Institutional Efficiency measures include overall financial health, core expenditures per degree, tuition balances, expenses compared revenues, administrative expenditures, and tuition and fees as a percentage of family income.
Measures of performance and success should be viewed through the lens of institutional context and mission. Institutions within the University of Wisconsin System have differences in missions, students served, and resource capacity. All UW System institutions work to create environments that respond to their unique mission-driven mandates and support their student success goals.
Composite financial index (CFI)
The CFI is a measure of overall financial performance based on four core financial ratios, each representing a particular domain of financial operations: (1) the primary reserve ratio, indicating resource sufficiency; (2) the viability ratio as a gauge of debt management; (3) the return on net assets ratio to track financial asset performance; and (4) the net operating revenues ratio measuring operating results. These ratios are then standardized, weighted, and combined into a single index score, the CFI, to indicate the financial health of the institution. The Higher Learning Commission considers a total CFI of 1.1 or higher as indicative of good financial health. CFI is available by individual UW institutions only. The measure is endorsed by the National Association of College and University Business Officers and was developed by Prager, Sealy & Co.; KPMG; and BearingPoint.
core expenditures per degree
Core expenditures include spending on instruction, student services, academic support, and institutional support. Degrees include degrees conferred at all degree levels. UW System total includes UW 4-year institutions only. UW Colleges, as a transferring institution, is not included as a significant portion of students transfer out before completing a degree. Data are from the National Center for Education Statistics (NCES) Integrated Postsecondary Education Data System (IPEDS). Note: beginning in fiscal year 2010, operation and maintenance expenses were distributed among other expenses and no longer reported as a separate category.
Due to revisions of prior-year IPEDS Finance surveys, FY16 data for some UW institutions were adjusted when FY17 data were added.
Due to an IPEDS decision to exclude costs incurred under the UW-Colleges administrative entity from their survey structure associate degrees earned at branch locations are not reflected in FY19 campus degree totals.
Tuition fund balances
A focus of the 2013 Legislative Audit Bureau report on UW System balances was the question of the level of commitment individual campuses had for their balances. In other words, the auditors attempted to categorize the degree of flexibility campus officials, or others, may have in directing balances to be used for one purpose or another. For example, balances in certain funds, such as university housing, are generally restricted to be used for their original purpose. In contrast, balances accumulated from tuition payments may be used for the broad academic mission and general university operations that tuition payments typically fund. For balances not limited by the fund origin, the auditors attempted to distinguish between planned uses where, for example, balances had been set aside for a legally binding contract. In another case, funds had been planned for an event or a purchase, but there is sufficient flexibility that the purchase could be cancelled in lieu of a higher priority that develops. The auditors placed high importance, in developing their levels of commitment categories, on the amount and type of documentation the institution could produce to describe the detail of the plan and how it was developed. The five levels of commitment developed by the legislative auditors are (1) obligated, (2) planned, (3) designated, (4) reserves, and (5) undocumented. Data come from UW System Administration reports to the Board of Regents. The UW System total includes UW System Administration and systemwide funds.
Instructional margin ratio
The instructional margin ratio is a measure of overall financial health related to an institution’s instructional mission. It compares the instructional revenue of an institution to its instruction-related expenses. The UW System total includes a small amount of instructional revenue funded through UW-Extension, UW System Administration, and systemwide funds. A ratio greater than 1.0 indicates revenue exceeded expenses, while a ratio of less than 1.0 indicates deficit spending.
Administrative expenditures as % of overall operating expenditures
Spending on administration is identified using the “institutional support” classification developed by the National Association of College and University Business Officers (NACUBO) and is a standard mandated by the Government Accounting Standards Board (GASB). Administrative spending is divided by student full-time-equivalent (FTE) enrollment, calculated as full-time headcount plus one-third part time headcount. Data for the UW System, neighboring states, and national average include public four-year institutions only. Midwest includes Iowa, Illinois, Michigan and Minnesota. Values are not adjusted for inflation. Source: National Center for Education Statistics (NCES) Integrated Postsecondary Education Data System (IPEDS).
Due to revisions of prior-year IPEDS Finance surveys, FY17 data for some UW institutions were adjusted when FY18 data were added. A significant increase in administrative expenditure per FTE for Midwest in FY18 is largely due to an increase in administrative spending at Michigan State University.
Tuition and fees as percent of family income
Published tuition and fees are for Wisconsin resident undergraduates enrolled full-time for both fall and spring semesters at UW institutions. When more than one UW institution is selected, published tuition and fees are weighted by full-time fall resident undergraduate enrollments. Peer and national tuition and fees are for public four-year institutions and are from the National Center for Education Statistics (NCES) Integrated Postsecondary Education Data System (IPEDS). Peer institution tuition and fees may reflect average tuition rates at institutions with cohort-based tuition and/or different tuition rates for different programs of study. National tuition and fees are weighted by total undergraduate enrollments. State and national median family income is from the U.S. Census Bureau’s American Community Survey for the calendar year that includes the fall semester. Wisconsin is the state used for UW institutions; peer institutions use the state where the institution is located. Neither tuition and fees nor state median family income is inflation-adjusted.