Some have asked whether certain expense and revenue relationships typify the successful institution. Here are six I have gleaned from working with a variety of clients:
- Salaries and benefits should not exceed 80% of net tuition revenue.
- Direct instructional salary and benefits should not exceed 35% of net tuition.
- Spending on institutional advancement should not exceed 50% of unrestricted funds raised (primarily annual fund receipts).
- The freshman discount rate should not exceed the rate for seniors by more than five percentage points.
- In the current environment, private institution net tuition should exceed $14,000 on an FTE basis. High cost areas will require more.
- The net contribution for non-traditional programs should exceed 40% of revenues after accounting for all direct costs.
Do you have some of your own? I’d love to add to this list. Remember, these are relationships between revenues and expenses.