Balancing the state college budget: why must tuition increase and by how much?

Bradbard, David A. ; Robbins, D. Keith ; Alvis, Charles 等

INTRODUCTION

Exam time is here, or so it seemed, as Percy Bradshaw prepared to enter the Board of Trustees Conference Room at Winegar University. This year July 15 had been selected as the date for the annual skewering. The event never failed to create butterflies as Percy braced himself for the litany of questions--perhaps it was an exam--that were sure to bombard him once inside the room. The examiners were the Board Members and President of Winegar and Percy had been relentlessly playing their predictable queries over in his mind as the moment of truth approached:

Will we have to raise tuition again this year?

Why?

By how much?

Will it cost us students?

What if we don't--worst and best case scenarios?

What are our alternatives to raising tuition?

Percy knew his answers would dramatically affect the pocketbooks and future prospects for thousands of Winegar University (Winegar University is a fictitious institution. However, all budget variable values are based on factual historical data) stakeholders. Not just students and prospective students, but faculty, staff, and the local business and employment community as well. For Percy Bradshaw was Winegar's Vice President, Finance, and hence responsible for assimilating revenue and cost estimates amidst increasingly pessimistic state revenue projections into budgetary recommendations for the President and Board of Trustees. What a moving target--mused Percy. Oh well, guess that's why I'm paid the big bucks--yeah right!--were Percy's final rueful thoughts as he crossed on through to the other side.

SUMMER: THE SEASON OF BUDGETARY UNREST

Earlier that summer, as in each of summers past, the Office of the Controller (more specifically Percy Bradshaw) monitored the state revenue projections and budget proposals emanating from the legislature in the state capital. As in each of his previous summers Percy had that sinking sense of deja vu--eleventh hour haranguing between the state Senate and House of Representatives over the amount of money budgeted for higher education was preventing him once again from finalizing a budget for the coming academic year. The University President was anxiously awaiting the budget so he could present it to the Board of Trustees for final approval. This meant, with the beginning of fall classes only 12 weeks away, the University could not present prospective students or their parents with their tuition tariff. The tuition charges to a large extent determine the number of students enrolling and thus determine the major revenue stream that would support the university's operations. Percy rued the recurring unpleasantness of summer--the season of uncertainty that complicated an already complex budgeting process. So, Percy decided he would do what he always did; attempt to prepare budgets based on various scenarios that would result from a number of interrelated factors.

His analysis this year would be further complicated by the fact the university's expenses exceeded revenues by $4.5 million in the previous year. This loss was largely due to an unprecedented 5 percent rescission (each state university was required to give back to the state; in Winegar's case nearly $1 million) of state funds. While last year's deficit was covered by using the University's reserve funds, Winegar's President clearly stated using the reserve funds is not an option for the next academic year. Further evidence the President was gun shy from the previous years' rescission of allocated funds was his request for budgets under three scenarios: worst case (five percent below last year's post rescission funding), best case (pre-rescission funding level) and most likely (same allocation as last year with the rescission).

THE CONTEXT OF BUDGETING AT PUBLIC (STATE ASSISTED) INSTITUTIONS OF HIGHER LEARNING

Institutions such as Winegar have seen their level of state funding drop precipitously in recent years. This has been reflected in the obsolescent "state funded" descriptor being replaced with the more accurate "state assisted" college or university. As shown in Figure 1, Winegar's level of assistance has fallen from 44 to 20 percent over the past 16 years. The dollar allocation is essentially the same now as it was in 1990 despite nearly two decades of increases in operating costs.

The key tool for offsetting adverse financial effects from reduced state allocations has been tuition pricing. Chief Financial Officers at public colleges have responded by becoming more sophisticated in the establishment of tuition rates. It is the most basic revenue enhancing option (Bryan & Whipple, 1995). The primary objective is to set tuition at a rate that retains current students, attracts new students, and provides revenue dollars sufficient to cover costs under the most pessimistic budgeting scenario.

Percy's situation is illustrative of the fact state budgeting for higher education hinges on a complex set of issues and stakeholder tradeoffs (Hannon, 2005). The primary drivers of university budgets have been well documented however the interplay and dynamics remain a mystifying dance among present choices and future options (Bryan & Whipple, 1995).

DATA TABLES TO THE RESCUE

As Percy Bradshaw sat scratching his head in early June, Gerald Radner, Winegar University's Director of Academic Computing and User Support, popped into Percy's office to update his computer's software applications.

"Why so glum Percy?" Gerald asked. "You look like someone just ran over your dog."

"I wish" Percy replied. "I never liked dogs. No, the President wants me to give him a draft of the budget, but there are so many uncertainties it will probably have to be completely reformulated after the members of the legislature finish their budget debate. This time of year is a real pain in my back!"

"Have you tried some of the decision support tools available in current spreadsheets?" Gerald asked. "They could allow you to quickly revise your budget as the major issues are resolved over the coming months. They would also allow you to present your preliminary budget based on a variety of possible scenarios."

"I'd be willing to give it a shot" said Percy. "Will you test drive me through it?" So Percy and Gerald set up a meeting. Percy was asked to prepare a list of major variables that affect his budget forecast and to provide initial values and ranges for each variable that could change.

Underpinning Percy's budget scenarios was the university's primary strategic objectives for the next 5-10 years (shown in Figure 2).

Figure 2. Winegar's strategic objectives for the next 5-10 years.

1. Retain and recruit faculty and staff who will continue to
offer national caliber education (operationalized as providing
average annual salary increases of at least 3 percent).

2. Increase enrollment from 6,400 to a student body of 8,000-8,500
students with an average incoming SAT score of 1,100 by increasing
admissions to 1,500 per year.

3. Increase the proportion of out-of-state enrollments from 15
(current) to 25 percent.

Percy would have to integrate these objectives into his budgeting scenarios; in essence they provide constraints or limits to his range of budgeting options.

BUDGET FORECAST VARIABLES

In order to prepare a budget forecast, Percy explained there were three types of variables that must be considered. The first type of variable concerns basic variables such as size of faculty, size of staff, number of in-state students, number of out-of-state students, etc. The second type of variable concerns sources of revenue for the university (e.g., state assistance and tuition). The third type of variable concerns the major expenses for the university (e.g., salaries, utilities, etc.). These variables are largely dependent on environmental context best described by Layzell and Lydden (1990):

Interrelated historical, political, economic, and demographic factors. Historical factors include state resident's traditional values and preferences regarding higher education as well as the state government's historical involvement in governance of higher education ... Political factors include the structure of higher education, gubernatorial influence, legislative influence, and interest groups' and citizens' influences. Economic factors include a state's general economic condition, state tax capacity, and availability of state revenues. Demographic factors include the level and composition of a state's population, enrollment in higher education, and student participation rates in higher education (pp. 1-2).

Five variables particularly important for budgeting decisions are: the amount of state appropriations; enrollment numbers and tuition fees for in-state students; and enrollment numbers and tuition fees for out-of-state students. Before Percy built any model budgets, he decided to look at the last 10 years of (a) state appropriations to Winegar University and (b) data relating to enrollments and tuition fees.

Table 1 displays 10 years of state appropriation data for Winegar University and all higher education in the state. The data show that the overall allocation as a percent of total state revenues has continued to decline. The other noteworthy aspect of the trend data is that within the overall secular decline in funding, there is pro-cyclicality associated with state economic health.

In the most recent year (2007-08), the state legislature provided about 20 percent of the university's base. This figure has been as high as 44 percent in 1989-90 (see Figure 1), but the data in Table 1 show that over the past decade the proportion of the university's budget from state appropriations has steadily fallen. Additional reasons for pessimism regarding an increase in state support may be found in the fact peer public universities have seen their "state assistance" shrink as low as 8 percent (Glenny, 1979).

The most recent year allocation (2007-08) was $19,963,000 (about $20 million). The rescission took back 5 percent (about $1 million). Therefore the base allocation for the most recent year was about $19 million. The best case estimate for the coming year's allocation would be a 5 percent increase up to $21 million. Worst case would be another 5 percent decrease beyond the rescission or $18 million. The most likely estimate would be $20 million.

Student tuition contributions to the budget are a function of the number of students that enroll in August, and the tuition rate set for the academic year. Tuition schedules are set once the legislative appropriation has been finalized. Tuition rates for in-state and out-of-state students for the last ten years are shown in Table 2. In the face of dwindling state appropriations, Winegar has increased tuition in the range of 13-15 percent for each of the past three years. Percy recognizes tuition increases affect the number of enrollees, though demand for Winegar degrees has exhibited remarkable inelasticity over the period of the tuition increases.

Despite this historical inelasticity, Percy's intuition and research suggest once tuition price increases reach a certain threshold, there is a significant decrease in student enrollments (Bryan & Whipple, 1995). Thus, Percy must be careful not to overprice tuition and chase off current students unable to afford Winegar's higher price tag. Percy has researched tuition pricing models and demand curves for similar sized universities and has developed estimates of student enrollment retention at different levels of tuition price for both in-state and out-of-state students. These estimates are displayed in Table 3.

The table shows Percy expects a moderate drop in demand for tuition increases of less than 10 percent but more excessive increases begin to significantly cut into retention. So according to Percy's research, there is price elasticity of demand for college tuition that would place limits on the ability to use increased tuition pricing as a means to offset decreased state funding and increased operating costs. These estimates apply to continuation rates for current students only. Percy thinks the diminished ability to admit the targeted 1,500 new freshmen due to elasticity can be offset by the relaxation of admission criteria--though this would be considered a short term or emergency type response that would not significantly affect the overall academic quality of the student body.

The determination of student tuition revenue would seem to be the result of the following calculation: [Total Tuition Revenues = (number of in-state-students * in-state-tuition) + (number of out-of state-students * out-of- state tuition)]. In reality, this calculation is considerably more complicated.

There are several additional factors university budgeters must take into consideration when projecting student tuition revenue. These factors include: the number of (1) full scholarships, (2) partial scholarships, (3) out-of-state tuition waivers or reciprocity agreements, and (4) work study programs. As a result of these factors, many students receive a tuition discount of some form and the university nets far less than full tuition for each student.

The line item student tuition revenue in the university's budget includes (1) revenues from students paying the full cost of tuition, (2) Pell Grants, (3) endowed scholarship annual interest income, and (4) athletic program earnings. The latter three revenue sources can fluctuate widely and add complexity to the budgeting process. For example, with a significant down-turn in the economy, there will be little or no annual investment interest income to be used to fund scholarships. This shortage will have to be encumbered elsewhere in the budget.

Similarly, the amount of monies needed to fund scholarships and out-of-state tuition waivers is also a moving target. Some of the factors influencing the funds needed for scholarships and tuition waivers would typically include: (1) How many high achieving students with strong SAT scores are to be given a scholarship in order to attract them to the institution? (2) How many athletic scholarships are required to support the institution's athletic goals? (3) How many of the students provided with tuition waivers or scholarships will be out-of-state students? (4) What is the expected increase in student enrollment for both in-state and out-of-state students? The answers to these four questions are supplied to the budget preparers by the Admissions Office and the Athletic Department.

Most often in an effort to be conservative in preparing the budget, the procedure is to budget the tuition revenues in full and then to itemize related off-set expenses in full on the expense side of the budget. Conservative accounting practice would typically prohibit netting of revenues with related expenses for fear the netting would hide or distort the budget picture. An example of not netting related items on the revenue section of the budget would be the amount of scholarship interest income would be included as revenues and then under the expense section of the budget the cost of scholarships will be budgeted as a separate line item expense. These two amounts are not necessarily dollar for dollar matches. A similar situation typically exists in relation to athletes. Athletic program revenue would be included as a separate line item in the revenue section of the budget and the cost of scholarships and tuition waivers for athletes would be budgeted as a separate line item in the expense section of the budget.

Basic Variables

Percy's scenario development begins by setting starting values for the following basic variables: number of in-state students, number of out-of-state students, in-state tuition, out-of-state tuition, and state assistance. Additional basic variables incorporated into the model include number of full-time faculty, number of full-time staff, average faculty salary, average staff salary, and the percentage of salaries for faculty and staff that goes for fringe benefits such as health insurance and retirement.

To simplify the model building process and still make it reflective of current numbers, necessitated the following simplifications: (1) all students pay the same, albeit discounted (discounted from full tuition to account for the absorption of expenses for full scholarships, partial scholarships, Pell grants, out of state tuition waivers or reciprocity agreements, and work study programs as described earlier), tuition, (2) the university's operating budget for 2007-2008 was $100,000,000, (3) the ratio of out-of-state tuition to in-state-tuition in 2007-2008 was maintained at 1.72 (i.e., 17, 564/10,210), and (4) tuition revenues account for 47 percent of the university's 2007-08 operating budget. To satisfy these conditions, reductions were made to full tuition fees for in-state- and out-of-state students to $6,724 and $11, 562, respectively. These numbers were formulated based on maintaining the 1.72 ratio and the revenue from in-state and out-of-state tuition is 47 percent of the operating budget. Using the average tuition price yields $47,000,268 of tuition revenue.

These variables along with the initial values Percy will use are displayed in Table 4. The values for in-state and out-of-state tuition include all student fees, room, and board for one year (two semesters) as well as tuition. Revenue Source Variables

As with all state assisted universities, primary revenue source composition for Winegar University's budget are traditionally from state legislature appropriations, student tuition, auxiliary sources of revenue, contracts and grants, and other sources of revenue (see Figure 1).

The latter three require some explanation. Auxiliary operation sources of revenues include housing, food services, and health care fees. Food services and health care have been outsourced and the fees for these services have been set according to the terms of the licensing agreement. Housing fees are based on the features and comforts of the dormitory and the operating costs.

Contracts for the bookstore, vending services, user fees for the athletic coliseum and other campus facilities are generally multi-year and not subject to change on an annual basis. Some facilities are subject to short term lease for private events (e.g., weddings, festivals, seminars, religious services, etc.) and usage is on a fee basis. Grants are awarded to faculty and administration by governmental, private sector, and not-for-profit organizations and foundations for directed research. A portion of these funds go to the university to cover university overhead and facilities use.

The other category of revenue consists of proceeds from summer instructional camps held on campus and conducted by university athletic coaches in various sports such as basketball, football, tennis, soccer, baseball, and golf. Additional other revenues are generated by vending sales and health center proceeds for treatments and medical supplies including prescription drugs.

Therefore, the major revenue variables are state appropriations from the legislature, tuition revenue based on enrollment, contracts and grants, auxiliary operations, and other. Revenue variables along with their estimated values are presented in Table 5.

Percy's determination of the initial values for the variables in Table 5 is based on the following reasoning. For the most recent year the university's operating budget was $100, 000,000. The revenue from student fees is the sum of the revenues from in-state and out-of-state students. Each of these calculations is the product of the number of students and the respective tuition rate. Based on the values from Table 4, student fees generated $47,000,268 in revenue. State appropriations, contracts and grants, auxiliary operations, and other account for 20, 17, 10, and 6 percent of the total operating budget, respectively, using the 2007-2008 percentages from Figure 1.

Expense Variables

The major categories of expenditures for Winegar University are shown in Figure 2. The variables in this category include personnel and benefits (faculty and staff salaries, faculty and staff fringe benefits), service and supplies, scholarships and waivers, and utility costs. The personnel cost for faculty is the product of the number of faculty by the average faculty salary found in Table 4. The amount for faculty fringe benefits is the product of the fringe benefit percentage in Table 4 and the total amount of faculty salary. The calculations for staff salaries and fringe benefits are calculated in the same manner.

The service and supplies variable includes all of the costs incurred through outsourcing food preparation and dormitory management. In addition, it also includes the cost of all supplies such as office supplies, physical plant supplies, ground maintenance supplies, etc. Scholarships and waivers include the costs of providing these discounts for students. The utility variable includes the cost of all utilities including electric, telecommunication, water and sewer, and gas. Based on the 2007-2008 budget year, these expenses represent 15, 8, and 4 percent of the total operating budget as shown in Figure 2. The initial values for the expenditure variables are shown in Table 6.

ANALYSES

With the variable information at hand, Gerald decided that the data table tools from Excel would be most useful to Percy in preparing his budget recommendations for the Board. Before instructing Percy in the use of these tools, Gerald built the spreadsheet shown in Table 7. This part of the spreadsheet serves as the mathematical model for all subsequent calculations. The column labeled "Formulas" displays the formulas used in the model. For purposes of this paper, a mathematical model consists of input variables, equations, and output variables. If one substitutes specific values of the input variables into equations, the results yield values for the output variables. For example, the output variable InStateTuitionRev is determined by the equation: InStateTuitionRev = NumInStateStudents*InStateTuition.

One-Variable and Two-Variable Data Tables

Before Gerald demonstrates a two-variable data table, he shows Percy how to develop a one-variable data table. For this analysis, Gerald built two one-variable data tables. The first analysis varied in-state-tuition from $6,274 to $8,024 and looked at the effects on total revenue and the surplus/deficit under the assumption state appropriations remained at 20 percent of the operating budget of $100 million. The second analysis varied tuition in the same manner and assumed state appropriations were reduced by five percent. The outcomes of these analyses are displayed in Appendix A.

Percy's real interest is to determine the impact on the budget when both the InStateTuition and OutOfStateTuition variables are varied simultaneously. Gerald explains this can be done by using a two-variable data table. For this type of analysis, Excel enables you to simultaneously vary two input variables and examine the impact on exactly one output variable. For the two-variable data table, Percy suggests that in-state tuition be varied in the same way it was done in the one-variable data table while out-of-state tuition is varied from $11,562 to $12,162 in increments of $100. The output variable for this analysis is the Surplus/Deficit (see Table 8).

Results in Table 8 using the mathematical model from Table 7, demonstrate there are multiple combinations of tuition increases for in-state and out-of-state tuition yielding a surplus. Assuming state support remains at the 2007-2008 level with no rescission, there is no need to raise either in-state or out-of-state tuition rates. To verify the calculations in Table 8, assume out-of-state tuition is $11,762 and in-state tuition is $7,124, then the Surplus/Deficit variable calculation is shown in the box below:

Operating expenses are set at $100,000,000.

InStateTuitionRev and OutOfStateTuitionRev generate $49,323,068. The latter figure results from the sum of the

InStateTuitionRev = 7,124*5,322=37,913,928 and

OutofStateTuitionRev = 11,762*970= 11,409,140

The remaining revenues in Table 8 remain the same so that the total revenue is 102,323,068. The expense variables do not change so

Surplus/Deficit = 102,323,018--100,000,275 = 2,322,793 as shown in Table 8.

The results from Table 8 prompted Percy to ask "What would be the effect of increasing out-of-state enrollment and also increasing out-of-state tuition?" Percy suggested varying out-of-state enrollments from 970 to 1,570 in increments of 100 while varying out-of-state tuition from $11,562 to $12,562 in increments of $100. The results in Table 9 show it is not necessary to initiate these measures yet. It should be noted that an enrollment increase of 400-500 students would require additional faculty. It is difficult to estimate the exact number of faculty, because it will depend on what majors the students choose. However, if the university wants to maintain an 18:1 student faculty ratio, then a crude estimate of new faculty would be between 23 and 29. This ratio is important because the university prides itself on a low student faculty ratio, and the ratio is used in all of the university's promotional material.

In Table 10 in-state enrollment and in-state tuition remain fixed, and out-of-state enrollment and out-of state tuition are varied under the assumption of a 5 percent rescission. Table 10 shows that a modest increase in out-of-state enrollment and out-of-state tuition would be enough to cover a five percent reduction in state appropriations.

Additional Analyses

Percy was quite pleased with the results of the data tables. He remarked, "Now that I have a good feel for how enrollment and tuition variables impact our budget, I'd like to examine three different scenarios where I can look at changing more than two input variables. The design of this spreadsheet is presented in Table 11. Percy named these scenarios "Worst Case", "Most Likely", and "Best Case." The initial values for the scenarios and the results are shown in Table 12. For each scenario, Percy wanted to see what would happen to the surplus/deficit variable if any of eight different input variables changed over a three year period. Equipped with this powerful tool and his estimated variable values, Percy is now able to compose his budget presentations for the President.

CONCLUSION

As Percy entered the room, armed with his laptop and his analyses in hand, he felt more confident of his ability to respond to Board Member challenges. In addition to the prepared scenarios and his responses to the obvious tuition questions presented at the outset of the case, Percy had prepared and rehearsed responses to several other anticipated questions.

* What are the major assumptions upon which you base your most likely scenario and on which scenarios are you more or less confident?

* Where should we set our in-state and out-of-state tuition to insure we will not have to tap into the emergency fund?

* Under your recommended tuition pricing, how many out-of-state and in-state students will not be able to afford to continue next semester?

* How critical to your budget is increasing the ratio of in-state to out-of-state students?

* If the state freezes salaries for the coming year for all (faculty and staff) employees, what would be your new recommendation regarding tuition pricing?

Equipped with his analysis of the budgeting environment, rehearsed responses, and his new tool, Percy felt confident he will be able to quickly respond to the President and other Board Members' questions regarding components of the recommended budget for the coming academic year at Winegar. He will pass his exam. Will you?

APPENDIX A: ONE-VARIABLE DATA TABLES

The one-variable data tables enable Percy to systematically vary one input variable and observe the effect on several output variables. For example, the left side of Table 1 shows the results of varying the input variable InStateTuition from $6,724 to $8,024 in increments of $100 on the output variables TotalRevenue and Surplus/Deficit (TotalRevenue-TotalExpenses). The left side of Table 1 shows the budget is fine as long as the state provides 20 percent of operating expenses. However, the right side of Table 1 shows that if the state reduces their support from $20 million to $19 million (i.e., a 5 percent reduction), the university faces shortfalls that must be remedied by increasing in-state tuition by at least $200 per student to yield a surplus.

Table 1
One-variable data tables showing the effects of increasing
In State Tuition under no rescission and a 5 percent rescission

State appropriations at 20 percent of the operating budget

InStateTuition      TotalRevenue     Surplus/Deficit

$6,724              $100,000,268           ($7)
$6,824              $100,532,468         $532,193
$6,924              $101,064,668        $1,064,393
$7,024              $101,596,868        $1,596,593
$7,124              $102,129,068        $2,128,793
$7,224              $102,661,268        $2,660,993
$7,324              $103,193,468        $3,193,193
$7,424              $103,725,668        $3,725,393
$7,524              $104,257,868        $4,257,593
$7,624              $104,790,068        $4,789,793
$7,724              $105,322,268        $5,321,993
$7,824              $105,854,468        $5,854,193
$7,924              $106,386,668        $6,386,393
$8,024              $106,918,868        $6,918,593

State appropriations reduced by 5 percent

InStateTuition      TotalRevenue     Surplus/Deficit

$6,724               $99,000,268       ($1,000,007)
$6,824               $99,532,468        ($467,807)
$6,924              $100,064,668         $64,393
$7,024              $100,596,868         $596,593
$7,124              $101,129,068        $1,128,793
$7,224              $101,661,268        $1,660,993
$7,324              $102,193,468        $2,193,193
$7,424              $102,725,668        $2,725,393
$7,524              $103,257,868        $3,257,593
$7,624              $103,790,068        $3,789,793
$7,724              $104,322,268        $4,321,993
$7,824              $104,854,468        $4,854,193
$7,924              $105,386,668        $5,386,393
$8,024              $105,918,868        $5,918,593

APPENDIX B: SPREADSHEETS FOR THE THREE-YEAR PROJECTIONS

Table 1

     A spreadsheet for a                          After 1 year
 three-year period under the
    "worst case" scenario

Num In State Students                5,322            5,322
Num Out Of State Students             970              970
In State Tuition                     $6,724          $6,724
Out Of State Tuition                $11,562          $11,562
Num Of Faculty                        340              340
Num Of Staff                          800              800
Average Faculty Salary              $65,883          $67,859
Average Staff Salary                $45,000          $46,350
Fringe Percent                        25%
Rescission Percent                    -5%
Revenue Variables
OperatingExpenses2008             $100,000,000    $103,000,000
In State Tuition Rev              $35,785,128      $35,785,128
Out Of State Tuition Rev          $11,215,140      $11,215,140
State Appropriations              $19,000,000      $17,100,000
Contract And Grants               $17,000,000      $17,000,000
Auxiliary Operations              $10,000,000      $10,000,000
Other                              $6,000,000      $6,000,000
Total Revenue                     $99,000,268      $97,100,268
Expense Variables
Faculty Salary                    $22,400,220      $23,072,227
Staff Salary                      $36,000,000      $37,080,000
Faculty Fringe Benefits            $5,600,055      $5,768,057
Staff Fringe Benefits              $9,000,000      $9,270,000
Service And Supplies              $15,000,000      $15,750,000
Scholarships And Waivers           $8,000,000      $8,000,000
Utilities                          $4,000,000      $4,000,000
Total Expenses                    $100,000,275    $102,940,283
Surplus/Deficit                   ($1,000,007)    ($5,840,015)
Variables that Change                Change
In State Tuition                       0
Out Of State Tuition                   0
In State Enrollment                    0
Out Of State Enrollment                0
Change In Operating Expenses         3.00%
Faculty Staff Salary Increase        3.00%
State Appropriation Change          -10.00%
Service And Supplies Change          5.00%

     A spreadsheet for a          After 2 years    After 3 years
 three-year period under the
    "worst case" scenario

Num In State Students                 5,322            5,322
Num Out Of State Students              970              970
In State Tuition                     $6,724            $6,724
Out Of State Tuition                 $11,562          $11,562
Num Of Faculty                         340              340
Num Of Staff                           800              800
Average Faculty Salary               $69,895          $71,992
Average Staff Salary                 $47,741          $49,173
Fringe Percent
Rescission Percent
Revenue Variables
OperatingExpenses2008             $106,090,000      $109,272,700
In State Tuition Rev               $35,785,128      $35,785,128
Out Of State Tuition Rev           $11,215,140      $11,215,140
State Appropriations               $15,390,000      $13,851,000
Contract And Grants                $17,000,000      $17,000,000
Auxiliary Operations               $10,000,000      $10,000,000
Other                              $6,000,000        $6,000,000
Total Revenue                      $95,390,268      $93,851,268
Expense Variables
Faculty Salary                     $23,764,393      $24,477,325
Staff Salary                       $38,192,400      $39,338,172
Faculty Fringe Benefits            $5,941,098        $6,119,331
Staff Fringe Benefits              $9,548,100        $9,834,543
Service And Supplies               $16,537,500      $17,364,375
Scholarships And Waivers           $8,000,000        $8,000,000
Utilities                          $4,000,000        $4,000,000
Total Expenses                    $105,983,492      $109,133,746
Surplus/Deficit                   ($10,593,224)    ($15,282,478)
Variables that Change
In State Tuition
Out Of State Tuition
In State Enrollment
Out Of State Enrollment
Change In Operating Expenses
Faculty Staff Salary Increase
State Appropriation Change
Service And Supplies Change

Table 2

  A spreadsheet for a three-
    year period under the
    "most likely" scenario                          After 1 year

Num In State Students                 5,322            5,522
Num Out Of State Students              970              1000
In State Tuition                     $6,724            $6,926
Out Of State Tuition                 $11,562          $11,909
Num Of Faculty                         340              340
Num Of Staff                           800              800
Average Faculty Salary               $65,883          $67,201
Average Staff Salary                 $45,000          $45,900
Fringe Percent                         25%
Rescission Percent                     -5%
Revenue Variables
OperatingExpenses2008             $100,000,000      $102,000,000
In State Tuition Rev               $35,785,128      $38,243,826
Out Of State Tuition Rev           $11,215,140      $11,908,860
State Appropriations               $19,000,000      $18,050,000
Contract And Grants                $17,000,000      $17,000,000
Auxiliary Operations               $10,000,000      $10,000,000
Other                              $6,000,000        $6,000,000
Total Revenue                      $99,000,268      $101,202,686
Expense Variables
Faculty Salary                     $22,400,220      $22,848,224
Staff Salary                       $36,000,000      $36,720,000
Faculty Fringe Benefits            $5,600,055        $5,712,056
Staff Fringe Benefits              $9,000,000        $9,180,000
Service And Supplies               $15,000,000      $15,450,000
Scholarships And Waivers           $8,000,000        $8,000,000
Utilities                          $4,000,000        $4,000,000
Total Expenses                    $100,000,275      $101,910,281
Surplus/Deficit                   ($1,000,007)       ($707,595)
Variables that Change                Change
In State Tuition                      3.00%
Out Of State Tuition                  3.00%
In State Enrollment                    200
Out Of State Enrollment                30
Change In Operating Expenses          2.00%
Faculty Staff Salary Increase         2.00%
State Appropriation Change           -5.00%
Service And Supplies Change           3.00%

  A spreadsheet for a three-
    year period under the
    "most likely" scenario        After 2 years      After 3 years

Num In State Students                 5,722              5,922
Num Out Of State Students             1030               1060
In State Tuition                     $7,133             $7,347
Out Of State Tuition                 $12,266            $12,634
Num Of Faculty                         340                340
Num Of Staff                           800                800
Average Faculty Salary               $68,545            $69,916
Average Staff Salary                 $46,818            $47,754
Fringe Percent
Rescission Percent
Revenue Variables
OperatingExpenses2008             $104,040,000       $106,120,800
In State Tuition Rev               $40,817,839        $43,511,873
Out Of State Tuition Rev           $12,634,110        $13,392,156
State Appropriations               $17,147,500        $16,290,125
Contract And Grants                $17,000,000        $17,000,000
Auxiliary Operations               $10,000,000        $10,000,000
Other                              $6,000,000         $6,000,000
Total Revenue                     $103,599,449       $106,194,155
Expense Variables
Faculty Salary                     $23,305,189        $23,771,293
Staff Salary                       $37,454,400        $38,203,488
Faculty Fringe Benefits            $5,826,297         $5,942,823
Staff Fringe Benefits              $9,363,600         $9,550,872
Service And Supplies               $15,913,500        $16,390,905
Scholarships And Waivers           $8,000,000         $8,000,000
Utilities                          $4,000,000         $4,000,000
Total Expenses                    $103,862,986       $105,859,381
Surplus/Deficit                    ($263,538)          $334,774
Variables that Change
In State Tuition
Out Of State Tuition
In State Enrollment
Out Of State Enrollment
Change In Operating Expenses
Faculty Staff Salary Increase
State Appropriation Change
Service And Supplies Change

Table 3

  A spreadsheet for a three-
 year period under the "Best
        case" scenario                            After 1 year

Num In State Students                5,322            5,572
Num Out Of State Students             970             1030
In State Tuition                     $6,724          $6,858
Out Of State Tuition                $11,562          $11,909
Num Of Faculty                        340              340
Num Of Staff                          800              800
Average Faculty Salary              $65,883          $67,201
Average Staff Salary                $45,000          $45,900
Fringe Percent                        25%
Rescission Percent                    -5%
Revenue Variables
OperatingExpenses2008             $100,000,000    $100,000,000
In State Tuition Rev              $35,785,128      $38,215,451
Out Of State Tuition Rev          $11,215,140      $12,266,126
State Appropriations              $19,000,000      $19,000,000
Contract And Grants               $17,000,000      $17,000,000
Auxiliary Operations              $10,000,000      $10,000,000
Other                              $6,000,000      $6,000,000
Total Revenue                     $99,000,268     $102,481,576
Expense Variables
Faculty Salary                    $22,400,220      $22,848,224
Staff Salary                      $36,000,000      $36,720,000
Faculty Fringe Benefits            $5,600,055      $5,712,056
Staff Fringe Benefits              $9,000,000      $9,180,000
Service And Supplies              $15,000,000      $15,300,000
Scholarships And Waivers           $8,000,000      $8,000,000
Utilities                          $4,000,000      $4,000,000
Total Expenses                    $100,000,275    $101,760,281
Surplus/Deficit                   ($1,000,007)      $721,296
Variables that Change                Change
In State Tuition                     3.00%
Out Of State Tuition                 3.00%
In State Enrollment                   200
Out Of State Enrollment                30
Change In Operating Expenses         2.00%
Faculty Staff Salary Increase        2.00%
State Appropriation Change           -5.00%
Service And Supplies Change          3.00%

  A spreadsheet for a three-
 year period under the "Best
        case" scenario            After 2 years     After 3 years

Num In State Students                 5,822             6,072
Num Out Of State Students             1090              1150
In State Tuition                     $6,996            $7,136
Out Of State Tuition                 $12,266           $12,634
Num Of Faculty                         340               340
Num Of Staff                           800               800
Average Faculty Salary               $68,545           $69,916
Average Staff Salary                 $46,818           $47,754
Fringe Percent
Rescission Percent
Revenue Variables
OperatingExpenses2008             $100,000,000      $100,000,000
In State Tuition Rev               $40,728,672       $43,327,136
Out Of State Tuition Rev           $13,370,077       $14,529,226
State Appropriations               $19,000,000       $19,000,000
Contract And Grants                $17,000,000       $17,000,000
Auxiliary Operations               $10,000,000       $10,000,000
Other                              $6,000,000        $6,000,000
Total Revenue                     $106,098,749      $109,856,362
Expense Variables
Faculty Salary                     $23,305,189       $23,771,293
Staff Salary                       $37,454,400       $38,203,488
Faculty Fringe Benefits            $5,826,297        $5,942,823
Staff Fringe Benefits              $9,363,600        $9,550,872
Service And Supplies               $15,606,000       $15,918,120
Scholarships And Waivers           $8,000,000        $8,000,000
Utilities                          $4,000,000        $4,000,000
Total Expenses                    $103,555,486      $105,386,596
Surplus/Deficit                    $2,543,263        $4,469,766
Variables that Change
In State Tuition
Out Of State Tuition
In State Enrollment
Out Of State Enrollment
Change In Operating Expenses
Faculty Staff Salary Increase
State Appropriation Change
Service And Supplies Change

REFERENCES

Bryan, G. A., & Whipple, T.W. (1995, September/October). Tuition elasticity of the demand for higher education among current students: A pricing model. Journal of Higher Education, 66(5), 560-574.

Caiden, N. 1988) Shaping things to come: Super budgeters as heroes (and heroines) in the late twentieth century. In I. S. Rubin (Ed.), New Directions in Budget Theory. Albany, N.Y.: SUNY Press.

Clemson University Budget Document, The Office of Budgets and Financial Planning. (2002-2003). Clemson University, Fiscal Year 2002-2003.

Glenny, L. A. (1972). The anonymous leaders of higher education. Journal of Higher Education, 43, 9-22.

Hannon, K. (2005, June). The campaign at the University of Georgia, Georgia Magazine, 84(3), 16-20.

Layzell, D. T., & Lyddon, J.W. (1990). Budgeting for higher education at the state level: Enigma, paradox, and ritual. ERIC Digest, 12.

Parsons, J., Oja, D., Ageloff, R. & Carey, P. (2010). New perspectives on Microsoft Excel 2007, Comprehensive. Boston, MA: Thomson Course Technology.

David A. Bradbard, Winthrop University

D. Keith Robbins, Winthrop University

Charles Alvis, Winthrop University

Table 1
Ten year history of state appropriations for Winegar University
and all state higher education

                          1998-99     1999-00     2000-01     2001-02

Winegar($K)               $19,142     $19,947     $20,844     $21,854

% Change                   3.78%       4.21%       4.50%       4.85%

Rescission                  0%          0%          0%          0%

Colleges &
Universities as            14.4        14.2         14         14.9
% of State Revenue

State Appropriation        1,921       2,029       2,154       2,299
for All Education($M)

All Education as % of      46.5        46.4        46.1        50.1
State Revenue($M)

Total State                4,133       4,377       4,675       4,588
Revenue($M)

                          2002-03     2003-04     2004-05     2005-06

Winegar($K)               $23,428     $25,404     $24,477     $21,900

% Change                   7.20%       8.43%      -3.65%      -10.53%

Rescission                  0%          2%          3%          4%

Colleges &
Universities as            14.8        14.6        13.7        12.9
% of State Revenue

State Appropriation        2,559       2,729       2,789       2,595
for All Education($M)

All Education as % of      51.8        51.1        51.1        50.1
State Revenue($M)

Total State                4,944       5,341       5,458       5,180
Revenue($M)

                          2006-07     2007-08

Winegar($K)               $19,539     $19,963

% Change                  -10.78%      2.17%

Rescission                  2%          5%

Colleges &
Universities as            12.4        11.6
% of State Revenue

State Appropriation        2,374       2,549
for All Education($M)

All Education as % of      49.3        48.8
State Revenue($M)

Total State                4,812       5,222
Revenue($M)

Table 2
A ten year history of Winegar's student enrollment, tuition, and fees

                       1998-99      1999-00      2000-01      2001-02

# Students              4,416        4,340        4,610        4,649
# In State              3,823        3,775        4,023        4,066
% In State               87%          87%          87%          87%
# Out of State           593          565          587          583
% Out of State           13%          13%          13%          13%
In State Fees           $4,032       $4,126       $4,262       $4,868
% Change                  2%           2%           3%          14%
Out of State Fees       $7,046       $7,250       $7,434       $7,680
% Change                  2%           3%           3%           3%

                       2002-03      2003-04      2004-05      2005-06

# Students              4,838        5,056        5,161        5,213
# In State              4,196        4,374        4,421        4,514
% In State               87%          87%          86%          87%
# Out of State           642          682          740          699
% Out of State           13%          13%          14%          13%
In State Fees           $5,600       $6,652       $7,816       $8,756
% Change                 15%          19%          17%          12%
Out of State Fees       $8,756      $10,310      $12,258      $14,410
% Change                 14%          18%          19%          18%

                       2006-07      2007-08

# Students              5,187        6,292
# In State              4,483        5,322
% In State               86%          85%
# Out of State           704          970
% Out of State           14%          15%
In State Fees           $9,500      $10,210
% Change                  8%           7%
Out of State Fees      $16,150      $17,564
% Change                 12%           9%

Table 3
Proportion of students retained and projected future enrollments
at various tuition levels

                    In-State                 Out-of-State

            Proportion    Projected                   Proportion
Tuition      Retained     Enrollment     Tuition       Retained

$10,210       100.00%       5,722        $17,564        100.00%
$10,710       95.30%        5,453        $18,564        93.30%
$11,210       85.90%        4,915        $19,564        83.60%
$11,710       62.50%        3,576        $20,564        74.80%
$12,210       39.10%        2,237        $21,564        53.60%

           Out-of-State

            Projected
Tuition     Enrollment   Total

$10,210        1070      6,792
$10,710        998       6,451
$11,210        895       5,810
$11,710        800       4,377
$12,210        574       2,811

Note. Contents of this table were adapted from Bryan and
Whipple (1995).

Table 4
Basic variables and their initial values

                            Initial
Basic Variables              Values

NumInStateStudents            5,322
NumOutOfStateStudents           970
InStateTuition               $6,724
OutOfStateTuition           $11,562
NumOfF aculty                   340
NumOfStaff                      800
AverageFacultySalary        $65,883
AverageStaffSalary          $45,000
FringePercent                   25%

Table 5
Revenue source variables and their initial values

Revenue Variables                    Initial Values

InStateTuitionRev              $35,785,128 (5,322* 6,724)
OutOfStateTuitionRev          $11,215,140 (970 * $11,562)
StateAppropriations         $20,000,000 (.20 * 100,000,000)
ContractsAndGrants           $17,000,000 (.17* 100,000,000)
AuxiliaryOperations          $10,000,000 (.10* 100,000,000)
Other                        $ 6,000,000 (.06* 100,000,000)

Table 6
Expense variables and their initial values

Expense Variables                     Initial values

FacultySalary                    $22,400,220 (340* 65,883)
StaffSalary                      $36,000,000 (800* 45,000)
FacultyFringeBenefits          $5,600,055 (.25* 22,400,220)
StaffFringeBenefits            $9,000,000 (.25* 36,000,000)
Total Personnel Costs                   $73,000,275
ServiceAndSupplies            $15,000,000 (.15* 100,000,000)
ScholarshipsAndWaivers         $8,000,000 (.08* 100,000,000)
Utilities                      $4,000,000 (.04* 100,000,000)

Table 7
The mathematical model section of the initial spreadsheet

Basic Variables               Initial Values         Formulas

  NumInStateStudents               5,322               5322
  NumOutOfStateStudents             970                970
  InStateTuition                  $6,724               6724
  OutOfStateTuition               $11,562             11562
  NumOfFaculty                      340                340
  NumOfStaff                        800                800
  AverageFacultySalary            $65,883             65883
  AverageStaffSalary              $45,000             45000
  FringePercent                     25%                0.25
  RecsisionPercent                  5%                 0.05
Revenue Variables
  OperatingExpenses2008        $100,000,000         100000000
  InStateTuitionRev            $35,785, 128           =B2*B4
  OutOfStateTuitionRev          $11,215,140           =B3*B5
  StateAppropriations           $19,000,000     =20000000*(1-B11)
  ContractAndGrants             $17,000,000         =0.17*B13
  AuxiliaryOperations           $10,000,000          =0.1*B13
  Other                         $6,000,000          =0.06*B13
TotalRevenue                   $100,000,000       =SUM(B14:B19)
Expense Variables
  FacultySalary                 $22,400,220           =B6*B8
  StaffSalary                   $36,000,000           =B7*B9
  FacultyFringeBenefits         $5,600,055           =B10*B22
  StaffFringeBenefits           $9,000,000           =B23*B10
  ServiceAndSupplies            $15,000,000         =0.15*B13
  ScholarshipsAndWaivers        $8,000,000          =0.08*B13
  Utilities                     $4,000,000          =0.04*B13
TotalExpenses                  $100,000,000       =SUM(B22:B28)
Surplus/Deficit                ($1,000,007)          =B20-B19

Table 8
Results of varying both in-state and out-of-state tuition on
the surplus/deficit with no reduction in state support or
change in enrollments

                             OutofState Tuition

InState      $11,562        $11,662       $11,762         $11,862
$6,724         ($7)         $96,993       $193,993       $290,993
$6,824       $532,193      $629,193       $726,193       $823,193
$6,924      $1,064,393    $1,161,393     $1,258,393     $1,355,393
$7,024      $1,596,593    $1,693,593     $1,790,593     $1,887,593
$7,124      $2,128,793    $2,225,793     $2,322,793     $2,419,793
$7,224      $2,660,993    $2,757,993     $2,854,993     $2,951,993
$7,324      $3,193,193    $3,290,193     $3,387,193     $3,484,193
$7,424      $3,725,393    $3,822,393     $3,919,393     $4,016,393
$7,524      $4,257,593    $4,354,593     $4,451,593     $4,548,593
$7,624      $4,789,793    $4,886,793     $4,983,793     $5,080,793
$7,724      $5,321,993    $5,418,993     $5,515,993     $5,612,993

             OutofState
               Tuition

InState      $12,062
$6,724       $484,993
$6,824      $1,017,193
$6,924      $1,549,393
$7,024      $2,081,593
$7,124      $2,613,793
$7,224      $3,145,993
$7,324      $3,678,193
$7,424      $4,210,393
$7,524      $4,742,593
$7,624      $5,274,793
$7,724      $5,806,993

Table 9
Surplus/deficit results by varying out-of-state enrollment and
out-of-state tuition with no rescission

Results of varying Out Of State Students and Out Of State
Tuition with state appropriations at 20 percent of the
operating budget (no rescission).

                         Num Out Of State Students

Out Of State         970           1,070           1,270
  Tuition
$11,562          $2,128,793      $3,284,993     $5,597,393
$11,662          $2,225,793      $3,391,993     $5,724,393
$11,762          $2,322,793      $3,498,993     $5,851,393
$11,862          $2,419,793      $3,605,993     $5,978,393
$11,962          $2,516,793      $3,712,993     $6,105,393
$12,062          $2,613,793      $3,819,993     $6,232,393
$12,162          $2,710,793      $3,926,993     $6,359,393
$12,262          $2,807,793      $4,033,993     $6,486,393
$12,362          $2,904,793      $4,140,993     $6,613,393
$12,462          $3,001,793      $4,247,993     $6,740,393
$12,562          $3,098,793      $4,354,993     $6,867,393

                     Num Out Of State
                         Students

Out Of State        1,370          1,470
  Tuition
$11,562          $6,753,593      $7,909,793
$11,662          $6,890,593      $8,056,793
$11,762          $7,027,593      $8,203,793
$11,862          $7,164,593      $8,350,793
$11,962          $7,301,593      $8,497,793
$12,062          $7,438,593      $8,644,793
$12,162          $7,575,593      $8,791,793
$12,262          $7,712,593      $8,938,793
$12,362          $7,849,593      $9,085,793
$12,462          $7,986,593      $9,232,793
$12,562          $8,123,593      $9,379,793

Table 10
Surplus/deficit results by varying out-of-state enrollment and
out-of-state tuition with a five percent rescission

Results of varying Num Of State Students and Out Of State
Tuition with a 5 percent reduction in state appropriations.

Out Of State         970           1,070          1,270
  Tuition
$11,562         ($1,000,007)      $156,193      $2,468,593
$11,662          ($903,007)       $263,193      $2,595,593
$11,762          ($806,007)       $370,193      $2,722,593
$11,862          ($709,007)       $477,193      $2,849,593
$11,962          ($612,007)       $584,193      $2,976,593
$12,062          ($515,007)       $691,193      $3,103,593
$12,162          ($418,007)       $798,193      $3,230,593
$12,262          ($321,007)       $905,193      $3,357,593
$12,362          ($224,007)      $1,012,193     $3,484,593
$12,462          ($127,007)      $1,119,193     $3,611,593
$12,562           ($30,007)      $1,226,193     $3,738,593

Out Of State       1,370          1,470
  Tuition
$11,562          $3,624,793     $4,780,993
$11,662          $3,761,793     $4,927,993
$11,762          $3,898,793     $5,074,993
$11,862          $4,035,793     $5,221,993
$11,962          $4,172,793     $5,368,993
$12,062          $4,309,793     $5,515,993
$12,162          $4,446,793     $5,662,993
$12,262          $4,583,793     $5,809,993
$12,362          $4,720,793     $5,956,993
$12,462          $4,857,793     $6,103,993
$12,562          $4,994,793     $6,250,993

Table 11
The spreadsheet formulas for a three year scenario model

Num In State Students                 5322
Num Out Of State Students              970
In State Tuition                      6724
Out Of State Tuition                  11562
Num Of Faculty                         340
Num Of Staff                           800
Average Faculty Salary                65883
Average Staff Salary                  45000
Fringe Percent                        0.25
Rescission Percent                    -0.05
Revenue Variables
OperatingExpenses2008               100000000
In State Tuition Rev                 =B2*B4
Out Of State Tuition Rev             =B3*B5
State Appropriations            =20000000*(1+B11)
Contract And Grants                 =0.17*B13
Auxiliary Operations                =0.1*B13
Other                               =0.06*B13
Total Revenue                     =SUM(B14:B19)
Expense Variables
Faculty Salary                       =B6*B8
Staff Salary                         =B7*B9
Faculty Fringe Benefits             =B10*B22
Staff Fringe Benefits               =B23*B10
Service And Supplies                =0.15*B13
Scholarships And Waivers            =0.08*B13
Utilities                           =0.04*B13
Total Expenses                    =SUM(B22:B28)
Surplus/Deficit                     =B20-B29

Variables that Change            Rate of Change

In State Tuition                      0.03
Out Of State Tuition                  0.03
In State Enrollment                    200
Out Of State Enrollment                30

                                       After 1 year

Num In State Students                   =B2+$B$34
Num Out Of State Students               =B3+$B$35
In State Tuition                       =B4+$B$32*B4
Out Of State Tuition                   =B5+B5*$B$33
Num Of Faculty                             =B6
Num Of Staff                              =$B$7
Average Faculty Salary               =(1+$B$37)*$B$8
Average Staff Salary                 =(1+$B$37)*$B$9
Fringe Percent
Rescission Percent
Revenue Variables
OperatingExpenses2008                =(1+$B$36)*$B$13
In State Tuition Rev                      =D2*D4
Out Of State Tuition Rev                  =D3*D5
State Appropriations                  =(1+$B$38)*B16
Contract And Grants                       =$B$17
Auxiliary Operations                      =$B$18
Other                                     =$B$19
Total Revenue                         =SUM(D14:D19)
Expense Variables
Faculty Salary                            =D6*D8
Staff Salary                              =D7*D9
Faculty Fringe Benefits                 =$B$10*D22
Staff Fringe Benefits                   =$B$10*D23
Service And Supplies                 =(1+$B$39)*$B$26
Scholarships And Waivers                  =$B$27
Utilities                                 =$B$28
Total Expenses                        =SUM(D22:D28)
Surplus/Deficit                          =D20-D29

Variables that Change             Variables that Change

In State Tuition                   Change In Operating
Out Of State Tuition             Faculty Salary Increase
In State Enrollment             State Appropriation Change
Out Of State Enrollment            Service And Supplies

                                 After 2 years

Num In State Students              =D2+$B$34
Num Out Of State Students          =D3+$B$35
In State Tuition                 =D4+D4*$B$32
Out Of State Tuition             =D5+D5*$B$33
Num Of Faculty                        =D6
Num Of Staff                         =$B$7
Average Faculty Salary           =(1+$B$37)*D8
Average Staff Salary             =(1+$B$37)*D9
Fringe Percent
Rescission Percent
Revenue Variables
OperatingExpenses2008           =(1+$B$36)*D13
In State Tuition Rev                =E2*E4
Out Of State Tuition Rev            =E3*E5
State Appropriations             =(1+$B38)*D16
Contract And Grants                 =$B$17
Auxiliary Operations                =$B$18
Other                               =$B$19
Total Revenue                    =SUM(E14:E19)
Expense Variables
Faculty Salary                      =E6*E8
Staff Salary                        =E7*E9
Faculty Fringe Benefits           =$B$10*E22
Staff Fringe Benefits             =$B$10*E23
Service And Supplies            =(1+$B$39)*D26
Scholarships And Waivers            =$B$27
Utilities                           =$B$28
Total Expenses                   =SUM(E22:E28)
Surplus/Deficit                    =E20-E29

Variables that Change           Rate of Change

In State Tuition                     0.02
Out Of State Tuition                 0.02
In State Enrollment                 -0.05
Out Of State Enrollment              0.03

Table 12
A summary of the three scenarios including the rates of change for
the variables and the results for the surplus/deficit
variable

Scenario Summary                    Worst Case      Most Likely

Assumptions
In State Tuition                       N/C              +3%
Out Of State Tuition                   N/C              +3%
In State Enrollment                    N/C              200
Out Of State Enrollment                N/C              30
Change In Operating Expenses           +3%              +2%
Faculty Staff Salary Increase          +3%              2%
State Appropriation Change            -10%             -5%
Service And Supplies Change            +5%              +3%
Results for the Surplus/
  Deficit variable
After one year                     ($5,840,015)     ($707,595)
After two years                   ($10,593,224)     ($263,538)
After three years                 ($15,282,478)      $334,774

Scenario Summary                   Best Case

Assumptions
In State Tuition                      +2%
Out Of State Tuition                  +3%
In State Enrollment                   250
Out Of State Enrollment                60
Change In Operating Expenses          N/C
Faculty Staff Salary Increase         +2%
State Appropriation Change            N/C
Service And Supplies Change           +2%
Results for the Surplus/
  Deficit variable
After one year                      $721,296
After two years                    $2,543,263
After three years                  $4,469,766

Note. The spreadsheets for the three scenarios are shown
in Appendix B.

Figure 1. A comparison of Winegar's sources of revenue for
the academic years1989-90 and 2007-2008.

Winthrop University
Revenues 1989-90

Auxiliary Enterprises       15%
Contracts and Grants        10%
Student Tuition and Fees    26%
State Appropriations        44%
Other                        5%

Winthrop University
Projected Revenues 2006-07

Auxiliary Enterprises       10%
Contracts and Grants        17%
Student Tuition and Fees    47%
Appropriations              20%
Other                        6%

Note: Table made from pie graph.

Figure 2. Winegar University's expenditures for 2007-2008.

Winegar University Expenditures
2007-2008

Scholarships and Waivers     8%
Services and Supplies       15%
Personnnel and Benefits      73%
Utilities                    4%

Note: Table made from pie graph.