Transforming the Economics of Higher Education – Practical Guidance

University_Cost_PyramidThe higher education industry and its observers have wrung hands over rising costs for years. While there are many reasons for escalating costs, there is at least one that higher education leadership has complete control over and could start addressing immediately. The fact of the matter is, there is almost a complete lack of visibility on how much it actually costs to deliver post‐secondary education and how those costs compare with the outcomes achieved. While the “measuring higher education outcomes” portion of the equation has been receiving growing national attention, the “cost to deliver” portion of the equation has received much less attention. Both issues must be addressed. Accurately measuring costs and comparing them with outcomes is one of the most important strategies that can be pursued in transforming the economics of higher education.

This paper, Cost Structure of  Post-Secondary Education : Guide to Making Activity-Based Costing Meaningful and Practical, written by Maria Anguiano, Senior Advisor to the Bill and Melinda Gates Foundation: Post-Secondary Education Success and currently Vice Chancellor for Planning and Budget for University of California, Riverside, provides practical guidance for the development of a detailed costing solution for universities and colleges.

Pilbara Group are proud to have contributed to the drafting of this paper based on our detailed experience with university modelling as well as our extensive experience with large-scale, enterprise-wide Activity-Based Cost/Management models.  Back when I first started implementing ABC/M models in the mid-90’s it was a large manual process and imposed a substantial maintenance burden on the organization, hence a lot of old ABC/M models were simply too hard to implement and maintain and were not sustainable.

Things are much different today, most organizations have detailed source systems including finance, HR, facilities and in the case of Higher Education, student and timetabling systems.  Our objective is to use all this data to make the development and the maintenance of the models as easy as possible, so they are usable and sustainable.

The other thing that we are dedicated to is developing solutions that are specific to particular industries, in this case Higher Education. We feel it is very important to implement solutions with specific business rules and methodologies that make sense to universities and colleges rather than implementing generic models and trying to make them fit.  It’s also important to ensure these models are not static, rather they are updated on a regular basis and, using feedback from our university community, improved on a regular basis.

Lea Patterson

About the Author:

Maria Anguiano currently serves as the Vice Chancellor for Planning and Budget for University of California, Riverside. Prior to this role, she was the Chief of Staff to the CFO of the UC system. In this capacity she worked on improving the administrative and operational effectiveness of the University as a key tenet of long-term sustainability and affordability for California residents. In addition, in the past year, she served as a senior advisor to the Bill and Melinda Gates Foundation Post-Secondary Success Team.  She is also a member of the State of California’s Private Post-secondary Education Advisory Council. Prior to working at UC, Maria was a public finance investment banker at Lehman Brothers and Barclays Capital. Maria has also worked as a CPA at Deloitte where she performed financial statement audits for firms in a diverse set of industries and nonprofit organizations. She graduated magna cum laude from Claremont McKenna College with a BA in Economics and has an MBA from the Stanford Graduate School of Business.


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