With declining enrollments and rising financial pressures, higher education leaders are being forced to make tough decisions around academic programs. Which should grow? Which can no longer be sustained? Which requires restructuring? And how do these leaders evaluate programs in a way that is fair, data-informed, and mission-driven?
Across the country, states, colleges and university systems, and individual institutions are taking a closer look at how academic programs contribute to not just student outcomes, but also the financial health of the institution. Leaders need a strategic way of making budgetary decisions around academic programs, which involves measuring those programs against a set of criteria designed to further institutional goals in areas such as student success, workforce alignment, and financial sustainability. This blog post, the first in a three-part series, explores some considerations and challenges in determining those criteria.
In many cases, existing program review processes help improve program curriculum and student success, but are less relevant to institutional decision-making around resource allocation. Too often, program budgets are based on factors such as inertia (e.g., what the program’s budget was in the past), expediency (e.g., which faculty members are retiring), or politics (e.g., the communication skills of program leaders).
Creating program evaluation criteria in a way that appropriately measures the success of unique academic programs is not simple. Many institutions and systems measure program productivity based on the number of graduates, majors, or student credit hours. This is a sensible place to start, but it is complicated by the fact that academic programs are interconnected. For example, students in every program enroll in general education and elective coursework across a variety of disciplines, and students in graduate programs may also serve as important components of the instructional staff for undergraduate programs. Because of these interconnections, eliminating an academic program may not result in savings if its courses continue to be required for students in other programs.
It is also overly simplistic to solely compare a program’s tuition and fee revenue to its costs. First, costs are incurred at the departmental level, rather than the program level. For example, an institution’s mathematics department incurs costs to employ faculty and staff who support students across a variety of programs. This includes every program that requires math as part of its general education curriculum, as well as math-adjacent programs such as statistics, data science, or applied mathematics. Course requirements for students seeking a degree in statistics likely overlap with those for data science, and faculty likely teach seamlessly across both programs. Eliminating the program in statistics could therefore not materially change the institution’s costs to run the mathematics department, because the same courses and faculty would still be needed to serve students in data science and applied mathematics, as well as the numerous other programs that require statistics courses.
Furthermore, a program’s tuition revenue typically needs to support not only its own operations but also contribute to student, academic, and institutional support costs. All departments use the same student support services such as the registrar, financial aid, libraries, tutoring centers, etc. Finally, some programs are simply costlier than others for legitimate reasons. Variations in pedagogy, accreditation standards, equipment and facility requirements, and the level of hands-on instruction needed to master course content are inevitable. Additionally, the salaries required to attract and retain faculty in different disciplines and the specific accreditation or licensing requirements can differ. Some students will need costly labs and equipment accessed in small courses to complete their credentials, while others can complete the majority of their course in a larger classroom environment. The institution’s costs to offer the former are certainly higher than the latter.
The result is that all postsecondary institutions are comprised of some academic departments that cost more to run than others. The challenge for institutional leadership is to determine the right mix of departments and programs to ensure the institution is financially healthy while also meeting its mission. This includes addressing student and workforce demands and advancing other important goals, such as statewide educational attainment, local economic development, or scientific research. To do this, institutional leaders need a nuanced understanding of department- and program-level finances and the role they play in the institution’s overall financial health, along with details on how each program contributes to institutional goals.
To help address these challenges, the South Dakota Board of Regents (SDBOR) asked NCHEMS for assistance in identifying how academic programs across its six universities impact institutional and system-wide financial health. This collaboration allowed us to develop a nuanced, system-wide view of program-level financial dynamics that balances cost structures with institutional goals and student needs. In part II of this blog series, we will use our work with South Dakota to explore in more detail our approach to identifying how programs and departments contribute to an institution’s overall financial picture.
