III. Detailed Analyses

1. Cost of the Graduate School

In all four analyses we use the following data from the Fiscal Year 2011 Graduate School budget and the following assumptions:

a. Budget
      

The Graduate School base budget consists of the following items:
                   

A. Staff salaries and fringe benefits:
                             

        Dean, .50 full-time equivalent (FTE)      
                              

        Assistant Dean, 1.00 FTE
                                       

    Classified Staff, 3.00 FTE     
                    

B. Stipends, Health Insurance and fringe benefits for Teaching and Graduate Assistants

C. Operating funds      

b. Assumptions


1. We exclude from the analyses item B on the assumption that the elimination of the Graduate School will not result in a reduction in the number of Teaching and Graduate Assistant (TA/GA) positions allocated to colleges and programs.


2. We exclude item C as it is funded entirely out of application fees, not budget allocation, and we assume that the unit that will perform the admission function, the Office of Admissions, will need these funds for operations as it does with undergraduate application fees.


3. We exclude the salary and fringe benefits of the .50 FTE Dean position as this will need to be shifted to other units in the University:  the Dean holds an appointment as Vice Provost and is a tenured professor. Shifting the salary to other units will not result in any savings in University budget other than savings resulting from reducing the cost of three sections per year currently covered by adjunct faculty. 
 

c. Maximum Gross Budget Savings
Because the three classified staff members are covered by collective bargaining agreements and have seniority in their classifications, the University will need to transfer them to other positions where the incumbents have less seniority (bumping). Based on the Salary Schedule for Represented Employees⁴, the employees with least seniority who will be eventually replaced after the series of successive bumps earn an average of 75% of the current Graduate School staff.  The re-assignment of the 3.00 FTE positions would result, after the successive bumps, in reducing employment at the University by 3 positions with combined salaries and fringe benefits are 75% of the current Graduate School staff, or $147,278.

The maximum University budget reduction resulting from the elimination of the Graduate School, therefore, is the sum of the salary and fringe benefits of the Assistant Dean and the salaries and fringe benefits of three classified staff who would lose their jobs, plus the salary savings resulting from the Dean teaching three sections currently taught by adjunct faculty. These total $245,628 gross reduction in University budget.

This gross reduction does not represent a net savings to the University. To arrive at the net impact on the University budget we must account for the costs that are shifted to other units as a result of shifting the various functions to them. To do this we calculate the costs to the other units and, thus, the net impact on the budget in four different ways.

2. Calculation of Net Budget Impact

Method 1: Cost Allocation

Methodology

The Business and Financial Affairs Division recently completed a cost allocation study for Fiscal Year 2010. This study is required periodically by the Federal government for the determination of the indirect cost rates that the University can charge on federally sponsored projects⁵. The data on cost allocation contained in that study, supplemented by data from the University’s FY 2011 budget are used to estimate the cost to colleges and other administrative units of transferring to them the functions currently performed by the Graduate School.

Assumptions

To estimate these costs we make four assumptions:

1. The functions currently performed by the Graduate School staff will need to be performed by the staff in the other units, that is, there are no redundant functions that can be eliminated. This is a reasonable assumption as the Graduate School has streamlined all operations as a result of previous series of budget and staff reductions. The functions currently performed are described in Attachment A.


2. The support staff members in the colleges, departments and units within Student Affairs are currently fully utilized (no excess capacity). This is a reasonable assumption as college deans report that after a series of budget cuts departments have reached the point where staff support is at minimum and that faculty position reductions are preferable to support staff reductions. Student Affairs reports that the various offices are chronically understaffed compared to peer institutions.


3. The administrative cost per student is the same for graduate and undergraduate students. This is a conservative assumption as the variety and complexity of graduate program requirements typically demand more administrative effort⁶.


4. The administrative cost allocation is based on the distribution of student head count between graduate and undergraduate. This is a reasonable assumption as the administrative effort required for each student is independent of the credit hours taken.

Net Budget Impact Estimate:

The Cost Allocation Study shows the cost of academic departments’ administration as $1,568,631. Included in this figure are 20% of department chairs’ salaries and fringe, 20% of deans’ salaries and fringe and 20% of departments’ and deans’ offices operating expenses. The support staffs in the departments are not included.

The University’s FY 2011 budget shows that in departments that offer graduate programs there were 26.93 FTE support staff members with salaries and fringe of $1,482,503 (See Attachment B). The cost of academic support for students is the sum of the department administration from the Cost Allocation Study and the staff support from the University budget, a total of $ 3,051,134, or $227.78 per undergraduate student⁷.

If some of the functions performed by the Graduate School staff are transferred to academic departments, the support staff cost will increase by $172,429 ($227.78 multiplied by graduate enrollment of 757)⁸, under the assumption that the cost of administration is the same for both graduate and undergraduate students - an assumption that underestimates the cost.

The cost to the Student Affairs division of handling the some of the functions currently performed by the Graduate School cannot be easily determined from the Cost Allocation Study. We will assume that there are no increases in cost to the Registrar’s Office or to the office of Student Financial Resources (Financial Aid office) as we have no detailed data that would enable us to estimate these costs.

For functions that would be performed by the Office of Admissions, we estimated the cost as follows: The office of Admissions processed 11,846 undergraduate applications in Academic Year 2009 using 24.50 FTE staff⁹. In Fiscal Year 2009 the Graduate School processed 1,130 applications, or 9.54% of the number of undergraduate applications processed by the Office of Admissions. If this function is transferred from the Graduate School to Admissions that office will need to increase its staff by 9.54% or 2.34 FTE positions. The average salary for Office of Admissions staff is $47,180, adding fringe benefits, the cost to the University of the 2.34 FTE additional staff is $143,522.

Adding the increased cost to departments ($172,429) and the increased cost to the Office of Admissions ($143,522), the total cost of the decentralized system is $315,951. The estimate of the net effect on University budget is an increased cost of $70,144 as shown in Table 1.

It should be noted that this estimated negative budget impact is a lower bound estimate. We assumed zero cost to the offices of the Registrar and Student Financial Resources, and we assumed that the administrative cost of serving a graduate student is the same as those for undergraduates.

Furthermore, the cost of transferring functions to the colleges or programs is likely to be higher than the figure used in line 2 of the table as a result of minimum staffing requirements (what economists call indivisibilities). Colleges and departments with small graduate programs will need to hire staff at a cost that significantly exceeds those implied by the calculation above. As an example for a college with one or two graduate programs enrolling a total of 60 students, the calculation above assumes that transferring the functions will increase the cost to the college by $7,026. In reality, to meet the service needs of the graduate students in such a college would require a minimum of .20 FTE (that is one day a week). At mid-range and mid-step employee salary and fringe benefits the cost of a .20 FTE is $11,915.

Method 2: Functions Analysis

Methodology:

Under this method we analyzed the functions currently performed by the Assistant Dean and the three staff members in the Graduate School, and provided an estimate of the annual FTE staff time devoted to each. These are reported in the first two columns of Table 2 below. Detailed descriptions of the duties under each function are listed in Attachment A.

We then made a determination as to the most appropriate office (s) to perform each of the functions. The determination is based on how close the particular function to the work currently is performed by each office, as this would allow for most efficient allocation of functions. These assignments are shown in column 3 of Table 2.

Assumptions

We assume, as we did before, that the support staff members in the colleges and departments are currently fully utilized (no excess capacity). The units in the Student Affairs Division are similarly operating at full capacity and will need resource allocation to undertake any new assignment of duties.

Net Budget Impact Estimate:

Estimate of the additional staff that would be needed by each office to provide the service inquiries, applicants, new students, currently enrolled students, TA/GA appointments and degree completion are reported in column 4. These estimates are calculated as follows:

• For functions that would be performed by the Office of Admissions, we estimated the cost as we did under Method 1 as an increase in staff of 2.34 FTE at a cost of $143,522.
• For functions that would be transferred to Student Financial Resources, we have no adequate method to calculate the additional resources that would be needed. We, therefore, assume that the additional cost of transferring the functions is zero in spite of our knowledge that that office does not have any excess capacity. (Note that the current Graduate School staff allocation to these functions is .60 FTE).
• For functions that would be transferred to the Registrar’s office, we have no adequate method to calculate the additional resources that would be needed. We, therefore, assume that the additional cost of transferring the functions is zero in spite of our knowledge that that office does not have any excess capacity. (Note that the current Graduate School staff allocation to these functions is .90 FTE)¹⁰.
• For the Systems function and the Graduate Council functions we believe that the Provost Office is the appropriate locus as these are university wide functions. We estimate the staffing need for the Provost Office to be a .50 FTE (the current staffing level) and that the salary and fringe benefits for the .50 FTE professional staff position is $34,800.
• To estimate the resources that would be required for functions that would be transferred to academic departments or colleges we provided the detailed task descriptions listed in Attachment A to one of the colleges and asked for an independent estimate of the resources that would be needed to perform the tasks. That college reported that they: “estimated number of hours per student for any given set of tasks over the course of a year.  The total FTE for each set of tasks is shown as a ‘college wide’ total if those tasks were distributed to the departments.”  We then scaled those estimates to calculate the resources that would be needed by the other colleges. The scaling factor is graduate enrollment in the college in the fall quarter of 2010. The estimated staff requirements by colleges (other than the College of Business and Economics (CBE) which already has support staff for the MBA) are reported in Attachment C.

To check the reasonableness of this method we applied the same methodology to CBE and the estimated staff need was found to be 1.13 FTE – compared to the current actual staffing of 1.50 FTE. We conclude that this method provides a reasonable but conservative estimate of the additional staff that would be needed by departments to perform the functions listed.

The additional positions needed by departments are then aggregated across colleges, excluding CBE, and are reported in column 4 of Table 2. We used the same cost per FTE as the average salary for the staff of the Office of Admissions to arrive at the cost of the additional staff in column 5.

Because we assumed no additional cost for functions transferred to the Registrar and the office of Student Financial Resources, the calculation of costs under this method are lower bound estimates of the potential costs.

The number of additional staff that would be needed if the administration of graduate education were decentralized estimated by this method is 9.78 FTE position, remarkably close to the 10.16 FTE estimated by Method 4 below in which we extrapolate from the existing structure of support for the MBA program. The fact that two completely different methods produce such close estimates is reassuring.  The difference in cost estimates between this method and method 4 is that in this method we priced the positions at the classified staff scale, while in method 4 program directors are priced at the faculty scale. The net impact on the University budget is estimated as $401,061as shown in Table 3.

Method 3: Comparative Data

Methodology:

Using data from universities that have centralized and decentralized graduate schools, one can estimate what the transfer of functions from the Graduate School to colleges, programs and other administrative units. To obtain data on the cost of a centralized versus decentralized organization of graduate schools, we posted a request on the Listserve of the Council of Graduate Schools requesting staffing data from institutions whose graduate program is of a size comparable to that at our university, (enrollment about 1,200 or less since our graduate enrollment is reported as 1,179 in the Common Data Set). Our objective was to calculate the average staffing per 100 students for universities which have a centralized Graduate School and for those that have a decentralized structure. The ratio of the average decentralized staffing per 100 students to centralized staffing per 100 students would then be applied to the current staffing of our Graduate School to arrive at an estimate of the staffing needed if our university would to convert to a decentralized system. The estimated staffing requirement would then be converted into a cost estimate using the Department of Personnel Salary Schedule for Represented Employees. The difference between this estimate and the current cost of the Graduate School would be an estimate of the budget impact of moving from a centralized to a decentralized structure.

Data:

The data we received appear in the following table:

The fact that we did not receive responses from any fully decentralized graduate school, in retrospect, is to be expected. The few universities with completely decentralized graduate education are not members of the Council of Graduate Schools (they have no graduate schools!), and are not, therefore on the Listserve¹¹. University A and University J responded because they have a semi-decentralized structure.  While these data do not permit us to implement the proposed methodology of comparing centralized and fully decentralized structures, they allow us to compare centralized and semi-decentralized structures. We realize that this sample is quite small; it is all we were able to obtain given the time constraint we were under¹².

Net Budget Impact Estimate:

Excluding our university, the average staffing for the eight universities with centralized graduate schools is .70 FTE staff per 100 students¹³. For the two universities that have semi-decentralized system the average staffing is 1.12 FTE staff per 100 students, that is more than 50% higher than the staffing ratio for centralized systems. The lower of the two semi-decentralized is University J with a staffing ratio of .83 per 100 students. To obtain a conservative estimate, rather than applying the average staffing, we apply this lower ratio to the enrollment at our university in fall of 2010 to estimate the staffing that would be needed had graduate education at our University been a semi-decentralized.

The estimate of the number of staff that would be needed if graduate school functions were semi-decentralized is 6.28 FTE. If we follow the semi-decentralized system model of University J (the lower of the two examples of semi-decentralized), the 6.28 positions staffing would include a central office with .50 Dean, 1.00 Assistant Dean and 1.00 support staff. These 2.5 positions currently exist in the Graduate School. The functions distributed to the colleges would be performed by the remaining 3.78 staff positions. This would require transferring 2.0 of the current Graduate School staff to colleges at their current salaries (collective bargaining agreement requirement) and adding 1.78 FTE staff position, at similar salary level. The average salary of the current staff is $50,351 and adding fringe benefits @30%, the cost of the additional 1.78 FTE staff needed is $116,512.

Note that the report from University J included only the distributed staff dealing with graduate students. It did not include any additional staffing in the Offices of Admissions, Registrar or Student Financial Resources. Adding the 2.34 FTE that we estimate will need to be added to the Office of Admissions, the total staffing needed would have been 8.62 FTE, and the net budget cost is of the additional 1.78 FTE distributed staff and the 2.34 FTE Admissions staff is $260,034.

Method 4: Extrapolation

Methodology:

We currently have a graduate program, the MBA, which has an infrastructure support staff. We use the staffing requirements for the MBA to extrapolate what other programs would need in order to provide the infrastructure needed if the Graduate School is eliminated.

Assumptions 

• We assume that the structure of support developed by the MBA program over the years is an efficient structure.
• We also assume that the existing MBA support staff is not fully utilized so that they will be able to absorb the functions currently performed by the Graduate School and which would be transferred to the program if the Graduate School is eliminated.
• We also assume that the current MBA support staff serves the graduate program in accounting.

Note that these assumptions will result in a lower bound on the estimated need as it is likely that the MBA program staff in fact have no excess capacity and will need additional resources to carry out the additional functions.

Under these assumptions we can use the existing data to estimate the infrastructure needs of the other graduate programs by extrapolating from the MBA.

Cost Estimation:

To estimate program needs for infrastructure support, we calculate the average staffing and cost 
per enrolled student in the MBA program. We then use these averages to estimate the needs of the other graduate programs.  All data in the following table are from the University Budget for Fiscal Year 2011. Fall enrollment in the MBA program was 93 and in the Master of Professional Accounting program (MPAC) enrollment was 7, for a total of 100 students.

Before we apply this infrastructure cost to other graduate programs, we adjust it downwards: because the faculty salary levels in CBE are higher than in other colleges, we reduce the cost of the Program Director by 50% on the assumption that salaries of other the other program directors will be on average 50% of that for the MBA program Director. We leave the other staff salaries the same as these are classified and exempt positions whose salaries do not vary by college. With this adjustment, the infrastructure support needed by graduate programs is estimated at 1.5 FTE and $123,125 for every 100 graduate students.

To estimate the cost to the University budget of decentralizing support for graduate programs we apply these figures to enrollment in graduate programs, excluding the MBA. We exclude programs with enrollment of less than 5 on the assumption that their needs can be met by other programs in the college.

Although the staffing requirement appears large – more than twice as large as the current Graduate School staffing- it is within the range of staffing at University A and University J, the two semi-decentralized graduate schools. This staffing requirement is also quite close to the estimate obtained by Method 2 (9.78 FTE).

The estimated impact on the University budget using this method and under the very conservative assumptions made above is an increase in cost by $587,896 calculated as follows:

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