Financial Liberation of Higher Education

 

I have updated some of the key numbers that support the PSA model. I decided to post my calculation document in raw form. The numbers speak for themselves, but I’ll provide some elaboration.

All calculations are based on the 2016-17 academic year and are in constant 2017-18 USD. Data has been averaged across 2 and 4-year public institutions and is presented in full time equivalent (FTE) measures. The data sources are the National Center for Education Statistics (NCES) and the College Board (CB). Calculations do not include weighting for 2-year vs. 4-year institutions or undergraduate vs. graduate level of study.

Two notable calculations:

a)   Maintaining the current number of FTEF and an annual practice expense of $200,000, the PSA model can provide HE for 34% of the total revenue in the HEI model.

b) At 34% of total revenue, PSA can provide not only a sustainable, respectable living for all FTEF, but tuition-free HE to 11,239,067 FTESs for a 10% increase in FTESs.

As always, I invite feedback and collaboration.

Full Time Equivalents

Full Time Equivalents		Student Ratio
Faculty (FTEF)	680,510	15.5
Graduate Assistants (FTEGA)	98,599	107.2
Other Staff (FTEOS)	1,162,004	9.1
Students (FTES)	10,565,751	N/A

[FTEF entails instruction, research and public service. All graduate assistants are considered part time. Figures are for 2 and 4-year public HEIs combined. Source: Snyder, et al., 2019, pg. 262 and 283.]

PSA sample practice expenses

Amount	Item
$10,000	Salary of academic practitioner (gross)
$3200	Other salaries, wages, and commissions (teaching assistant)
$2000	Rent (office and lecture services, facilities, and equipment)
$200	Advertising
$100	Printing and shipping
$200	Office supplies and equipment (computer, phone, business cards, etc.)
$200	Website hosting, maintenance, internet fees
$50	General business insurance
$150	Health insurance
$200	Retirement
$500	Society membership and other professional fees (accountant, professional development courses, etc.)
$16,800	Total

Practice expenses are based on professional prerogative and so in reality will display considerable variety. These numbers - $16,800/month or $201,600/annum - are for a solo practice with office assistance and facilities, face-to-face teaching facilities, and a teaching/graduate assistant. These numbers are consistent across cities in North America. It is also important to note that under these calculations the mean, median and mode of income distribution are the same, with a range of zero – so, every academic earns the identified practice scenario income.

PSA practice funded by select current HEI model sources

Source	Per FTES	Total FTES	Per FTEF
Revenue
Total Revenue	$37,797	$399,353,690,547	$586,844
Appropriations & Non-operating Grants	$10,523	$111,183,397,773	$168,382
Tuition & Other Fees	$7,666	$80,997,047,166	$119,024
Expense
Instructional	$10,832	$114,448,214,832	$168,120
Instructional, Research, Public Service, and Academic Support	$18,959	$200,316,073,209	$294,361
Instructional, Research, Public Service, Academic and Student Support	$21,036	$222,261,138,036	$326,609

[Formula used in calculations: (Source per FTES) x (Total FTES) ÷ (Total FTEF) = Per FTEF (Practice Funding/Revenue). Source: Snyder, et al., 2019, pg.386, 387, 394.]

With this sort of financial liberation in higher education amazing things are possible. Maintaining the total revenue per FTES and a practice expense pf $200,000/annum, the number of faculty could increase by 66% or 449,143 FTEF – or as PSA prefers, FTE Academics. With an academic-student ratio of 1:15.5 that would also mean a 66% or 6,961,719 increase in FTES. Graduate assistance would increase by 1145% or 1,031,054 FTEGA. The flexibility in PSA finance also means there is room for more liberal student expansion and retention numbers, along with tuition and expense-free HE.