Implementing and Managing Budgets

Case Studies
The following case studies offer an opportunity to make use of information in this chapter, as well as previous chapters, to address budgetary challenges that might face a higher education institution. Having read through all the chapters, it might also be interesting to return to Chapter One and review the case study on Alpha University at a time of surplus.
Case Study: Omega College
Omega College is a private liberal arts college located in a small town in the Midwest. The closest large city is about fifty miles away. There is a community college in the next town about twenty miles away. Most faculty and staff live in the town or in small towns nearby.
Originally a Protestant-affiliated institution, Omega is now a completely independent institution and receives no funding from the church. It was founded in the late 1800s to meet a pressing need for teachers in the state. Until recently enrollment at Omega has been relatively stable, with average enrollment of 850 full-time undergraduates, some limited programs for part-time students, and a very limited master’s degree program in education focusing on certification issues in the state. Undergraduates come to Omega from nearby states, although there is a smattering of students from other areas of the country. There is a very small international student enrollment and most international students study at Omega for a semester and then return home.
Omega has a robust information site on U-Can (the University and College Accountability Network). The cost of tuition is $25,000 for the academic year and room and board is an additional $7800 for two semesters. About 70% of the full-time students who attend Omega receive some type of financial aid (state, federal, and/or institutional).
In each of the last four years the freshman enrollment has missed the target by about twenty students. To offset that enrolment drop, the admissions staff developed an outreach program to the nearby community college to encourage transfer students, but most of the community college transfer students go to the regional campus of the state university to complete their bachelor’s degree. There is a nearby military base, but students rarely come to Omega from that source. The average enrollment over the last four years has dropped to 800 full-time students. This is of concern for many reasons, not the least of which is the financial health of the institution.
Omega has a very limited endowment (most of which is earmarked for student financial aid, some academic departmental support, and three endowed professorships) and thus is very dependent on undergraduate tuition to meet the day-to-day operating expenses of the institution. Graduate tuition for the part-time teacher certification program is a financial plus for the institution.
An annual fund program is essential to the fiscal health of the institution and relies on the generosity of board members, alumni, and friends of the institution to help fund the annual operating budget. The decline in enrollment has caused the institution to reduce nonessential budget expenditures, and faculty and staff have not received a raise for the past two years. Obviously, Omega College is just holding on and a new approach to financing the ongoing expenses of the institution is needed.
The institutional administration and faculty and the governing board are currently focused on development of a strategic plan for the institution that deals with both the financial and enrolment questions. The strategic planning committee is charged with the following responsibilities:
1. The development of a fi ve-year fi nancial plan for the institution.
2. The development of an academic plan that increases the options and opportunities for students to come to Omega College at the undergraduate and graduate levels.
3. The development of an aggressive institutional advancement plan. As the committee does its work the college administration must work to stabilize enrollment and keep the doors of the institution open.
As a member of the administration:
1. What other actions might you recommend that the institution consider for the short term?
2. What additional sources of revenue could you identify that might be available to Omega College?
3. What data would you need to gather to determine whether the options being considered are viable and cost effective?