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The 'business' of higher education By TimHudson in Hudson On Higher Learning September 2, 2009

Sure, a university is and ought to be a place of learning, contemplation, enlightenment, cutting-edge research and intellectual activity. But it is also a business – and in the case of UHV, a growing one.

UHV has made tremendous progress during the past five years with the business aspects of our enterprise. Our budget process is thorough, transparent and meticulous. Each year, we “peel” the budget “onion” and put it back together in order to sustain our operations, thrive and innovate.

Today we are a $43.3 million business, employing about 425 people. According to a 2006 study, UHV generates 1,151 direct and indirect local jobs – and we have grown by about 30 percent since that study.

So, where do we get the money to “run the shop,” hire new people and create new programs such as nursing, publishing and economic development?

First, the state “appropriates” about 50 percent of our funds – with 90 percent of this coming by way of a funding formula that “reimburses us” (two years after the fact, by the way) for teaching our students. If we have more students, we get more money from the finite pool established each biennium by the Legislature. Growth = revenue. Does this sound like a “business”? I suspect so.

Second, we get about 35 percent from “user fees” which, in our business, we call “tuition.” Our goal is to produce the highest-quality product we can for the least amount of money so that we can maintain a competitive price point. How are we doing? Well, among Texas public universities – all accredited by the same accrediting body – we rank as the sixth least expensive out of 34. We’ll never be the least expensive and don’t aspire to be since we want to offer some programs, like master’s degrees, that some other universities don’t. As with appropriations, growth is good: more students = more tuition + more state support.

Third, we get the rest of our revenue from a variety of sources such as donations (thank you, everyone!) and faculty research grants (thank you, faculty). But from year to year, the main additional “source” of money to spend on new ideas or people comes from our own internal process in which we take a very hard look at our expenditures and re-allocate money to new ventures (like nursing) and processes (like increasing our bandwidth).

You can imagine the endless debate about this matter and what is the appropriate balance of funding sources for universities, what the reimbursement “formula” should be, what tuition should be, etc. But overall, this is not a bad “system.” Even with its flaws, it is fundamentally fair in that we get paid for teaching (appropriations); we get paid for our efficiency and productivity (re-allocations and grants); and we get paid by our “customers” (tuition) who, like all customers, have choices. If we don’t offer a good product at a good price, they will “vote with their computers” and “buy” (that is, enroll) elsewhere.

Now, what do we SPEND this money on? Well, some goes to the “usual” such as the light bill, water bill, technology, meeting regulatory mandates, etc. But the majority goes to people. During the past five years, the amount UHV puts into faculty and staff has increased as we have driven down administrative and overhead costs (helping us keep our tuition low) and invested in compensating and retaining the people who comprise the institution and make it what it is. Our goal is “learning,” and our people are the key ingredient.

Yes, the university is a business, and it makes a huge contribution to our region’s economy. The “product”? Well, some would say our graduates, but, more generally, I would argue that it is “continuous learning” – learning that begets learning that empowers individuals, keeps our communities competitive in an information-driven global economy and contributes to society. I feel privileged to be part of a business that is “good” in so many ways.

UHV page

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