Some Economic Considerations and a Procedure for a University Cost Study.

Hirschl, Harry Hamel

A study of the nature, product, expenses, and income of a university develops a methodology to translate a university's statement of these descriptive data into an analytical cost study framework. The product of a university is defined as the intellectual growth of students and staff. Since this product can not be quantified, costs are assigned to class units (meetings of students and teacher) which are proxy variables representing the product. Information requirements for the construction of total cost schedules relating to the degree-granting process are formulated and examples are given. Methods for allocating and distributing direct and indirect expanses and revenues are analyzed within the cost model framework. By introducing the concept of marginal cost functions into the framework it becomes possible to base predictions of fiscal requirements on each institution's unique policies and practices. Implications of this procedure are examined to show how the data can be transformed into useful studies of (1) factors influencing the cost of classes, (2) estimation of future expenses based upon changing student population, and (3) institutional or interinstitutional per student cost comparisons. (TT)