The Cost of a Growth Spurt
Story posted November 19, 1999
Bowdoin would not likely break even financially if it undertook another 10 percent growth in number of students, as it did in the mid-1990s.
This was the determination of Associate Professor of Economics Michael Jones, after conducting a financial analysis of the most recent growth. He shared his research at a recent faculty seminar.
When colleges make a conscious decision to increase enrollment, the reasons are likely more complex than when a company decides to increase production, but to some extent the growth of a College can be examined in economic terms like the growth of a business. Jones looked back at the most recent growth, to see if the College did, indeed, break even, and considered whether the outcome would be the same in the future.
He explained that "Any budget exercise like this has, lurking in the details," jobs, ideals, feelings and other matters that he had not necessarily taken into account for his purposes. "Take a bit of what I say with a grain of salt," he said.
In 1993 the student body numbered about 1410, and the college decided to increase that number to about 1510 by the 1997-1998 academic year, Jones said. Even with this growth spurt, Bowdoin remains among the smallest colleges in its 22-college comparison group, he said, and Middlebury is the only other of the 22 to engage in deliberate growth.
Jones’s task was difficult because of the complexity of a college budget, which comprises revenues and expenditures in several inter-relating funds. And the analysis was made even more challenging for several reasons: Changes in the accounting system in the past several years made it difficult to ensure that the numbers he was examining from the present and from 1993 were actually comparable; the budgeting process was also changed.
Another difficulty was looking at growth only as it related to enrollment, because the College grew for reasons other than the increase in number of students. The square footage of Bowdoin’s facilities increased because of new buildings and renovations. The number of beds on campus increased, as did the number of full-board equivalent diners, because of changes in the residential life system.
What Jones tried to do was to determine whether the extra revenue from an increase in enrollment would pay for the expenditures necessary to maintain academic quality. He determined that over the past growth, the College basically broke even. But to determine whether this would be the case with another growth spurt, he had to look in great detail at the expenditures of every department and evaluate what expenses would need to increase with an increase in students.
While the college seems to have broken even in this most recent growth, it wouldn’t necessarily happen again, Jones said.
Though Bowdoin has added many new buildings, more students would mean additional buildings and cost-reducing choices in construction become more difficult to make as the number of people using the buildings increases.
Also, to increase the number of students, but keep the quality of the students the same, would mean looking at financial incentives to offer applicants. Increasing the number of faculty to maintain academic quality, also means looking at the cost of hiring someone over time, as their pay increases, not just taking their hiring salary into account. As numbers of students and faculty increase, the budgeting becomes more and more complex.
Jones’s examination of the College’s growth prompted discussion about the value of education—the College’s product—and how quality in education could be measured.
If Bowdoin decided to grow again by 10 percent, it would leapfrog over several schools to be in the middle of the 22 colleges in number of students, Jones said. An increase in size could be a benefit, regardless of financial cost, it was pointed out, because a larger student body might help to attract additional high quality students.
Many present at the seminar thought that it was the less easily measured, non-financial benefits such as this one, that made looking at College growth from a financial aspect an important exercise, but not the only basis for a final decision about College growth.
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