By Ruth Bolster
Features Editor
Published: Wednesday, March 21, 2012
Updated: Wednesday, March 21, 2012 16:03
Article from The Miscellany News
The chart above breaks down Vassar's sources of income. Tuition only makes up only half of the College's total revenue.
Second only to Columbia University on U.S. News and World Report’s 2012 list of most expensive private schools, Vassar has undoubtedly acquired a reputation for being pricey. Although such lists do not consider the amount of financial aid individual students receive, they serve as an indicator of the amount of money required from each student to help keep these respective institutions going. Ultimately, the process behind establishing the price of a Vassar education is done with an attempt to best meet the needs of the campus community.
The process of establishing a comprehensive tuition fee begins the fall prior to the upcoming academic year. Armed with information on the health of the national economy as well as the expected costs of continuing the various programs and services offered by Vassar, the Board of Trustees reviews expenses, other sources of income and ultimately decides upon a figure that it believes would appropriately cover the school’s costs.
This is done in an attempt to establish the school’s budget for the fiscal year.
In addition to the 49 percent of total revenue generated through tuition, Vassar also receives 33 percent of its income through interest generated by its financial assets, nine percent through private gifts to the College.
Additionally, six percent of Vassar’s income is generated through any additional fees that the College charges, such as childcare fees at Wimpfheimer Nursery School and the Infant and Toddler Center or cash sales for food at the Retreat, and three percent of its income is generated through government grants.
When deciding the budget, Budget Director and Assistant Vice President for Finance and Administration David English and his staff begin by assessing the College’s current budget and overall finances.
“The Budget Director and his staff do this by looking at what is being charged to the accounting system, but they also have conversations with people, whether it is the director of financial aid, or the director of dining operations,” said Vice President for Finance and Administration Betsy Eismeier.
“A lot of different offices know things that would affect revenue and expenses that you can’t see when you’re just looking at the accounting system.”
After carefully considering the College’s operating expenses, the Board of Trustees approved a budget of $152 million last fall, which ultimately can be broken down to an average cost of $67,125 per student. This cost is subsidized by both Vassar’s endowment and gift funds, resulting in the lowered comprehensive fee of $55,135.
However, with approximately 60 percent of the student body receiving varying amounts of financial aid, this fee is further tailored in consideration of each student’s ability to pay.
The effects of the need-blind policy, which allows the school to admit students regardless of their ability to pay, must also be considered when establishing the school’s budget.
Before this policy was implemented, a fixed portion of the annual budget would be set aside each year specifically for financial aid. However, with the need-blind policy, the overall amount of financial aid needed is less controlled than before, making this aspect of the budget less predictable.
As Eismeier explained, “In general we want to have student tuition be stable, if not growing a little bit to support cost pressures. The first year we implemented need-blind in 2008-2009, net tuition, or the amount we collect after financial aid, went down slightly.”
However, Eismeier also noted that the enactment of the need-blind policy also occurred during the height of the economic recession, and that it is very likely that this also contributed to the decrease in net tuition during that particular fiscal period.
She continued, “Because of our implementation of the policy change, net tuition hasn’t grown. The plan now is to have stability and a little bit of growth going forward. But the financial aid policy means that establishing the budget is less predictable than it has been in the past when we were targeting a certain amount of financial aid each year.”
The College adjusted to the pressure on net tuition after financial aid by reducing or controlling the growth in college expense budgets and by relying on investment return to endowment and gifts by alumnae/i to the Annual Fund. However, drawing heavily from endowment carries long-term consequences.
“They call it ‘intergenerational equity.’ The long-term consequences of drawing from it is that generations in the future might not have the same level of benefit from the endowment,” Eismeier said.
Despite this, Vassar’s budget in terms of where exactly these finances are directed has remained relatively stable. 65 percent of all operating expenses, for example, go toward compensating members of the faculty, staff and administration. For the 2011-2012 school year, this $68,752,000 went specifically to employee salaries and wages, while $27,187,000 went to employee benefits.
One of the most costly aspects is providing health insurance for each of Vassar’s employees.
“Like so many organizations, Vassar sponsors plans for our faculty, and we also contribute to a union plan, which covers dining and Buildings and Grounds employees,” said English.
“There is the potential that employer-based plans will have to cross subsidize the uninsured or under-insured. There is a lot of uncertainty of how national health care reform will impact our cost base, but we have to provide every year in the budget that there has been a significant increase in costs, just to keep going.”
The College also sponsors two separate retirement plans for union and non-union employees, as well as workers’ compensation and various levels of tuition benefits for employees and children of employees.
“The College also pays for disability insurance, life insurance, and we are required to contribute to FICA, Social Security and Medicare,” stated English.
“Although it is hard to call Social Security and FICA ‘benefits’ because all employers are legally mandated to pay for it,” he admitted.
“The College will provide employee benefits when there is a tax advantage. This allows us to create benefits for employees, such as pre-tax savings pension plans,” said Eismeier.
Vassar offers many of these benefits in competition with other employers who may also attract the type of faculty members Vassar wishes to have.
Eismeier said, “You take some companies like Google, for example, who put together a package of employee benefits that they think appeal to the kind of people they want to hire. Then it becomes a competition among employers for a particular talent base.”
As Eismeier explained, companies could offer benefits that range from various recreational activities to having exotic food available in the cafeteria, all with the intention of attracting a particular type of employee.
Eismeier continued, “When potential faculty members are looking at other employers, we have to think about what kind of benefit structure they are looking for. And to retain our faculty, we have to be able to say that we offer a comparable benefit array as the employers that may seek to take our best people.”
Vassar compares their compensation rates to 21 peer institutions through data collected in the American Association of University Professors’ annual “Report on the Economic Status of the Profession.” This survey contrasts data regarding benefits provided by various institutions of higher learning across the nation.
Additionally, The College and University Personnel Association collects data by job title for all other college employees, including administrators and staff.
“If you could think about it for faculty, the job titles are straightforward—professor, assistant professor, associate professor. For the rest of the jobs, the schools design these jobs somewhat differently and pick somewhat different titles,” stated Eismeier.
“So it is a little bit harder to know exactly what the job is. It is a little bit more difficult to do the comparative analysis, but we have the same comparative goal with all of our employee groups.”
The second largest aspect of the budget, which comprises 25 percent of the budget’s total, is reserved for consumable expenses. These include utilities, fees for visiting lecturers, various dining expenses, library acquisitions and athletic team expenses.
As a result of the recent recession, Vassar has been exerting various “cost control efforts” in these particular areas of spending.
For the 2011-2012 school year, consumable expenses ultimately totaled $44,104,000.
Plant and equipment expenses, which are reserved for the upkeep of the College’s physical facilities, accounted for $7.4 million, or five percent of the budget.
Additionally, the remaining five percent of the budget is reserved for paying interest on debt incurred for renovations and improvements to the physical plant.
Despite being tagged as one of the highest costing colleges in the nation, Vassar’s budget hopes to provide all employees with equitable compensation and providing students with the best possible college experience.
Article from The Miscellany News
