financial recommendations for fee-based budgeting in 2019 — and beyond
Each year brings a new fee-based degree budget, and we feel it’s important to provide a refresher on budgeting best practices that our fee-based degree experts recommend to ensure good, sustainable fiscal health for all of our degrees. At UW Continuum College, we manage more than 110 fee-based degree programs* — one of the nation’s largest portfolios of professional and continuing education programs.
We provide each fee-based degree program with a wide range of support and services to help foster long-term sustainability. We provide program management, operations, market research, marketing, finance, IT, registration, online learning and financial-risk protection services for new and existing programs. UWC² uses an indirect cost model that involves aggregating the cost of UWC² staff and other expenses that directly support the success of fee-based degrees. These costs are allocated in two ways — as a flat program management fee and on a per-course, infrastructure fee basis.
We continually work with our campus partners to keep our programs sustainable, and managing the fee-based budgeting process is a big part of that. Read on to learn the best ways to maintain a sustainable degree program.
Take a realistic, focused approach to budgeting — then expand
When budgeting for an existing degree or launching a new fee-based degree, it’s important to be realistic. Budget conservatively with realistic enrollment numbers to give your degree program the best chance at sustained success. Base your enrollment projections on historical trends, not optimistic thinking. Your degree will be better set up for the current fiscal year and the future.
If you are starting a new program, stay focused on a single topic area to help keep costs down. As your program matures and becomes fiscally strong, you may consider adding multiple discipline tracks. However, issues can arise if some tracks start stronger than others. For example, divided cohorts may require additional teaching resources or result in higher instructional and administrative costs, which are then passed on to students through higher course fees.
The same goes for electives: add program-specific, budgeted elective courses to your degree program only after both budget and enrollment are meeting or exceeding expectations. If enrollment counts and budgets are misaligned, offering new electives can jeopardize your program’s fiscal sustainability. We recommend a gradual approach with a cohort that’s in lockstep — and, as the program achieves consistent sustainability, you can add electives.
How and when to set your new fee rates
Students who already work hard to pay for their education are negatively impacted if tuition increases considerably or suddenly. It’s better to increase the tuition incrementally each year, even if the program’s budget is healthy enough to maintain the current fee rate on a year-to-year basis. This slow fee rate rise will prevent a larger, unexpected fee increase in the future. There are times when a program changes and expenses rise and a larger increase may be necessary. Early conversations and communications with your students about such an increase will help to prepare students when the tuition bill arrives.
Our competitive analyses and market research can help you set tuition at the right level to maintain a sustainable budget from the outset.
Keep credit loads appropriate and conservative
In our current budget model, higher credit courses can lower infrastructure fees, and, in some cases, instructional costs. For example, a 40-credit program composed of 5-credit courses means eight faculty salaries and eight infrastructure fees; a 40-credit program composed of 4-credit courses means 10 faculty salaries and 10 infrastructure fees. The budget model favors higher credit courses, and, during the degree’s planning stage or over the lifecycle, we can help you plan your degree’s credit requirements to ensure that your degree structure is fiscally optimized to benefit from the current budget model. When designing new fee-based degree, be mindful of the amount of credits needed for your students to graduate with the skills needed to succeed in their field of study. Also be mindful of the minimum degree credit requirements since additional credits result in additional costs for the students. We can provide you with data on graduation requirements of similar programs at peer institutions to ensure there’s not a wide credit disparity.
Affiliated certificates — with large or small enrollment — can have downstream benefits. Even if a certificate only has four or five students, a certificate can provide a pipeline of future degree students and help cover degree costs. A certificate program typically requires only a few students to break even, but in the case of more significant interest, enrollment can generate substantial net revenue and resources to a degree program or department.
Analyze your salaries
Salaries can be the largest expense on any budget. We have found that when more than 50 percent of a program’s gross revenue is allocated to total faculty and staff salaries (not including benefits), there is a significant chance a program will go into deficit. If your budget shows this salary-to-gross ratio, it may be time to remedy the situation.
We know there are no easy solutions, but here are a few options to consider: cut nonessential expenses, reduce the FTE allocation of professional staff, shift some instruction from full-time faculty to lecturers or adjuncts, or gradually raise course fees to lower the revenue ratio.
Buffer your budget’s bottom line
Part of budgeting conservatively is ensuring you have a buffer for your budget’s bottom line. We advocate for a 4-percent buffer; below that, your program may be so close to breaking even that the smallest unforeseen enrollment drop can result in a program deficit.
While the risk-opportunity fund is there to mitigate unplanned losses, this risk pool must be maintained at a sufficient level for the benefit of all programs into the future.
Our program managers create an annual program narrative that includes a historical overview of the program in terms of finances, applications and enrollments. This informative document includes a brief competitive program analysis and outlines key opportunities and sustainability challenges, if any, that a program may be experiencing. Your UWC² program manager can share this narrative with you as you discuss your budget and planning for the coming year.
Partner with your program manager
Getting to know your program manager is vital to ensuring your degree’s sustainable success. By connecting regularly and collaborating with your program manager through the life cycle of your program, you can share challenges and seek their expertise on best practices for managing a fee-based program. Additionally, your program manager is also your centralized resource to connect you to other UWC² services such as marketing, fiscal services, online learning, market research and registration services. The more your program manager knows about your program, the more they can try to help.
*To determine the degree count, we follow the University’s institutional metadata rules and track ABBV-pathway-level-type. If the same degree has multiple pathways within the same reporting period it is counted only once.