Reven-U: Funding Higher Education

Mike Vogel | 6/27/2011

Among the revenue sources Florida universities are pursuing:

» More foreign and out-of-state students

Florida wants more out-of-state students in part because they pay more. At a typical Florida campus, an out-of-state student pays $10,000 more each year than a student from Florida.

Where Do They Go after High School?

117,089 students graduated from Florida public high schools in 2008-09 41% went to a Florida college (a former community college) 23% went a state university 4% went to independent universities in Florida 4% to 5% enrolled in post-secondary education out of state 1.5% enrolled in a Pre-K-12 adult program About 32% entered the workforce

Note: Numbers total more than 100% because students may enroll in more than one sector. Source: Florida Board of Governors

FIU, for example, wants to increase its percentage of non-Floridians from the current 10% to 12%. That would amount to having 2,400 more foreign and out-of-state students in 2015 than in 2009. Even the University of Florida, the public university with the most drawing power, says it needs to build an out-of-state recruiting infrastructure.

But every state has the same idea. At Florida's public universities, out-of-state student revenue has actually fallen from $192 million four years ago to $176.5 million in 2010-11, according to Florida Board of Governors data. Curry, the higher education consultant, drew chuckles at an administrators conference earlier this year with his observation: "State X has all of its students coming from State Y and State Y has all of its students coming from State X. Is that how you're going to solve the problem?" he asks. "That maybe works for some universities, but it certainly won't work for all of them" [Overseas Subsidy].

» Research

Rosenberg echoes every Florida university administrator in saying FIU will be "more aggressive" in going after federal research dollars. He wants to increase research revenue 39% to $146 million by 2015-16. Research grants build prestige, bring a professor extra salary, fund graduate students, pay for expensive lab gear and provide research opportunities for students that help them learn and get jobs — plus help solve community problems or societal ills and disease.

Getting outside funding to pay for all that saves universities money but otherwise, research doesn't help the bottom line. Federal grants cover the cost of doing the research and provide "overhead" money — but that just compensates universities for the costs of compliance and similar administrative costs. State and private donors rarely do even that much. In shell-game fashion, some universities reinvest that overhead in developing new grants. Research dollars at Florida's public universities increased 143% since 2000 to $1.7 billion.

?

This month, Florida universities for the first time will have the freedom to charge real market rates for some online graduate programs. [Photo: Florida International University]

What research does offer is the hope of a commercialization home run. "The stories about Gatorade at the University of Florida and (anti-cancer drug) Taxol at Florida State University are legendary," says University of South Florida provost Ralph Wilcox, which has received a $60-million licensing fee for a promising anti-depression drug now in trials. "We have high hopes."

» Donations

Well Heeled
Florida's Top 20 Endowments
1.	University of Florida	$1.1 billion
2.	University of Miami	618 million
3.	Florida State University	453 million
4.	Miami Dade College	306 million
5.	University of South Florida	296 million
6.	Rollins College	280 million
7.	Florida Atlantic University	156 million
8.	Stetson University	123 million
9.	University of Central Florida	103 million
10.	Florida A&M University	96 million
11.	Florida International University	95 million
12.	University of North Florida	69 million
13.	Embry-Riddle Aeronautical University	64 million
14.	Valencia Community College	63 million
15.	Broward College	62 million
16.	Palm Beach Atlantic University	61 million
17.	Florida Southern College	52 million
18.	University of West Florida	50 million
19.	Florida Institute of Technology	45 million
20.	College of Central Florida	40 million
Source: Chronicle of Higher Education Endowments 2009-10. Amounts have been rounded.

It takes a long time to build gift flow, but Florida universities are investing in development staff and building endowments ["Well Heeled," right]. USF, for instance, has a $600-million campaign under way. FIU is beginning a $750-million fundraising campaign. "Clearly we have to be far more aggressive in fundraising," Rosenberg says.

» Partnerships

FIU gets revenue from a partnership with Florida Power & Light, which rents a small space on campus for a call center staffed by student interns looking to get experience and a leg up for management jobs after graduating. It plans to partner with other south Florida organizations.

» Market-rate grad programs

Grad students pay more. This month, armed with new authorization from the Legislature, Florida universities begin offering some online graduate programs free of state strictures that restricted price to what it cost the school to offer the program. How much pricing power universities have depends on the strength of the brand. Other Florida universities look longingly at UF's online MBA programs, the best in the world in some rankings, as a brand with pricing power. The price for its one-year professional MBA program is increasing 11.8% to $36,000. By pricing five programs at market rates, UF hopes to see a 9% revenue increase. Those programs at present bring in $26.5 million.

» New markets via online

Most Florida universities want to do more online. Online classes allow them to reach new markets geographically or demographically that would be too costly to serve with satellite campuses or with traditional classes. Some 7.3 million of the nation's 19 million students in the higher education market are over age 25. Since 1993, UF has been contracting with Embanet-Compass Knowledge, a company based in Chicago and Orlando that helps universities offer advanced degree programs online. The two split revenue (starting at 60% to Embanet Compass and going down as revenue rises).

Online is a big market for Florida universities, though hard to quantify. State data count classes offered online to students living 200 feet from campus along with classes for students living 200 miles from campus. That said, just over half of Florida public university students — 172,000 — took a class in 2009 in which more than 50% of instruction was delivered by technology. Some 26,024 — equivalent to the student body of one of Florida's smaller universities — took only online classes, UCF is the leader in courses and enrollments, followed closely by USF and UF.

Tags: Education