METHODOLOGY – ACC COURSE-COST COMPUTATIONS [BACK]

Summary:

• Based on FY2008ProgramRevenueExpense spreadsheet from the ACC Business Office
• Indirect costs as assigned by the methodology adopted by the Business Office are included
• Within departments, costs are allocated between courses based on class-size averages
• Course-cost estimates are based on averages over all sections of a course on all campuses
• Adjustments for later years are based on published tuition, enrollment, and expense changes

Data sources:

[1] Each spring the ACC Business Office publishes a spreadsheet that summarizes the previous fiscal year’s enrollment, revenue, and expense results for each of the 75 instructional departments.

[2] The ACC Course Catalog was used to build a list of recognized ACC courses, with information about the number of credit and contact hours for each course as well as the amount of any additional course-specific fees.

[3] Enrollment information from the ACC Course Schedule was used to estimate the average class size for each type of course.

[4] Appendix D of the 2007 final report from a citizen’s advisory committee appointed by the ACC Board was the basis for the current system ACC uses for allocation of indirect expenses. It includes discussion of several of the issues involved.

Details:

[a] Since instructor salaries dominate direct costs, the direct cost of each course (e.g., GOVT2305) is estimated by dividing the total direct cost for the department (e.g., Government) by the number of instructor hours used, then multiplying by the number of instructor hours for the course (a typical value is about $5000 for a lecture course). A per-student direct-expense estimate is made by dividing this figure by the student enrollment for the course, giving values between $150 and $250 per student for lecture courses, depending on average class size. Direct costs per student for laboratory and technical courses are substantially higher.

[b] Indirect costs for each course are allocated on the same basis as is used in the Business Office spreadsheet – half based on student contact-hours and half based on direct-cost levels (see caveat [i] below). All expenses except faculty salaries and instructional-department budget allocations are treated as indirect. These include the costs of campuses, classrooms, faculty offices, library services, tutoring and computer labs, student services, faculty/staff fringe benefits, and general administrative services such as purchasing, personnel, computer-system support, and campus mail.

[c] The most recent edition of the Business Office program revenue/expense analysis uses FY2008 data. If a fiscal year after that is specified, the out-of-district and out-of-state tuition rates are increased appropriately (the in-district rate has remained the same), state reimbursement rates are increased to reflect appropriations, and expenses are multiplied by a general adjustment reflecting the change in per-student expense rates. Note that the FY2009 surge in enrollment has led to per-student expense rates lower than those for FY2008.

[d] Payments shown by students are based on the tuition status and fiscal year specified; they include course fees where they are levied. They also include the $60/credit-hour fee for courses that appear more than twice in the course list. To simplify the tuition-status interface, the $40-per-course fee for out-of-district Early College Start students at ACC campuses is not included.

[e] State reimbursements are based on the budgeted per-contact-hour rate for the type of course, multiplied by the number of contact hours for the student. This does not take into account that the state funds for any given year are allocated based on enrollment in a previous year. This approach is taken because current enrollments will affect state support in subsequent years.

Caveats:

[i] The indirect-cost allocations are approximations, and do not make use of detailed information about how much use a course’s students make of college facilities and services. However, other plausible allocation methods produce similar results. Since decisions on the level of course offerings are based primarily on community demand, approximate cost estimates suffice for most planning purposes.

[ii] These figures are based on averages for each course. The costs for particular classes and students can deviate substantially from the averages, especially for small classes. However, the expense estimate for an entire degree or certificate plan has less variability.

[iii] Short-term variations in student enrollment will not change ACC’s expenses by the full amounts calculated here, since most of the college’s expense structure changes over a multi-year time-frame as scheduling and faculty-hiring adjustments are made. However, over the long term ACC expenses have grown at least as fast as enrollment, even after taking inflation into account.

[iv] Accounting for internships and clinical courses, which have a variety of instructor-cost situations and do not form sections in the usual sense, is based on credit hours and thus may be significantly different from the values that a course-specific analysis would yield. But because any discrepancy will be shifted to other courses in the same department, such situations should have little impact on the cost estimate for the overall program.

Questions? Comments? Suggestions? Contact Hunter Ellinger, the author of this website.

[This page last modified April 12, 2009]