significant federal legislation to impact higher education

significant federal legislation to impact higher education

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significant federal legislation to impact higher education

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The finances of higher education can appear complicated to the casual observer. Higher education financing comprises two broad categories: revenue and expenditures. Revenue sources are typically tuition and fees, state appropriations, gift giving, and investment income. Expenditures include compensation, technology, debt service (borrowing costs) and other operating expenses. While the level of revenue and expenditures will vary by institution, the categories and criticality of each are consistent throughout higher education.

Most colleges and universities are heavily dependent upon tuition and fee revenue. Public institutions also receive public funding through state appropriations, and community colleges get funding from the communities they serve. Private gift giving, investment income, and facility rental are other common sources of revenue in many colleges. However, tuition is usually the largest single revenue source. Higher education is very labor-intensive, and costs associated with compensating faculty and staffs are typically the largest expense incurred by the institution. Compensation expense includes all forms of salary, wages, overtime, overloads, summer contracts, and employer-paid benefits such as health insurance, pension plan contributions, and life insurance provided by the institution. Other major costs include technology, interest expense associated with borrowing, and physical plant maintenance.

Each institution’s budgeting process will depend on its academic calendar and culture. The budget process must always suit the needs of the institution and work within its social and political framework. The budget calendar identifies the tasks to be completed, who must complete these tasks, and when the tasks must be completed. Frequently, there is a budget committee that includes representatives from all areas of the institution, including students. Most budget processes are considered inclusive and usually solicit input from the campus community. Many colleges separate the budget into two main categories: operating and capital. The operating budget addresses the revenue and expense categories that drive and support the institution such as tuition and gift income as well as compensation expense, and the cost of technology. The capital budget plans for large expenditures that often exceed one year and support the institutional mission. New building construction, major renovation projects, and significant vehicle and equipment purchases are examples of capital expenditures.

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Strategic or long-term planning is vital to an institution’s growth and success. Planning demands expertise from all areas throughout the college, as it determines all future action and plans. Operating and capital budgets should always fit into the larger plans of the college as outlined by the strategic plan. Some institutions combine the budget and planning process into a single endeavor. Others separate them into two distinct categories. Either way, there must be a connection between budgeting and strategic planning processes for both to be successful. The strategic plan is a dynamic document that must be reviewed and updated continually as the college responds to political, social, and economic realities.

Public higher education gained acceptance in the United States as a way to provide affordable education to the general population. Private higher education had existed for many years but was considered by many to be available only to the wealthy and privileged. The primary mission of public higher education is to keep college affordable and improve the lives and opportunities of everyone regardless of socioeconomic status. Funding public higher education is a state function and therefore varies by state. Economic conditions will dictate how much funding is available to the state legislature. Higher education is also competing for funding with other government-related services. Legislators have been critical of the rising cost of college tuition and have been demanding increased accountability from administrators in public higher education. With public funding, there is always political influence in the administration of higher education. Depending on the state, the governor and state legislators may have significant influence on college policy and frequently serve on the governing board of the institution.

The first significant federal legislation to impact higher education in this country was the Morrill Land Grant Act of 1862. Subsequently many pieces of federal legislation have had direct effects on institutional administration as well as costs for colleges to comply with legal requirements. The goal of most federal legislation has been to improve access to higher education, provide financial aid options, ensure accessibility to the disabled, and make colleges safer. While this legislation has had a significant impact on the growth and success of higher education over the last century, compliance with the law always comes with a price. The Higher Education Act of 1965 is a good example of federal legislation that helped higher education to grow and prosper while requiring colleges to establish many new student services and to ensure fair treatment of all students.

significant federal legislation to impact higher education

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