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i
FINAL REPORT
ACKNOWLEDGMENTS
This Pilot Study would not have been completed without the inputs, time and
patience provided by various individuals. The research team undertook focus group
discussions, made presentations to end-users and other research teams, as well as
requested data and other inputs from various universities For all this, the research team
wishes to acknowledge the following for their invaluable contribution to the study, listed
in alphabetical order:
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FINAL REPORT
ii
FINAL REPORT
EXECUTIVE SUMMARY
The first phase of this project assessing the viability of the normative financing
framework involved an attempt to estimate the cost of producing degrees at a sample
private and public HEI.
Costs were broken down into 3 major categories: direct personnel expenses, departmental
MOOE and indirect costs. Inasmuch as different universities accounted for costs in
different ways, the researchers had to exert a considerable amount of effort to reconcile
accounts and arrive at consistent ways of calculating figures.
The full spreadsheet accounts with all relevant cost figures were then derived. To
simplify analysis, we computed costs for 2 sample degrees per university, using the
formula described in the methodology.
The figures reveal significant differences between tuition fees charged and the cost
figures computed. The cost figures are more reliable as they work on the premise that the
university has internalized all relevant expenses.
Our findings confirm the intuition that scale effects from the number of students enrolled
work to drive down both personnel and MOOE costs. It is this sort of logic that has caused
universities to enact internal controls on program expansion, class sizes, and other means
to ensure efficiency.
We are careful to point out, however, that the data obtained from this method are
essentially static – that is to say, they do not incorporate programmed increases in quality
provision (which itself is costly), as well as very significant market distortions (such as
“irrational” student preferences).
As this is the first phase, we expect that as additional universities and HEIs are surveyed,
we will be able to use the accumulated data to construct a cost function and compute the
marginal cost of producing a graduate in a course from an HEI of a given quality level.
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FINAL REPORT
TABLE OF CONTENTS
1.0 Introduction 2
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FINAL REPORT
References 47
Appendices
List of Tables
List of Figures
ii
FINAL REPORT
The research framework is composed of three chapters. The first chapter describes the
study, enumerates the objectives, and provides the relevance of the study. The second
chapter is dedicated to the review of related literature while the third chapter provides the
details of the framework and the methodology adopted.
1
CHAPTER 1
Introduction
The rationalization of the Philippine Educational System has been described extensively
by the Presidential Commission on Educational Reform (PCER). In their April 2000
Report, they revealed three basic problems in the Philippine education system. These are
inequity in opportunities and resource allocation, inefficiency in the use of resources, and
low and declining levels of quality. In the bid to address these concerns, the Education
Sector Development Program (ESDP) was formed. It is envisioned that this ADB-funded
program would give rise to policy reforms in the following areas:
Sector Financing
Normative Financing for Basic Education
Scholarships and Loans
Normative Financing in Higher Education
Rationalization of State Universities and Colleges
Allocations for Non-Salary Expenditures in Basic Education
The task is daunting and consequently each of the objectives had been broken up to
manageable sizes. The concern of this research is for Normative Financing in Higher
Education.
A review of the budgetary allocation for state universities and colleges (SUCs) has shown
that they have been primarily subsidized by the National Government through input
financing (PCER, 2000). About 75% of the budget allocation for SUCs goes towards
personnel services, while about 18% finances operating expenses. Thus increments to
yearly budgets are there only to cover mandated salary increases and the costs of
inflation.
Introduction 2
Despite the steady 17-18% of the education budget going to the SUCs, the share of each
university decreases not only because the total budget for the educational sector has
decreased, but also because of the growing number of SUCs that have to be financed.
While the number of SUCs has remained below 115, the number of satellite campuses
has increased dramatically. With lower budgets, the quality of education has begun to
deteriorate as teachers themselves are not able to obtain advanced degrees.
Clearly there is high dependence on the National Government in the financing of higher
education. Yet Government is financing the operations of 114 SUCs that serve only
28.3% of higher education institution (HEI) enrollees with expenditures ranging from as
low as P6,000 to as high as P100,000 per student. Studies (PCER, 2000; Preddey and
Nuqui, 2001) have shown that of total HEI enrollees, only 25 % belong to the poor
income groups.
The inequities and efficiencies cannot continue unabated if Government is to uplift the
standard of education necessary for the nation’s development. This concern has led to
the concept of normative financing, a budgetary allocation process used by countries such
as Australia and the United Kingdom. In normative financing, educational institutions
are given budget allocation according to a formula that considers the cost to educate a
student taking a particular degree. In layman’s terms, government will be “buying” a
particular number of students taking a particular degree, the degree of which is line with
government priorities, thus transforming the system from being input based to being
output based.
A comprehensive study on the costs of the different degree programs offered in higher
educational institutions is a major component of the normative financing formula.
However, before an extensive study can be done, it is essential to conduct a pilot research
study to determine the best way to arrive at a cost for a particular degree. This is what
the research study hopes to accomplish.
The output of this study is a research methodology that can be used across all HEIs,
whether public or private, so that data are comparable. This methodology will be tested
for a prototype degree, in order to arrive at useful estimates of student costs.
Introduction 3
1.4 Significance of the Study
An important step in trying to address the major issues involved in the financing of
higher education is a comprehensive cost analysis of the major degree programs offered
by higher educational institutions so as to have a positive view of how resources are spent
and for what purposes. This will provide the stakeholders in higher education, relevant
information so as to first of all answer normative questions regarding the uses of funds in
higher education and then make the appropriate policy recommendations. Essentially an
analysis of costs will provide a systematic accounting of the uses of funds in the degrees
offered in higher education institutions.
This process will give us vital information such as: (a) the distribution pattern of the uses
of the funds; (b) the allocation of funds across educational inputs (.i.e. salaries,
equipment, research and development, etc); (c) the proportionate cost shares of inputs; (d)
the overall structure of costs for each degree program and institution; and lastly (e) an
estimate of the cost per student in the different degrees offered by higher education
institutions in the country. In turn this will lead to insights on normative questions (of
what ought to be) regarding these issues such as (a) is the allocation of funds across
education inputs ideal?; (b) is the allocation of funds between research and teaching
ideal? Or, (c) does teaching take precedence over research?
;
The comparative cost data obtained will afford a better understanding of the costs of
higher education degree programs; in particular the cost per student in each degree
program considered in the study. Moreover, they will also afford a better understanding
of other important issues in higher education financing as identified by the CHED. These
include the following:
Will the option of selective subsidies based on programs and/or institutions lead
to better allocative efficiency?
How much of the average cost of higher education should be borne by the
students and their families?
Are there possible options for alternative private sources of financing higher
education?
Introduction 4
Should the government increase its appropriations for higher education
scholarships? Where should these scholarships be directed to (i.e. students,
faculty, which programs and institutions)?
There have been many constraints in the accomplishment of the objectives of this
research. Since it is a pilot study that needed immediate output, the number of HEIs was
considerably trimmed from 8 to 4, then later to just 2. The choice of these 2 HEIs was
determined by the following: (1) easy access to data and (2) quality of education.
Moreover, one HEI had to be a public institution, while the other a private institution
both of high quality for benchmarking purposes.
The choice of HEI for evaluation was limited to the National Capital Region. There was
no attempt to try to identify HEIs from other regions since the study does not intend to
arrive at a representative cost per student per degree but aims to test the research
methodology
The identity of the HEIs studied is to be kept confidential. This is especially important
for private institutions. To further disguise these private HEIs, the more common
programs were used to substitute the names of programs through which the university can
readily be identified.
Finally, no inflationary factor was imputed in arriving at costs for each subsequent year
of student education. However, costs are not stagnant and consequently a multiplier
should be included when using the formula for normative financing.
Introduction 5
1.6 Acronyms and Operational Definitions
For uniformity, “degrees” shall refer to that conferred upon the students upon their
graduation.
There are many terms that are referred to in their acronym form. These terms and their
definitions are listed in the table next page:
Acronym Definition
Introduction 6
CHAPTER 2
Review of Related Literature
Unfortunately, the proliferation of SUCs has placed a considerable strain on the scarce
resources of the government. According to the PCER Report (2000), the average annual
cost per student for basic education was about P5,000 in 1998 compared to that of higher
education which ranged from P6,700 to close to P100,000. The cost per student at the
University of the Philippines was P62,000 compared to its maximum tuition fee level of
only P8,000. In the same report, it was relayed that the cost per student in SUCs is even
much higher than those of private institutions. The balancing act has resulted in great
deficiencies in basic education manifested by lack of classrooms, textbooks and teachers,
and continued unsatisfactory ratings in achievements tests for math, science, and
language (PCER).
The creation of additional SUCs over the years (see Figure 2.1), either through
conversion of CHED-supervised institutions (CSIs) or legislative intervention, has meant
that the 17-18% proportion of SUC budget to total education sector budget has resulted in
smaller budget allocations per SUC. Thus the increase in SUCs as well as the increase in
satellite campuses not only increases competition for scarce resources, but it also
perpetuates poor quality of education as most of these SUCs have merely been converted
from CSIs without regard to their capabilities (ADB and WB, 1998).
N u m b e r o f S t a t e U n iv e r s it ie s a n d C o lle g e s
1 2 0
1 0 0
8 0
6 0
4 0
2 0
0
Figure 2.111 9Cum
0 0 -
9 1 0
ulative Number of
1 9 2 1 -
1 9 3 0
State Universities
1 9 4 1 -
1 9 5 0
1 9 6 1 -
1 9 7 0
and Colleges 22 00 01 10 -
1 9 8 1 -
1 9 9 0
With normative financing the government hopes to achieve less dependence by the SUCs
on the National Government for higher and advanced education financing. Consequently
the rise of SUCs, should there be, will only in areas unserved by the private HEIs and
thus deserving of National Government financial support.
This chapter provides the framework used in this research. It justifies the methodology
adapted by the research team and proceeds to describe in detail the tools, criteria, and
procedures employed to arrive at the findings and conclusions.
The objective of the study is to arrive at a cost per student per degree. To do this, it is
necessary to properly allocate all costs to a particular degree. There are two components
of costs: direct costs and indirect costs. Direct costs refer to the teaching expenses for
personnel services and MOOE of the department offering the degree. Indirect costs refer
to research, extension services, and administrative costs of running the entire HEI, the
total of which is distributed to all departments.
The approach taken by the research team is to identify the following: an average cost per
unit for each subject a student would have to take to attain a degree; an average share in
the direct maintenance and operating expenses of departments by students who enroll in
subjects offered by that department; and an average share in all other yearly costs to run a
university by the total number of student enrolled in the university.
There are different ways to compute the average cost per unit per subject per student,
from the simplest to the most complex. Intuitively, the simplest formula that can arrive at
cost estimates quicker makes many assumptions and consequently provides the roughest
estimate of unit costs. On the other extreme is the complex methodology that entails
more manpower efforts, minimizing assumptions, and thereby presenting more realistic
estimates of unit costs. The different formulae and their effect on unit costs are described
further in Appendix A.
Notwithstanding, the framework calls for determining an average cost per student to take
a course, for instance English. If the average cost is expressed in units, this cost is
multiplied by the total number of units a student must take for English to complete a
degree. If the average cost is expressed per subject, the average cost is then multiplied by
the number of English courses a student must take to complete a degree.
Therefore, if the above procedure is done for all major subject categories, then the direct
teaching cost per degree per student can be readily attained. It can also be presented per
year, thus fully disclosing how costs to educate may increase as a student progresses to
higher years.
To fully complete the cost per degree, the direct costs for operating expenses and the
indirect costs per student are then added to determine the cost per student for each of the
years in the university. The direct operating expense is determined by dividing total
direct operating expense by the number of students taught; while the indirect cost per
student is arrived at by dividing the total indirect costs, earlier described, by the total
student population.
Research Methodology 9
Figure 3.1 below attempts to depict the conceptual framework that starts from the
University budget.
University/College Level
Department
Research Methodology 10
3.2 Research Design
This research project is a pilot study that aims to test the usefulness and applicability of
the methodology to determine the cost per degree. The model builds up as more
information is gathered from the HEIs.
The initial concept of the research instrument was first discussed in a focus group
discussion (FGD). During the FGD, representatives from the finance and information
systems department of four universities were invited to discuss their accounting and
information systems. This was necessary to determine the kind of data that can be
retrieved and the time it would take to extract data. The FGD identified five sources of
data: Finance department for financial statements, Human Resource department for
plantilla, Office of the University Registrar for course offerings, number of enrollees,
Office of the Vice President for Academics (or its equivalent) for faculty loading, and the
different Department Heads for flowcharts.
3.2.1 Year of Analysis. In designing the research, it was important that the costs
of the different HEIs could be made comparable. The year of study had to be as
close to each other as possible. The initial review of the budgetary process of the
universities revealed that the accounting cycle of public schools is different from
that of the private sector. Public HEIs work on a calendar year while private HEIs
use the school year. Given the difference in accounting cycles, a workable
commonality had to be set.
At the time this study was started, the complete set of data for a school year was
SY 2000-2001. This was then used as the benchmark. Since this encompasses
two budgetary periods of the public HEIs, a logical time frame to make data
comparable would be to cover the same school year using two sets of financial
data for public HEIs, one for 2000 and another for 2001. However, this approach
requires more effort and discretion to correctly extract the information. For
practical purposes, it would be easier to work on two separate school years, but
only with one calendar year. Consequently, the data used for the SUCs is
calendar year 2001. This encompasses data from 2nd semester, 2000-2001,
summer of 2001, and first semester of 2001-2002. This is also better than getting
the information for one term and multiplying it by 2.5. For the private institution,
the data used came from school year 2000-2001.
3.2.2 Cost Centers. Another consideration in the design of the research was
accountability centers. Initial feedback showed that the private HEIs are able to
segregate expenditures according to cost centers that go down to the department
level. For some, the portion of research and extension on the department level
can be automatically charged to the research and extension services budget.
Consequently, there was no need to extract data from the teaching component
since all personnel expenses reflected per department in a computerized
accounting system working on specific cost centers WERE direct teaching
expenditures.
Research Methodology 11
For the SUC however, expenditures were treated as lump-sums and allocated to
cost centers only on one level. Thus there would be a budget for “Higher
Education” but this is not brought to the department level. If this would be the
case for all SUCs, then more steps would have to be taken to arrive at the cost per
department. These steps are discussed in data gathering procedures.
3.2.3 Service Courses. There are many departments that service the courses of
other majors. For instance, a faculty member in the business management
department may teach a course in liberal arts. Thus unless a portion of the
personnel expenses were reported as part of the liberal arts expenditures, this
would have to be transferred to reflect the true costs for both departments.
Otherwise the expenditures of business management would be divided by less
number of courses, while alternately, that of liberal arts would be divided by a
bigger number of courses.
The matter of service courses was resolved by determining the cost per course for
each faculty member and correctly assigning that cost to the department that
offers the subject.
3.2.4 Laboratory Costs. There are some courses that are more expensive to
teach than others because of the laboratory costs. If a laboratory cost can be
specifically identified as a department cost, then the costs are included in the
MOOE of that department. If a laboratory cost is shared by a particular college,
then the MOOE is assigned to the collage and allocated to the different
departments under the college based on usage. In this case, the number of
sections becomes relevant information. Finally, if the laboratory cost is shared by
the entire University, then the costs are left at the University budget and shared by
the total number of students.
3.2.5 Administrative Expenses. The basic premise used is that for as long as an
expense can be identified as belonging to a college or department, then the
expenditure is assigned to that college or department. Otherwise, it is treated as
an indirect cost that is to be divided by the total student population.
Research Methodology 12
3.2.7 Donated Property. For public HEIs in particular, there are properties
donated by individuals or the local government units. The value of these
properties are however not reflected in the financial statements. For the moment,
this was not tackled. But the information is relevant in determining quality of
education and efficiency of resource utilization.
The researchers used the interview method and survey form to gather data for the study.
3.3.1 Interview. The interview was necessary to ensure that proper clearances
were given to gather data. The research analysts were basically tasked to gather
the data. Research assistants were used only to follow-up submission of data or
additional requirements.
3.3.2 Survey. A survey template was used to ensure that the same kind of data
was being gathered. Raw data in hard copy were encoded using a template. Soft
data were merely uploaded. The survey was further revised after the experience
of the research exercise.
There were two basic requisites that had to be met for a university to be included in this
study. The primary concern was accessibility of data while the secondary concern had to
do with quality of education. Due to the confidential nature of the data, the names of the
universities are not disclosed. Suffice that one is a public HEI and the other a private
one.
3.4.1 Accessibility of Data. The expediency to complete the pilot study was a
paramount concern. Because of this, the more cooperative Universities were
tapped. Initially, 8 Universities were targeted. However the list was trimmed
down to 4 and finally to only 2 since waiting for complete data from the other 2
would further delay the project.
3.4.2 Quality of Education. The cost per degree that would be derived from this
study is supposed to be credible. Consequently, the search for Universities was
limited to those who are either Centers of Excellence (COEs) or Centers of
Development (CEDs). Other measures used to determine quality was the
percentage passing rate in government licensure examinations.
The researcher used the illustration, labeled as figure 3-2, as a guide in the research
design, data collection, and data analysis. Essentially, it was a model-building approach
as the research formula was constantly being evaluated. This was adapted from the case
study method espoused by Yin (1994).
Research Methodology 13
ANALYZE &
DEFINE & DESIGN PREPARE, COLLECT, & ANALYZE CONCLUDE
select
cases modify
instrument
Figure 3-2. Model Building Approach (Adapted from Case Study Method
used by the Cosmos Corporation)
Source: Yin (1994, p. 49) “Case Study Research: Design and Methods”
The research instrument was then presented to the participants of the focus group
discussion. Based on the comments, the instrument for data gathering was again
revised. This final instrument takes into account the possibility that not all HEIs
have cost centers and consequently is lengthier. Since the direct department costs
would have to be derived, the amount and detail of information required is
necessarily more. A copy of the research instrument as used for data gathering
purposes is found in Appendix B.
Research Methodology 14
3.5.3 Preparation for Data Collection. The data required by the research was
confidential and voluminous. Consequently, two critical steps were undertaken
prior to data gathering.
The first step was to get the clearance from the University administrators to
disclose confidential information. This was done with the help of the CHED, who
prepared an endorsement letter. Once the CHED letter was received and
acknowledged, the research team set an appointment with the key personnel
identified in section 3.5.4.
The second step was to send an advance copy of the research instrument that
specifically lists the information required of the HEIs. With this in place, the HEI
were given more lead to prepare their data. Unfortunately, this did not work for
the 2 HEIs eliminated from the study.
3.5.4 Data Collection. As soon as the clearance from the University registrars
was given and the survey guide sent out, the members of the research analysts
including research assistants went to the University to gather the data. The
following offices were visited for the required information:
Despite the prior clearances however it was the experience that the release of
information was still staggered and spread over several months. Some data,
especially from the SUC, was in hard copy and the team had to photocopy this
and encode it into the system template.
In trying to make sense of the data collected, it became imperative to arrive at the
following: total cost per department, total number of units taught in the whole
year by the department, average class size, while making sure that the
expenditures balanced at the aggregate level. To ensure this, the financial
statements were divided into three major categories: (1) direct (teaching)
personnel services; (2) direct MOOE; and (3) indirect costs. If the HEI did not
have specific cost centers, the costs were further broken down to the department
level (i.e. economics, business management, math, etc.) of each college.
3.5.5 Documentation Process. All hard and soft copies submitted by the HEIs
were properly labeled and stored. These reached about 2 feet high for the SUC
and a foot high for the private HEI. A lesser amount of hard copy was submitted
by the private HEI because submission of data was in a soft copy.
Research Methodology 15
For the SUC, data were encoded into the system template and were regularly
backed up to ensure that data would remain intact should a virus hit the system.
The system template is simply the survey form in excel file.
3.5.6 Analytical Procedures. The research team made no attempts to force the
data gathered into an existing conceptual framework. Only when the data were
analyzed and the conclusions drawn, did the researcher review the existing
conceptual frameworks. Thus, much of the analysis relied on dissecting each
individual case and comparing them to the other cases so that a pattern could be
established.
The analytical process is a 3-step approach. The first step is to arrange the
information needed into a form that could be analyzed. The sample sheets as
basis for analyses is found in Appendix C. The second step is analyze the
individual cases by comparing average results with individual results and making
sense of the costs by considering efficiency and quality indicators. The final step
is to compare the results with other HEIs. For this study, the final step was
limited and focused more on determining the differences in research
methodology.
3.5.6.1 Analytical Sheets. There were 6 basic worksheets that were used
as bases of further analysis. Data for these worksheets were extracted
from the encoded data in the templates. A step-by-step procedure on how
to accomplish the analytical sheets is found in Appendix D.
To costs were allocated based on the time spent each week on the
following:
Undergraduate Teaching
Graduate Teaching
Administration
Research
Extension Services
All Others
Research Methodology 16
To arrive at a cost per student per faculty member for personnel
services, the total teaching expense (direct personnel costs) per
faculty member is divided first by the number of sections taught to
arrive at a cost per subject per faculty member. This quotient is
then divided by number of students enrolled in the class to get the
cost per course per student. This second quotient is further divided
by the number of units the course is equivalent to. The steps were
repeated for each of the faculty members in the department.
• Direct Cost per Student for MOOE. For the computation of the
MOOE per department, the direct operating cost of the department
was derived. This included any college or university expense
directly related to running the department like laboratory expenses.
If this was not readily available, the figures were extracted from
the financial statements. The direct MOOE was simply divided by
the total number of students who took enrolled in subjects offered
by the department.
• Indirect Cost per Student. The indirect cost refers to all costs not
directly shouldered by a particular department. For the purpose of
this study, this indirect cost was broken down ultimately per
student. If the cost could be assigned to specific departments (as
per usage or size), the amount was segregated, included in the
direct MOOE and divided by the number of students who
contributed to the cost. Other costs, such as library services,
cafeteria services, registrar’s office, accounting office, etc. were
divided by the total student population to arrive at an indirect cost
1
It is advisable to group similar subjects instead of computing a unit cost for all possible subjects. There
could be for instance a unit cost for basic Mathematics and advanced Mathematics. This is where the
subject classification becomes useful. The research team suggests three categories: (B) basic, (C) cognate,
(M) major, and (E) elective.
Research Methodology 17
per student. The personnel costs related to administration, research
and extension services that were removed from the personnel
services expenditures formed part of indirect costs. These
personnel cost were added to costs that could be directly assigned
either to research or extension services. The sum was then divided
by the total student population.
To recap, total indirect cost is the sum of: (1) costs of running the
university that cannot be directly allocated to each department such
as library services, IT services, medical services, etc. (2) portion of
personnel services, earlier removed, of teaching faculty members
who rendered administrative work, research, and/or extension
services.
• Cost per Student per Year. The cost per student per year is simply
an addition exercise. The figures derived from direct personnel
costs, direct MOOE, and indirect costs were added.
• Cost Per Student per Degree. The costs a student would incur per
year, dictated by the subjects taken, were added to arrive at a cost
per student per degree. The research team however recognizes that
the costs are not stagnant each year and thus a multiplier has to be
factored in. This step was not performed for the pilot study.
Research Methodology 18
• Evaluate efficiencies and standards of quality. For instance look
into class sizes, utilization of space, investment in facilities.
• To evaluate quality of university consider acceptance/rejection rate
into the university, percentage passing rate as compared to national
passing rate of government licensure examinations, and
accreditation levels by CHED. Consider research output of the
university. Review student: faculty ratio.
• Consider additional expenses that would be incurred to upgrade the
standard of quality for each department, college, or for the
university in general.
• Other factors that may affect efficiency and quality are access to
donor grants.
3.5.6.3 Comparative Case Analysis. For the pilot study, the comparative
analysis was largely focused on discussion differences in research
experience for the SUC and non-SUC. However, for subsequent phases of
study on normative financing, the research team recommends the
following analytical framework.
Research Methodology 19
Moreover, the initial formula presented by the research made aggressive use of
averages. It was initially thought that the costs per subject could be lumped and
simply divided by the average class size. Given the arguments presented in
Appendix A, it was decided that the analytical method be modified to take into
account differences not only within the department but among the different
classes themselves. Thus, a faculty member teaching 4 different sections of the
same class can effectively produce 4 different cost per student since the class
composition could be different.
Given the discrepancy, the research team presents the different formula that could
be used and leaves the judgment to the decision-makers.
Research Methodology 20
PART II – CASE STUDY REPORTS, ANALYSIS AND CONCLUSION
The second part is composed of three chapters. The first chapter describes the results of
the study on an individual basis. It presents sample figures for identified
departments/degrees and a simple analysis of these figures. As mentioned earlier, the full
analysis, especially of the private HEI, was not discussed but shall be included as part of
the research output of subsequent researches. This is so because of the highly
confidential nature of the actual costs.
The next chapter compares the results of the two cases. Since little was done in terms on
analysis on the individual cases, this chapter covers more the comparison in data
gathering between a SUC and a non-SUC.
Finally, the last chapter presents conclusion and recommendations for subsequent
research on normative financing, in particular, and future studies, in general.
Cost Analysis 21
CHAPTER 4
Cost Analysis
The private university test case falls under the “high quality/high cost” category. It
offers a variety of courses through its colleges, although its unique and evolving
financial structure means that those colleges that have become financially autonomous
under its set-up (i.e. are called “professional schools”) were not considered in this
study. After all, the rationale for the granting of financial autonomy is the ability of
such a college to pay market-or-better-than-market rates for its faculty members and
thus does not require an “umbrella” organization such as a university with which to
share costs.
(a) a cost per student per subject taken; this appears as a large spreadsheet containing
said information for every subject offered by the private university during the year
in question; the research team has taken a typical student’s flowchart and matched
each subject that needs to be taken to the appropriate cost of that subject;
(b) an MOOE per department figure, which is to be added as an annual cost for each
subject taken;
Algebra 2 781.75
Economics 1 1087.02
Accounting 2 910.84
2
Total academic units: 175
3
It is interesting to speculate as to whether any “Establishment Clause” provisions would be violated if
public funding were channeled toward religious education.
Cost Analysis 22
English 2 1410.69
Computer 1 907.81
Sociology 1094.45
PE 2 (2 units) 364.41
Calculus 1 797.28
Economics 2 1165.67
Accounting 3 830.80
Filipino 1 951.78
Computer 2 1278.40
Science 1 1584.06
PE 3 (2 units) 426.27
Microeconomics 1360.66
Macroeconomics 1513.35
Economic Statistics 1797.48
Literature 2 1037.33
Science 3 1031.50
General Psychology 841.25
Cost Analysis 23
Total Direct Costs Per Student 22,900.42
Add Indirect Costs Per Student 29,390.09
To make the analysis of cost structures more meaningful, we first present the data for
Case 2 below, as this should make comparisons easier:
Cost Analysis 24
Case 2: The Cost of a BS Chemistry Degree4
4
Total academic units: 175
Cost Analysis 25
PE 3 (2 units) 418.25
Cost Analysis 26
For the student’s third year, we have:
Biochemistry 1 2428.52
Biochemistry Lab 1 2094.82
Physics 4 1400.18
Physics Lab 3 2151.15
Chemistry Seminar 1 2287.34
Chemistry Research 1 2287.34
General Psychology 841.25
Literature 2 1037.33
Biochemistry 2 1594.25
Biochemistry Lab 2 2508.32
Organic Chemistry 3 1448.46
Physics 5 1440.08
Chemistry Research 2 7934.72
Religion 4 1207.44
For the final term (with MOOE and indirect costs adjusted accordingly):
Cost Analysis 27
Total Direct Costs Per Student 10,890.40
Add Indirect Costs Per Student 9,796.69
We must begin by stressing that the data obtained from this pilot study are intended to
eventually become sample observations in a cost-function regression. The larger
project is to estimate the cost of producing a degree after controlling for quality levels.
The following sections are in order as we examine the properties of the individual cost
structures of our two sample degrees, as well as survey related issues:
4.1.1 Patterns in Personnel Costs. The average personnel cost per subject
that an Economics major incurs is P854.60 – for a Chemistry major, it is
P1769.40. Nothing about this is unusual as it is merely reflective of the higher
proportion of Phd-holders in the Chemistry Department. One must also note
that since benefits are pro-rated according to tenure, departments with more
long-staying staff are also going to experience higher wage bills.
We may look closer at the individual accounts and see that the 3 most
expensive subjects an Economics major takes are Public Finance (P3108.78 per
student), Operations Research (P2134.95) and Economic Development
(P1417.61). Again, this is to be expected as all 3 are “major” subjects and are
generally given to more senior faculty members. The classes are also smaller,
averaging 25 students or so each time they are offered, as a number of majors
fail pre-requisites to the subjects above and are thus unable to proceed.
The 3 least expensive subjects in the Economics program, on the other hand,
are expectedly “general” or “basic” courses – Science 4 (P326.05), Science 3
(P438.32) and Algebra 1 (P471.62). This is so, again, because relatively junior
instructors are usually assigned to handle these courses, apart from the fact that
it is common for these subjects to feature near-maximum student counts.
Cost Analysis 28
end of the program when, presumably, most of the original “block” have been
screened out.
In a very real sense, departments have to walk a tightrope. On the one hand,
additional programs and extension services help increase the departmental
profile, and this in turn may have a salutary effect on enrollment, especially if
the programs are considered innovative. If one examines the figures across
departments in the university, for instance, one will notice that the 3 out of the 4
highest MOOE figures belong to the Biology Department (P946.95), Chemistry
Department (P593.13) and Physics (P482.49) – which have more “traditional”
courses, while those departments that offer new degree programs more often
have lower MOOE – see Business Management (P230.63), Marketing
Management (P263.87).
This being a private university, where all costs are internalized, there are
numerous in-house mechanisms designed to maintain levels of efficiency and
control costs. Some of these include rules on the dissolution of classes (the
minimum number is 14 for undergraduate subjects and 6 for graduate subjects),
and the offering of subjects (the fully computerized enrollment process allows
each dean’s office to track student enlistment; subjects are opened only when
demand reaches a threshold level). Other policies spell out penalties (such as
Cost Analysis 29
phasing out or the reduction of departmental budgets) for keeping unsustainable
programs. At the university level, there exist directives for maintaining optimal
full-time/part-time faculty ratios as well as “salary caps” designed to guide
hiring practices. Departments are also classified according to size – “large” or
“very large” departments (based on the number of faculty and course offerings)
are given proportionately higher operating budgets each year.
4.1.3 Behavior of Costs over the Program and the Need for Cross-Subsidies.
In this section, we trace the movement of costs as a student proceeds through a
given program and note the implications for both university and normative
financing authorities.
Returning to the data above, we see that our composite Economics student costs
P49,276.41 to educate during the first year, then P52,290.51 and P48,016.06 for
the second and third years respectively. The figures are quite stable and reflect
the impact of higher personnel costs as a student takes major subjects. The
pattern for Chemistry is slightly different – P64,032.32 for the first year,
P62,871.10 for the second, P84,413.39 for the third, and P20,687.09 for the
final term. The markedly higher cost of the third year reflects the impact of
extremely expensive research subjects taken by the student.
Although not within the scope of this pilot study, we suggest that these cross-
subsidy mechanisms should be studied more closely as they hint at the
existence of, say, an optimal number of colleges for a university. The private
Cost Analysis 30
university in question has, in recent years, experimented with the granting of
financial autonomy to a number of its colleges. This was supposed to allow
said colleges to offer better-than-market rates to its instructors, paid for by
proportionately higher tuition fees charged. All in all, however, the
undertaking has produced disappointing results – and a large part of the
explanation lies in the autonomous colleges being less able to take advantage of
the common pool of university resources (under the arrangement, they would
have to “pay” for their use), while leaving the under-subscribed colleges to fend
for themselves in the absence of a source of subsidies. The result is that further
“professionalization” of colleges has been put off until more modifications can
be made to the experiment.
4.2 Sample Costing for a State University: Teacher Training and Related
Disciplines
Physics 1 3035.28
Chemistry 1 3035.28
Math 7 2099.85
Eng 2 1957.58
Fil 2 2194.82
VE 1 1528.88
5
Total academic units: 190
Cost Analysis 31
PE 2 1528.88
Ed 2C 2935.52
Ed 3C 2935.52
Math 14 3499.75
AGP 2 2152.15
Litt 1A 1957.59
Tech 1E 4628.35
Phys 4 3035.27
Per Ed 645.62
Per Ed 645.62
Cost Analysis 32
IT 1 3380.09
AGP 4 2152.15
Sci 3 2276.46
Phys 5 3035.28
Phys 6 3035.28
Tech 2A 4628.35
KAS 1 2152.15
Per Ed 645.62
Ed 6C 2935.52
Ed 7C 2935.52
Eng 3 1957.59
IT 2 3380.10
AGP 5 2152.15
Com SC 3380.10
Phys 9 2276.46
Tech 2E 2869.53
Per Ed 465.62
Ed 8C 2935.52
AGP 6 2152.15
Litt 2 1957.59
Com Sc 3380.10
Sci 10 2276.46
Phys 12 2276.46
Phys 13 2276.46
Psych 2194.82
Hum 1 2697.06
Ed 9C 11742.09
Cost Analysis 33
Add MOOE for Chemistry Department 3,161,58
Add Indirect Costs Per Student 21,543.00
Eng 2 1957.59
Music 1 2687.06
Psych 2194.82
Math 2 2099.85
VE 1 2194.82
Math 15 2099.85
PE 2 1528.87
6
Total academic units: 156
Cost Analysis 34
Bio 4 2770.92
Math 16 2099.85
ND 1 2123.78
ND 2 2123.78
PE 3 1528.87
Fil 2 1957.59
Chem 3 3035.28
ND 3 2123.78
ND 9 2123.78
Bio 11 2770.91
Psych 3 2194.82
PE 4 1528.88
AGP 4 2152.15
Eng 13 1957.59
Chem 6 2276.46
ND 14 2123.78
ND 7 2123.78
ND 12 2123.78
ND 6 2123.78
Cost Analysis 35
And finally, the fourth year figures come to
4.2.1 Composition of Program Costs. Given that the average tuition fee per
term at this state university is about P225, it is interesting to look at the actual
costs incurred running a COE-quality teacher training program.
Cost Analysis 36
We surmise that this flatness of costs is due to the relative lack of market
incentives for performance within the institution. The salary scales in SUCs
tend to be flatter than those in private universities as a result of budget
constraints and this allows those with tenure to “catch up” with those who may
have come in with higher academic ranks. The result would be a departmental
wage bill that is evenly distributed across lecturers.
A final pattern that may be recognized has to do with the relatively high
personnel costs for math subjects in all program. Math subjects cost twice as
much as non-math courses across the board (for some education courses, they
cost 8 times as much as non-math courses!). There are two possible
explanations for this. First would be the higher academic qualifications of
those handling math and related subjects; the other reason could be the
increased number of units given to math subjects – a quick examination, after
all, would show that the per unit costs do not differ substantially from the other
offerings.
4.2.2 Relatively Large Indirect Costs. The figures also indicate per student
indirect costs that amount to roughly 3 times the level of personnel costs
(P21,346 as compared to about P5000 for MOOE expenses). This suggests that
if all costs of this state university were to be internalized, the bulk of the
expenses would be on the maintenance of facilities and services.
In a sense, this can be expected as it is less likely that savings can be obtained
from property, plant and equipment than it can from, say, a fixed but low salary
scale, especially when this sort of capital has historically been maintained at a
relatively small expense.
Overall, the costs of these high-quality degrees (as certified by CHED) indicate
that the market (i.e. private-institution) price of education hovers around
P20,000 to P25,000 a semester for essentially non-lab program, even as we
stress that these are static figures and do not reflect either generally increasing
prices nor future quality targets.
Cost Analysis 37
characteristics – such as teaching. A well-established economic principle says
that individuals should pay for courses whose returns are primarily private. The
primary examples of this are business degrees. On the other, there are degree
programs that manifest strong externalities or spillovers (i.e. benefits to society
and not just to the individual). Science and technology courses are good
examples of this for the research they create, but one can make the argument
that teaching also falls under this category, as there is a pressing social need not
just for instructors, but instructors of high caliber.
But if the social welfare principle is followed instead, one can then make the
argument in favor of much larger endowments to courses taught at normal
universities, since in effect, the institution is “underpaid” for the services it
provides. In this case, the monetized value of the social benefit should be used
to balance off the cost of maintaining facilities, paying personnel, and all other
activities related to operating the university.
A computation such as this raises more questions than provides answers, given
the number of obvious qualifications. Firstly, it must be noted that neither
research nor extension services are considered in the formula and as such, the
final figure is to be treated as the sum of purely instructional and maintenance
activities – with no room for improvements in the quality of services. To the
extent that the government sets its own research agenda and targets for
accreditation, the appropriate cost adjustments must be made.
Thirdly, we point out that, again, market distortions on the demand side are
likely to affect cost computations as well. Take the well-documented
preference for law degrees, which may, in part, explain the overwhelming
Cost Analysis 38
number of students enrolled in CASS. On the one hand, the college benefits
from this large population, as costs per unit tend to be quite low. It does not
follow, however, that this figure should be interpreted as a sign of the college’s
“efficiency”. Rather, the low cost can itself be viewed as a reason for the
course being over-subscribed.
Cost Analysis 39
CHAPTER 5
Recommendations, Insights and Conclusion
There were several constraints on the analysis of information since the number of HEIs
reviewed was brought down to only 2. For subsequent studies however, we recommend
that the following be undertaken.
5.2 Insights
7
A market failure is commonly defined as a situation in which the free operation of demand and supply
forces still does not result in a socially desirable outcome.
Perhaps the best way of describing the situation is one of continuity and change,
with different types of market failures. For one, it is significant that Philippine
higher education still continues to be dominated by an urban professional
orientation, with no sign of developing a requisite preference for hard sciences
and research. Business, commerce and accountancy still make up about a quarter
of all graduates. Education continues to account for 15% of the pool, with the arts
& sciences taking about 10%.
The main changes are said to be in engineering and health, which doubled their
share in 10 years. Of course, this increase is almost entirely explained by the
rapid increase in enrollments in the more popular specialist IT and computer
science colleges.
1987-1988 1997-1998
Subject Graduates % Subject
Graduates %
Perhaps the most telling statistic showing the extent of the labor-education
mismatch is the figure for the number of graduates taking jobs outside their field
of training. The CHED Graduate Tracer Study of 1998 reveals an alarming decline
in the number of graduates finding work in the areas they prepared for. The only
exception was nautical science, which increased by 9%. In computer science, the
percentages went from 76 to 39 (!), in fisheries from 67 to 21, in law from 62 to
40, in nursing from 85 to 41, in physical sciences from 64 to 20 and in teacher
education from 77 to 42. In a calculation whose result can only be described as
scandalous, it was determined that the actual unemployment rate may be
discounted by about 40% by removing those graduates with high search criteria
(say, those that would only accept employment in white-collar jobs in the urban
sector) and those no longer in the labor market (say, those simply not interested in
finding a job after repeated rejection).
The trouble, however, lies precisely in its economic circumstances. The LWF
Department has the 5th highest MOOE bill in the private university. Its personnel
costs are driven up by the fact that most of its staff is made up of Phd holders and
promotion can be quite rapid within this department8.
And then there is enrollment. By the department’s own count, there are 81
students registered with it – an extremely shallow student base, not helped by the
fact that the College of Education has siphoned off those who would wish to do
translation studies or related work.
8
Some faculty members have raised concerns about this publicly, pointing out that “anthologies” and
“creative works” are put in the same class as “original research” of social scientists, to the relative
disadvantage of the latter. Since promotion is based almost solely on publication, it is claimed that a
discipline that allows creative work to be credited as research will result in faster promotion for some.
This looks to be fate of every department not fancied by a growing yet ill-
informed student market. For clearly, it is in our social interest to preserve and
encourage literature and language studies – the PCER Report itself gives as a major
recommendation the expansion of vernacular programs as a means of improving
overall literacy. But the private demand for such courses has not responded
accordingly – as the table above shows, students continue to flock to courses that
are not just over-subscribed, but also lead to redundancy.
A similar argument can be made for, say, a China Studies program. In our sample
private university, the China Studies program has just been phased out. From the
point of view of private demand, this can perhaps be explained by the preference
of students for European studies (a largely “donor-driven”) program. But from a
social standpoint, it is hard to explain how the demand for this major can be so
low given the increasing importance of China as a trading partner and regional
player, as well as the complete dearth of any “China experts” in both academic
and policy circles.
We take the results if this study as evidence that the following steps must eventually be
taken in order to arrive at true economic cost inputs to the normative financing
framework:
(1) the construction of a cost function, using enough time series data. This is important
for determining the factors which most greatly affect the marginal cost of an
additional “place” at a university;
(2) the normative financing framework itself must incorporate dynamic changes such as
the government’s own programs for rationalizing higher education, improving faculty
qualifications and standards of living, producing better research etc;
(3) finally, the extent and role of market distortions in higher education must be
incorporated more explicitly. College courses that are over-subscribed necessarily
become cheaper – and in such instances, cheapness is not an indicator of efficiency.
Therefore, in order for cost figures to be more meaningful, they have to be adjusted
to take into account market trends, individual preferences, and the true economic cost
of selecting a given degree program.
The third part provides a listing of the various research documents utilized in this
research project as well as a list of the tables and figures.
The information contained in the following appendices is useful and should dispel ideas
on variations to the model. Appendix A provides the arguments using different formulae
in arriving at a cost per degree. Appendix B is a sample survey format used to gather
data needed for analysis. Appendix C shows the worksheets used for cost analysis while
Appendix D describes in detail the steps an analyst should take to accomplish the
worksheets.
Part III 46
REFERENCES
Asian Development Bank and World Bank. (1999). Philippine Education for the 21st
Century. The 1998 Philippines Education Sector Study. Manila.
Yin, R.K. (1994). Case Study Research: Design and Methods (2nd Ed.). Thousand Oaks,
California: Sage Publications.
References 47
APPENDIX A
Comparison on Different Formulae to Compute Unit Direct Personnel Costs Per Student
Emphasis is made on the computation of the estimated unit cost for direct personnel
expenditures because personnel services readily account for 80-90% of the total
university budget. Consequently in arriving at the cost per degree for each student
enrollee, the impact of this variable is significant.
The decision as to which formula to use has to do with the degrees of confidence. From
the perspective of a generalist, a simple average would suffice. After all, it is the costs of
several universities averaged out that will eventually be the determinant of the true cost to
educate. From the perspective of a numerically oriented individual, the closest estimate
to the average cost to complete a degree is highly appreciated. However arriving at the
closest estimate requires more time and energy.
Understandably the output of cost studies serve as inputs to the normative financing
formula. This formula has a significant impact on the budgetary allocations of state
universities and colleges. Consequently, the formula must be as credible as possible to
convince lawmakers and university officials that it is the better budgetary allocation
mechanism. Essentially, we are looking at a model that is defensible. It is the decision
makers that have to be convinced, not the analysts.
This chapter shows the different formulae discussed by the research team, using the civil
engineering third year of an SUC as an example. Essentially, the first formula differs in
approach as the denominator for the computation considers only students who are
majoring in a particular degree while the second method looks at total figures and
averages this out. The next formulae are similar in components but the degree of
estimation moves closer to arriving at closer to actual costs under study at a considerable
amount of effort. In essence the formulae is similar in approach in the sense that the
personnel expenditures are considered are divided by number of sections taught and then
by number of students enrolled in the course. The course costs are then added for a one-
year period.
There are admittedly other ways of computing average costs per degree, true to the adage
there are many ways to skin a cat. However, these were no longer presented but analysts
can readily derive the computations from the data presented in the examples. The
research team is open to discuss any methodology with future researchers and analysts, to
address concerns of interested third parties.
This method calls for using the actual college personnel services expenditures and
dividing this by the number of students majoring in degrees offered by the
department.
Appendix A 48
For instance, the cost to complete an engineering degree is computed as follows:
Points of Concern:
1. The method did not take into account the costs that have to be removed
from faculty members who spent time doing administrative work, research
work or extension services.
2. To major in engineering, it is necessary to take general education courses.
This method only takes into the account the costs of engineering. It
implies that the costs for teaching mathematics, for instance, should be
shouldered solely by the mathematics department. This would mean that
the cost per student majoring in mathematics would be artificially higher,
which is incorrect since it is known that the mathematics department
services the requirements of the entire student population.
This method calls for simply dividing total personnel services expenditures for
higher education by the number of sections offered by the university and dividing
this quotient by the average class size.
Multiply cost per student for a course by the number of courses in a year. For
example, 16 subjects of courses are needed by civil engineer students in the third
year, thus arriving at a yearly cost of P17,556.60
Points of Concern:
Appendix A 49
5. However, experience from reviewing SUC financial statements show that
this method is convenient as personnel expenditures are presented as a
lump-sum figure. For instance there is a total personnel cost for Advanced
Education and total personnel cost for Higher Education. These are not
normally presented as personnel costs for the different colleges and
departments. This being the case, the method provides great ease in
computing cost estimates.
6. At this point, it is noteworthy to state that many of the succeeding methods
assume that the proportion of students to sections is the same and that the
unit equivalents for a course are likewise the same. This is a critical
assumption since the teaching expenditures are divided by total number of
sections regardless if the course weight is 2, 3, 5, or 7 units. This in effect
should not be the case since it is total units that play a more significant
role in allocation of teaching expenditures and not number of section.
Given the same example of a civil engineering student, the annual direct
personnel cost per student is P11,552.
Points of Concern:
This method calls for getting the direct teaching costs of faculty members in a
college and dividing it by the number of students enrolled in the course to arrive
at a cost per course. This is done for all departments.
Appendix A 50
Direct Teaching Cost in the Engineering College P4,012,406
Number of Students Enrolled in College 3,066
Cost per Student for an Engineering Course P1,308.68
Points of Concern:
This method calls for getting the direct teaching costs of faculty members who
taught subjects offered in a department (regardless of their mother department)
and dividing it by the number of students enrolled in the course. This is done for
all departments.
Appendix A 51
Points of Concern:
This method calls for getting the direct teaching costs of the university and
dividing the costs by the number of sections offered by the department over the
total number of sections offered by the entire university. The resulting quotient is
then divided by the number of students enrolled in the courses offered by the
department.
Points of Concern:
9
Figure is annualized because the personnel services is also on an annual basis. For other methods, there is
no adjustment if the numerator and denominator have the same period of coverage.
Appendix A 52
G. Computing Unit Cost from Total Departmental Expenditures
This method goes down to the department level and uses the direct teaching costs
of the college and dividing the costs by the number of sections offered by the
department over the total number of sections offered by the entire college. The
resulting quotient is then divided by the number of students enrolled in the
courses offered by the department.
Points of Concern:
1. This method underestimates the direct cost of personnel services that form
part of the cost per degree per student.
2. It fails to account for different unit weights of subjects within a
department as well as the different qualifications of the faculty member.
3. However, if the profile of the subjects and teachers is uniform, this method
would approximate direct teaching cost for one student.
This method computes the direct teaching costs of each course in a department
and divides it by the number of students taught. It does this by grouping together
the personnel costs of all faculty members who teach a particular subject.
Appendix A 53
Points of Concern:
This method brings Method H one-step forward. Since the data to get the costing
is already presented and in an analytical form, this method merely computes the
direct teaching costs per student per faculty member and only then averages it out.
This is the method discussed in Chapter 3 of this paper.
The cost per student is directly lifted from the worksheet and consequently the
computations are no longer shown here.
Appendix A 54
APPENDIX B
RESEARCH INSTRUMENT
The primary purpose of this survey to collect basic revenue and cost data of your
University as broken down per degree. The ultimate objective is to arrive at a unit cost
per degree per student. The survey is being conducted for the Commission on Higher
Education in support of an ADB Project on Normative Financing of Higher Education.
FORM A1
CONTACT INFORMATION
Institution Name
Respondent name
Contact Phone
Contact E-mail
Appendix B 55
FORM A2
Revenue Stream
National Government
Local Government
Tuition Fees
Basic fees
laboratory
miscellaneous
Private Grants
Other Revenue
Investment income and investment gains (losses)
Sales and services of educational activities
Sales and services of auxiliary enterprises
Other revenue
I. Expenditures
Appendix B 56
FORM A3
ALLOTMENTS (Period)
BY COLLEGE, DEPARTMENT, OR OFFICE
Name of SUC:
Campus:
Graduate School
College of Arts and Sciences
Languages Department
Mathematics Department
Sciences Department
College of Agricultures and Forestry
College of Agriculture
College of Business Economics, & Accountancy
College of Education
Office of the President
Office of the Registrar
Main Library
Information Technology Center
Student Services Division
Auxiliary
Medical & Dental Clinic
Research Services
Extension Services
Others
Total Allotments xx xx xx xx xx xx xx xx xx
Appendix B 57
FORM A4
EXPENDITURES (Period)
BY COLLEGE, DEPARTMENT, OR OFFICE
Name of SUC:
Campus:
Total Expenditures xx xx xx xx xx xx xx xx xx
Appendix B 58
FORM B1
ENROLLMENT
COLLEGE/DEPARTMENT/DEGREE
Total xx xx xx xx xx xx
10
If the financial data is for calendar year 2002, enrollment data should be second term 2001-2002, summer
2002, first term 2002-2003.
Appendix B 59
Total xx xx xx xx xx xx
FORM B2
GRADUATES
COLLEGE/DEPARTMENT/DEGREE
Total xx xx xx xx xx xx
Appendix B 60
FORM B3
LICENSURE EXAMINATIONS
Architecture Examination
Civil Engineering
Etc.
Total xx xx xx xx xx xx
Appendix B 61
FORM C1
FACULTY INFORMATION
COLLEGE/DEPARTMENT
Appendix B 62
FORM C2
FACULTY COMPENSATION INFORMATION
COLLEGE/DEPARTMENT
GRAND TOTAL xx xx xx xx xx xx xx
Appendix B 63
FORM C3
FACULTY ACTUAL DISTRIBUTION OF FACULTY TIME (in units per week)
COLLEGE/DEPARTMENT
Second Term
Summer
Appendix B 64
Teaching Teaching Admin Research Extn Others Total
Undergrad Grad Svcs
First Term
Appendix B 65
FORM D1
LIST OF CLASSES TAUGHT PER FACULTY
COLLEGE/DEPARTMENT
11
Indicate whether subject is basic (B), cognate (C), major (M), or elective (E)
Appendix B 66
FORM E1
PHYSICAL INFRASTRUCTURE INFORMATION
Land Area
What is the total land area upon which the University sits in?
When was the property acquired?
How did the University acquire the property?
What was the valuation of the property at the time of acquisition?
What is the valuation of the property as of December 31, 2001?
Total Area
Building
Parking
Sports Field
Roads, Streets
Easements
Total
Land Area # Floors Flr Ar Matl Used Acq. Date Acq Price
Condition
Building
For the spaces in each building, specify its usage in terms of floor area.
Building
Appendix B 67
FORM E2
EQUIPMENT and CAPITAL OUTLAY INFORMATION
Office
Do you expect to acquire land for expansion within the next 5 years?
If yes, for what purpose would this be?
What would be the expected budget?
What funding source to do you expect to use to finance the acquisition of land?
Construction
Major Repairs
Do you expect to undertake any major repairs on existing building/s within the
next 5 years?
What would be the expected budget?
What funding source to do you expect to use to finance this?
Instructional Equipment
Do you expect to acquire any instructional equipment within the next 5 years?
What are these?
What would be the expected budget?
What funding source to do you expect to use to finance this?
How is the cost of equipment depreciated?
Appendix B 68
All Other Equipment
Do you expect to acquire any other equipment within the next 5 years?
What are these?
What would be the expected budget?
What funding source to do you expect to use to finance this?
How is the cost of equipment depreciated?
Appendix B 69
APPENDIX C
SAMPLE ANALYTICAL SHEETS
WORKSHEET
PART 1 Distribution of Direct Personnel Cost Per Faculty Member
LOADING HOURS
Faculty College/ Total
Teaching Admin Res. Extn Others Total
Name Dept Salaries
Under-
Grad Svcs
graduate
(Col A) (Col B) (Col C) (Col D) (Col E) (Col F) (Col G) (Col H) (Col I) (Col J)
#
Total Cost/
Faculty Total Cost/ Total Cost/ Total
Subject Teaching Unit/
who Sections Course Student Student/Course Units
Cost Student
taught
Appendix C 70
PART 4 Direct MOOE per Student
Total
Department/ MOOE/
MOOE Enrolled
College Student
Students
Personnel
Total Indirect
Personnel Services
Office MOOE Total Student Cost per
Services Removed
Population Student
from Part 1
(Col A) (Col B) (Col C) (Col D) (Col F) (Col G) (Col H) (Col I) (Col K) (Col L) (Col M) (Col N)
Appendix C 71
APPENDIX D
STEP-BY-STEP INSTRUCTIONS FOR THE ANALYST
The term encode is used for universities that can provide only hard copies of the data.
For some universities, a soft copy of the data can be given. In this case, the analyst
merely picks up the data from the other files already existing.
1.1 This Sheet is used to allocate the total personnel services of each faculty member
to the different major responsibilities.
1.2 Encode the faculty name in column A, using the format family name, then first
name.
1.3 Indicate the department the faculty is assigned to in column B.
1.4 Encode the total personnel services per faculty member in column C. Get data
from survey form C2.
1.5 From survey form C3, indicate the distribution of faculty time for each faculty
member. Get the total of first term, second term, and summer of the year in study.
For instance, a faculty members spent 12 hours for teaching in the undergraduate
program in term 1, 16 hours in term 2 and 3 hours in summer, the total teaching
load is 31 hours. Do this for research and extension as well. All other hours in a
week unaccounted for can be placed in the column marked “Others”.
1.6 Columns D to I are numeric fields. The total of these fields is shown in Column
J. Use the @sum (d6:i6) formula.
1.7 Apportion the total personnel salaries by the main categories of Undergraduate
teaching, Graduate teaching, Research, Administration, Extension, and Others.
This is computed by getting the ratio of hours spent to total hours multiplied by
the total personnel services. For instance, a faculty member spent a total of 36
hours teaching and total work week for the year is 80 hours. Multiply the total
personnel salaries by 36 over 80.
1.8 For Column L, use the formula as follows (+d6/$k6 x c6). Copy this formula to
Column M, N, O, and P.
1.9 The last column is merely to check that all costs have been accounted for. Add
the Columns L to P using the formula @sum (l6:p6) . The total amount should be
equal to total personnel services. If not, something went wrong.
1.10 After doing this procedure for all faculty members in the department, add the
columns so that there is a total figure for each of the columns. This is the
department total.
1.11 Do this for all subsequent departments.
1.12 After the last row of entries, add all department totals to get the university total.
The figure for total personnel services should match the total expenditures for the
year under survey form A4. If it does not, data could be missing.
Appendix D 72
1.13 Note that the listing on Sheet 1 is unique. A faculty member cannot be listed
twice. This may explain any discrepancy between the total personnel services on
sheet with actual expenditure.
1.14 Move onto Sheet 2.
2.1 Sheet 2 is the more complicated portion of the worksheets for cost analysis. This
sheet contains information on the actual subjects taught by all faculty members in
the year. Sometimes, it is better to create sub-sheets so the file is manageable. If
there are 100 faculty members who teach 10 subjects in a year, the total rows
would be 1000.
2.2 Sheet 2 starts with the faculty name in column A and department in Column B.
Ensure that each row has the name of faculty and the department for sorting
purposes.
2.3 Proceed to encode all the subjects taught by a faculty member for the entire year
in Column C. Data should be encoded the same way again for sorting purposes.
So if capital letters were used for the faculty name, all faculty names should be in
capital letters. If not, the data will not be properly sorted.
2.4 Classify each subject into basic (B), cognate (C), major (M), or elective (E).
Indicate the capital letters in Column D.
2.5 For each subject, encode the number of students enrolled in the class (Column E)
and the number of student units (Column F).
2.6 Create an exact copy of Sheet 2. Under the Edit button of Excel, choose the
option Move/Create Copy. Then click on create a copy. This new copy is now
sheet 2 (2).
2.7 On sheet 2(2), sort the data by faculty name so that you can get all the subjects
taught by a faculty member. Sometimes a faculty member services other
department and even graduate studies. To sort, mark all the fields to be sorted,
click the Data button, press sort, choose No Header, and sort by field A,
ascending.
Appendix D 73
2.8 Once all the information is encoded and the names have been sorted, compute the
teaching cost per course (Column G). This is done by dividing the total teaching
salary (from Sheet 1) by the number of subjects taught. Each row will now have a
cost per subject.
2.9 To copy the personnel services amount, press (+) then press Sheet 1, then bring
cursor to the correct field. When you press enter, the amount will automatically
transfer. Do this for all rows. Then using the edit key, divide the amounts by
total number of subjects taught by faculty member.
2.10 After doing the same thing for all faculty members, total Column G. The total
amount should equal Column K of Sheet 1.
2.11 When you are certain the sheet balances, create a copy of sheet 2(2). This is now
sheet 2(3).
2.12 On sheet 2(3) sort the data again this time by the course code (Column C). For
each of the courses/subjects taught, compute the cost per student (Column H) and
the cost per student per unit (Column I).
3.1 Sheet 3 is the summary of all computations derived from Sheet 2(3).
3.2 List all the major subject categories in Column A.
3.3 In Column B, just add the total number of faculty members who taught the
subject. Use the command @sum(then enclose the relevant rows)
3.4 In Column C, add the total cost/course for all similar subjects, taken from Column
G of Sheet 2(3). (Note that data is already sorted by subject so it is easy to get the
sum).
3.5 In Column D, add the total number of sections for the course. Use the formula
@count (then enclose relevant rows). Count Column F of Sheet 2(3).
3.6 In Column E, get the average teaching cost. To compute for the average teaching
cost use @average (then enclose the relevant rows). This is taken from Column G
of Sheet 2(3). This step is different from 3.4 since it is the average as against the
@sum in 3.4.
3.7 For Column F, add the total number of students who enrolled in that subject,
taken from Column E of Sheet 2(3).
Appendix D 74
3.8 For Column G, get the average cost per student, taken from Column H of Sheet
2(3).
3.9 For Column H, add the total number of units taught, taken from Column F of
Sheet 2(3).
3.10 For Column I, get the average cost per student per unit, taken from Column I of
Sheet 2(3).
3.11 Proceed to sheet 4.
Appendix D 75
6.6 Encode in Column L, the direct MOOE per student for each subject taken. So if
there were 2 subjects on English taken in the first year, the direct MOOE is
multiplied by 2. The Direct MOOE was computed in Sheet 4.
6.7 Encode the indirect cost per student taken from Sheet 5. Note that this is a yearly
expense and should only be included in the bottom of the year.
6.8 After adding Columns K, L and M, you will get the total cost for that year. Do
this for all the years and add each year to get the cost per degree.
Cost
Cost/ Total Per Total Dir. Dir Ind.
Subj Unit Unit Cost Subj Units Unit Cost PS MOOE Cost Total/Year
ENG 101 3 137 411 ENG 102 3 137 411 822 300
FIL 101 3 137 411 FIL 102 3 137 411 822 300
MATH 102a 3 205 614 MATH 113 3 205 614 1228 300
ECON 101 3 134 402 HUM 101 3 196 588 990 300
MU 101 3 144 432 PHILO 101 3 162 487 920 300
SOCIO 101 3 123 369 MU 102 3 144 432 801 300
RIZAL 3 123 369 PSYCHO 101 3 175 525 894 300
PE 101 2 167 335 EDP 1 3 165 495 830 300
PE 102 2 167 335 335 300
TOTAL 23 1170 3344 TOTAL 26 1489 4299 7643 2700 4098 14441
Appendix D 76