Disease: Facilities costs increasing
According to The Chronicle Of Higher Education (2009), a recent study determined that 14% of all campus buildings nationwide have been built in the time period of 1999-2009. In another article, the Chronicle notes that the average campus in 1974 had 160 square feet per student compared with 450 in 2009 (Carlson, 2009). In addition, costs to maintain facilities is expensive as well, and according to the Center For College Affordability And Productivity (2010), building and grounds operation and maintenance is typically the second largest expense at most universities, with only personnel having greater costs.
Solution: change in accounting practices: financial incentives at several levels
Virtually all institutions of higher education allocate space via negotiation without any managerial accounting practices being involved. In a full costing situation, such as the use of activity-based costing, use of space would be accounted for in school and department budgets. This type of accounting practice with charges accrued for space would provide incentives to economize on space.
Universities could charge departments less for space with little demand, such as Fridays and weekends. In turn, schools and departments could pass these savings onto students and charge less for courses offered during “off-peak” times. This type of yield-management pricing is typical for any type of entity that has high fixed costs coupled with low variable costs. Example of this type of pricing that is used in industry includes hotels, airlines, and sports venues. At Kean University in New Jersey, tuition discounts offered on Friday and Saturday lead to an increase in enrollment of 700 students without an increase in fixed costs (Carlson, 2009).
Carlson, S. (2009, April 17). Campus officials seek building efficiencies, one square foot at a time. The Chronicle of Higher Education, ,. Retrieved from http://chronicle.com/article/Campus-Officials-Seek-Building/3292
Center For College Affordability And Productivity (2010). 25 ways to reduce the cost of college. Washington, DC: Retrieved from http://centerforcollegeaffordability.org/uploads/25Ways_to_Reduce_the_Cost_of_College.pdf
The Chronicle Of Higher Education (2009, March 13). 13 reasons colleges are in this mess. Retrieved from http://chronicle.com.ezproxy.cbu.edu:9000/article/13-Reasons-Colleges-Are-in/33943/
Paul, I enjoyed this article since I sit in meetings with the Physical Plant and Campus Planning and Design departments on a regular basis. Construction projects over $99k are managed by the Tennessee Board of Regents. With the expertise of the local Physical Plant and Campus Planning and Design departments, the University of Memphis could manage these projects themselves and save overhead costs and perhaps increase quality due to local oversight. Finally, departments typically do not pay separately for space at the UofM unless they are an auxiliary or the space is considered auxiliary space. Thus there is no incentive to share space or utilize space in the most productive ways since departments are not charged for space and only pay for charges associated with phones, data lines etc. Edwina Washington
ReplyDeleteThanks for adding your valuable professional experience with this subject! I am sure your experience is typical of the vast majority of universities and colleges.
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