
“There was an overall fear of administration of course misusing it,” Kenneth Roberts, a full professor of art and art history at UNM Gallup and the Faculty Senate president, said of faculty reaction. There was a fear that the college would end up “planning to fill seats rather than minds,” and, among some faculty challenged on their course loads, the fear that, “Well, I’ve got it good and I like it this way."
“The other argument, that business models do not fit us -- the arguments everyone is having nationally -- yeah, we went through all of those and we still are. But the world didn’t explode; we’re still here. Everything’s going to be done in a very positive way, I believe.”
Overall, Roberts said of the tool and all the transparency that came with it, “We liked it a lot.”
"In previous times, shall I say generally, we haven't had this kind of information. Faculty really like to have the complete story even if it's bad news," Roberts said. "Faculty just need to know why decisions are made against some other alternative. What is the rationale for this?"
“We need the information so we can share the responsibility.”
(It’s worth noting here that while messages were left with about eight other UNM faculty members -- presumably some of whom might have been the ones who are feeling or felt those fears described above -- no one else called back over a three-day period.)
“I think some of the faculty were somewhat threatened, but I think it was also an eye-opener. 'Oh, I’m making, whatever it might be, $55,000, but actually that revenue that’s being brought in by the teaching load is a third or a quarter of that,'” said Christine Marlow, UNM Gallup’s dean of instruction. She's found the instrument to be useful in determining the numbers of students needed for a particular class to be offered -- "Before, if there were 10 students in a class, that seemed reasonable, but of course that's very much contingent on the level of the class, the tier of the class, whether it's taught by full-time or part-time faculty" -- and said the tool can be used as a component in the program review process.
“This information had to be couched in the fact that it doesn’t mean we’re going to turn around and fire faculty because of this. It creates another piece of information.”