Finances in Higher Education

Finances in higher education reflect the earlier influences from the Colonial era through today just as they impact the financial future of American higher education. The understanding of the foundational contributions of finances in American higher education lead to an ability to alter current practices.

Amherst College in Amherst Massachusetts claims that approximately half of its $155 million goes toward the benefits and salaries of faculty and staff (Boultier, 2010). This statistic remains consistent across the educational field as other institutions of higher education put forward their spending expenses (Bates College, 2009; Smith College, 2010; Tam, 2010).

Inflation

There exists an inability to match the inflation rate in today’s academic world. During 2009, the recession greatly determined academic pay. Professors were given an annual pay raise of 1.2 percent (from an average of $109,843 salary) which was the smallest pay increase in the last 50 years. The 1.2 percent pay raise could not compensate for the 2.7 percent inflation rate of the same year. This pay discrepancy was consistent across higher education in both public and private schools from vocational to comprehensive universities (Lewin, 2010).

Expenditures in Higher Education

Other expenditures in higher education which compose the additional 50% of the budget include instructional fees, academic support, student services, maintenance and administrative fees (Bates College, 2010). These expenses are maintained through the continued support of public and private funds. Bates College (2010), a private institution, claims that 72% of its income is derived through student tuition and only 14% through government support. Compare this statistic to the public sector. The University of California (2010) receives 38% of its budget revenue from student tuition whereas 50% is derived from governmental support.

Funding

Funding, one of the major responsibilities of earlier college presidents and governing boards, demanded greater attention. To meet this demand, institutions of higher education created departments to acquisition funds. This led to more opportunities as colleges opened a new career for philanthropy. The Center of Philanthropy, maintained by Indiana University Purdue University Indianapolis (IUPUI), provides students and professionals with “the historical and philanthropic context, the current issues, and the art and science of fundraising and philanthropy. You gain the knowledge needed to build your organization’s resources with confidence and success in an ever-changing society” (IUPUI, 2010, p 1).

This educational resource has obvious need in the current economic forecast. Many public and private universities report the need for budget cutbacks. Montana State University reports the impending budget cutbacks as they lose continued support from state funding. The state governor proposed a 5% decrease in budget support which equates to $7.6 million (Pickett, 2010). This cutback raises a substantial financial threat to a university which obtains a majority of its income from governmental support. Additionally, Montana state has sliced its financial support of its state university from 73% to 47% (Stand Up for Education, 2010).

Sources

Bates College. (2009). Budget and Finance Advisory Committee FAQs. Retrieved from www.bates.edu/x197277.xml

Boultier, E. (2010). Trustees explain endowment losses and budget plans. Retrieved from www.amherst.edu/aboutamherst/magazine/extra/node/95671

Cohen, A. & Kisker, C. (2010). The shaping of American higher education: Emergence and growth of the contemporary system. San Francisco: Jossey-Bass.

IUPUI. (2015). The fundraising school. Retrieved from www.philanthropy.iupui.edu/thefundraisingschool/

Lewin, T. (2010). Study Finds a 1.2 Percent Increase in Faculty Pay, the Smallest in 50 Years. Retrieved from www.nytimes.com/2010/04/12/education/12faculty.html

Stand Up for Education. (2010). Higher education funding issues. Retrieved from www.standupmontana.org/hEDissues.htm

Tam, D. (2010). College of the Redwoods: Closing campuses, reducing benefits possible solutions to budget crunch. Retrieved from www.times- standard.com/localnews/ci_15140932

University of California. (2010). 2009-2010 projected revenue. Retrieved from             www.universityofcalifornia.edu/budget/documents/uc_budget_graphs.pdf