Assessing department/subject financial viability in a Canadian university: Presentation at Leiden University, Netherlands
In a context where a vast majority of revenue and expenses in a higher education institution are centrally managed by the institution as a whole, how do we analyze the financial resources available to fund academic unites and the appropriateness of their expenditures? To what extent are units financially independent or subsidized by others? DPM partner, Pierre Mercier presented a paper, co-authored by Blair Jackson and Marcel Mérette in August at Leiden University, Netherlands as part of the EAIR 2019 conference.
Changing governance structures, increasing organizational complexity, along with financial pressures and growing competition means that higher education managers must strive to deliver high quality education within the constraints of the available revenues to do so. The presentation addressed a case study to look at how the proposed methodology offers a transparent image of the decision-making at all levels on the road to responsible management. This case study offers a transparent methodology to identify and allocate the shares of institutional revenues and expenses associated with each unit in relation to a variety of factors. The paper examines a measure of viability – i.e. the difference between the revenues generated and the total of direct and indirect costs – and the impact of a series potential factors of influence on viability such as, for example, the salary mass of regular and other professors, the number of students being taught, and the budgetary adjustments for service teaching.
In general, the results show that those units that are net providers of undergraduate service teaching tend to have positive net revenues, regardless of the financial weight associated with service teaching. This relation is further enhanced by the fact that service courses often tend to be taught by teaching personnel other than regular professors who are on different pay scale. Overall, the study identifies units that cost less than the revenues they generate, balanced units, and subsidized units. This methodology offers a transparent image of decision-making at all levels on the road to responsible management.