From: Waldrup, Bobby
Sent: Thursday, October 11, 2012 3:12 PM
To: Rakita, Gordon
Cc: Lai-Chin, Fong Chuen
Subject: RE: Question from September Faculty Association Meeting
Please find the question offered by Dr. Candler to the September Faculty Association meeting and my response below.
Bobby Waldrup, Ph.D., CPA
Associate Provost for Academic Programs
University of North Florida
From George Candler at Sept 6th, 2012 FA Meeting
I've got a question about summer scheduling, about a problem that has existed everywhere that I've taught. It might be best directed at Provost Workman.
Apparently when we do summer budgets, we allocate x dollars to pay for faculty to teach summer classes. These classes then generate tuition revenue, which I'll call y. The problem seems to be that y and x do not interact. To take the graduate program I teach in (the MPA): we average 20+ students for our classes. To put me in front of that class will have a marginal cost of maybe $10k, at 12.5% of my salary, plus retirement contribution (no extra health costs are incurred), and a bit of electricity. Yet with 20 graduate students at tuition of $1272 each, the marginal revenue generated by this class is over $25k. We only offered three MPA classes this summer due to budget constraints, rather than our usual four. I've no doubt (student numbers are healthy) that we left $15k (revenue of $25k - cost of $10k) on the table. If the revenue side of the equation was added to the cost, we would be able to make less harmful decisions about how many classes we can 'afford' to offer.
In matching marginal tuition generated against its associated marginal costs, the 12-month fiscal year is used as opposed to traditionally bifurcated academic year / summer term. In the short run, the university’s expenditure budget is approved and set in Tallahassee, and therefore we do not locally have the freedom to deviate significantly by adding additional summer costs regardless of possible tuition generated. In the long run, the vast majority of costs at the university is fixed in nature across the 12-month fiscal year, and must be matched against the FTE generated across that same 12-month period. Since 99% of summer enrollment is constituted of non-transient students, the marginal tuition that would be generated by increased summer enrollment would come at the expense of future Fall/Spring tuition revenues.