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The Escalating Costs of Higher Education in Faith-Based Institutions: Identification of Challenges and Solutions

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We hereby recommend that the Dissertation by
Gary N. Williams
The Escalating Costs of Higher Education in Faith-Based Institutions:
Identification of Challenges and Solutions
Be accepted in partial fulfillment of the requirements for the Degree of
Doctor of Education
In Educational Leadership
Melinda Clarke, Ed.D., Program Director
Dissertation Committee
Michele W. Atkins, Ph.D., Chairperson
Thomas R. Rosebrough, Ph.D.
Jimmie Davis, Ph.D.
In presenting this dissertation in partial fulfillment of the requirements for
the Doctor of Education degree at Union University, I agree that the Library shall make it
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Any copying or use of the material in this dissertation for financial gain shall not be
allowed without my written permission.
The Escalating Costs of Higher Education in Faith-Based Institutions:
Identification of Challenges and Solutions
A Dissertation
Submitted in Partial Fulfillment of the Requirements for the
Doctor of Education Degree
Union University
Gary N. Williams
July 2010
UMI Number: 3443008
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I dedicate this completed manuscript to my dedicated, loyal, and encouraging
wife of almost 40 years, Dale, a superior educator in her own right; to my daughter,
Bethany Paige Bledsoe and her husband, Brent; and to my grandchildren, Scott Edward
and Berkley Elizabeth, the lights of my life and the apples of my eye. I also dedicate this
accomplishment to the memory of my mom, Maurine H. Williams, who always
encouraged me to be all that I could be in Christ.
There are many individuals to whom I owe an immense debt of gratitude who
provided guidance, assistance, and encouragement in the completion of this dissertation.
Special, heartfelt thanks to my committee chairperson, Dr. Michele Atkins, for her hours
and hours of conference time, her wisdom, expertise, suggestions, constant
encouragement, inspiration, and sense of humor. My committee members, Dr.
Tom Rosebrough, Dean of the College of Education and Human Studies, and Dr. Jimmy
Davis, Vice-President, Union University Germantown Campus, were encouraging and
inspirational and lent insight and wisdom into my research. I also want to thank Dr. Linn
Stranak, Chair of the Department of Physical Education and Wellness, for his research
methods and statistical analysis expertise.
My thanks to Dr. David S. Dockery, President of Union University, and Dr.
Charles Fowler, Senior Vice President for University Relations, for their ongoing interest
and support in my completion of this dissertation and terminal degree.
Most of all, my abundant thanks to the Lord, Jesus Christ, for His physical,
spiritual, and emotional strength during these days of study, research, and writing in
completion of the Doctor of Education in Higher Education Leadership degree.
In recent years there has been increased interest and awareness in the cost of higher
education. Due to the extended present economic recession, revenues from sales taxes are
down considerably. These sales tax revenues are a primary source of support for publiclyfunded, land grant colleges and universities. Similarly, revenues and gifts to higher
education institutions have been diminished due to the ailing and slowly recovering
economy. Therefore, the primary source of revenue for these institutions has been an
increase in tuition to college and university students and their families. This dissertation
examined private faith-based institutions to determine if those factors which affected the
increased costs of higher education in private, faith-based institutions were similar to
those factors which increased costs in publicly-funded, land grant institutions. The
purpose of this study was three fold. First, key factors in the escalating costs of higher
education at faith-based institutions as perceived by Chief Financial Officers (CFOs) and
Chief Advancement (CAOs) at these institutions were examined. Second, potential
sources of income and costs savings at faith-based institutions as perceived by CFOs and
CAOs at those institutions were examined. Third, similarities and differences in the
perceptions of CFOs and CAOs at faith-based institutions regarding escalating costs,
potential sources of income, and cost savings were examined. Key factors contributing to
escalating costs, potential sources of revenue, and strategies for costs savings identified in
the literature by public institutions examined were utilized as a baseline for examination
of factors at faith-based institutions. Forty-nine senior level administrative officers at
faith-based institutions that were members of the Council for Christian Colleges and
Universities (CCCU) were surveyed to determine their perspectives on factors affecting
higher education costs and those factors which affected revenue streams at their
institutions. The research revealed that those factors which affected rising costs at public
institutions also affected costs escalation at private, faith-based institutions.
1. INTRODUCTION .............................................................................................1
Statement of the Problem .............................................................................2
Justification for the Study ............................................................................5
Purpose of the Study ....................................................................................6
Research Questions ......................................................................................8
2. REVIEW OF LITERATURE ..........................................................................12
Factors Affecting the Escalating Costs of Higher Education ....................16
Attracting High Quality Faculty ...........................................................16
Technology Issues .................................................................................20
Construction, Renovation, and Maintenance ........................................23
New Programs and Expansion of Existing Programs ...........................32
Student Services ....................................................................................34
Title IX Compliance .............................................................................37
Sources of Revenue and Costs Savings .....................................................41
Cutting Costs as a Management Resource for Facilities ......................41
Contributions from Alumni ..................................................................46
Planned Giving......................................................................................50
Student Paid Tuition .............................................................................53
Endowment ...........................................................................................55
Maintenance of Advancement Staff......................................................60
Conclusion .................................................................................................62
3. RESEARCH METHODS ................................................................................68
Purpose of the Study ..................................................................................68
Population Description...............................................................................69
Research Questions ....................................................................................70
Procedures ..................................................................................................71
Analysis of Data .........................................................................................73
Limitations .................................................................................................75
4. FINDINGS .......................................................................................................76
Participant Demographics ..........................................................................77
Statistical Results .......................................................................................80
5. DISCUSSION ..................................................................................................96
Escalating Costs .........................................................................................96
Perspective Comparison: CFOs and CAOs………………………….….107
Recommendations for Future Research……...………………………….109
1. Time Spent in Current Position........................................................................79
2. Factors that Contribute to Increasing Costs Determined by…………….…….82
CFOs and CAOs
3. Factors Affecting the Costs of Higher Education Determined By……….…..84
CFOs and CAOs Not Listed by Public Institutions
4. Factors Affecting Escalating Costs Beyond Inflation: CFOs ………………..86
5. Factors Affecting Increasing Costs Beyond Inflation: CAOs…………… ….87
6. Factors that Affect Cost Savings and Operating Efficiency: CFOs……….…89
7. Factors That Affect Cost Savings and Operating Efficiency
Determined by CFOs and CAOs Not Listed by Public Institutions……...…91
8.. Factors Contributing to Increased Revenue Streams Resulting in
Savings to Students…………………………………………………..……..93
Many high school graduates in the United States today are faced with a
challenging situation. Through their secondary education years, students have been
encouraged by their teachers, parents, and other mentors to pursue some form of postsecondary education; they have been told that a college degree is essential for success,
career advancement, and even parenting. A great number of students from lower
economic strata have been taught to expect that the way to higher economic status is by
obtaining a post-secondary education degree. As a result, some of these students have
worked diligently throughout their secondary education years to prepare for postsecondary education pursuits. Yet, many never gain admission to a college or university
due to several factors, including financial issues. Many students who come from lower
economic strata have not qualified for academic scholarships because their performance
in secondary education schools was not good enough. Furthermore, tuition costs are too
high for these students to afford. This reality is disappointing for prospective college
students and their families, considering the need for a college degree in today’s job
market (Bracey, 2005).
Statement of the Problem
Escalating tuition costs for students who want to attend a public or private college
or university are making it more difficult for them to do so. In an effort to increase budget
resources public institutions have unfortunately chosen to increase tuition for prospective
students and their families. This is a practice that has been used a great deal recently as
institutional support from state legislatures has dwindled due to declining sales tax
revenues in an ailing economy. At the same time, private institutions are finding it more
and more challenging to raise funds from alumni, friends, corporations, and foundations.
Institutions, both private and public, are experiencing shrinking endowments in a volatile
stock market.
Moreover, according to Czerniewicz (2004), there are multiple factors that
contribute to increased costs as institutions struggle with revenue problems. Factors
affecting rising higher education costs in public institutions include, but are not limited
to, constant updating of technology; new education programs or the expansion of existing
programs; and student services, including in some circumstances high-end residence life
facilities. Universities also compete for high-profile faculty who are known for their
research and publishing capability. The high costs of construction for new facilities or
updating and remodeling of aging facilities to meet the needs of contemporary education
environments are prohibitive. In addition, federal regulations such as Title IX compliance
add to the cost of a college education. These multiple factors, if not balanced with other
revenue sources, affect the cost of tuition for students. From the perspective of the
student and his or her family, transportation, books, fees, and other miscellaneous
expenses can easily push the cost of a four-year baccalaureate degree to over $100,000.00
at the most prestigious public schools.
Costs are prohibitive to those who are accepted; however, many are denied
admission. According to Gardner (2004), an estimated 250,000 prospective students were
turned away from college in 2003-2004 due to a reduction in admissions or increased
tuition. Factors which are contributing to this access denial include growth in numbers of
students seeking a college education, state budget cuts, tuition increases, merit-based
programs, and recruitment of out-of-state students.
One factor that affects accessibility is income. For example, in 2006 the median
annual household income was determined to be $48,201.00, according to the U.S. Census
Bureau (2007). The Bureau also found that 12.7% of households fell below the poverty
level while another 20% earned less than $20,000.00 per year. Low or inadequate family
incomes coupled with rising costs and tuition increases made it difficult for prospective
students to gain admission to many colleges and universities, both public and private.
Inadequate academic performance at the secondary level also prevented prospective
students from qualifying for the most significant scholarships dollars.
College students of today are parented by the group known as baby boomers who
attended college in the late 1960’s and the 1970’s when tuition costs were low. The vast
difference in tuition costs over the past 30 years creates a situation much like sticker
shock. Flower (1998) explained that even over a decade ago, during the college cost scare
of 1996, the United States Congress actually considered price controls whereas college
presidents and financial officers frantically sought to justify price structures to their
publics, boards, and state legislatures.
Even today, institutions of higher education are reviewing their programs, revenue
streams, and problems that arose and are arising out of this crisis. Student-paid tuition is
one source of revenue and accounts for only a portion of the costs of educating today’s
students. Clotfelter (2006) explained that new and innovative ways of raising money
from alumni and friends of universities, corporations, and foundations are emerging.
Faculty and staff campaigns to raise money for capital improvements as well as
operations is a part of the comprehensive plan to raise funds for colleges and universities,
in addition to increasing endowments and pursuing revenue possibilities from federal and
state governments. However, government funding sources are not often realistic for faithbased institutions because of state and federal regulations that threaten the rights of these
institutions related to hiring practices and campus initiatives. Institutions, especially
public, but also private, are adopting an almost entrepreneurial behavior as they are
forced to raise their own funds, facing the reality that block grants from the state are less
likely than ever.
There appears to be a wealth of literature exploring the factors that affect the costs
of higher education and, likewise, the sources of revenue to offset these costs, in public
institutions. Furthermore, there is some literature, although limited, exploring cost and
revenue factors in secular private institutions. However, there is scant research, if any,
exploring the factors affecting the escalating costs of higher education and sources of
revenue in private, faith-based institutions. Whereas private, faith-based higher education
institutions have similar characteristics of public institutions, they have unique
characteristics as well. Therefore, this study examined the factors affecting the escalating
costs of higher education in private, faith-based institutions. Furthermore, this study
examined the solutions available for private, faith-based institutions to increase revenue
streams, thus diminishing the rate of increase in tuition costs for students and their
Justification for the Study
The relevance of this issue is timely as college costs and accessibility for future
students is at stake. Operating costs for higher education institutions continue to rise,
which is a challenge for colleges and universities. Access to higher education is difficult
for students because of declining family income due to job losses and a struggling
economy. Revenue streams for public higher education institutions are stagnant or
declining in an economy where state income from tax revenues continues to dwindle.
The literature, while comprehensive in its research of these issues in publiclyfunded institutions, is scant when relating to private, faith-based institutions. This
research study examined issues and factors that contribute to escalating costs in the 105
schools that are members of the Council for Christian Colleges and Universities (CCCU).
This research examined solutions that are available to private, faith-based institutions that
could lead to increased revenue streams and costs savings to the institution as well as
students and their families. In addition, this research study examined the similarities and
differences between public institutions of higher education and private, faith-based
institutions of higher education concerning factors which affect escalating costs and
available solutions to the issue. The results of this study contribute to the literature and
provide administrators in private, faith-based institutions a resource of research-based
ideas regarding operational efficiency and fundraising that will assist in diminishing the
rate of costs escalation at their institutions.
Purpose of the Study
The purpose of this study was three-fold. First, key factors in the escalating costs
of higher education at private, faith-based institutions as perceived by Chief Financial
Officers (CFOs) and Chief Advancement Officers (CAOs) at those institutions were
examined. Second, potential sources of income and cost savings at private, faith-based
institutions as perceived by CFOs and CAOs at those institutions were investigated.
Third, similarities and differences in the perceptions of CFOs and CAOs at private, faithbased institutions regarding escalating costs, potential sources of income, and cost
savings were examined. Key factors contributing to escalating costs, potential sources of
income, and potential strategies for cost savings identified by public education
institutions of higher education in the literature were utilized as a baseline for
examination at faith-based institutions. The issue of escalating costs in private, faithbased institutions is a concern for students and their families as costs continue to rise
above the annual rate of inflation (Bracey, 2005). A review of the literature indicates that
college costs, of which tuition is only a part, have escalated rapidly.
The faith-based institutions examined are members of the Council on Christian
Colleges and Universities (CCCU). The CCCU (2009) is an international higher
education organization, founded in 1976 with 38 members of intentionally Christian
colleges and universities. At the time of this study, the CCCU had 105 members in North
America (102 in the U.S. and 3 in Canada) with 74 affiliate institutions in 23 countries.
The CCCU is a tax-exempt 501(c)(3) non-profit organization headquartered in
Washington, DC. The CCCU has a stated mission of advancing the cause of Christcentered higher education and helping member institutions transform lives by faithfully
relating scholarship and service to the truths of the Bible. Around 900 of the
approximately 4,000 degree-granting institutions of higher education in the United States
are self-defined as religiously affiliated. However, only 102 intentionally Christ-centered
institutions in the U.S. who have chosen to apply meet the qualifications for membership
in the CCCU. Members of the CCCU must meet the following minimum criteria:
1. Strong commitment to Christ-centered higher education
2. Located in the U.S. or Canada
3. Full regional accreditation for U.S. campuses
4. Primarily four-year comprehensive colleges and universities
5. Broad curricula rooted in the arts and sciences
6. Christians hired for all full-time faculty and administrative positions
7. Sound financial status
The literature review that follows examines the plethora of issues which higher
education institutions are experiencing as they face rising costs along with diminished
revenue sources. Colleges and universities, in an attempt to solve rising costs, utilize
tuition increases as the primary source of new revenue. However, the research indicates
that rising tuition and other costs affect those who can least afford these increases,
making the achievement of an American dream, a college degree, less affordable and
accessible. This topic and potential solutions to this dilemma is of crucial importance,
both to the higher education community and to its customers, potential students.
Research Questions
The following research questions were addressed:
1. What variables identified by public colleges and universities that contribute to the
increasing costs of higher education are also identified by CFOs and CAOs at
CCCU institutions?
2. Among variables affecting the increasing costs of faith-based higher education
identified by CFOs and CAOs at CCCU institutions, how do they contribute?
3. What are the factors that CFOs and CAOs perceive to contribute to the escalating
costs of higher education in faith-based institutions that are beyond costs related
to inflation?
4. What solutions do CFOs and CAOs at CCCU institutions identify as available to
faith-based higher education institutions that can facilitate more efficient
operation that result in savings to students?
5. What solutions do CFOs and CAOs at CCCU institutions identify as available to
faith-based higher education institutions that can facilitate an increase in revenue
streams that result in savings to students?
6. What solutions do CFOs and CAOs at CCCU institutions identify as available to
faith-based higher education institutions that can assist in diminishing the rate of
costs escalation?
7. Is there a difference in perceptions of CFOs and CAOs concerning the factors that
contribute to the increasing costs of higher education at faith-based institutions?
For the purpose of this research, the following definitions were utilized:
Council on Christian Colleges and Universities (CCCU). The CCCU is an
international higher education organization founded in 1976 comprised of colleges and
universities with a mission of Christian higher education (CCCU, 2009).
Institutional Chief Financial Officer (CFO). The CFO is the administrator on the
university or college campus who has responsibility for administration of the budget of
the institution.
Institutional Chief Advancement Officer (CAO). The CAO is the administrator of
the college or university campus who is responsible for the procurement of outside funds
to support the mission of the institution.
Escalating costs of higher education. Escalating costs is that increase in cost of
higher education operation as it relates to colleges and universities.
Efficient operation. Efficient operation is the effective management of a higher
education institution that results in a low costs-to-results ratio.
Revenue streams. Revenue streams are sources of college or university income.
Inflation. Inflation is defined as the rate of producing a higher education
component related to increasing costs.
Technology. Technology encompasses computer purchases and maintenance,
teaching resources, information management, and communication systems.
Construction, renovation, and maintenance. This category involves activities
which are required on the college or university campus to provide facilities (construction
of new and renovation of old) and maintenance to provide facilities for new or existing
programs such as academics, athletics, housing, and student services.
New programs, expansion of existing programs. This category consists of courses
of study offered to students to help them achieve their higher education and professional
Student services. Student services are those activities designed to meet the needs
of students while obtaining a higher education including housing, food, entertainment,
mental and emotional support, and health services.
Title IX compliance. Title IX is a provision by the Federal Government that
requires colleges and universities to maintain athletic programs that meet the needs of
female students consistent with the male/female ratio on the college or university
Sources of revenue. Sources of revenue involve income which enables the college
or university to sustain its operation.
Cutting cost as a management resource for facilities. Cutting cost is a strategy to
provide more efficient operational use of college or university facilities.
Contributions from alumni. Contributions are funds given by alumni of the
university usually in the form of an annual, either designated or undesignated, gift.
Planned giving. A planned gift is a gift by a university constituent that results in
a future gift to the college or university, usually through a will. Examples include real
estate, stocks, bonds, and trusts.
Endowment. An endowment is funds raised by the college or university which are
permanently set aside by the institution. Income generated by the endowment is used for
a variety of purposes, usually designated by the donor.
Student paid tuition. Tuition is a source of institutional income paid by the student
for the cost of his or her higher education experience.
According to Bracey (2005), the “hereditary privilege” that most college-bound
students feel that is theirs is not that simple. Students who expect a reasonably easy
transition from high school to college are sometimes finding something different.
Students are being turned away at the college door because there is no room or because
they cannot accumulate enough money to meet the rising cost of tuition and related costs
like books, room, and board.
Operating costs at colleges and universities are at an all-time high; however,
sources of revenue for both public and private institutions are suffering due to the lagging
economy, loss of state revenue, and the challenges of raising money in a diminished job
market. The relevance of this issue is undeniable as college costs and accessibility for
future students is at stake. A review of the literature reveals that colleges are struggling to
balance their rising costs with reasonable tuition rates. Moreover, costs to students
especially affect accessibility for low-income and middle-income prospective college
students who are least likely to afford the rising expense. Household income tends to rise
at a slower pace than higher education tuition. Real median household income in the
United States climbed only 1.3% between 2006 and 2007, reaching $50,233, according to
a report from the U.S. Census Bureau. Meanwhile, the nation’s official poverty rate in
2007 was 12.5%, not statistically different from 2006 (U.S. Census Bureau, 2007).
During this same time period, tuition increases at public higher education institutions
averaged 9%, outpacing household income increases at a 7:1 ratio.
Czerniewicz (2004) randomly selected 280 public universities to determine the
factors that most effected rising costs at these selected institutions. The 280 institutions
were not named but reflected institutions from various parts of the country: the northeast,
southeast, mid-west, southwest, and western portions of the United States. No
international institutions were selected. Data collection was accomplished through the
responses of 132 institutions to a survey electronically transmitted by the researcher.
Respondents were able to respond to objective as well as subjective inquiries.
Responses were grouped into the following areas: technology purchases and
upgrades; new educational programs or expansion of existing programs; and student
services, including in some circumstances high-end residence life facilities. In addition,
results showed that universities in the study also competed for high-profile faculty who
are known for their research and publishing capability. The high costs of construction for
new facilities or updating and remodeling of aging facilities to meet the needs of
contemporary education environments were prohibitive (Czerniewicz, 2004). In
addition, federal regulations such as Title IX (Education Amendments of 1972 to the
Civil Rights Act of 1964) compliance added to the cost of a college education. All of the
aforementioned factors affect the cost of tuition. These factors present not only financial
challenges for potential college students as they progress through the college educational
experience, but also many times lead to post-baccalaureate student debt.
Moreover, publicly-funded higher education institutions face large cutbacks in
funding from state legislatures due to recessionary influences. Due to lagging sales tax
revenues, states forced to balance their budgets are implementing cutbacks in their higher
education resources. According to Hebel (2010) Nevada universities are preparing to
close colleges, departments, and programs; demoralized professors are leaving the state;
and thousands of students are being denied access from courses. According to the
chancellor of the Nevada higher education system, the prospect of shutting down an
entire institution remains a “distinct possibility” for the future. California, which faced
the largest shortages of any state, has drawn much of the attention as tens of thousands of
students were turned away from public higher education institutions as tuition rose by
more than 30%.
Although all institutions of higher education have faced hardships, private
colleges and universities have and will be especially stressed compared with public and
community colleges. Even as public institutions are reducing their budgets significantly,
private colleges and universities have experienced a decline in constituent support as well
due to the poor economy. Furthermore, private institutions depend on income from their
endowments to fund programs and scholarships. The depressed stock market over the
past few years caused a significant decrease in earnings as well as losses to endowment
principals. Further, Goodman (2009) stated that credit rating agencies issued a first-time
negative outlook for all sectors of higher education since the inception of their published
higher education outlooks in the mid-1990’s.
Goodman (2009) argued that higher education institutions face risks to revenue in
four crucial areas. First, there is increasing pressure on tuition and financial aid due to
declines in household income, investments, and home equity. With the deflation of
housing values predominantly in the fall of 2008 and winter of 2009, homeowners found
their property less valuable and often less than the mortgage held on the property. Loss in
investments and jobs provided less income from which parents might support their
college-bound students. Moreover, access to loans was limited. Second, higher education
institutions are experiencing a major loss in endowments, the largest in recent decades.
With the sharp decline in the stock market, institutions are not only losing much needed
income, but are suffering losses to their endowment principals. Third, many colleges are
facing pressure on liquidity of their investments. Investments in hedge funds, private
equity, and other investments are generally proving to be less dependable and more risky
than originally thought. Therefore, institutions are seeking more security from their
investments, thus, generating more confidence from their donors. Finally, many
institutions are exposed to volatility in variable-rate debt markets. Institutions are more
likely than ever to be exposed to high risk due to the great variability in investment
income from stocks, real estate, and foreign investors in U.S. debt.
Colleges and universities plan years in advance. However, in this volatile
economy, if colleges enter a new year’s budget cycle without some type of contingency
plan, if enrollment drops and tuition income shrinks below expectations, there would be
reason for extreme caution, even alarm.
The review of the literature examines critical issues relating to this crisis of
escalating costs in higher education and potential solutions to the crisis. Furthermore,
while attempting to solve rising cost dilemmas, colleges and universities are faced with
tuition increases as the primary source of new revenue. First, literature exploring factors
affecting the rising costs of higher education is discussed. Second, literature examining
various revenue sources is explored.
Factors Affecting the Escalating Costs of Higher Education
Numerous factors affect the escalating costs of higher education. Public and
private institutions are faced with the dilemma of how to pay for high quality faculty to
attract the best students, fund construction costs of new facilities and maintain existing
facilities, and meet the expectations of students who may be accustomed to the comforts
of private bedrooms and bath facilities. This section of the literature review will examine
those factors identified by public institutions that most affect the rising costs of higher
Attracting high quality faculty. According to King (2000), the key to attracting the
best and brightest students to any campus is to provide the programs in which they
choose to study and to provide high quality faculty in those programs. In general, if
liberal arts-based institutions are to attract high quality, research-oriented, publishing
faculty, it will require high dollars. These dollars are not limited to salaries and must
include provisions for research facilities, auxiliary staff, benefits, and technology.
To underscore this dilemma, King (2000) argued that the capacity of world
renowned institutions such as Oxford and Cambridge to compete on equal terms with
Harvard, Yale, or Princeton diminishes by the day. Based upon their observations, three
primary areas have evolved in the academic labor market.
First, in today’s global economies, pursuing high quality academic scholars is not
limited to state, regional, or national borders. Second, the disparity in the ability of
institutions to expend educational resources is ever widening between public and private
universities. This disparity is related to diminishing resources of public institutions due to
a decline in resources from state budgets and an increase in the ability of private
institutions to raise their own funds. These trends directly correlate with a university’s
ability to compete for high quality faculty. Third, current institutional expenditures
demonstrate that many of the world’s best public universities are in danger of declining in
relative academic and research quality, status, and prestige (King, 2000).
It is critical to note that King’s (2000) contributions are more than a commentary
about the current academic market or faculty quality that is negatively impacting only
Oxford and Cambridge. University leaders in the United States are expressing similar
concerns that the increasing disparity in faculty compensation that favors private
universities is leading to a departure of faculty from public universities to more
generously-funded private institutions. Private institutions have the flexibility and latitude
to set their own tuition rates and raise their own funds without the restrictions that are
placed upon public institutions by their state legislatures. King observed that relative
fiscal compensation in private universities has increased at a much faster rate than in
public universities since 1980.
Ehrenberg (2004a) stated that the objective of being the most desirable academic
institution is accomplished by striving for excellence in every aspect of the institution’s
functioning. Ehrenberg continued, “They aggressively seek out all possible resources and
put them to use, funding things they think will make them better, ‘better than their
competitors, especially as it relates to faculty” (p. 189). To be better than their
competitors, colleges and universities will spend more to attract the best and brightest
faculty, including provision of research opportunities and improvement of facilities,
student services, and instructional technology. In the meantime students and their
families increasingly want the best possible education. In fact, Ehrenberg noted that the
number of our nation’s top students who choose to enroll in selective private institutions
has increased substantially in recent years.
Ehrenberg (2004b) explained the influence of academic governing processes by
administration and trustees in private institutions and their relationship to rising college
costs. Trustees and administrative leaders at private institutions can set their own tuition
and fees whereby public institutions cannot. He pointed out that faculty preferences affect
development policies, how money is raised and spent, program rankings, pricing that is
indicative of high quality, and financial aid policies that are often based on student test
scores rather than student need.
Furthermore, there exists a dilemma. In order for high quality private institutions
to maintain superiority among their peers, these institutions are choosing to maintain and
increase quality largely by spending more, not by increasing efficiency, reducing costs, or
reallocating funds (Ehrenberg, 2004c). Public institutions find it difficult to compete with
the spending of large, private institutions. Mary Sue Coleman (2002), the first female
president of the University of Michigan, acknowledged the spending gap and challenged
the public to take an interest in funding public institutions of higher education. She
argued that the University of Michigan system can compete with the wealthy private
institutions in the area of quality; however, public institutions must be funded much
better in order to maintain.
Critics of higher education costs escalation have taken aim at faculty and their
research programs. Politicians and political writers have responded to serious questions
about college costs with uninformed answers. They believe that faculty members do not
teach enough classes, are paid too much, or are always engaged in useless research,
needing to be more productive (Flower, 1998).
The best and brightest individuals appear to be attracted to higher education
teaching positions by high salaries, benefits, and research opportunities. However, faculty
salaries in general do not account for the bulk of higher education’s steadily increasing
costs. In fact, during the recession of 2001 and 2002, record state budget deficits dictated
that faculty members at U.S. two- and four-year public colleges and universities enjoyed
an average 2.5% increase in their salaries in 2003, according to a report by the U.S.
Department of Education’s National Center for Education Statistics (NCES, 2005).
Groyles (2005) reported that salaries are barely keeping up with inflation. Salary
increases for higher education faculty at every level of experience and longevity are
consistent, ranging from 1.6% to 3.5%, but averaging 2.5%. During these same years,
college costs rose between 8% and 14% at four-year public institutions.
Likewise, small salary gains for professors, instructors, and lecturers at both
public and private non-profit schools. Curtis (2005) stated that schools, regardless of their
size, are facing difficulties, noting that the negative effect of the downturn in the stock
market in 2001 and 2002 on endowments for private schools was in many ways just as
detrimental as what the public schools experienced due to state budget deficits. While
faculty salaries occupy a significant proportion of any university’s budget, faculty are not
the only large expenditure. Technology is another large line item expense that contributes
to the rising costs of higher education.
Technology issues. In 1997 management guru Peter Drucker predicted that in 30
years big university campuses would be relics, driven out of existence by their inexorable
increases in tuition and by competition from alternative education systems made possible
by information technology (IT). While Drucker’s comments may be overstated, the
nation’s major research universities, both public and private non-profits, are facing
fundamental changes in the way they provide education if they are to thrive, rather than
simply survive.
Research universities suffer from what economist Baumol (2005) referred to as
runaway costs. Labor-intensive industries cope with rising costs of delivering their
products and services by employing labor-saving devices that result in cost savings in
their production environments. However, highly selective universities operate in a market
in which rankings and prestige have been more important than the price to most
prospective students. These universities prosper not by employing practices which save
money but by convincing their publics that the value of an education at a first-tier
university is worth the rising costs. The fact is that labor intensity and quality-based
competition are causing an increase in the cost of higher education at all universities,
particularly the private non-profits. Lohman (2005) pointed out that this increase cannot
continue indefinitely.
In examining technology issues related to higher education administration, Gilbert
(1995) argued that numerous questions and beliefs arise from students, faculty, the
university president, the provost, the librarian, and even the bookstore manager. Students
wonder why some courses are not more on the cutting edge of technology as they prepare
for their future, while at the same time wanting the personal attention that a “real”
professor, and not a graduate student or a computer, can give in the classroom. Many
faculty members are basically afraid of new technology and wonder if they can keep up
with their students who are demanding more technology in the classroom. Faculty want
to know how they will and must change their teaching strategies and who will help them
get where they need to go as they integrate the classroom and new technology. University
presidents want to know that the large sums of money being spent on updating and
investing in new technology are not only appropriate for the time but also valuable in the
long term. With the rapid developments in technology, the university presidents’
expectations are not realistic.
Technology administrators may be perplexed by the speed at which technology is
advancing, which influences their decision making. What may be the latest technological
advancement for the present more than likely will be out of date, though not useless, in a
few years, maybe even months. Technology administrators, in addition to the
responsibility of training faculty and staff on new hardware and software, must also
worry about the daily issues that are problematic to ongoing operation. Librarians, who
often work with technology administrators to assist with training faculty, staff, and
students in the library setting, face the personal dilemma of remaining up to date and
current in the area of technology. Many bookstore managers seek to find the least
expensive way to manage resources for students. A growing number of students are
buying their texts from online sources or checking them out of the University library.
In the face of rapidly rising higher education costs, of which information
technology is a major concern, how will universities and colleges keep up, maintain the
latest information technology resources for students and faculty, and avoid financial
difficulty? According to Eisenberg, Nilan, and Schaber (2006), technology costs must be
built into the budget and planned, not as an addendum that may or may not be funded.
While states and higher education institutions have committed significant funds to
technology, it is still treated mainly as an addendum that may or may not receive the
attention it deserves rather than a recurring expense for colleges and universities that
must receive high priority in the budgeting process. Temporary solutions do not reduce
costs or increase productivity on the university campus. Eisenberg et al. explained that
what may contribute to a short-term fix may cost higher education institutions and the
state budgets that fund them more in the long term. States may need to abandon current
short-term, cost-based funding approaches and develop in their place new approaches that
encourage longer term investments in course and program development related to
information technology.
State universities have been forced to raise tuition in order to generate income to
offset state budget deficits and diminished funding for technology costs. Likewise,
private, non-profit higher education institutions have been forced to take this same
approach, especially when university endowments generate little income in the face of a
flat stock market (Lohman, 2005).
Technology issues pose significant challenges on a day-to-day basis. However,
construction of new facilities, coupled with the renovation and maintenance of existing
facilities, presents a budget challenge that will only escalate over time if not addressed.
Construction, renovation, and maintenance. As competition grows in higher
education markets, more institutions are improving their position by focusing on an
aspect that typically is the first and often most remembered impression that prospective
students and parents have as they search for a college: the physical environment of the
campus. Agron (1999) conducted a study for the American School and University’s Fifth
Annual College Maintenance & Operations (M & O) Report. Agron mailed
questionnaires to approximately 1,300 physical plant directors at two-year and four-year
public higher education institutions with no graduate programs. Questions on the survey
related to costs and expenditures associated with salaries, benefits, supplies, equipment,
energy usage, maintaining and remodeling existing structures, and new construction of
facilities. Physical plant directors were also asked to report the percentage of the
institutional budget spent on energy usage, maintenance and remodeling, and new
construction. Forty-one percent of physical plant directors responded to the survey.
Agron found that colleges earmarked an average of 10% of their total institutional
budgets to maintenance and operations for the 1998-1999 school year.
A similar study was conducted by Agron in 2007. Data for the American School
and University M & O Cost Study were collected via an in-depth questionnaire mailed in
October 2007 to 900 physical plant directors at two-year and four-year colleges with no
graduate programs. Recipients were asked to document various M & O costs for the
2007-2008 school year. Median M & O expenditures were measured as per full-timeequivalent (FTE) student and per square foot of space, as well as incidence of various
maintenance practices.
The physical plant director distributed portions of the survey among position
holders including administrative personnel, those individuals who have managerial or
supervisory duties (did not include the overall director of the physical plant); custodial
personnel, those individuals responsible for building upkeep and cleaning; maintenance
personnel, those individuals who perform skilled jobs, such as plumbing, electrical, or
HVAC repair; grounds personnel, those individuals responsible for landscape
maintenance and upkeep; and secretarial personnel, those individuals providing clerical
support. Agron’s research showed that institutions spent 16.4% of their budgets on
maintenance and operations expenditures in 2007, up from 10% in 1999 (Agron, 1999).
Additionally, data for the annual American School & University M & O Cost
Study were collected by Agron (2008) via an in-depth questionnaire mailed in October
2008 to 700 physical plant directors at two-year and four-year colleges with no graduate
programs. Private institutions made up 52% of respondents while public institutions made
up 48% of respondents. Fifty-three percent of respondents were four-year institutions
while 47% were two-year institutions. Recipients were asked to document various M & O
costs for the 2007-08 school year. Research detailed median M & O expenditures per
full-time-equivalent (FTE) student and per square foot, as well as the incidence of various
maintenance practices.
Maintenance and Operations costs in this study were expressed in median dollars
per FTE student. The total median M & O budget per FTE student was $1,418 and
amounted to 11% of the total budget, down from 16.4% in 2007 (Agron, 2007).
However, the amount of square footage maintained increased from 272 square feet in
2008 (Agron, 2008) to 277 square feet per FTE student in 2007 (Agron, 2007). The
author reported that the amount of square footage maintained per custodial employee was
34,084 square feet and 69,873 square feet per maintenance employee (Agron, 2008).
The area affecting M & O budgets the most was energy expenditures. Spending
per FTE student on energy/utilities rose an astounding 24% from the year 2007.
Moreover, this increase came after dramatic increases in the cost of energy/utilities in
2006 (Agron, 2008).
Furthermore, the author indicated that the annual amount that the median college
spent on energy cost (gas, electricity, and other fuels) amounted to $850,000.00. Eight
percent of responding institutions had as few as four buildings, while 47% of respondents
had 15 buildings or more. Only 8% of responding institutions had more than 10,000
students while 52% of responding institutions had between 2,000 and 5,000 students.
This study showed that whereas the percentage of the budget allocated for maintenance
and operations is decreasing, the amount of work expected of maintenance and grounds
employees continues to increase.
The State of Illinois Board of Higher Education (2004) reconvened the
Committee on Statewide Capital Policies and Priorities on October 7, 2004. The
Committee was charged to evaluate current statewide higher education facilities’ policies.
According the State of Illinois, facilities constituted an institution’s largest asset and
provided the foundation that was necessary to attract high quality faculty, staff, and
students. The Board determined that the State of Illinois college and university facilities
supported a wide array of instructional, research, and public service programs. The
Illinois system constitutes a physical plant that is large, complex, and diverse with its
facilities differing by institution in accordance with institutional mission. Some Illinois
higher education institutions have major research facilities, whereas others primarily have
facilities supporting undergraduate and graduate classroom instruction. Some Illinois
institutions have residential facilities, whereas others operate primarily as commuter
institutions. Facilities also differ from institution to institution based upon the condition
and age of original construction. The State of Illinois Board of Higher Education found
that increasing costs for maintenance, new construction, energy, and staff were beyond
the reach of diminishing revenues in the state’s budget.
The Illinois State Board of Higher Education (2004) suggested that a concept
identified as “Life Cycle Costing” be implemented. Life Cycle Costing was devised due
to the reality that construction of a building is only a part of the building’s cost. The plan
integrates construction and operations costs for the building under construction. Life
Cycle Costing also ensures that funds would be available in the future to maintain and
remodel as needs arise and functions change. However, complicating the concept of Life
Cycle Costing is the fact that this process may increase the initial cost of each project,
thus reducing the amount of funding that is available for other capital projects.
Furthermore, general budget funds, those funds which support the day-to-day activity of
the institution, may be reduced for operations and other initiatives. In revenue-producing
facilities such as residence life complexes, these issues are somewhat less complicated
because the monies they produce will pay off the debt incurred during construction,
maintenance, and renovation (Agron, 2005).
Colleges and universities face a barrage of facilities-related needs each year,
ranging from small repairs to major remodeling for new or expanding programs to
construction of completely new facilities and utility systems. Minor repairs will always
be needed as buildings age through their normal life cycle. Institutions must address
small repairs and renovation needs as they occur, as failure to do so leads to accelerated
deterioration and costly repairs. Furthermore, program change and growth necessitates
facility renovation and growth. However, renovations to make existing space more useful
for emerging academic priorities can be addressed in less time than raising money,
designing a completely new facility, and construction of the new facility (Agron, 2005).
Buildings and the infrastructure systems that support them also have finite life
cycles. Composition roofs deteriorate and may only last 15-20 years; heating, ventilation,
and cooling systems (HVAC) wear out or require repair in as little as 10 years; mortar
and masonry decay; and outdated lighting systems become inefficient. At certain points
major remodeling is required to extend the useful life of every facility.
The need to expand electrical and cooling capacity for individual buildings and
entire campuses has grown dramatically with the acceleration and advancement of
technology. While a facility may appear to have outlived its usefulness as originally
designed and constructed, with remodeling and renovation the facility can be used for
other purposes (Agron, 2005). Further, Argon explained that when the cost to upgrade
building systems to current state-of-the-art standards for today’s instructional and
research programs is greater than new construction costs, new construction may be
required. New construction is also required to significantly expand the scope of an
existing program, initiate new programs, or replace temporary facilities.
Even with differences in size, scope, and scale from campus to campus and from
institution to institution, colleges and universities face a similar array of capital funding
needs. Institutions must ensure that facilities are upgraded to take advantage of the latest
technologies and are adequate for the needs of students, faculty, and staff. Many
institutions face large amounts of deferred maintenance and must work to protect
previous investments in facilities.
Agron (2005) argued that for state colleges and universities there are severe
limitations on funds that are available for new construction, especially in years of strained
state budgets and shortfalls. The requests for funds for new construction and maintenance
of facilities may be viewed as less important than funds for day-to-day operations. When
institutions are forced to reallocate operating funds, the temptation and necessity may be
to move funds away from the maintenance of facilities and infrastructure to other
operating line items, such as student services. Whereas deferred maintenance may seem
the least costly short-term solution, this decision spread over several years results in more
maintenance and infrastructure projects held over from one year to the next, with the cost
of the project increasing as each year passes. It is clear how the delay of maintenance and
upgrades of aging structures results in a significant deferred maintenance backlog
(Agron, 2005).
Despite the challenges of the University of Illinois system, the Illinois Higher
Education Statewide Capital Policies and Priorities Committee (State of Illinois Board of
Higher Education, 2004) recommended that future requests for new building projects
include an estimate of the new building’s complete life cycle costs: the costs for its initial
construction, daily operations, maintenance, and the major renovations and upgrade of
building systems to ensure the building’s integrity over its expected life cycle. The
committee argued that a Life Cycle Cost plan was important for every facility.
As new construction takes place, university administrators and facilities managers
and operators are asking architects and contractors to confirm whether their building
systems are performing as expected upon completion of the construction phase. The more
comprehensive the confirmation process, the greater opportunity there is for reducing
operations and maintenance costs, thus, improving facility performance. A highperformance facility that produces an environment conducive to learning can boost the
achievement level of university students and comfort levels for the occupants of the
building (Erickson, 2009).
University facilities are incorporating building systems with sophisticated
technology, computer controls, and circuitry for operation. These systems, particularly
designed for heating, ventilation, and air condition (HVAC), are also being incorporated
for the use and control of lighting, fire alarm systems, energy management, elevators,
security, communications, and life-safety. However, after construction is completed,
these facilities should be evaluated on a regular basis to determine if they are operating
correctly and functioning at the promised levels of efficiency. This process, known as
building commissioning, confirms that the facility fulfills the design intended by the
university, its occupants, and operators (Erickson, 2009).
According to Erickson (2009), as commissioning services are reviewed,
educational institutions should involve the architects and engineers that can evaluate the
proposals for design and construction to determine which proposals overlap with standard
owner and architectural agreements. The costs of these professional services are
dependent upon the depth of evaluations and the systems that are being commissioned.
Typically, fees are based upon the square footage of the building, project scope, and
geographic location. Erickson determined that the cost of building commissioning is well
worth the upfront cost and will lead universities to recover project cost quickly due to
long-term efficiency of the facility.
Examining the perplexing state budget funding issues and the costs of building,
operating, maintaining, and renovating state university campus structures, it is apparent
that most public university systems face similar dilemmas. The American Recovery and
Reinvestment Act of 2009, passed by Congress on February 12, 2009 and signed by
President Obama on February 17, 2009, was designed to stimulate the economy. This Act
includes $7 billion for colleges and universities that may be used for renovation,
improvements, and energy-efficiency projects. While the $7 billion is a small part of a
large overall package, the intent of the Act is to create jobs and address some of our
fossil-fuel dependence.
Colleges are facing a growing deferred maintenance problem, which at many
public institutions adds up to repair bills in the hundreds of millions of dollars. Some
state legislatures have not supported higher education institutions at levels needed to
maintain campus infrastructure. At the same time, these institutions continue to expand
their campuses even as they have trouble maintaining the buildings they already have
(Carlson, 2009). Moreover, Carlson explained that maintenance funds for public
universities have not been increased in decades. For example, in Kansas the deferredmaintenance backlog at 7 public universities, 19 community colleges, and 6 technical
colleges amounts to $1 billion (Kansas State Board of Regents, 2009). In the past two
years the Kansas state higher education system has established a rule that each new
building must have funds in place to permanently cover its maintenance, a policy that too
few colleges have even considered.
Colleges and universities continue to compete with one another in several areas.
Competing for high quality faculty members demands that campus facilities are built and
maintained at the highest level in order to attract and retain them. Additionally, the best
and brightest students are attracted to outstanding faculty members under which they may
study. Quality facilities at a cost of tens of millions of dollars attract high quality faculty
and students. As institutions compete with one another, parents and students seem willing
to pay the escalating costs that are initiated by such competition among institutions and
the need for quality facilities (Agron, 2005).
Construction, renovation, and maintenance of campus facilities command a large
portion of the university budget. Additionally, the development of new programs and
expansion of existing programs must meet the demands of the market and needs of the
New programs and expansion of existing programs. Yankelovich (2005) asked
several questions concerning the future of higher education. For instance, what will
higher education look like 10 years from now? If higher education is highly responsive to
the demands of society for new programs and the expansion of existing programs, how
will higher education keep up with the demands and the costs of expansion? What forms
might these new programs assume?
Realistically speaking, higher education has many constituencies, traditions, and
constraints weighing on it. Yet the higher education system must find ways to meet the
needs of its customers. Some strategies utilized to meet these needs include the creation
of new programs, varied schedules and offerings, distance learning, advanced technology,
block scheduling, and advanced degrees (Yankelovich, 2005).
According to Daniel (1997), universities are in crisis. First, Daniel argued that
university systems are mainly driven by teaching rather than learning. While universities
are constantly evaluating present programs, starting new programs, and expanding
existing programs, there has not been a sufficient paradigm shift to emphasize learning,
which is student-centered, as opposed to an emphasis on teaching, which is
teacher/professor-centered. Further, Daniel stated that there must be a change in the
manner in which university faculty relate to knowledge and their students. Student
learning must be more outcome-based.
Second, Daniel (1997) explained that the crisis is not only an American university
problem, but is worldwide. Students around the globe are limited to higher education due
to access, cost, and flexibility. According to Daniel, one new campus would need to open
every week somewhere in the developing world to meet the anticipated needs of students
entering the world of higher education. Half of the world’s population is now under 20
years of age and three-quarters of them live in Africa and Palestine. The traditional
university campus will deny access to nearly all of these young people. Without an
education many of these young people will grow up to be unemployed, unconnected, and
unstable. In a global world, this is a global problem.
In addition to meeting the needs of an ever-expanding world population of
prospective students, the world-wide university system is not equipped to accept or
educate these students. Ashe (2003) agreed with Daniel’s (1997) perspective on the
higher education classroom. According to Ashe (2003), the greatest problem is resistance
to change. Universities continue to add and expand new and existing programs, but
remain teacher-centered instead of student-centered. The programs are costly but fail to
meet the needs and demands of an ever-expanding student population. While adding new
programs and expanding existing programs is fundamental to meeting the needs of
university students, the market, and the community, institutions are approaching change
in a way that makes education more economical and accessible. Ashe pointed out that
higher education institutions must be very careful that students, who are labeled as
customers by large for-profit universities such as the University of Phoenix and DeVry,
are not merely facilitated but are taught and more than adequately prepared for a life of
vocational fulfillment.
Student services. According to James V. Koch (2001), president of Old Dominion
University, the consumer controls what amenities are offered today’s college students. In
the world of higher education, one may ask who the consumer is. Students, regardless of
location, have become able to shop higher education offerings, prices, quality, and
convenience. Koch further stated that institutions respond to what students tell them they
want and at some institutions this has involved extensive provision of student services,
entertainment, excellent food, and a host of other student-oriented services.
The common denominator is that students, the consumers, increasingly are in
control. Gone are the days of the 1960s and 1970s when universities spoke of the
multitude of students they flunked out. Gone, too, are more recent days when the
majority of college students were taught between 8:00 a.m. and 2:00 p.m. Students now
demand and receive courses taught at night, on weekends, in three-week blocks of time,
over the Internet, with guaranteed internships, and with prolific access to microcomputers. Convenience remains important, but now it is the convenience of the students,
not the faculty, that is most important (Yankelovich, 2005).
Further, there is a distinct trend toward personalizing higher education to the
needs of particular students. Universities are offering programs that recognize a student’s
past coursework, experiences, and current and future needs. For-profit, entrepreneurial
higher education competitors are telling students that they will provide the education that
the student wants or needs, not the education that someone else thinks the student wants
or needs (Koch, 2001).
The end result is increasing market segmentation in higher education. Colleges
and universities have determined that they must focus their efforts in order to succeed
because no institution can meet everyone’s needs all of the time. Some institutions are
determining that their primary focus must be on four-year, undergraduate, liberal arts
education, while others see research as their primary focus. Many for-profit institutions
focus on online and distance education. Even Yale University, with an endowment of
more than $5 billion, declared a few years ago that it had to narrow its efforts (Koch,
According to Koch (2001), in order for colleges and universities to prosper in an
increasingly competitive world, colleges must demonstrate that they can add knowledge
to their students, not merely that they are capable of graduating already gifted students
who enter with an impressive SAT or ACT score. Further, in this new paradigm students
progress as they can demonstrate learning, whether or not they have accumulated the
correct number of hours attending faculty lectures.
Students are becoming higher education shoppers who are more interested in
learning outcomes, job guarantees, and cost of tuition. Student shoppers might say, “Can
you guarantee me that I will pass the CPA exam or be admitted to medical school?” They
might also ask, “Just how expensive is it and what is it going to cost for you to get me
there?” and “What amount of scholarship/financial aid will I get if I come to your
school?” Moreover, student shoppers are no longer captive to the particular state in which
they live due to the availability of online programs and degrees (Koch, 2001).
Fredrickson (2002) explained that prospective students and their parents regularly
bargain for scholarship money and financial aid in order to receive the best deal and the
most money. Based upon the amount of scholarship money that is awarded to a given
student, some students at some universities are actually paid to come to school. In
addition, student shoppers look for the best in residential facilities and student centers.
According to Fredrickson, Columbia University is in the middle of a five year, $800
million construction program, which includes a student center, major residence hall, an
upgrade of existing dorms, and renovation of historic buildings. Columbia has also
significantly expanded its College of Engineering and Applied Sciences, and with it
created a national center for the emerging field of nano-technology. New York University
has also invested heavily to transform itself from a commuter school to one of the most
selective private universities in the country. Its average SAT score rose from 1190 in
1990 to 1340 in 2002. Today, the school receives more applications than any other
private school in the country.
In addition, many colleges and universities remain committed to including
numerous and highly desired amenities in residence halls as a means of attracting student
shoppers to campus living. Agron (2005) noted that the most common amenities among
projects completed in 2004 were laundry facilities and Internet access, followed by
electronic security systems, television rooms or lounges, and air conditioning. Other
commonly reported amenities included individual room or apartment lavatories,
elevators, and kitchen facilities.
The total cost of new residence hall construction in 2004 among all universities in
the U.S. ranged from $363,000 to $60.4 million. The median project was $10 million; the
average project cost was $13.1 million. New housing projects accommodated as few as
48 students and as many as 730 students. Obviously, these revenue-producing projects
are much more cost effective than those building projects and capital improvements
which produce no revenue (Agron, 2005).
New programs, student services, construction and maintenance, along with
technology updates and faculty salaries, consume a large part of the university budget.
However, government regulations such as Title IX also cost higher education institutions
substantial sums of money if they are to meet government imposed guidelines.
Title IX compliance. Guidelines issued by Title IX of the Education Amendments
of 1972 to the Civil Rights Act of 1964, gave colleges and universities three options for
ensuring that they meet Title IX guidelines and have enough women participating on
sports teams. First, the number of female athletes should be substantially proportional to
the number of female undergraduates. In other words, if half the students on campus are
women, then roughly half the athletes should be women. Second, the institution may
establish a history and continuing practice of expanding opportunities for women in
sports. Third, the institution may prove that the university’s sports program effectively
accommodates the interests and abilities of female undergraduates. In other words, the
institution must show that sports are being provided in areas where female athletes have
interest and demonstrated abilities.
Colleges and universities are continuing to make progress toward gender equity in
sports. According to Suggs (1999), the number of women on varsity teams continues to
rise steadily. Suggs stated that participation and financial trends in Division I of the
National Collegiate Athletic Association (NCAA) demonstrates a rise in budgets for both
women’s and men’s sports. However, budgets for women’s sports are rising faster than
men’s sports. This rise in cost is not necessarily good news for male or female athletes.
While women’s teams will not be eliminated or seriously curtailed, non-revenue
producing men’s sports like baseball or track and field could face cut-backs. According to
Suggs, Title IX will protect female athletes from this kind of program curtailment.
Women’s athletics and some men’s programs are threatened by rising costs. The
soaring cost of fielding teams is forcing athletic departments to consider program options
that will save money yet meet government guidelines, favoring money-making teams
over the other squads that make up a broad-based sports program (Suggs, 1999).
Teams for men and women alike are becoming more expensive each year, adding
to the escalating cost of higher education. Non-revenue teams in Division I cost roughly
$220,000 on average in 1999-2000 (Suggs, 2005a). The cost of competing continues to
rise. According to equity reports filed by colleges, expenses rose from $5.8 million per
institution in 1996-97 to $12.9 million in 2001-2002 for NCAA Division I schools. Most
of the increase came for Bowl Championship Series (BCS) members, whose average
budgets rose from $14 million to $34 million. Because the manner in which institutions
account for revenue and expenses varies from campus to campus, it is difficult to draw
definitive conclusions from the budgetary figures in the reports. Scholarships, for
example, might be counted as an expense by an athletic department that finances its own
grants, while another athletic department might count scholarships as revenue if the
college itself allocates money to cover expenses. Division I-AA members reported losses
of nearly $700,000 each, while Division I-AAA colleges reported losing $500,000 on
average on their athletic programs (Suggs, 2005a). While Title IX guarantees female
athletes the opportunities that they deserve, meeting the requirements of Title IX along
with the expense of all athletic programs brings to bear escalating costs that are hard to
justify in all but the large BCS schools’ athletic programs (Suggs, 2005b).
A growing concern among colleges and universities is the practice known as
tuition discounting. Results from the 2009 NACUBO Tuition Discount Study show that
the average tuition discount rate for first-time, full-time freshman for fall 2008 was 42%.
The results are based on the 355 independent institutions that responded to the survey in
November, 2009. The greater demand for aid, due to the effects of the current economic
crisis on families in an already highly competitive environment, led to an all-time high
average tuition discount rate (Merea, 2009).
This result came at a high price for colleges and universities. Many independent
institutions had to implement salary freezes, hiring freezes, staff reductions, and other
cost-cutting measures. At the same time, net tuition revenue fell 2.5% from 2007 to 2008
due to an increase in grant aid awarded by institutions.
The percentage of first-time, full-time freshmen receiving institutional grants has
also increased. On average, 82.3 % of freshmen at the responding institutions in fall 2008
received an institutionally funded grant award, slightly high than the share in 2007 which
was 81.7% but a substantial increase from 78.8% in 2000. For students who received
these grants, the reported average award covered more than half, or 53.5% of the fall
2008 tuition and fee “sticker” price, compared with 49.2% in 2007.
On average across all survey participants, 12% of institutional grant aid was
reported as funded by endowment income. The study found a positive relationship
between endowment levels and the percentage of aid funded by endowments; that is, the
higher the endowment level, the higher the percentage of grand aid funded by endowment
The study also found that about 36% of the institutional grant aid distributed by
independent institutions in fall 2008 was awarded based entirely on students’
demonstrated financial need; 41.5% was awarded based entirely on non-need criteria
such as academic merit; and 22.5 % was based on a combination of need- and non-need
criteria. On average about 58% of all institutional grants were awarded based at least
partially on students’ demonstrated financial need.
Numerous studies highlight causes for the escalating costs of higher education.
The literature encompassed several factors including attracting high quality faculty,
technology additions and updates, construction of new facilities and maintenance and
renovation of older facilities, new programs and program expansion, student services and
scholarships, and Title IX athletics compliance. All factors are substantive components in
the escalating cost of higher education. This portion of the literature review examines
strategies that colleges and universities have utilized to diminish the rates of increase in
higher education expenses. The literature reviewed explores not only cost management
strategies but also sources of revenue which help to defray tuition increases for the next
generation of students.
Sources of Revenue and Costs Savings
Cutting costs as a management resource for facilities. In a stagnant economy,
schools and universities must seek new ways to maximize the effectiveness of their
already tight budgets. The news from state capitals carries a gloomy message for schools
and universities. Revenues are down, state coffers are empty, and schools must cut
spending to stay within their budgets. For most institutions, that means searching for
ways to cut costs and save money in areas that do not affect a school’s primary role, that
of educating students. Many schools can unearth savings by taking advantage of
technological advancements, more efficient equipment and supplies, and smarter ways of
managing their resources. Kennedy (2003) discussed 10 ways that universities may cut
costs on management, upgrading, and construction of facilities.
First, institutions may use energy upgrades across university and college
campuses. Kennedy (2003) noted that the U.S. Department of Energy estimated that
schools could save $1.5 billion in energy costs by making better energy choices. Altering
behavior, such as turning off lights in unoccupied areas and shutting down unused
computers, can save money. Installing more energy-efficient equipment can also can cut
energy bills. Replacing an antiquated, inefficient heating, ventilation, and air conditioning
system with a modern system reduces maintenance costs and also lowers long-term
energy costs. According to Kennedy, the typical energy cost for a school is 90 cents per
square foot per year; the potential energy costs for a school designed to be energy
efficient is 45 cents to 68 cents per year. Schools that cannot afford the initial expense of
new equipment often use “performance contracting” to partner with energy service
companies. The company pays the initial cost of installing new equipment or upgrades
and the school pays for the new system with the savings generated from the more
efficient, energy saving equipment.
Second, institutions may use security technology as another source of cost
savings. Continuing technological advancements and lower costs mean that more schools
can afford high-tech solutions to security problems. Surveillance equipment such as
closed circuit cameras, access control systems, metal detectors, and alarms can help many
schools provide safer environments for their students and staff without a strain on their
budgets. Advancements such as digital video recording allow schools to record and
archive their surveillance without the need to label and store video cassettes. These
security products can provide information needed by school officials yet free up
manpower for more appropriate work. This type of technology can save money compared
with the cost of personnel or the cost impact of failed security (Kennedy, 2003).
Third, Kennedy (2003) explained that institutions may use Maintenance
Management Systems (MMS) as a source of budget savings. Many schools are using
technology to help them run and monitor maintenance programs in their facilities more
efficiently. A MMS allows maintenance workers to keep track of ongoing work orders,
job costs, preventive maintenance schedules, and equipment and supply inventories.
Fourth, institutions may utilize energy efficiency systems to provide historical
records of completed work. The most up-to-date MMS packages utilize this system and
have become available through application service providers (ASPs). ASPs use their
computers to maintain computer applications and institutional data; school maintenance
workers connect to the system over the Internet to manage data.
Fifth, Kennedy (2003) stated that higher education institutions may contract with
another organization in the community for use of facilities as an approach to costs
savings. If an institution cannot afford to operate facilities independently, it is possible to
find another institution with which to share the cost. As schools confront the growing
problem of aging facilities and insufficient space, more administrators are embracing
partnerships as a solution to tight capital improvement budgets. Institutions have teamed
with park districts, libraries, and municipalities on construction projects in order to save
funds and maximize use of public facilities. Once completed, the institution shares the
facilities with its community partner.
Sixth, the university may choose to modernize washroom facilities. Upgrading the
equipment and fixtures in school washrooms can lessen the burden on a school budget by
reducing water consumption and discouraging costly vandalism. Waterless urinals, lowflow toilets, automatic flushing devices, and sensor controlled fixtures can help reduce
the cost of water consumption as well as provide a cleaner environment. Low-flow
devices may reduce water consumption by 15-20% and can pay for themselves in saved
energy in four to eight months, according to the U.S. Department of Energy (2001).
However, the water saved from modern equipment could be wasted if an institution’s
plumbing system is plagued by leaks. A maintenance staff that is vigilant about detecting
and repairing leaks can reduce a school’s water waste costs significantly (Kennedy,
Seventh, institutions may update windows in their facilities as a source of savings.
Kennedy (2003) reported that schools that upgrade window systems and have added
windows to their facilities may save money by spending less on lighting, as well as
heating and cooling. Installing more energy efficient windows can reduce energy bills by
keeping outside elements – excessive cold or heat – from entering the building and
causing more strain on heating and cooling systems. Installation of additional windows in
a facility can allow a school to depend more on day lighting and less on artificial lighting
that adds to utility bills. A well designed day-lighted environment should eliminate glare
and prevent overheating. Kennedy noted that the design should allow users to adjust the
artificial lighting as needed through dimmer switches or automatic photocell controls.
Eighth, institutions of higher education can save resources by adequately
assessing their facilities on a regular basis, usually annually. Schools that have accurate
information about the condition and needs of their facilities are in a better position to
spend money on capital improvements more efficiently. Facility assessment firms can
assist institutions in creating an accurate and up-to-date database of an institution’s
infrastructure so administrators can determine more precisely how much needed
improvements will cost (Kennedy, 2003).
Ninth, Kennedy (2003) explained that institutions may utilize outsourcing as a
source of savings. Many institutions can save money by contracting out certain services
and operations to private companies. Kennedy stated that the efficiency of outsourcing
will depend on factors that vary from service to service and from institution to institution.
Some institutions have efficient in-house operations in place and would not benefit from
privatizations. However, many institutions contract with private companies to manage
their food preparation and custodial operations. On some university campuses, private
companies manage bookstores, laundry services, food services, and vending. Kennedy
reported that the top reasons institutions utilize privatized services include cost
containment, time savings, professional management, and better equipment.
Tenth, Kennedy (2003) stated that institutions may use alternative fuels as a cost
savings. He reported that U.S. Department of Energy officials are encouraging
institutions to consider alternative fuels or electricity to fuel campus vehicles that will
reduce cost and pollution. Compressed natural gas (CNG) often is recommended for
institutions because the vehicles are readily available and the fuel is considerably less
expensive than gasoline. Kennedy noted that in the San Marcos, California School
District, CNG-fueled vehicles cost 12 cents a mile to operate compared to 32 cents a mile
for diesel-powered buses and vehicles. Whereas electric-powered school buses are not
practical in most cases, colleges and universities can take advantage of small
maintenance carts and other electric-powered vehicles that are available.
Land-rich colleges and universities are showing interest in developing alternative
energy resources. They are collaborating with companies to establish renewable energy
sources such as wind farms and solar arrays. Possibly the largest such project is Colorado
State University’s planned wind farm on an 11,000 acre university holding. While the
potential exists for the university to provide for its own energy resources, resulting in
considerable savings itself, there is the possibility that the university may be able to
contract with other municipal and corporate entities to provide energy resources for them,
resulting in additional income for Colorado State University (Carlson, 2008).
In addition to Kennedy’s (2003) observations, Agron (2005) also suggested an
eleventh factor, building commissioning. When a newly constructed facility fails to meet
expectations, administrators often are the ones who must address unexpected repair costs.
Building commissioning begins in the pre-design phase and continues through design,
construction, and the warranty period to ensure that building systems perform as
intended. This process ensures the performance of the building’s systems through review,
testing, and documentation. A properly commissioned facility can result in fewer change
orders during the construction process, fewer call backs, better long-term occupant
satisfaction, lower energy bills, and avoided equipment replacement costs.
Contributions from alumni. Just as higher education institutions must investigate
cost saving measures in the construction, management, maintenance, and renovation of
facilities, higher education institutions are relying upon its constituents for additional
funds to help manage and control the escalating cost of higher education, especially for
private, faith-based institutions. A vital part of the private, educational institution’s dayto-day operations is raising money needed to carry out the work of that institution. Olsen,
Smith, and Wunnava (2001) conducted a study at Middlebury College with the
cooperation of the Alumni Records Office to determine the life-cycle giving of alumni at
that institution.
Data on alumni contributions received in the years 1968-1987 from the graduating
classes of 1926-1967 was obtained from Middlebury College, located in Vermont. The
alumni gifts were standardized to 1967 dollars. The data was studied over a period of 31
years so that the data became purely cross-sectional in nature. Reunion models were also
used to capture the effect that reunions have on the level of donations. With the idea in
mind that not every reunion would affect donations equally, the researchers included a
second reunion model to capture the effect of the three largest reunions, the 25th, the 50th,
and the 60th. Eight cross-sectional dummies were used.
Past research has indicated through the life-cycle hypothesis that as age
increases, consumer spending increases, and specifically as it relates to charitable giving
to this small liberal arts college. However, Olsen et al. (2001) found from their research
that this giving trend tends to level off at the age of retirement. Furthermore, the authors
found that the growth rate of donations coincided with the age and income profile but
became stagnant at the age of retirement. Tax treatment of charitable donations tends to
impact the size of donations to charitable organizations. Olsen et al. found that the level
of tax benefit associated with the gift impacted the donation to the institution.
The university graduate, a new alumnus, has barely had time to frame his or her
diploma before the first solicitation arrives from the alumni office of the university. In the
ensuing years after graduation, a substantial percentage of alumni will contribute to their
alma maters. Whereas most alumni realize that there is a need at the institution for alumni
financial support, it is believed that when alumni give they do not do so out of a spirit of
altruism (Harrison, Mitchell, & Peterson, 1995). Some alumni donors may give back to
the university because of what the institution did for them in the past, but others may give
because of what they perceive the college will do for them now or in the future. Donors
seem to want the satisfaction that accompanies recognition from their former school,
from appearing in a list of names in the alumni magazine or the Roll Call of Donors, to
receive free football tickets, or have a scholarship or a building named in their honor.
Giving to higher education involves a mutual satisfaction of needs. Many donors are
motivated to give out of a need for recognition. Some donors seek status. Many schools
are able to foster an emotion generated by good friends, faculty, respect, and institutional
memory. These feelings give rise to the desire to be recognized by the institution and
serve as a motive for making financial gifts to the university.
Furthermore, Harrison et al. (1995) referred to the Exchange Model of alumni
donations. The authors of the study indicated that alumni donate to their colleges out of a
desire for recognition; thereby, the gift is given in exchange for recognition. Recognition
may mean any way in which colleges or universities honor their donors, such as sending
them a bumper sticker, having their names printed in an alumni newsletter, inviting them
to a recognition dinner or reception, giving them tickets to sporting events, or naming a
building or scholarship after them. In addition, the authors found that while alumni are
willing to donate funds well in excess of the monetary value of the recognition they
receive, their utility does grow with the dollar value of their college’s recognition.
Donations by alumni are a significant source of revenue for private colleges and
universities and their importance promises to grow in the future. In 1997-98 alumni
contributed $3.3 billion to 658 private institutions, representing 7.9% of university
educational and general expenditures. In the wake of the bull market in stocks of the
1990s, some university capital campaigns even surpassed their ambitious goals. Income
from donations seems likely to assume an increasingly important role in total revenue.
Some private institutions, hopeful of sustained growth in the stock market, even
moderated their tuition increases only to see their hopes diminished in the stagnant
economy of 2001-2002 (Ortman, 2001).
However, some close observers have cautioned about expecting sustained growth
from alumni donors. One fear is that much of the generosity of the current cohort of
givers will be lost in the next generation. For instance, Gose (2004a) found that the
generation now in its retirement years has volunteered at a pace that is unlikely to be
matched by subsequent generations.
However, fear arises as institutions are increasingly admitting students based
upon their stronger academic credentials and merit, whereby the sons and daughters of
alumni and the socially elite are increasingly overlooked. Since the latter tend to come
from families with more financial resources and hence, have more money to give, the
former tend to come from families that are less wealthy. This new type of student with
high academic credentials may give less as an alumnus than those from previous
generations (Clotfelter, 2006). For instance, Clotfelter deducted that changes in
admissions policies at Princeton in the 1920s that reduced the prevalence of wealthy
students also resulted in a decline of the average gift size from alumni.
Most universities average 20-25% of their alumni giving to an Annual Fund. This
percentage does not include special gifts to a Capital Campaign or other special projects.
However, gifts to the Annual Fund are designated for special funds or scholarships at
times, which may or may not be named after the donor. Senter College in Kentucky is the
obvious exception with 45% of its alumni contributing to the Annual Fund. Giving by
alumni of colleges and universities, especially small, private, liberal arts universities will
always meet a critical need. Therefore, it is important to universities that alumni giving to
higher education increased to $6.6 billion in 2005, an 11.9% increase from the year
before (Strout, 2005a).
Planned giving. Financial planners do not often discuss planned giving with their
clients. Yet, colleges and universities, among other non-profit organizations, rely on the
charitable nature of their alumni and other supporters for their very existence. Woolen
(2005) considered various charitable techniques and the tax ramifications that can be
presented to potential donors of colleges and universities. Additionally, he explained that
both the donor and the university can benefit from planned giving opportunities. Woolen
noted in his study sponsored by the National Committees on Planned Giving that
approximately 89% of households nationwide contribute to at least one charity each year.
Whereas this figure would indicate extraordinary generosity, that generosity is not being
expressed in terms of long-range bequest. Of those who responded to the survey
representing the general United States population, 42% reported that they had a will, but
only 8% had made a charitable bequest. Nonetheless, this number has increased from 6%
in 1992. However, it is still relatively small and counts for very few dollars. Woolen also
reported that total giving nationwide has shown a steady rise from year to year due to
demographic changes. Yet when adjustment is made for inflation, bequest giving has
remained relatively constant since 1987.
Gaudiani (2006), a senior research scholar at Yale Law School, is a leading voice
in the United States on the topic of philanthropy, wisdom, tradition, and civil society.
Gaudiani (2006) stated:
Generosity is more American than pumpkin pie. It defines the American spirit.
Some people think that Americans are generous because we are rich. I argue that
we are rich, at least in part, because we are generous. The American experience
has produced a tradition of philanthropy that is vital, effective, and intimately
linked to our economic success. This tradition has combined with the American
experience to produce a culture of generosity that we cannot afford to lose (p. 62).
In order to offset some of the escalating cost of higher education, university and
advancement officers are working with donors, especially those who have reached or are
approaching retirement age, about the various ways that they might leave a lasting legacy
at their alma mater, or if not an alumnus, at a higher education institution that is making a
difference in the lives of young people as they prepare for a life vocation. Oddly enough,
Americans are giving to charity each year while their children are still in the household.
Institutions of higher education must help charitable donors understand that planned
giving is the same type of charitable donation to the institution through making a bequest
by will, charitable trust, life insurance, or through one of the many other techniques
available. Colleges and universities are showing donors an avenue to demonstrate how
meaningful the institution has been to them during their lifetime (Woolen, 2005).
According to Woolen (2005), this approach with potential donors seems to be
working fairly well. Out of a list of 12 categories which describes those philanthropies to
which donors may give, colleges and universities are first, museums and libraries second,
private foundations fourth, and health charities fifth. Religious groups are last. Woolen
explained why colleges and universities ranked first in charitable bequest. Universities
and colleges, along with other charitable institutions, have a professional development
staff with greater access to prospective donors. Universities know where their alumni are
and have prepared them to expect to be asked for gifts.
Colleges and universities, along with other charitable organizations, are well
equipped to show their donors how a charitable gift will benefit them both short- and
long-term. The term planned giving generally applies to gifts made at the time of death to
any 501(c)(3) organization. Current gifts may also be considered planned giving when
used for gifts to be made at the time of death. Charitable gifts are generally deductible
from federal income and estate taxes at death since that is when the actual gift is made.
Current gifts, however, are income tax deductible in the year the gift is made. This is one
reason that charitable gifts seem to inevitably rise in the month of December, at the end
of the tax year. Gifts made to colleges and universities often, for example, name a
particular department or mission project as the ultimate beneficiary of a planned or
current giving opportunity. If the gift is in cash, the gift is deductible from one’s federal
income tax for the full amount of the contribution up to 50% of the donor’s adjusted
gross income. For gifts of long term capital gain or property that has appreciated (stocks,
bonds, mutual funds, real estate), the donor may deduct the full fair market value of the
gift only up to 30% of the adjusted gross income. A cancelled check may be used as
substantiation for a charitable cash donation of $250.00 or less. The university is required
to provide a written receipt or other acknowledgement for cash gifts in excess of $250.00
(Woolen, 2005).
The pursuit of planned gifts by university and college development offices
requires that someone in that office be well versed in charitable gifts and the various
forms that the gift make take: partial interest charitable gifts, IRA’s, life insurance, and
other gift options. Most universities will have an expert in the advancement office that
only works with planned giving donors simply because it requires much knowledge and
expertise with regard to the various options and the Internal Revenue Service laws that
oversee such gifts (Woolen, 2005).
Student paid tuition. Fiore (1996) noted that for most small, private liberal arts
institutions of higher learning, student paid tuition is the largest source of revenue,
especially if the university is not heavily endowed. One of the biggest problems facing
many parents today is payment of their children’s education as the cost associated with
higher education grows each year. Fiore stated that most of the time these costs grow at a
rate that is three to four times the rate of inflation. The rising costs of a college education
may impose significant burdens on many families. Finding ways to finance these
expenses may require extensive thought and planning.
At a time when parents seem willing to pay the extra cost for their children to
attend exclusive, highly selective, private universities, what is the best way for them to
plan to meet these rising costs? Moreover, as state budgets are cut and tuition at large
state university systems rises, a taxpayer-funded education is not as inexpensive as it
once was.
Zimmerman (2004) suggested several options that may assist families in planning
for future college tuition costs. First, Zimmerman recommended parents purchase
qualified bonds. Qualified bonds include those issued after 1989 at a discount to
taxpayers who are at least 24-years-old before the date of issuance of bonds. A qualified
bond purchaser may designate anyone as the beneficiary. However, the interest exclusion
is not available if the bonds are bought from another taxpayer (other than a spouse) or are
put into the name of a child or other dependent. In addition, the interest is not excludable
if the bonds are purchased with redemption proceeds rolled over from other Series E
bonds. A taxpayer must meet certain income limits to exclude the interest from these
bonds. The exclusion is not available to married taxpayers filing separately. However, if a
family begins buying early, qualified bonds are an excellent way to prepare for a child’s
higher education expenses (Zimmerman, 2004).
Second, prepaid tuition programs are a vehicle for funding education costs, better
known as the tuition guarantee program. Typically these programs involve the purchase
of a prepayment contract or annuity from a state or educational institution. When a
designated beneficiary enrolls in the college or university, the contract can be redeemed
to pay all or a portion of the college costs. The cost of the arrangement varies with the
age of the beneficiary; generally the younger the child, the smaller the payment. Under
most plans cash refunds are provided under specified circumstances, such as if the
beneficiary becomes deceased or does not attend college (Zimmerman, 2004).
In the above mentioned scenario, neither the parent (the contributor) nor the child
(the beneficiary) is currently taxed on a program’s investment earnings. The contributor
is taxed only if funds are refunded to him or her and then only to the extent the refunded
amount exceeds contributions. The beneficiary is taxed on the program’s earnings when
they are distributed or when education benefits are provided (Zimmerman, 2004).
Regardless of the source of revenue, parents must determine how they will meet
the escalating costs of higher education. The above mentioned options are among the
ways that this need can be met. However, Zimmerman (2004) noted that as students and
parents face the dilemma of increasing costs, some are finding that graduation with
enormous debt is the result of a lack of sound planning for higher education expenses.
Endowment. An endowment serves two main purposes. First, it provides a
consistent source of income that lessens a college or university’s dependence on outside
donors for annual support. Second, an endowment also serves as a bulwark against rough
financial times. Hartsook (2004) described an endowment as a life insurance policy on
the existence of an organization. Unlike an individual’s life insurance policy, an
endowment does not end. Rather, the endowment is invested and yields benefits to the
university or college for many years to come. The gift prevents the organization from
dying. Moreover, colleges with large endowments are not subject to the fluctuations of
the economy and the marketplace. Endowments allow an institution to maintain programs
and services of the university. Certain kinds of university programs, especially in the arts
and classical languages, may not be particularly interesting to some generations, but
deserve to be preserved if a renaissance of that program occurs. On the negative side,
Gose (2004b) argued that cash cushions found in large endowments might lead a college
or university to maintain business as usual even if its service no longer provides much
However, while the 1990’s served as a prosperous time for fundraising and
endowment growth for colleges and universities, the same cannot be said of the last five
years, 2003-2008 (Kennedy, 2009). Ivy League schools that normally have very large
endowments running into the billions have seen those endowments lose substantially.
This loss is causing a dramatic slowdown in the development of ambitious expansion
plans. According to Blumenstyk (2009), college endowments earned an average return of
minus 3% for the 2008 fiscal year and an estimate minus 22.5% in the five months after
that. The declines are already having an impact. More than a quarter of all institutions
said they planned to draw less money from their endowments during 2010 than they had
expected to spend.
Blumenstyk (2009) invited 796 institutions in the United States and Canada to
respond to a survey after the abrupt downturn in the markets during the summer of 2008.
A total of 435 institutions responded to the survey. Blumenstyk found that endowments
had fallen in overall value by an estimated average of 22.9%. At least five universities
ranking in the list of the largest 10 endowments did not respond. However, endowment
losses translated to an estimated decline of $94.5 billion in market value for institutions
who responded to the survey.
These findings reflect the two-pronged problem that colleges face. Negative
returns are diminishing endowment values and philanthropy has not been adequate to
make up the losses and endowment spending. Large private colleges depend upon their
endowment income to cover 15-20% of their operating costs and, for some of the
wealthiest institutions, endowment provides as much as 45% (Blumenstyk, 2009).
An example of the problem is found at Yale University. Yale President Richard
Levin announced in February, 2009 that construction projects already under way on the
New Haven, Connecticut campus would be completed, but that construction on all other
approved projects would be postponed until conditions in credit markets improve or until
gift funding is received. Levin further announced that capital expenditures of up to $2
billion will be deferred over the next five years (Kennedy, 2009).
Further, administrators at Harvard University in Cambridge, Massachusetts
decided to slow down plans to expand their campus facilities across the Charles River
into the Allston neighborhood of Boston. According to Drew Faust, Harvard President,
the unprecedented drop in endowment and pressure on every other source of income
forced a careful review of all capital planning. Harvard expected its endowment, which
has been valued at $30 billion, to lose 30% by the end of the 2008-2009 fiscal year.
Whereas the work of the Allston complex is vital to the long-term future of Harvard, the
work must continue at a much slower pace until the economy and fundraising improve
Kennedy, 2009).
Hartsook (2004) explained that some of the most successful approaches to
fundraising for endowments demonstrate a need to communicate how the endowment
fund and its earnings will have an impact on people. Simply having a large bank account
is not a persuasive motivation for giving money. However, giving an endowed
scholarship so that a university student can get an education and contribute to society is a
very attractive motivation.
However, it is a challenge to raise endowment funds for operating costs or
maintenance of a building; therefore, fundraisers must demonstrate how and why their
endowment will make a difference. Furthermore, donors are attracted to success. Older,
established institutions with a history of success with the programs they offer are ideal for
endowment investments. New organizations have a difficult time illustrating their need
for perpetuity since they have not necessarily demonstrated their success or guaranteed
longevity (Hartsook, 2004).
Traditionally, individual donors are the best prospects for endowment giving.
Corporations do not want to give away their capital for endowment purposes.
Foundations themselves are effective endowments so it seems redundant for them to give
earnings to endowments only to have the money reinvested (Hansman, 2004).
Usually those individuals who give endowment dollars understand how and why these
funds can assure the long-term future and health of the institution.
Furthermore, Hansman (2004) argued that an institution may reach a point when
the endowment grows so large that donors do not wish to give any longer. If the
endowment is not being accessed to benefit students, faculty research, and the mission of
the university, potential donors may become discouraged. Organizations are not always
clear about the use of proceeds from their endowments. They must be effective in
reporting that a given endowment has been used for special purposes to meet a specific
need. Institutions should not simply report that they used interest from the endowment to
“balance the budget.”
Likewise, Hansman (2004) warned against severely limiting the spending policy
of the endowment so that it restricts the institution’s use of the money. Hansman argued
the need to be concerned about the perpetual use of the funds, but university endowment
managers should know the purpose of the endowment was not to have money stored
away so effectively that the institution never really uses it.
Raising money for endowment is very difficult. A disappointing lesson to learn
for fundraisers is that raising money for endowment is often discouraging in an age when
donors are presented giving opportunities that offer immediate personal gratification.
While raising money for “bricks and mortar” is also challenging, it does offer naming
opportunities and recognition for donors that can be seen on a daily basis while
endowments, though helping to ensure the future, are hidden away (Gose, 2004a).
However, interest generated by endowments, regardless of size, provides a cushion and
helps to alleviate the pressures caused by the escalating costs of higher education.
Maintenance of the advancement staff. At first glance, perhaps one might wonder
how the effective maintenance of the advancement staff can be a source of revenue.
However, retention of staff is important in the field of advancement so that long-term
relationships with donors are managed carefully in order to generate confidence in the
institution and the management of funds that are given on a regular basis or for a onetime project (Strout, 2005b).
Strout (2005b) explained that fundraising professionals may be referred to as
fundraisers, development officers, or advancement professionals. Many colleges and
universities will immediately employ proficient fund-raising professionals and keep these
fundraisers forever. Strout noted the critical importance of maintaining a staff of
professionals who know how to secure important private support from alumni and friends
of the university, corporations, foundations, and other major donors. There simply are not
enough advancement professionals in the field that can secure these funds. Moreover,
higher education is desperate for additional funding.
Capital campaigns of hundreds of millions, even billions of dollars are not
uncommon. Meanwhile, taxpayer support for public colleges is diminishing. The
competition for philanthropic dollars is intense and at an all time high. John Lippincott
(2004), president of the Council for the Advancement and Support of Education (CASE)
surveyed 50 chief advancement officers (CAOs) about their major fundraising
challenges. The administrators surveyed were from four-year publicly-funded institutions
with enrollments above 10,000 students. The CAOs answered 25 open-ended questions
with regards to their activities in the advancement office. Qualitative analysis of the
survey revealed that the most significant challenge facing these senior advancement
officers was the recruitment and retention of fundraising staff.
The fundraising profession is relatively young. While most other administrative
positions in higher education have a professional development system from which to
draw its talent, development staff members come from varied backgrounds such as
corporate sales, marketing, and the legal profession, and are not necessarily groomed for
the job in the manner that other administrators are. For example, department chairs are
often deans in training and provosts are often college presidents in training (Strout,
Strout (2005b) further stated that fundraising is not a career to which most people
aspire. When fundraisers are asked how they came into their jobs, no two stories are the
same. However, after someone starts showing promise as a fundraiser, he or she may not
remain at the same organization long. Lipppincott (2004) found that 65.5% of CAOs
have been at their institution for five years or less. Another study by the Association of
Fundraising Professionals, as cited by Lippincott (2004), found that 18% of 919
respondents from all sectors of fundraising (not just university fundraising) had been in
their job for one year or less. Experts such as Lippincott assert that college fundraising
professionals are leaving their jobs for better positions at other colleges. Most of the time
these professionals do not leave for a higher salary; rather, they do not feel that they have
sufficient staff, feel unappreciated, and think that there are no career advancement
opportunities where they are (Strout, 2005b).
Lippincott (2004) indicated that while giving to colleges and universities was flat
in the 2003 fiscal year, there is evidence that institutions are experiencing an increase in
private donations. For instance, the Center on Philanthropy at Indiana University reported
a 34% increase in donations of at least $1 million to charities from individuals in the third
quarter of 2004 compared with the same period in 2003. Higher education accounted for
53 of those gifts in that quarter.
Of course, the primary predictor of giving in the next few years is the state of the
American and global economy. Assuming the economy continues to grow, and the stock
market remains stable, private donations to higher education should continue to grow.
However, university fundraisers report that competition for philanthropic dollars is fierce.
Many charitable organizations have professional fundraisers now and more international
universities are soliciting donations in the United States. There is an effort to shift
funding to more private giving because we are in an era when funding at the state and
federal levels is being cut. This reduced state and federal funding of public institutions
causes an increase in the number of colleges, universities, and other charitable agencies
seeking donations. Therefore, stability and longevity among fundraising professionals is
definitely an asset to any college or university (Strout, 2005a).
As higher education costs continue to escalate and universities become more
crowded, more and more students are being turned away because there is no room for
them; because their entrance exams do not meet selective university standards; or because
the rising cost of tuition, room, board, fees, textbooks, and other expenses are simply
more than some families can manage. State budget cuts to large state university systems
have caused these institutions to raise tuition, making access more difficult for those who
can afford these rising costs the least.
Contributing to rising costs is the ever-increasing need to update technology and
expand existing technology. Communities and corporations are requesting that new
programs be initiated to meet their expanding needs. Existing programs must be
expanded to satisfy accreditation agencies and market demand. Construction of new
facilities and the renovation of existing facilities is a must to attract high quality faculty
members along with the best and brightest students. Student life initiatives are becoming
extravagant and more expensive to attract those who expect the finest amenities. As
universities and colleges compete for students, scholarships have become an increasing
component of the budget. The cost of higher education continues to grow. While baby
boomers who attended college in the 1960s and 1970s send their offspring to school, they
experience the reality of higher education cost and many have not planned well for the
While parents and students are making the necessary adjustments to fund higher
education, colleges and universities have options which will help curtail spending and
diminish the rate of escalation for rising college expenses. Universities have the option of
cutting costs by managing their resources for facilities more efficiently. Further savings
at higher education institutions may be realized by conducting energy upgrades,
increasing security technology, employing maintenance management systems, engaging
in community facilities partnerships, modernizing washrooms, installing energy efficient
windows, and increasing the use of day-lighting. Universities should also do a better job
at facilities assessment so that infrastructures may be managed more effectively. Some
institutions are outsourcing and contracting for services and operations that have led to
cost savings. The use of alternative fuels is also a consideration along with a relatively
new concept, building commissioning.
Likewise, universities are investigating new sources of revenue. Charitable
contributions from alumni, friends, and other constituents are a key source of revenue for
universities in the sustainment of their budgets. However, an altruistic spirit does not
appear to motivate alumni and other donors to give to the needs of the college or
university. Rather, most donors give in order to receive some type of recognition: a return
gift in the mail, as simple as a bumper sticker or a key chain; their name listed alongside
other donors in the Roll Call of Donors in the university magazine or alumni newsletter;
or their name on a building or scholarship which they have funded. In addition, tax
credits are a motivation for gifts to the university or other charitable organization. Most
colleges and universities receive gifts from approximately 20% to 25% of their alumni
(Hansman, 2004).
Planned giving resources can be significant sources of revenue for higher
education institutions. Both the university and the donor can benefit extensively from
planned giving initiatives. Estimates show that 89% of families in the United States give
annually to some type of charity. Whereas this percentage is indicative of extraordinary
generosity, giving is not being expressed in long-range bequest and accounts for a
relatively small amount of dollars (Woolen, 2005).
Unfortunately, universities that are dependent on student paid tuition with very
little income from endowments or other sources have no other option than to raise tuition.
State universities struggling from cuts in state funding are being forced to raise tuition by
double-digit figures. Parents who are faced with escalating higher education costs can
prepare by engaging prepaid tuition programs offered by colleges and universities, by
purchasing tax free bonds over time, or beginning early to save for college. Otherwise,
students will have huge amounts of debt after graduation. If this is the only option, some
students are opting out of higher education altogether (Zimmerman, 2004).
While the raising of endowment funds is crucial to universities, donors must be
extraordinarily persuaded to give to endowments. Endowments increase the security of a
university to deal with hard times and difficult economies, but endowment donors
sometimes diminish their gifts to the Annual Fund, therefore, putting a hardship on
university operational and capital funding.
Maintenance of a full staff of advancement professionals is crucial to the task of
fundraising, which helps colleges and universities meet the ever-increasing demands for
increased funds to meet escalating costs of operating and maintaining higher education
institutions. However, most advancement professionals are staying in their jobs an
average of five years and moving on to other places of employment, not necessarily for
increased compensation, but for better advancement opportunities and working
By encouraging retention of advancement staff, universities are better able to
develop long-term relationships with donors that lead to stronger alumni giving and
contributions to capital fund campaigns, endowments, and planned giving opportunities.
All types of giving are necessary in order to constantly meet the challenges of escalating
higher education costs.
Universities must make extra effort to communicate the mission, vision, and
values of the university. It is imperative that those who support the university budget,
whether alumni, friends, corporations, foundations, or even students who pay tuition and
accompanying expenses, understand these foundational constructs. As communication
and interaction between universities and their constituencies increase and understanding
is mutual, escalating higher education costs will be confronted constructively.
The literature adequately explores the escalating costs of higher education in
publicly-funded institutions. Various causes for escalating costs are examined while
suggesting ways that costs may be eliminated or diminished. Researchers reviewed in the
literature agreed on the issues that point to the sources of increased costs as well as
factors for economizing.
However, the research is limited to the study of large, land-grant, publicly-funded,
research institutions. Private institutions, especially faith-based institutions, have not been
included in the aforementioned research and the research is insufficient.
Public institutions face serious issues with regards to diminished state and federal
funding. However, private, faith-based institutions face rapidly rising costs without
public funding. These institutions must raise more money from private sources or raise
tuition for students and their families.
This study provides helpful information that may assist private, faith-based
institutions in exploring cost saving measures in their institutions in addition to locating
new sources of revenue. Together, implemented costs saving measures and new sources
of revenue will help to diminish the rate of increase for higher education’s increasing
Purpose of the Study
The purpose of this study was three-fold. First, key factors in the escalating costs
of higher education at private, faith-based institutions as perceived by Chief Financial
Officers (CFOs) and Chief Advancement Officers (CAOs) at those institutions were
examined. Second, potential sources of income and cost savings at private, faith-based
institutions as perceived by CFOs and CAOs at those institutions were investigated.
Third, similarities and differences in the perceptions of CFOs and CAOs at private, faithbased institutions regarding escalating costs, potential sources of income, and cost
savings were examined. Key factors contributing to escalating costs, potential sources of
income, and potential strategies for cost savings identified by public education
institutions of higher education in the literature were utilized as a baseline for
examination at faith-based institutions.
In the context of analyzing and comparing rising costs, the researcher explored
and researched populations that have historically not been studied. The vast majority of
literature that examines the escalating costs of higher education relates to public, landgrant, research-based institutions that are funded by taxpayer initiatives. Most faithbased, private institutions do not have the benefit of receiving federal or state funding.
There is an identifiable gap in the existing literature that examines the escalating costs of
higher education in private, faith-based institutions. This study adds to the literature and
provides insightful information that may assist private, faith-based institutions as they
attempt to manage their rising costs.
Population Description
One-hundred-five faith-based institutions are affiliated with the Council for
Christian Colleges and Universities, hereafter referred to as the CCCU. The CCCU is an
international higher education association of intentionally Christian colleges and
universities. Founded in 1976 with 38 members, it has grown to 105 member institutions
in North America with 74 other institutions affiliated from 23 countries. A variety of
denominations are represented throughout the CCCU with sizes of the institutions
ranging from approximately 6500 students at Indiana Wesleyan University to Redeemer
College with almost 500 students. Total enrollment at all CCCU schools is approximately
175,000 students. The CCCU is headquartered in Washington, DC in the Capitol Hill
district with the stated mission of advancing the cause of Christ-centered higher
education and helping member institutions transform lives by faithfully relating
scholarship and service to Biblical truth (CCCU, 2009).
Of the 4,000 degree-granting higher education institutions in the United States,
approximately 900 are self-designated as “religiously affiliated.” Only 105 intentionally
Christ-centered institutions in the United States have qualified for membership in the
CCCU. CCCU members must meet the following requirements:
1. Strong commitment to Christ-centered higher education
2. Located in the U.S. or Canada
3. Full regional accreditation for U.S. campuses
4. Primarily four-year comprehensive colleges and universities
5. Broad curricula rooted in the arts and sciences
6. Christians hired for all full-time faculty and administrative positions
7. Sound financial status
Research Questions
1. What variables identified by public colleges and universities that contribute to
the increasing costs of higher education are also identified by CFOs and
CAOs at CCCU institutions?
2. Among variables affecting the increasing costs of faith-based higher
education identified by CFOs and CAOs at CCCU institutions, how do they
3. What are the factors that CFOs and CAOs perceive to contribute to the
escalating costs of higher education in faith-based institutions that are beyond
costs related to inflation?
4. What solutions do CFOs and CAOs at CCCU institutions identify as available
to faith-based higher education institutions that can facilitate more efficient
operation that result in savings to students?
5. What solutions do CFOs and CAOs at CCCU institutions identify as available
to faith-based higher education institutions that can facilitate an increase in
revenue streams that result in savings to students?
6. What solutions do CFOs and CAOs at CCCU institutions identify as available
to faith-based higher education institutions that can assist in diminishing the
rate of costs escalation?
7. Is there a difference in perceptions of CFOs and CAOs concerning the factors
that contribute to the increasing costs of higher education at faith-based
Before the study began, approval from the Union University Institutional Review
Board was secured. The population of CFOs and CAOs of CCCU schools was invited to
participate. Participants were provided the opportunity to complete the survey online but
were also mailed a copy of the survey by United States Postal Service with a return selfaddressed, stamped envelope for convenience. The participants were asked to respond
within a two week time period after which an e-mail reminder was sent to each CFO and
CAO. Second and third email reminders were sent to each CFO and CAO after the
original invitation to participate. Due to low response rate, each university was contacted
by telephone for the purpose of extending a personal invitation for participation and to
collect information concerning employment of CFOs and CAOs at member institutions. It
was found that 21 positions were either vacant or in an interim capacity.
Measures were taken to insure the validity of the survey instrument. First, the
survey was piloted with a small group of higher education CFOs and CAOs. Second, the
survey instrument was reviewed by an advisory team of scholars to check for needed
modifications to ensure that the survey was clear, reliable, and valid. The researcher
examined, from the research literature, the factors that were shown to affect the cost of
publicly-funded higher education institutions. Rather than comparing the schools to each
other, the researcher compared the responses of CFOs to the responses of the CAOs to
identify potential trends that affect escalating higher education costs at faith-based
institutions. Because of the high visibility of these executive level positions, anonymity
was maximized. While no institutional names or locations were identified in the study,
demographic analysis indicated the size of the institution, the location of the institution
by region (northeast, mid-west, west, southeast, south-west), and university setting
(urban, suburban, or rural) for the sake of comparison.
The researcher utilized a mixed method approach; both open-ended questions and
cross-sectional survey design was utilized. The statistical path identified differences in
variables and solutions identified by CFOs and CAOs were evident.
The dependent variables in this study were the escalating costs of higher
education in faith-based institutions and potential sources of new revenue. Independent
variables related to the escalating costs of higher education considered in this study
include the following:
Attracting high quality faculty
Increased competition for the best and brightest students
Technology upgrades and purchases of new equipment
Construction of new facilities
Maintenance and renovation of aging facilities
New programs
Expansion of existing programs
Improved student services
Title IX compliance
10. Other Factors
Independent variables related to potential sources of new revenue and budget savings
1. Better management of energy resources, including energy saving renovations
2. Sharing of community resources
3. Outsourcing of core curriculum
4. Increased contributions from alumni and friends of the university
5. Increased planned giving from university donors
6. Student paid tuition
7. Long term retention of advancement staff for maximum productivity in fund
Analysis of Data
Question 1. A frequency analysis was run utilizing the identified factors that
contribute to the increasing costs of higher education in CCCU member institutions.
In order to answer Question 1, the researcher identified those variables that contributed to
escalating costs in faith-based institutions affiliated with the CCCU. These variables were
compared to those variables identified in the literature review that affect escalating costs
in public colleges and universities.
Question 2. Frequency analysis was used to interpret Question 2. Variables were
identified that increase higher education costs more heavily than others.
Question 3. A qualitative analysis was undertaken to determine which variables, if
any, contributed to higher education’s escalating costs in faith-based institutions which
are beyond the rate of inflation. A qualitative analysis was appropriate for this question
because there is no body of research available upon which to construct a quantitative
response choice. The participants responded to an open-ended question. Responses were
coded for themes.
Question 4. Descriptive statistics and qualitative analysis was used to answer
Question 4. The researcher was able to identify the solutions that are available to faithbased colleges and universities that can help them to operate more efficiently and thus
diminish the rate of increase in higher education costs.
Question 5. Descriptive statistics and qualitative analysis were used to answer
Question 5. Solutions were identified that are available to faith-based colleges and
universities that can help them to secure additional funds and result in a savings to
Question 6. Descriptive statistics and qualitative analysis were used to answer
Question 6. Solutions were identified that will help CCCU colleges and universities
diminish the rate of increases in higher education costs.
Question 7. In order to answer Question 7 the Mann-Whitney non-parametric test
was utilized. Perceptions of CAOs and CFOs at CCCU member institutions were
examined to determine if those who allocate dollars and those who raise dollars have
similar views on escalating higher education costs.
Although this study utilized the population of CFOs and CAOs from CCCU
institutions in the United States, the response rate was low (25.8%); therefore, results
should be interpreted with caution. Furthermore, as with all survey research, the integrity
of the research depends upon the honesty of the respondents.
First, demographic data is presented that describes the population of Chief
Financial Officers (CFOs) and Chief Advancement Officers (CAOs) at CCCU
institutions who participated in the study. Second, the data are presented which address
the seven research questions specified in this dissertation:
1. What variables identified by public colleges and universities that contribute to
the increasing costs of higher education are also identified by CFOs and
CAOs at CCCU institutions?
2. Among variables affecting the increasing costs of faith-based higher
education identified by CFOs and CAOs at CCCU institutions, how do they
3. What are the factors that CFOs and CAOs perceive to contribute to the
escalating costs of higher education in faith-based institutions that are beyond
costs related to inflation?
4. What solutions do CFOs and CAOs at CCCU institutions identify as available
to faith-based higher education institutions that can facilitate more efficient
operation that result in savings to students?
5. What solutions do CFOs and CAOs at CCCU institutions identify as available
to faith-based higher education institutions that can facilitate an increase in
revenue streams that result in savings to students?
6. What solutions do CFOs and CAOs at CCCU institutions identify as available
to faith-based higher education institutions that can assist in diminishing the
rate of costs escalation?
7. Is there a difference in perceptions of CFOs and CAOs concerning the factors
that contribute to the increasing costs of higher education at faith-based
Participant Demographics
There are 105 colleges and universities who hold membership in the Council for
Christian Colleges and Universities (CCCU) in the United States and Canada. While
there are other colleges and universities outside of North American associated with the
CCCU, they are considered to have affiliate membership (CCCU, 2009).
The population of CFOs and CAOs at the 105 CCCU institutions was given the
opportunity to participate in the online research survey concerning factors that contribute
to the rising costs of tuition at their institution. Forty-nine persons out of the possible 210
responded to the survey of which 29 were CFOs and 20 were CAOs, reflecting a response
rate of 23%. It is noted that 21 positions were either vacant or had interim officers at the
time of the survey, thus allowing for a population pool of 189 possible participants.
Therefore, the actual response rate of the survey was 26%, still a low response.
To attempt to increase survey participation, the researcher sent a third round of email requests for participation to those who had not responded. Further, phone calls were
made to those offices of CFOs and CAOs to solicit their participation. Out of the 49
persons who participated in the survey, 29 (59.2%) were identified CFOs while 20
(40.8%) were CAOs at CCCU institutions.
Table 1 indicates the participants’ approximate time served in their current
position at the time of their participation in the study. Over half of CFOs (75.8%) and
CAOs (63.2%) had served at their institutions for 10 years or less. Only 10.5% of CAOs
had served in their positions 16 years or more. A slightly larger percentage (13.8%) of
CFOs has served 16 years or more. One CAO failed to respond to this question, yielding
an n of 19.
Furthermore, results indicated that most (81%) CFOs and CAOs were serving in
institutions with ≤ 3000 students. Eighteen percent of participants are working in
institutions with student populations of less than 1000 whereas 4% are in institutions with
populations greater than 5000. In regards to institutional setting, participants were
distributed equally throughout city size. For instance, 35% were working in institutions
located in a large city (population of 250,000 or more), 20% were working in institutions
located in a small city (population of 50,000 to 249,999), and 45% were working in
institutions located in a small town (population of 49,000 or less).
Table 1
Time Spent in Current Position
Chief Advancement Officers (n = 19)
0-4 years
5-10 years
11-15 years
Greater than 16
Chief Financial Officers (n = 29)
0-4 years
5-10 years
11-15 years
Greater than 16
Statistical Results
The Statistical Package for the Social Sciences (SPSS), Version 15.0 was used to
analyze the data in order to answer the seven research questions. The subsections that
follow provide an explanation of the analyses performed in order to answer each
Questions 1 and 2. What variables identified by public colleges and universities
that contribute to the increasing costs of higher education are also identified by CFOs and
CAOs at CCCU institutions? Among variables affecting the increasing costs of faithbased higher education identified by CFOs and CAOs at CCCU institutions, how do they
The population included CFOs and CAOs at the 105 institutions who are affiliated
with the Council on Christian Colleges and Universities (CCCU). Forty-nine persons
responded to the survey through the use of an online instrument administered through
Survey Monkey. The responses were filtered to provide in-depth examination of the two
groups and their responses.
Those factors affecting rising costs in public institutions were listed in the survey.
CFOs and CAOs at CCCU institutions were asked to rate these variables and their affect
on escalating costs at their institutions. Furthermore, respondents had the opportunity to
provide additional variables not listed that they believed contributed to the escalating
costs of higher education at faith-based institutions. CFOs and CAOs were asked to rank
the listed factors in the survey according to impact on cost escalation.
Descriptive statistics and rank order analysis were used to answer the research
question. Factors that affect the escalating costs of faith-based higher education as
perceived by CFOs and CAOs are delineated in Table 2. Five participants failed to
respond to this question. Continuous updating and acquisition of information technology
was noted by both CFOs and CAOs as the most significant factor affecting institutional
costs. This factor was followed by the costs of attracting high quality faculty,
construction of new facilities, and renovation and maintenance of existing facilities. Title
IX compliance was noted as the least significant factor by both CFOs and CAOs.
Ranking of factors were similar by CFOs and CAOs.
Table 2
Factors that Contribute to Increasing Costs Determined by CFOs and CAOs
Updating/Acquisition of IT
Attracting high quality faculty
Construction of new facilities
New academic programs
Student services
Expansion of existing programs
Title IX compliance
Note. N = 44
As stated, CFOs and CAOs had the opportunity in the survey to list factors that
contributed to escalating costs not listed on the survey. Therefore, these findings reflect
factors different from those noted at public institutions. Thirty-seven of the 49
participants responded to this question. Table 3 lists these factors and the number of
CFOs and CAOs who noted each factor. Respondents indicated that institutional benefits
such as health insurance were very influential in the escalating costs at their institutions,
closely followed by the provision of services and amenities to university students. Other
factors listed included institutional provision of scholarships and tuition discounts,
marketing and promotion of the university to attract students and institutional support,
and reduced income from endowments.
Table 3
Factors Affecting the Costs of Higher Education Determined by CFOs and CAOs Not
Listed by Public Institutions.
Upscale Student Services Amenities
Student Scholarships
Institutional Employee Benefits
Health and Dental Insurance
Employee Tuition Discounts
Note: N = 49
Research Question 3. What are the factors that contribute to the escalating costs
of higher education in CCCU institutions that are beyond costs related to inflation?
CFOs and CAOs were asked to list those factors which they believed contributed
to the escalating costs of higher education in their CCCU institutions beyond costs related
to inflation. Qualitative analysis was utilized to identify themes and categories for both
respondent groups. CFOs listed the cost of benefits for all employees, especially health
insurance, to be particularly significant. CAOs listed the construction of new facilities as
a primary factor related to escalating costs beyond inflation. Tables 4 and 5 describe the
categories that emerged.
Table 4
Factors Affecting Escalating Costs Beyond Inflation: CFOs
Benefits for employees
Health insurance, tuition discounts for
employees and their dependents, and
retirement account funding
Unfunded student financial aid
Providing financial aid beyond that
provided by endowment income
Expansion of staff
Expansion or reallocation of staff to meet
needs of new or expanded programs
Technology and library resources
Expanded use of online research
capabilities, wireless computer access, and
“smart” classrooms
Student services
Quality health and counseling services
Note. N = 29
Table 5
Factors Affecting Increasing Costs Beyond Inflation: CAOs
Construction of new facilities
Competitive physical plants crucial to
recruiting new faculty and attracting the
best students
Marketing of the university in order to
maximize fundraising efforts is crucial and
expensive. Competition for high quality
students influence marketing trends.
Fundraising efforts require accessing
donors. Energy and travel costs are
Note. N = 20
Research Question 4. What solutions do CFOs and CAOs at CCCU institutions
identify as available to faith-based higher education institutions that can facilitate more
efficient operations that result in savings to students?
Overall, both CFOs and CAOs viewed cost savings solutions from very similar
perspectives. Both administrators listed and ranked similarly those factors that affect
operating efficiency at their institutions. Responses to open-ended questions were coded
to establish categories and themes. Five participants failed to respond to this question.
Findings from the literature review indicated that the most significant source of
revenue for both public and private institutions is student paid tuition. Therefore, CFOs
and CAOs were asked to consider factors that could increase revenue that would result in
costs savings to students rather than cost increases to students through increased tuition.
However, revenue from student paid tuition was noted by both CFOs and CAOs as the
most significant source of revenue for CCCU institutions participating in this survey.
Following student paid tuition, effective and efficient facilities management ranked high
as a significant cost saving measure (61% of CFOs and 55% of CAOs responded that that
this factor is a major source of savings), followed by regularly scheduled maintenance of
facilities. The use of alternative fuels and “Life Cycle Costing” were listed as factors not
in use at over 88% of the respondent’s institutions and was the least significant factor that
contributed to cost savings and institutional operating efficiency. Table 6 indicates the
solutions that were listed on the survey and the descriptive statistics of the ratings by the
Table 6
Factors That Affect Cost Savings and Operating Efficiency: CFOs and CAOs
Tuition Revenue
Capital Campaigns
Effective Facilities Management
Regularly Scheduled Maintenance
Alumni Giving
Planned Giving
Energy Efficient Lighting
Life Cycle Costing
Water Saving Devices
Use of Alternative Fuels
Note. N = 44
Respondents had the opportunity to respond to an open-ended question asking for
solutions available to faith-based institutions that were not listed on the survey. Both
respondent groups agreed that increasing student/faculty ratio would improve costs
escalation. CFOs noted that better and more efficient athletic team travel could result in a
significant cost savings. Both CFOs and CAOs indicated that more efficient heating and
cooling systems at their institutions would contribute to saving financial resources.
Improved managerial practices such as updating technology to lower the number
of support staff, more efficient financial tracking systems, better training of employees,
and reduction of employee benefits were cited as potentially significant sources of costs
reduction. However, both CFOs and CAOs responded that student paid tuition followed
by funds raised from capital campaigns provided the vast majority of funding for
university operations and for campus construction projects. Table 7 delineates the factors
noted by the CFOs and CAOs that affect cost savings and operating efficiency at faithbased institutions and the number in each group that indicated that factor.
Table 7
Factors That Affect Cost Savings and Operating Efficiency Determined by CFOs and
CAOs Not Listed by Public Institutions
Increased Student/Faculty Ratio
Efficient Healing and Cooling
Improved Financial Tracking
Employee Training
Benefit Reduction
Improved Managerial Practices
Efficient Athletic Team Travel
Note: N = 49
Research Question 5. What solutions do CFOs and CAOs at CCCU institutions
identify as available to faith-based higher education institutions that can facilitate an
increase in revenue streams that result in savings to students?
Table 8 lists those factors rated by CFOs and CAOs that can assist in increasing
revenue streams resulting in savings to students. Operating efficiency ranked high among
responding CFOs and CAOs as a source of institutional savings, thus making more funds
available for other needs at the institution. Noted as well is the importance of alumni
contributions to the institution, either in the form of undesignated gifts to the Annual
Fund, or as designated gifts to a particular department, school, or discipline. Alumni gifts
are often designated for student scholarships as well. Alumni participation to the annual
fund is particularly significant. National rankings in some of the most prestigious annual
reports such as U.S. News and World Reports College Rankings will list among other
criteria the percentage of alumni giving to the institution. Obviously, a high percentage of
alumni giving to the annual fund assist the institution in achieving a higher ranking by
such organizations while contributing to revenue streams of the institution.
Capital campaigns are most often used to increase endowment or construct new
buildings or facilities. Donors and stakeholders for the university will often give to a
capital campaign for personal recognition or simply out of a sense of loyalty to the
institution. Gifts to a capital campaign may be designated or undesignated. It is most
desirable for the institution to receive undesignated gifts so that donor dollars may be
used where they are most needed.
Endowment funds are the most difficult monies to raise. Income generated from
invested endowment funds can be used to support a variety of programs and needs.
However, in time of hardship or economic recession income from endowments will be
diminished. In turn, institutions that depend heavily on endowment income for operations
have difficulty developing a budget, and many times faculty and staff must be cut due to
the shortfall.
Table 8
Factors Contributing to Increased Revenue Streams Resulting in Savings to Students
Operating efficiency
Capital campaigns
Alumni giving
Effect of tenured development staff
Note. N = 44
Research Question 6. What solutions do CFOs and CAOs at CCCU institutions
identify as available to faith-based higher education institutions that can assist in
diminishing the rate of costs escalation?
Descriptive statistics were utilized to analyze responses to listed items on the
survey and qualitative analysis was utilized check for themes on the open-ended item.
Overall, both CFOs and CAOs believed that better facilities management along with
scheduled maintenance procedures would result in a diminished rate of costs escalation.
CFOs and CAOs listed several solutions that they have used at faith-based institutions
that were not found in the literature related to public institutions. Among the themes
found from their responses were better control of utilities usage, energy conversation
practices, and a heightened awareness of personal responsibility for institutional savings
among faculty and staff. Surveyed administrators responded that regularly scheduled
maintenance procedures would result in long-term savings and deter the need for major
repairs and renovations in the future.
Research Question 7. Is there a difference in perceptions of CFOs and CAOs
concerning the factors that contribute to the increasing costs of higher education at faithbased institutions?
The Chi-Square test was performed to determine any significant differences in the
perceptions of CFOs and CAOs relating to the factors which affect increasing costs of
higher education at CCCU institutions. The evaluation was made based upon the 49
responses of CFOs and CAOs at CCCU institutions. The Chi-Square statistical analysis
resulted in a significance value of .067. There was no significant difference in the
responses of CFOs and CAOs concerning factors related to the increasing costs of higher
education at CCCU institutions.
However, other findings were noted related to differences in response pattern
between the groups. Whereas there was a larger standard deviation among CFOs related
to the affect of renovation and maintenance factors on costs escalation, CAOs
overwhelming responded that renovation and maintenance issues were very influential in
contributing to costs escalation. A minor difference in perspective was noted as CFOs
responded that Title IX issues were not at all influential factors in costs escalation while
CAOs thought that Title IX issues and regulations were moderately to very influential on
escalating costs. On the other hand, both administrators believed that attracting and
retaining high quality faculty, updating information technology, construction of new
facilities, and top quality student services and amenities contributed most to increased
While a significant amount of research has been undertaken to study the factors
which affect the escalating cost of higher education, most of this research has involved
publicly-funded higher education institutions that are funded to a great degree by
taxpayer dollars. This research is discussed in Chapter 2.
The findings in this study produced original data which explored the escalating
costs of higher education in faith-based institutions as opposed to taxpayer-funded public
higher education institutions. There are some similarities in factors affecting escalating
costs and funding solutions between public universities and faith-based institutions.
However, there are also some significant differences in these two types of institutions
when studying those factors which affect rising costs and the strategies utilized to
increase revenue streams that will potentially offset some of the increases in costs.
Escalating Costs
Administrators at both publicly-funded and faith-based institutions cited several
key factors that contributed to escalating costs at their institutions:
Improvements and additions to Information Technology (IT)
2. Attracting high quality faculty
3. Construction of new facilities
4. Maintenance of facilities
5. Renovation of facilities for new programs or expansion of existing programs
6. Student services
7. Expansion of existing programs
The respondents in this study were Chief Financial Officers (CFOs) and Chief
Advancement Officers (CAOs) serving at higher education institutions that were
members of the Council of Christian Colleges and Universities (CCCU). The research
literature (e.g., Baumol, 2005; Eisenberg et al., 2006; Lohman, 2005) and respondents in
this study indicated that the cost of updating IT to keep up with the fast-paced
technological demands of the academic environment is a major contributor to the
escalating costs of higher education. Eisenberg et al. (2006) noted that most institutions
consider technology as an addendum to the budget instead of a line item in the budget.
The authors argued that this practice is impractical because the updating of technology is
mandatory to meet student and faculty needs in an academic environment. In addition,
attracting high-quality faculty was identified in the literature and by the respondents as a
significant factor in the escalating costs of higher education. King (2000) stated that the
key to attracting the best and brightest students to any campus is to provide the programs
in which they choose to study and to provide high-quality faculty in those programs. He
explained that if liberal arts-based institutions are to attract high-quality, researchoriented, publishing faculty, high dollars are needed. These dollars are not limited to
salaries and must include provisions for research facilities, auxiliary staff, benefits, and
It was determined that there are similar factors that contribute to escalating costs
on the campuses of both public and faith-based institutions; however, there are several
differences. Public institutions and their funds are driven by public policy and taxpayer
dollars which are subject to the political and economic climate. In times of economic
growth, funding for public universities seems to be adequate. On the other hand, during
economic recessions or depressions, publicly-funded institutions face severe budget cuts
that involve program cutbacks and even employee layoffs.
Most faith-based institutions are financially driven by student tuition. Whereas
this practice may seem to be a tremendous liability for private, faith-based institutions,
these same institutions are not affected by legislative budget shortfalls that are generated
by diminished tax revenues and job losses in the public sector. A caveat to tuition-driven
institutions is that growth in the budget must be accommodated through increases in
student tuition or budget cuts in other institutional areas.
An issue strongly connected to student scholarships and financial aid is a practice
known as tuition discounting. While attractive to potential students, the practice can be
destructive to the institution’s budget if the student discounts are excessive, thereby,
resulting in budget shortfalls for the institution. Results from the 2009 NACUBO
Discounting Study revealed that the average tuition discount rate for first-time, full-time
freshmen in the fall of 2008 was 42%. Private colleges who cannot afford these high
tuition discount rates will find themselves facing difficult times and perhaps closure.
Finally, CFOs and CAOs listed the following factors that contribute to the
escalating costs of higher education specific to faith-based institutions:
1. Institutional benefits
a. Health and dental insurance
b. Tuition discounts for employees and employee dependents
c. Retirement funding
2. Provision of high-end student services
3. Unfunded student financial aid/scholarships
4. Library resources
5. Expansion of staff
6. Marketing to prospective students and donors
7. Heightened awareness of university status through highly publicized
university events, public service, and presentations
8. Travel
Institutional benefits such as health insurance, provision of services and amenities
to university students, institutional provision of scholarships and tuition discounts,
marketing and promotion of the university to attract students, marketing to attract
institutional support from existing and potential donors, and reduced income from
endowments contribute to cost escalation. The majority of respondents in this study
serves at small institutions (≤ 3000 students); therefore, may be more affected by the cost
of health insurance than most large, public systems. Furthermore, faith-based institutions
typically absorb tuition discounts given to employees whereas tuition discounts at public
institutions are provided through tax dollars. Faith-based institutions do not receive tax
dollars; therefore, they are dependent upon revenue from funds such as endowment
earnings and tuition.
Marketing for institutional support to attract donors is vital, yet costly. The
university magazine, special events, community service, publicity, and advertising in
print and visual media contribute to the heightened awareness of the university and its
success (or lack thereof) in the community, regionally, and nationally. Additionally,
faith-based institutions spend money attracting the best students and provide scholarships
to these students, resulting in escalating institutional costs. Institutions which offer a
multitude of scholarships for students in order to decrease the burden of tuition must be
certain that these scholarships are funded, which contribute to an increase in the budget.
University administrators serving at both public and faith-based institutions of
higher education are searching for ways to increase their revenue streams to offset
increases in their institutional budgets. CFOs and CAOs in this study indicated several
factors also noted by public higher education institutions that may be utilized as solutions
to reduce the escalating costs of higher education. In addition, respondents differed in
two respects. First, they rated some solutions as unimportant that were noted as important
by public institutions. Second, respondents reported several solutions that were not
indicated by public institutions.
Solutions reported to be important in diminishing the escalating costs of higher
education and contributing to increased revenue streams by both public institutions and
faith-based institutions include the following:
1. Student tuition
2. Capital campaigns
3. Efficient facilities management
4. Regularly scheduled maintenance of facilities
5. Alumni giving
6. Endowment
7. Planned giving
8. Effect of tenured development staff
Budget increases due to inflation, increases in employee benefits for faculty and
staff, program growth, and the provision of high-end student services all contribute to
increasing costs. Whereas new construction is primarily funded through capital campaign
projects in faith-based institutions, publicly-funded institutions go to public coffers for
fund increases for capital projects and improvements. During difficult economic times,
these funds are typically not available.
Private institutions often utilize income from endowments to support their budgets
and also to offset increases in budget spending. Endowments at both public and faithbased institutions vary in size and funds available to support the budget. However,
difficult economic times take a tremendous toll on the resources that are generated from
endowments due to losses on investments. During times of recession, when income from
investments is down, institutions which depend on endowment fund income to
supplement their budgets and operations face challenging times. For instance, Yale
University, which experienced a significant endowment decline in the 2008 fiscal year, is
being forced to delay expansion plans indefinitely. Yale’s large endowment (second only
to Harvard University) fell 30% from $36.9 billion to $16 billion as of June 30, 2008.
Yale’s endowment supports 44% of the university’s annual operating budget. Among
Yale’s 9,000 non-faculty employees, the university fired 59 in its first round of cost cuts.
Another 541 left the school either on their own or after accepting a buyout (Lorin &
Staley, 2009).
Most faith-based institutions are independently managed by university
administrators with advice and leadership from trustees of the institution and the
influence of some type of denominational board or convention that cooperates with the
university. Some denominations contribute more than others to their faith-based
universities. However, it is not likely that the percentage of denominational contributions
and support to the institution’s budget keeps pace with the escalating costs of higher
education and the increase in budgets. No data was available to determine how much
denominations in general contribute to their respective higher education institutions.
However, it may be noted that funds may also be generated from donors that are affiliated
with these denominations.
It takes more than student-paid tuition and support from the denomination to
support most faith-based institutions. As pointed out in this research (i.e., Hartsook,
2004), donors are more likely to give to an institution that has a strong sense of direction
and vision for the institution as well as a long history of personal relationships with
individuals on staff, particularly development staff. The university must be able to
communicate regularly with a strong sense of mission and vision that will invoke
confidence, enthusiasm, and institutional support. The role of the university President is
crucial, for his or her leadership sets the standard by which all other administrators,
faculty, staff, and students will work together to accomplish the mission of the university.
This kind of confidence will likely inspire donors to make undesignated gifts to the
annual fund, support a growing endowment, give to a capital campaign project, and
invest in student scholarships.
Solutions reported to be important in diminishing the escalating costs of higher
education and contributing to increased revenue streams by public institutions only
include the following:
1. Energy efficient lighting and windows
2. Life Cycle Costing
3. Water saving devices
4. Use of alternative fuels
Few of the respondents noted that they utilized energy saving solutions such as
energy efficient lighting and windows, Life Cycle Costing, water saving devices, or
alternative fuels as a solution to the escalating costs of higher education. However, CFOs
and CAOs reported the rising cost of energy and utilities as a factor in escalating costs.
Since the price of utilities is a factor in higher education cost escalation, institutions
should consider solutions involving energy savings. Perhaps respondents in this study
rated these items differently due to their position in the institution. For instance, the
sample in the research literature regarding energy and utilities (i.e., Agron, 1999; Agron,
2005; Agron, 2007; Agron, 2008) consisted of physical plant directors. This group would
typically be attuned to energy and utility needs of the institution. On the other hand,
respondents in this study were CFOs and CAOs, those responsible for the budget and
fundraising for the institution. It is likely that differences in response were simply due to
awareness resulting from job responsibilities.
Nonetheless, institutions should consider a major paradigm shift among its
campus populations including faculty, staff, administrators, and students. An increased
awareness of energy conservation should be implemented on the campus so that all
populations are aware that energy usage costs significant dollars and wasted energy
means wasted dollars, which then transfers to increased operational costs for the
university and increased tuition costs for students and their families. Institutions should
seriously consider Life Cycle Costing and efficient energy practices to be certain that
they are using their facilities management dollars as wisely as possible.
Solutions reported to be important in diminishing the escalating costs of higher
education and contributing to increased revenue streams by faith-based institutions only
include the following:
1. Increased student/faculty ratio
2. Efficient athletic team travel
3. Energy conservation practices
a. Control of utilities usage
b. Efficient heating and cooling systems
4. Improved management practices
a. Efficient financial tracking
b. Better employee training
c. Reduction of employee benefits
d. Awareness of institutional savings among faculty and staff
While certainly not the most desired means of increasing revenue, the increase of
the faculty/student ratio was mentioned by the respondents in this survey. Those
institutions, however, who are most interested in the highest academically challenging
environment may not consider this practice as a viable alternative. A low faculty/student
ratio is crucial as students and faculty seek to form and maintain a relationship that
produces a more fulfilling and enlightened educational experience. Ehrenberg (2004a)
noted that those institutions which seek to be the most academically challenging will seek
out every resource to achieve academic excellence through a low faculty/student ratio.
Furthermore, universities seeking to maintain their high rankings in the national journals
will maintain a low faculty/student ratio.
Whereas raising faculty/student ratio may not be considered by institutions, other
solutions mentioned by CFOs and CAOs are viable options for faith-based institutions in
reducing costs escalation and increasing revenue streams. Energy conservation with
utilities control along with efficient and reliable heating and air conditioning systems
(HVAC) could be a key tool in achieving budget savings. According to Agron (2005),
some HVAC systems need major repairs or replacement within as little as 10 years. As
technology has increased on university campuses, the need for adequate, expanded,
reliable, consistent temperature control is essential. Kennedy (2009) suggested that
energy upgrades across the nation’s college campuses could save as much as $1.5 billion
Higher education institutions need a major paradigm shift that will lead
administrators, faculty, staff, and students to think more conscientiously about saving
energy and conserving resources, both natural and financial. This paradigm shift will
require training of all staff and students so that they become more intentionally aware of
behavior that will generate budget savings through energy conservation. Altering
behavior by simply turning off lights in unoccupied areas and shutting off unused
computers can generate significant savings. Rewarding employees for increased
productivity and efficiency on the university campus is a creative way of raising
awareness and motivating employees. Campus campaigns to promote energy efficiency
can be extremely beneficial as the university seeks to be more frugal. Once again,
recognition and rewards are tremendous motivational tools for employees.
Better training through an ongoing program of staff development was listed by
CFOs and CAOs as a tool to enhance workplace efficiency and productivity in the
university setting. With an adequate reward/incentives program for all employees, budget
savings and quality of service to students, donors, and other stakeholders should be
enhanced. For those institutions desiring excellence in all facets of university life, an
ongoing program of staff development is essential for the university and rewarding for
Most universities are not fully aware of how all of their financial resources are
expended. Better financial tracking systems that contribute to a heightened awareness of
ongoing expenditures and accountability for resources by budget managers are essential
tools for managing and saving financial resources. For those departments which achieve a
high level of resource management, recognition and rewards should be given by the
Better management of financial resources and a workforce that is highly
motivated and productive will most likely result in budget savings. Some institutions may
need to reduce their work force in order to remain solvent. While this is not the most
desired solution, reduced resources in a time of economic decline, recession, or
depression will assist institutions in becoming more financially stable.
A reduction in employee benefits is another way to reduce costs. Health insurance
alone has increased 20% to 40% over each of the last five years and, in most cases, this
increase is absorbed by the university budget. Retirement contributions for employees by
the institution are also a source of significant expense. Again, while decreasing of any
type of employee benefit is not the most popular means of managing the budget, in
financially challenging times it is an option.
Perspective Comparison: CFOs and CAOs
Results indicated that CFOs and CAOs at CCCU institutions have similar
perspectives concerning factors that contribute to the escalating costs in faith-based
higher education. It is important for these two administrators to have similar views on
this issue and others in the university setting. CFOs administer the budget whereas CAOs
are responsible for raising the funds over and above student paid tuition to run the
institution. CFOs and CAOs are generally a part of a senior level administrative
coordinating team that maintains a high level of communication. This team is generally
coordinated by the President of the university or a person of his choosing. CFOs and
CAOs work together to coordinate resources and needs of the university. As private,
faith-based institutions face the challenges of meeting needs with adequate resources, a
strong element of faith is exercised as we seek a provisional God along with alumni,
friends, donors, and stakeholders who are willing to invest in the mission and vision of
the university. Should the university CFO and CAO have significant, differing views,
spoken or unspoken, the institution may not function at an optimum level.
Participation in the study by the population of CFOs and CAOs at CCCU faithbased institutions was quite small. Forty-nine administrators (29 CFOs and 20 CAOs)
participated in the survey out of 168 potential research participants. A larger sample
could have possibly produced more response diversity or given stronger affirmation to
the information cited. Furthermore, as with all survey research, the integrity of this
research is dependent upon the honesty of the respondents.
There are several implications for this study. These implications are delineated
Institutions of higher education should intentionally employ a staff and
student development campaign to teach energy conservation on their
campuses. Energy conservation campus-wide will result in savings to the
institution which will result in savings to students.
The model of good stewardship of resources may have the added benefit
of building credibility among the institution’s constituents (alumni,
parents, corporations, foundations, churches, etc.) that will assist in raising
funds and other types of support.
As colleges and universities examine new and renovated/remodeled space
for new and expanding programs, solutions for maintaining these spaces in
the long term must be considered. With Life Cycle Costing, the projected
building maintenance is built into the costs of the building in its planning
Institutions should examine and update all buildings for energy efficiency.
As technology has advanced, so have energy-saving devices such as
lighting, windows, water fixtures, and HVAC systems.
CFOs and CAOs at faith-based institutions should maintain a conversation
about all issues that affect the university in order to decrease the escalating
costs of higher education at their institution.
Recommendations for Future Research
The results of this research identifying factors in private, faith-based universities
that affect cost escalation do not differ significantly from those factors identified by
public, land-grant institutions. Key differences lie in how these two types of institutions
are funded. While public universities are funded by tax dollars through budgets enacted
by state legislatures, private, faith-based institutions are primarily funded by student-paid
tuition. Private, faith-based institutions have the freedom to raise additional resources
from their constituents: alumni, friends, foundations, corporations, and other donors. In
challenging economic times, funds allocated for public institutions through the legislature
are generally cut, which may result in significant reduction of services to students, layoffs
of faculty and other employees, and a halt of construction projects. These same
challenging economic times will also affect private, faith-based institutions as income
from endowments that support the budget is diminished.
It is recommended that higher education institutions move quickly to institute
programs that will promote energy efficiency and conservation of resources. In light of
current cultural issues related to energy and resource conservation and efficiency, the
depressed economy, and loss of jobs in the workforce, there is much potential for further
research into areas that will promote “green thinking” and operations on college and
university campuses. New solutions that will assist universities in saving resources,
promoting efficient budget management, and diminishing the rate of cost escalation on
the campuses of private, faith-based institutions will be welcomed. This type of research
will hopefully result in a declining rate of escalation in student-paid tuition that will result
in savings for students. The discovery of cost saving measures that will conserve energy
and dollars is a worthwhile area of study that would have significant implications for
generations to come. Recycling is a must for future generations if we are to be guaranteed
much needed resources for a growing world population. Studies researching the
institution of alternative fuel conversions such as wind or solar energy and usage for the
operation of campus facilities and vehicles could prove to be transformational in
managing escalating costs, on both public and private, faith-based university campuses.
The general population in the United States has enjoyed plentiful resources for many
generations. It is imperative that colleges and universities model a new way of thinking, a
paradigm shift that will ensure sufficient resources for the generations to come. Resulting
savings will help students, both current and future, achieve an excellence-driven higher
education at a reasonable cost that will significantly impact their opportunities in the
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