Transcript 4. Finances Auburn increasingly relies on tuition and fees, as state appropriations fail to keep pace with the university’s overall budget growth.

4. Finances
Auburn increasingly relies on tuition and fees, as state appropriations fail to keep pace with
the university’s overall budget growth. While today representing about one-third of AU’s
annual budget, public fiscal support as a percentage of Auburn’s revenue has been declining
for more than a decade. AU receives lower funding per student from state appropriations
combined with tuition than almost all out-of-state competing institutions. Accordingly, AU is
not resourced appropriately to compete directly with these peers
The “It Begins at Auburn” campaign will more than double AU’s endowment, advancing the
University to the 75th percentile among its SREB peers (based on 2004 data and assuming
no change in their endowment levels). Despite recent growth, annual giving to Auburn is not
notably high, at 77 percent of the SREB median dollar level in 2005. Alumni participation,
measured on different bases as 21 percent or 11 percent, also suggests opportunity for
growth
Messina & Graham
102
State budgets across the U.S. are under pressure, which will continue – driven by health care
costs and other factors. “The share of the state pie garnered by higher education has fallen as
that devoted to Medicaid has risen dramatically.”2 Total state spending on higher education by
all states combined dropped four percent from 2002 to 2004, and by ten percent after adjusting
for inflation
Alabama earmarks sales and income tax revenues for the Educational Trust Fund (ETF). This
shelters education funding from health and other demands on the state’s tax revenue, but these
taxes fluctuate with the economy. While the ETF’s revenues have grown at about five percent
per year on average since FY 1992, (driven by employment growth and wage increases), they
dropped by nearly five percent in FY 2001 and had no growth in FY 2003. ETF revenues grew
by nine percent in 2004 and 11 percent in 2005. A proration-prevention account helps to
cushion volatility somewhat; the state transferred $198 million (3.8% of the ETF tax share) to
that Rainy Day fund in 2006
2 Ford
Policy Forum, 2004
Messina & Graham
103
AU’s share of the Educational Trust Fund can be expected to vary in the future: the ETF is
divided among K-12 schools, community colleges, the UA system, and other institutions. Even
the fund’s continuing control of the major tax streams may carry some legislative risk, as health
and other demands bear down
AU’s state appropriation from 2001 to 2005 grew at an annual rate of about 2.6 percent, roughly
the same as the CPI. The state appropriated 13 percent more for AU for 2005-06 than for 200405, and another 19 percent more than that for 2006-07, as the Alabama economy grew strongly
State appropriations have represented a decreasing fraction of AU’s overall revenue, declining
from 41.9 percent in 1995–96 to 30.1 percent in 2004–05. Based on the most recent
information, that percentage will likely rise by a few points during 2006-07 Chart 37
Messina & Graham
104
State Appropriations as Share of Auburn’s Total Revenue
FY 1996 - 2005
Chart 37
41.9%
34.4%
30.1%
1996
2001
2005
Source: AU OIRA
Messina & Graham
105
• This ETF growth rate over the medium term will be probably less than the future growth in
AU’s costs. AU total spending growth averaged 5.6 percent per year from 1995-96 to
2002-03, though the expense growth rate was only three percent in 2004-05. The
possibility of a gap between appropriations growth and spending growth implies the need
for developing other funding sources
• AU’s state appropriation per student in 2004-05 was lower than that received by most of
its direct competitors, including U of A (by a small amount), U of TN, U of FL, UGA and
Georgia Tech. Chart 38.
This may oblige AU to charge higher tuition than others in
order to approach being competitive in total financial resources. Data are not yet available
for assessing to what (if any) extent the double-digit increases in AU’s state appropriations
since 2004-05 have closed the funding gap
Messina & Graham
106
State Appropriations per FTE Student
Auburn versus Competition – FY 2005
Chart 38
$10,062
$9,006
$8,281
$8,144
$7,281
$6,010
$5,622
$5,180
$4,502
GA Tech UGA
FL ST
UFL
UTN
U of A
AU
Clemson
UMS
Source: SREB; AU OIRA
Messina & Graham
107
• The U.S. is in an extended period of increased private giving, resulting from the sharp
rise in numbers of multi-millionaires, generational wealth transfer by the Baby Boomers,
and other factors. Giving to universities has doubled since 1994 (reflecting accumulative
annual growth rate of 6.85 percent), and it has risen 57 percent in CPI-adjusted terms.
Chart 39
Messina & Graham
108
U.S. Private Giving to Higher Education
Chart 39
$ Billions
Up 57% after CPI
adjustment
25.6
12.4
1994
2005
Source: Council for Aid to Education
Messina & Graham
109
• Most institutions depend on regular gifts – both annual fund and endowment – from
alumni and friends to help cover operating costs and to fund scholarships, programs,
research, and expansion
- The top universities in the nation raise as much as $600 million in a year, and several
have multi-billion-dollar campaigns under way. The top ten money-raisers
account for 16 percent of all funds raised
- Friends who are not alumni have become significant contributors, although their
participation varies appreciably from year to year
- Annual support (excluding major, one-time capital gifts) may range from only a
percent or two to nearly ten percent of a university's annual budget
• Despite recent growth, annual giving to AU of $29.6 million in 2005 is not notably high, at
77 percent of the SREB median. Alumni participation, measured on different bases as 21
percent or 11 percent, also suggests opportunity for growth in view of the Auburn spirit
and measures of graduates’ satisfaction
Messina & Graham
110
• Projecting the “It Begins at Auburn” $500-million campaign to achieve its target and
augment the current endowment by some $290 million, AU will more than double its
current endowment. At $26,600 per student, this would put AU at the 75th percentile of
its SREB peers (based on 2004 data and assuming no change in their endowment
levels). This will place AU ahead of close competitors like U of A and Clemson, while
still well behind the top regional research universities such as Georgia Tech. Chart 40
Messina & Graham
111
Endowment per FTE Student – AU versus Competitors – 2004
Chart 40
$ Thousands
71
“It Begins at Auburn”
($290 million total increase)
23
GA Tech UMS
Source: AU OIRA
27
21
U of A
20
17
UTN
FL
17
16
Clemson UGA
Messina & Graham
13
AU
12
FL ST
112
Assessment of Strengths, Weaknesses, Opportunities,
and Threats (“SWOT” Assessment)
Auburn University
STRENGTHS
• AU’s big-school, big-time sports, small-town campus near fast-growing Atlanta is attractive
to many Alabama and Georgia students. AU draws the top share of Georgia students who
leave their home state for a Southern Region Education Board public research university
• AU has notable strengths in selected academic areas. AU’s Wireless Engineering program is
a leader. The undergraduate Engineering and Business programs rank well in USNWR’s
lists. Several of AU’s College of Architecture programs rank strongly in the Design
Intelligence Survey
• AU ranks well on USNWR’s retention value-added measure and on the National Survey of
Student Engagement’s “supportive campus environment” measure
• AU has research strengths in selected engineering and agri-science areas
• AU has a track record of good financial management, and development has recently shown
great progress with “It Begins at Auburn”
• AU’s large alumni base expresses strong Auburn spirit – and AU has solid political support
in Alabama
113
Messina & Graham
WEAKNESSES
• Academically, AU lags nearby states’ best universities in measures of incoming
undergraduate quality. It also has a reputation for students who do not study hard and are
consumed by athletics
• AU’s undergraduate education likely does not prepare students as well as it could to enable
them to compete in the twenty-first century. On the Collegiate Learning Assessment, AU’s
seniors achieve “at expected level,” like the students of a majority of other participating
schools. The Spellings Commission and others regard “the expected” as no longer
good enough. AU’s scores on National Survey of Student Engagement measures are Bs
and Cs relative to the top ten percent of schools. AU’s six-year graduation rate is below that
of its competitors as well as the national average for four-year schools
• AU is not competitive on key measures in most research areas, and being located away
from a major growth and research hub is problematic for research leadership
• AU is under-resourced – for its array of programs and relative to competitors – owing to
historically declining real state appropriations, comparatively low endowment and alumni
giving, and limits on feasible tuition increases
• AU’s cohesiveness as a community has been adversely affected over the last five years or
so by several factors – including lack of consensus on vision and mission, a divided Board,
presidential turnover, and frayed relations among the Board, administration, faculty, and
other constituencies
Messina & Graham
114
OPPORTUNITIES
• Coalesce Board and faculty behind a new President and an agreed-upon vision
• Market AU’s stronger undergraduate programs and the Honors College much more
proactively to win more talented students
• Build on AU’s past lead in value-added retention by enhancing undergraduate education
quality for the current profile of AU students; experimenting with innovative approaches
in program design, teaching, and learning; and using the results to market to prospective
students
• Focus research in a few areas of natural strength and relative advantage, and drive
collaborations with nearby research powerhouses, taking advantage of telecommunications
technologies
• Rationalize program offerings to moderate expense growth and gain critical mass in areas
of focus
• Harness technology thoughtfully to improve quality while containing costs in
selective distance-learning offerings, elements of undergraduate instruction, backoffice operations and extension
• Continue to strengthen alumni and friends’ financial support of the University through “It
Begins At Auburn” and intensified annual-fund campaigns, leveraging these
communications opportunities to build greater awareness and understanding of Auburn, its
accomplishments, and its aspirations
115
Messina & Graham
THREATS
• Demographic trends in high-school graduates are neutral for student enrollment, and the
growing fraction of Hispanic students will present a new challenge for AU
• AU’s dependence on Georgia for students paying out-of-state tuition is vulnerable to any
flattening in Georgia’s high-school graduate numbers and to lesser-ranked Georgia colleges’
becoming more competitive with AU
• AU could face increasing financial challenges if Alabama state appropriations do not keep
pace with AU expense increases and if resultant tuition hikes meet market resistance
• AU’s value proposition could erode if students, parents, or the state begin to emphasize the
college years as a time for gaining competitive skills – unless AU can demonstrate stronger
value-added
• The U of A’s aggressive recruitment of high academic achievers could reduce AU’s share of
strong in-state students and damage AU’s reputation. It may also have the potential to
discourage state appropriations to both universities if the schools are perceived as using
public funds to compete for prestige
• Technology developments in higher education create opportunities for fast-moving
competitors, so AU must be constantly vigilant about remaining at the forefront of applying
relevant techniques
Messina & Graham
116
Strategic Challenges and Implications
Auburn University
• Areas of Strategic Concern
• Potential Strategic Directions (Illustrative)
• Action Implications of Possible Strategic Priorities (Illustrative)
Messina & Graham
117
Areas of Strategic Concern
Auburn University
AREA
CONCERN
STUDENT ENROLLMENT
• AU is accepting 84 percent of
applicants
• Not much room for greater selectivity or
for managing enrollments by adjusting
standards
• Over 40 percent of out-of-state students
(entering fall 2006) are from Georgia
• Vulnerable to decrease because of possible
Georgia economic downturn, policy changes,
or other factors
• ACT scores, while among the best in
state, are still well below those of
nearby competitors
• Could make it harder to build reputation for
excellence
Messina & Graham
118
Areas of Strategic Concern (Continued)
Auburn University
AREA
CONCERN
STUDENT ENROLLMENT
• Tuition increases averaged 8.9 percent
per year from 1995-96 to 2005-06
• This is 3.5 times the increase in CPI, and
twice the rate of increase of public fouryear colleges in general. How sustainable?
What effect on perception of value?
RESEARCH
• Flat to declining projected federal research
funding
• Increasing competition for federal research
dollars
• AU not in a strong position in many
research fields
• Research is costly, with expenditures
consistently exceeding revenues
Messina & Graham
119
Areas of Strategic Concern (Continued)
Auburn University
AREA
CONCERN
FUNDING
• AU is under-resourced. AU’s totalrevenue-per-student is below that of
competitors
• The shortfall of between ~$1,500 to $3,500
relative to regional competitors is not made
up by alumni giving or other sources. This
represents a significant disadvantage
PRIVATE GIVING
• The percent of alumni giving seems
relatively low
• May indicate that many alumni do not feel
informed about or strongly connected to AU
Messina & Graham
120
Potential Strategic Directions
• Instruction. Renew the University’s primary emphasis on instruction, with undergraduate
education the top priority. Become more selective on admissions, raising standards over
time. (This echoes the 21st Century Commission report of a decade ago)
• Research. Focus research on building from areas of strength and developing
collaborations (including with industry); seek supplemental funding
• Extension. Implement a technology-leveraged business model for extension and outreach
• AU system. Better link with AUM, and collaboratively expand on-line presence and brand
image among working students
• Operations. Continue to improve efficiency to help reduce the rate of cost increases
• Finances. Increase financial resources to enable excellence
- Consider expanding capital campaign
- Implement an initiative to increase annual giving
- Pursue opportunities for special gifts
Messina & Graham
121
Action Implications of
Possible Strategic Priorities (Continued)
Auburn University
IF A CHOSEN STRATEGIC
PRIORITY WERE TO BE . . .
THEN ACTIONS AU COULD
TAKE WOULD INCLUDE . . .
Improve the quality of the undergraduate
experience
• Realign faculty responsibilities (and evaluations)
to allow more time for undergraduate teaching
• Hire a larger fraction of teaching-oriented faculty
• Challenge the deans and faculty to develop ways
to make AU a leader on the Collegiate Learning
Assessment
• Perform a broad review of the undergraduate
curriculum in light of pervasive and highereducation trends and recent thinking
• Become more selective in admissions
• Increase the use of technology to leverage
teaching and learning interactions
• Build additional dormitories and common spaces
Messina & Graham
122
Action Implications of
Possible Strategic Priorities
Auburn University
IF A CHOSEN STRATEGIC
PRIORITY WERE TO BE . . .
Increase research scale
THEN ACTIONS AU COULD
TAKE WOULD INCLUDE . . .
• Focus resources on building from areas of natural
strength
• Expand funding sources (endowment, annual
giving, special gifts) to support a larger research
enterprise
• Encourage more research collaborations with
leading nearby universities
• Take a series of best-practice steps to win more
grants (greater dollar value, higher success rate)
• Realign faculty responsibilities (and evaluations)
to allow more time for research
• Hire a larger fraction of research-oriented faculty
Messina & Graham
123
IV. Auburn University Montgomery
• Comparison of Auburn University and AUM
• Profile
• Assessment of Strengths, Weaknesses, Opportunities, and
Threats (“SWOT” Assessment)
• Strategic Challenges and Implications
*Acknowledgment: The Vice Chancellor for Administrative Services and the Strategic Planning
Committee of Auburn University Montgomery were extremely helpful in compiling and critiquing selected
data presented in this profile of Auburn, and in suggesting additional sources. Even so, the selection of
data to be presented, all judgments expressed, and any remaining errors are the sole responsibility of
Messina & Graham
Messina & Graham
124
Comparison of Auburn University
and Auburn Montgomery
Chart 41
AUBURN
AUM
YEAR FOUNDED
1856
1967
INSTITUTIONAL ROLE
Land Grant, Comprehensive
Research Institution
Education of Central
Alabama’s Diverse Citizens,
Supported by Research and
Service
USNWR CATEGORY
Top National Universities
Master’s South – Third Tier
TOTAL ENROLLMENT
23,000
5,100
NUMBER OF GRADUATE
STUDENTS
3,000
800
DOCTORATES AWARDED
(2003)
159
0
Messina & Graham
125
Comparison of Auburn University
and Auburn Montgomery (Continued)
Chart 41
AUBURN
AUM
REVENUES ($ Millions)
$495
$61
ENDOWMENT ASSETS
($ Millions)
$269
$22
FEDERAL RESEARCH
($ Millions)
$45
$0.1
IN-STATE TUITION
$5,500
$4,600
STUDENT: FACULTY RATIO
17:1
16:1
STUDENT SOURCE
40% Out-of-State
80% Montgomery County, 3%
Out-of-State
PERCENTAGE WHITE
88%
60%
Messina & Graham
126
Comparison of Auburn University
and Auburn Montgomery (Continued)
Chart 41
AUBURN
AUM
PERCENT WORKING
STUDENTS
80-90%
PERCENT OF PART-TIME
UNDERGRADUATES
9%
34%
FRESHMEN ACT SCORE
(25 / 75 percentile)
21 / 27
18 / 23
FRESHMEN FROM TOP 10%
OF HIGH SCHOOL
35%
N/A
SIX-YEAR GRADUATION RATE
65%
28%
Messina & Graham
127
Comparison of Auburn University
and Auburn Montgomery (Continued)
Chart 41
LEADING UNDERGRADUATE
COURSES TAKEN (%)
AUBURN
AUM
Liberal Arts (24%)
Business (19%)
Engineering (15%)
Science & Math (13%)
Education (8%)
Architecture (7%)
Human Sciences (6%)
Agriculture (5%)
Nursing (3%)
Business (30%)
Science (24%)
Liberal Arts (17%)
Education (15%)
Nursing (10%)
Messina & Graham
128
Profile of Auburn University Montgomery (AUM)
AUM’s students come mostly from the local Montgomery area, as do Troy-Montgomery’s.
Chart 42. This reflects the educational role of AUM, serving the more place-bound, joboriented, working student for whom studying close to home and job are prime considerations.
It makes AUM much more heavily dependent on local demographics, economics and
competition than AU, for example
The Montgomery-area population of prime potential students – high-school graduates age 1824 – has been on a steady rise since 1990 and is expected to rise by another eleven percent
in the next ten years. Chart 43 The working-adult population is projected to rise by about five
percent in the same period. Chart 44
Messina & Graham
129
Source of Undergraduates
Chart 42
AUM – Fall 2005
Elmore Co.
15%
Troy-Montgomery – Fall 2004
Elmore Co.
14%
Montgomery Co.
49%
Montgomery Co.
64%
Autauga Co.
10%
Autauga Co.
9%
Lee &
Dallas Co.
6%
Other
12%
Other
21%
Source: AUM OIRA
Messina & Graham
130
Montgomery Area
High-School Graduates Age 18 - 24
Chart 43
57,000
60,000
63,000
50,000
46,000
Growth Rates
Actual
1990
Actual
2000
1990 – 2005
21%
2005 – 2015
11%
Projected Projected Projected
2005
2010
2015
Note: Includes Montgomery, Elmore, Autauga, Lee and Dallas Counties
Source: Center for Demographic Research, AUM
Messina & Graham
131
Projection of Montgomery Area
Working Adults Age 25 - 44
Chart 44
124,000
127,000
134,000
129,000
2005 - 2015
5.5% Increase
Actual
2000
Actual
2005
Projected
2010
Projected
2015
Note: Includes the traditional five-county market area, only those with high-school diplomas
Source: Center for Demographic Research, AUM
Messina & Graham
132
Despite the population growth of AUM’s traditional five-county market area, enrollment
declined between 1995 and 2000, and today it remains well below its 1995 level. Chart 45.
There is some impact from strong job opportunities, (e.g., in the growing auto industry), that
compete for prospective students, but a share loss to other Montgomery institutions may also
have played a part. Chart 46
Of Montgomery area four-year schools, AUM comes second to ASU in enrollment, ahead of
Troy-Montgomery, with Faulkner and Huntingdon much smaller. Chart 47. But the
competition for Montgomery students is more with Troy than ASU, whose students appear –
although various sources differ sharply on this – to come from across the state and nation. In
terms of share of degrees awarded in Business (one of the most popular programs in all the
institutions) AUM comes first and is far ahead of ASU, partly reflecting better success in
graduating students. Chart 48
Messina & Graham
133
AUM Enrollment Trends
Chart 45
1995 - 2006 Fall Semester
Number of Students
5,882
4,900
1995
2000
5,123
5,128
5,079
2004
2005
2006
Source: AUM OIRA
Messina & Graham
134
Montgomery Competitor Enrollment Trend
Fall FTE Enrollment
All Students (Undergraduate and Graduate)
6000
AUM*
ASU
1994 2000 2004
1994 2000 2004
Chart 46
Troy-Montgomery
5000
4000
3000
2000
1000
0
1994 2000 2004
* Lower than headcount numbers because of FTE adjustment of part-time students
Source: ACHE Fall Credit Hour Production Reports and Alabama College System Enrollment Summary Fall 1994 - 2004
135
Share of Montgomery Area Four-Year Institution
Undergraduate Enrollment – 2005
Chart 47
100% = 10,949 FTE (#)
Troy-M
23%
(2511)
ASU
38%
(4152)
Faulkner
5%
(600)
Huntingdon
6%
(622)
AUM
28%
(3064)
Source: ACHE Public Four-Year Headcount Enrollment and FTE Fall 2005;
Peterson’s 2006; Articles from Montgomery Advertiser; Faulkner University Website
Messina & Graham
136
Share of Montgomery Area
Bachelor’s Business Degrees Conferred – 2005
Chart 48
100% = 611 Degrees (#)
Huntingdon
3%
(20)
ASU
13%
(77)
AUM
34%
(206)
Faulkner
24%
(146)
Troy-M
26%
(162)
Source: ACHE Institutional Data on Bachelor’s Degrees conferred 2005 Public and Private Four-Year Institutions;
Alabamamentor.org. (Peterson’s) – Percent of Business / Marketing Majors by Institution
Messina & Graham
137
Market research findings suggest that AUM has the best academic reputation in Montgomery
across all segments. But Troy-Montgomery is widely perceived to be the better option for
working adults, offering more convenience in several ways. Chart 49. AUM’s Education and
Business programs are seen as strong by some key segments. Students and former students
report problems with the financial-aid office and career center, while high-school counselors state
that the admissions office is not user-friendly. There is a general perception that campus
facilities and campus life are lacking. Chart 50
In terms of ACT scores, AUM, Troy and Faulkner compete for similar students and require an 18
for most of their admits, but have programs for a minority of lower achievers. Huntingdon
students are on average academically stronger and ASU students weaker than those at AUM
Chart 51
AUM’s six-year graduation rate, while low, is better than ASU’s and much better than Troy’s,
consistent with the picture of AUM as a higher-quality institution. Chart 52. On the other hand,
AUM seems to experience considerably more transfers out than the in-town competition
Chart 53
Messina & Graham
138
Market Research on AUM’s Competitive Position
Chart 49
OVERALL PERCEPTIONS
MARKET SEGMENTS SHARING THIS VIEW
AUM instruction and faculty quality is
high, with the strongest academic
reputation of local competitors
Current students (85%); recent graduates;
students at local competitors; private HS
counselors; HS parents; Montgomery
public
Troy-Montgomery is a better school for
working adults because of convenient
course times, TV and on-line courses, and
flexible mini-quarters
Recent graduates; transfers-out; students
at local competitors; public HS
counselors; HS parents; Montgomery
public (46% versus 26%)
AUM is harder but better than local
competitors
Recent graduates; transfers-out; students
at local competitors; Montgomery public
Source: AUM Market Surveys and Focus Groups, August 2006
Messina & Graham
139
Market Research on Specific
AUM Strengths and Weaknesses
Chart 50
SPECIFIC FEATURES
MARKET SEGMENTS SHARING THIS VIEW
Nursing program is strong
Students at local competitors
But NOT Public HS counselors or
Montgomery public
Education and Business programs are
strong
Public and private HS counselors;
Montgomery public
Inadequate course availability by time and
day
Current students
Unhelpful financial-aid office and career
center
Current students; recent graduates;
transfers-out
Admissions office not user-friendly
Public and private HS counselors
Campus life and facilities need work
Current students; recent graduates;
private HS counselors; HS parents
Source: AUM Market Surveys and Focus Groups, August 2006
Messina & Graham
140
Competitor ACT Comparison – 2005
Percent of Entering Freshmen Scoring 18 or Higher
Chart 51
96
84
72
74
26
ASU
Troy U*
AUM
Faulkner Huntingdon
(all campuses)
*No separate data available for Troy-Montgomery
Source: Peterson’s, 2006
Messina & Graham
141
Comparison of Selected Competitors – 2005
Chart 52
AUM
Troy-Montgomery
ASU
% Completing Bachelor’s
Degree in 6 Years or Less
28
9
23
% of Students 25 or older
26
63
55
% African-American
33
56
95
% Full-Time Students
66
36
57
% Living on Campus
12
0
43
Size of Campus (acres)
500
6
172
Source: Peterson’s; ACHE; USNWR; Articles in Montgomery Advertiser
Messina & Graham
142
Transfers from Montgomery Public Universities
Fall – 2005
Chart 53
236
99
To Other
140
49
To AU
88
To Troy
50
41
As % of Enrollment
5%
9
To Other
27
To AUM
41
To Troy
To Other
To AUM
AUM
72
Troy-M
ASU
1%
3%
AUM received transfers of 83 students
Source: ACHE
Messina & Graham
143
The annual cost comparison of local colleges in the Montgomery press – based on reporting by
the Alabama Commission of Higher Education – shows AUM about ten percent higher than TroyM and ASU. Chart 54. The effective cost of AUM for students taking the typical number of
credits is no higher than at those competitors, but the perception of a higher price may be
enough to drive some students’ choices. Even so, price did not emerge as a factor in AUM’s
recent market research. Both Faulkner and Huntingdon offer attractive financial aid to attract
Montgomery students, which puts them to some degree in competition with AUM, at least in
attracting stronger students. Chart 55
Messina & Graham
144
Competitor Tuition and Fees 2005-06
Chart 54
As Reported in the Press
$10,5003
$4,6401
AUM
$4,0081
$4,0042
ASU
Troy-M
Faulkner
Source: 1ACHE Annual Undergraduate Tuition and Required Fees Combined, Public Four-Year Institutions 2005 - 2006
2Peterson’s 2006
3College Opportunities Online Locator, Faulkner Profile, 2005 - 2006 Estimated Expenses, Tuition and Fees
Messina & Graham
145
Montgomery Private University
Commuter Scholarships
Chart 55
HALF OFF TUITION FOR COMMUTING STUDENTS!
The Capital City Commuter Award offers the opportunity for students
from the surrounding area to receive a quality education in an
excellent Christian environment!
This award is the equivalent of 50% off tuition to qualifying students,
and can be combined with any federal or state financial aid for which
the student is eligible. It is also renewable for up to nine semesters!
To be eligible for this award, you must have at least an 18 composite
on the ACT, enroll as a full time student, with at least 15 semester
hours, enter school following your graduation, and commute from
your home to Faulkner.
The first step to qualify for this award is to apply for admission!
Source: Faulkner University Website – Financial Aid
Messina & Graham
146
AUM performs a range of public services, collaborating with state government and other
partners. Chart 56
Messina & Graham
147
Public Service
Chart 56
• AUM participates in several partnerships and collaborations with public
and private organizations – for example
- Black Belt initiative
- Writer’s Block
•
AUM partners with local, state, and regional governmental agencies to
provide consulting and training – for example
- Air Force Information Technology Conference
- Montgomery Police Department
- SMART Governing
- Governmental Accounting
Messina & Graham
148
State appropriations have declined as a percentage of revenue over the past decade, although
the state decided on double-digit increases for 2005-06 and for 2006-07, as the Alabama
economy grew strongly. Tuition and contracts are very significant components of AUM’s
revenue. Charts 57
Messina & Graham
149
AUM Revenue Components
FY 2004 - 2005
Chart 57
$ Millions
25
20
15
10
5
0
2004 2005
Other*
2004 2005
Contracts
2004 2005
Tuition
& Fees
2004 2005
State
Appropriations
*Includes auxiliary revenue, sales and services of educational departments, and net investment income
Source: AU Comprehensive Annual Financial Report, 2005
Messina & Graham
150
Assessment of Strengths, Weaknesses, Opportunities,
and Threats (“SWOT” Assessment)
Auburn Montgomery
STRENGTHS
• AUM is academically stronger than local competitors, and it has built a reputation for quality
among current and past students, high-school counselors, and the Montgomery public
• AUM’s separately-accredited programs such as Business, Education, Medical Technology,
Nursing, and Public Administration set AUM apart as a leader in preparing students for
professional careers
• AUM’s six-year graduation rate exceeds that of local competitors
• AUM has a strong position in support of state government
• AUM is named as a Best-Value College and Best Southeast College in the 2006 Princeton
Review
Messina & Graham
151
WEAKNESSES
• AUM has experienced declining enrollment, likely reflecting in part a loss of market share to
competition, and it suffers high transfers out
• AUM lags Troy-Montgomery on perceived convenience for working-adult students. AUM’s
shift to a semester system and Troy’s more numerous on-line and TV-based program
offerings contribute to this perception gap
• AUM is seen as requiring harder work to obtain a degree and probably has not
communicated the value to students of a more academically-demanding program
• AUM is seen as not user-friendly in administrative areas such as admissions, financial aid,
and the career center
• AUM’s campus facilities and campus life are not perceived as attractive
• AUM’s growth prospects are limited, since it already attracts a large share of high-school
seniors from its traditional five-county market area, it accepts nearly 100 percent of
applicants, and it enrolls roughly 80 percent of its acceptances
Messina & Graham
152
OPPORTUNITIES
• Market the value to students of AUM’s program quality more effectively, in terms of superior
job opportunities and graduation rates, leading number of degrees conferred in Business,
etc.
• Improve customer service and turn around perceptions of inconvenience by better
communicating the array of evening and weekend course offerings
• Shift to mini-terms for working students
• Introduce competitive on-line course offerings where these appear to be educationally
effective, and exploit information technology for “time-shift” convenience of working students
• Capitalize on the connection with Auburn main campus for joint programs and other
opportunities to create value for prospective students
• Develop comprehensive international business (and possibly science and liberal arts)
programs to address globalization trends, building on relationships with Korean, Chinese and
Mexican schools and Auburn’s main-campus language / cultural programs
• Focus on proven methods of raising the six-year graduation rate for AUM’s working students
Messina & Graham
153
THREATS
• AUM is heavily dependent for enrollment on the Montgomery area, which is expected to
experience slowing growth in high-school graduates, although the working-adult population
may keep growing
• AUM’s market is the working student, so credit hours, if not the absolute numbers of students,
are vulnerable to how students weigh their immediate job pay against the value of studying for
a degree. Continued growth in automotive jobs that do not require degrees could hurt AUM
• AUM’s target students may increasingly choose the “easy option” of programs at competing
schools, as on-line and TV (“distance-learning”) options become culturally even more
attractive than more demanding learning approaches, regardless of quality
• Troy’s business model – on-line, lower-quality programs with potentially higher fixed and
lower variable costs – may generate more dollars than AUM for marketing to prospective
students, leading to further loss of share for AUM
• AUM’s pricing flexibility – for example, to respond to any shortfall in state appropriations –
may be very limited, given its market demographics and local low-price competition
• Generous commuter scholarships offered by Faulkner and Huntingdon may siphon off an
increasing share of AUM’s most academically-attractive applicants
Messina & Graham
154
Strategic Challenges and Implications
Auburn Montgomery
• Areas of Strategic Concern
• Potential Strategic Directions (Illustrative)
Messina & Graham
155
Areas of Strategic Concern
Auburn Montgomery
AREA
CONCERN
• AUM enrollment decline
• Possibly losing share to competition and/or to
employment as an alternative to college. Is
this trend reversible?
• Market perception that TroyMontgomery is more convenient for
working adults
• AUM cannot afford to concede this large
segment to a competitor
• Competition using more on-line and TV
instruction than AUM, of uncertain quality
• How should AUM respond to lower-cost,
more-convenient instruction?
Messina & Graham
156
Areas of Strategic Concern (Continued)
Auburn Montgomery
AREA
CONCERN
• Transfers out of AUM running at five
percent of enrollment, higher than
competition
• Apart from direct loss of tuition revenue, if not
understood and reversed, this attrition could
harm AUM’s market image
• Widespread dissatisfaction with
admissions, financial-aid and career
offices
• Could be contributing to enrollment declines
and transfers out
• Nursing program not perceived as
leader
• Potentially missing opportunity to promote a
high-quality, joint AUM / AU program
Messina & Graham
157
Potential Strategic Directions
Auburn Montgomery
• Customer service. Make AUM’s admissions, financial aid and career offices the best in Montgomery,
after objective review of the challenges in providing satisfying experiences to students and other
‘customers’
•
Campus. Upgrade campus facilities and campus life in ways that increase enrollment and pay for
themselves or are funded by private giving
•
Instruction. Implement educationally effective, alternative methods of course delivery for working
adults – for example, mini-terms and on-line and hybrid (mix of on-line and face-to-face) instruction.
Emphasize improvement of six-year graduation rate over time
•
AU system. Take fuller advantage of the Auburn brand and develop collaborative Auburn-AUM
programs that meet market needs
• State government. Further capitalize on AUM’s location in the state capital, a competitive advantage
for both AUM and Auburn in meeting government’s consulting needs and preparing students for careers
in government
•
Operations. Continue to improve efficiency to help reduce the rate of cost increases
•
Finances. Consider development campaigns and other ways of obtaining incremental resources that
would allow AUM to compete more effectively
Messina & Graham
158
V. Next Steps
• Building on the dialogue already initiated regarding external factors,
discuss the AU and AUM profiles with the AU University Senate and Deans,
and with AUM’s Advisory Board and Strategic Planning Committee
• Perform additional fact-gathering in selected areas – for example
- Profile the graduate programs and the faculty
- Review research activities in greater depth
- Benchmark best practices of other universities in selected
areas, such as Hispanic student enrollment and retention
• Initiate high-level financial analyses using recently-developed tools – for
example
- Evaluate research economics
- Model the resource requirements associated with possible
future scenarios
• Continue to explore potential strategic opportunities for AU and AUM to
pursue together
Messina & Graham
159
Appendices
• Auburn University Strategic Planning – Profile of the Environment,
July 2006 (separately bound)
• Ranking Methodologies
• Selected Information Sources
Messina & Graham
160
Ranking Methodologies
US NEWS & WORLD REPORT
What goes into the USNWR rankings of national universities?
Indicator
Weight
Peer Assessment of Academic Reputation
Graduation Rate
Expenditures per Student
SAT/ACT
Faculty Compensation
Class Size 1-19
Percent of Freshmen in Top 10% HS class
Alumni Giving
Value Added
Freshmen Retention
Percent of Faculty with Terminal Degree
Class Size 50+
Acceptance Rate
Student/Faculty Ratio
Percent Full-Time Faculty
25.0%
16.0%
10.0%
7.5%
7.0%
6.0%
6.0%
5.0%
5.0%
4.0%
3.0%
2.0%
1.5%
1.0%
1.0%
100.0%
Total
USNWR gathers the data by survey from the colleges themselves.
Source: OIRA; USNWR Website
Messina & Graham
161
Ranking Methodologies (Continued)
PRINCETON REVIEW
Princeton Review Top-20 lists are compiled based on comparing results of student surveys, “about 300 per
campus,” completed in the prior three years, almost all administered on-line. The survey asks some 80
multiple-response questions about academics, students and life at school. The results are reported in 62 Top20 lists
DESIGN INTELLIGENCE
Design Intelligence, an architecture and design publication, annually surveys the principals and recruiters of a
long roster of firms of architects and interior, industrial and landscape designers. The survey asks these firms
from which programs their best new associates have graduated over the past five years
Results are compiled for each specialty (architecture, industrial design, etc.)
A national list shows the responses of all firms from across the U.S.
Another set of lists shows how firms in each region responded to the question
However, since graduates of schools with top architecture and design programs go to work in every region,
Southern firms, for example, might cite a Northeastern school as a leader. Design Intelligence therefore
compiles a third set of lists that show the top Southern schools mentioned by Southern firms, and so on for
each region
Source: Princeton Review Website; Design Intelligence
Messina & Graham
162
Ranking Methodologies (Continued)
TheCenter
Since 2000, the Lombardi Program on Measuring University Performance at the University of Florida, known as
“TheCenter”, has published an annual report, “The Top American Research Universities.” This report is widely
regarded as the most reliable and authoritative source of comparative data on the research performance of
those American universities that have at least $20 million in annual federal research expenditures. The report
ranks universities according to their standing on nine quantitative measures: total and federal research dollars,
endowment assets, annual giving, national academy members, faculty awards, doctorates granted, postdoctoral appointees, and undergraduate SAT/ACT score ranges. Those that are in the top 25 on every one of
the nine measures rank first (MIT, Stanford and U Penn were the only ones in the 2005 report), those who were
in the top 25 on eight measures rank next, and so on. TheCenter goes to some pains to ensure comparability
and accuracy in the data used. One consequence is a two to three year time lag in the data reported. The
December 2005 report is the latest available as of October 2006, and is based on 2003 performance.
Source: TheCenter
Messina & Graham
163
Selected Information Sources
Books on Issues and Opportunities in Higher Education
Bok, Derek. Our Underachieving Colleges. Princeton: Princeton University Press, 2006.
Brewer, Dominic J., Susan M. Gates, and Charles A. Goldman. In Pursuit of Prestige: Strategy and
Competition in U.S. Higher Education. Somerset: Transaction Publishers, 2005.
Friedman, Thomas L. The World Is Flat: A Brief History of the Twenty-First Century. New York:
Farrar, Straus and Giroux, 2005.
Geiger, Roger L. Knowledge and Money: Research Universities and the Paradox of the
Marketplace. Palo Alto: Stanford University Press, 2004.
Hersh, Richard H., and John Merrow. Declining By Degrees: Higher Education at Risk. New York:
Palgrave MacMillan, 2005.
Rosovsky, Henry. The University: An Owner’s Manual. New York: W.W. Norton Company, Inc.,
1991.
Vedder, Richard. Going Broke By Degree: Why College Costs Too Much. Washington, D.C.: The
AEI Press, 2004.
Messina & Graham
164
Selected Information Sources (Continued)
Commissions and Reports
Alliance for Regional Stewardship. “Making Place Matter.” 2004.
Auburn University. “Recommendations of the Twenty-First Century Commission.” March 20, 1997.
Baum, Sandy, and Lucie Lapovsky. “Tuition Discounting: Not Just A Private College Practice.” The
College Board, 2006.
Byrne, John V. “Public Higher Education Reform Five Years after the Kellogg Commission on the
Future of State and Land-Grant Universities.” NASULGC, January 2006.
The College Board. “Trends in College Pricing.” New York: College Board Publications, 2005.
Council for Aid to Education. “Report on Contributions to Colleges and Universities.” February 16,
2006.
Huron Consulting Group and The Washington Advisory Group, for North Carolina State University.
“Enhancing the Ability of North Carolina Public Research Universities to Contribute to State
Economic Development.” 2004.
Messina & Graham
165
Selected Information Sources (Continued)
Commissions and Reports
Kellogg Commission. “Returning to our Roots: Executive Summaries of the Reports of the Kellogg
Commission on the Future of State and Land-Grant Universities.” NASULGC, January 2001.
McPherson, Michael S., and Morton Owen Schapiro. “The Promise and Perils of Universal Higher
Education.” Ford Policy Forum (2004).
The National Center for Public Policy and Higher Education. “Measuring Up 2006: The State Report
Card on Higher Education – Alabama.” 2006.
National Science Board. “An Emerging and Critical Problem of the Science and Engineering Labor
Force.” 2004.
United States. Department of Education. Miller, Charles, and Cheryl Oldham. “Setting the Context.”
Issue Paper, 2006.
United States. Department of Education. Spellings Commission Final Report. “A Test of Leadership –
Charting the Future of U.S. Higher Education.” 2006.
Messina & Graham
166
Selected Information Sources (Continued)
Recent University Strategic Planning Documents
University of Alabama
Clemson University
Dartmouth College
Florida International University
George Washington University
Georgia Southern University
Georgia State University
Georgia Institute of Technology
University of Georgia at Athens
University of Illinois
University of Kentucky
Mississippi State University
Rice University
University of Southern California
Middle Tennessee State University
Texas A&M
University of Texas, Trends Affecting Higher Education, September 2005
The Society for College and University Planning (SCUP) website
SCUP Trends in Higher Education, July 2005
Messina & Graham
167
Selected Information Sources (Continued)
Databases
ACT, website
Alabama Council on Higher Education (ACHE), website database
American Association for the Advancement of Science, website database
TheCenter, The Top American Research Universities, December 2005 and other years
College Opportunities Online Locator, website database
Design Intelligence: America’s Best Architecture & Design Schools, 2006
National Association of State Universities and Land-Grant Colleges (NASULGC)
National Center for Education Statistics, 2004
National Science Foundation, website
OECD
Peterson’s, website database
Princeton Review, college database
SREB Fact Book on Higher Education, 2005
U.S. Census Bureau
U.S. Energy Information Administration
U.S. News and World Report, “America’s Best Colleges Premium Online Edition,” 2006 and 2007
U.S. News and World Report, “America’s Best Graduate Schools Premium Online Edition,” 2007
Messina & Graham
168
Selected Information Sources (Continued)
Periodicals
The Atlanta Journal-Constitution, “Technology Reboots Curriculum,” May 10, 2006
Aviation Week, website
Business Week, “Campus Revolutionary,” February 27, 2006
Chronicle of Higher Education, “Big Dreams in the Bluegrass State. The University of Kentucky
Seeks to Make His State’s Flagship University a Top-20 Public Research Institution,” April 28,
2006
Chronicle of Higher Education, “College Presidents and Governing Boards Must Strengthen Bonds,
Report Says,” September 29, 2006
Chronicle of Higher Education, “The Legitimacy of Assessment,” September 22, 2006
Chronicle of Higher Education, “Ole Miss Embraces Its Painful Past to Move Forward,” September 29,
2006
Chronicle of Higher Education, “Report Blames College Practices for Limiting Access of Minority and
Low-Income Students,” September 1, 2006
Chronicle of Higher Education, “Researcher Proposes Basing College Rankings on Different Criteria,”
September 22, 2006
Chronicle of Higher Education, “Regions and Universities Together Can Foster a Creative Economy,”
September 15, 2006
Chronicle of Higher Education Forum, “The Spelling Report, ‘Warts and All,’” September 1, 2006
Chronicle of Higher Education News Blog, “Charles Miller Assails Private and Research Universities
in ‘Personal’ Letter,” September 28, 2006
The Economist, Bill Gates’ Comment, May 4, 2006
169
Messina & Graham
Selected Information Sources (Continued)
Periodicals
The Economist, “Poison Ivy,” Lexington Column, September 23, 2006
Finance.yahoo.com, “Learning Is A Leader’s Edge,” article written by Jim Citrin, quote by Jeff Immelt,
May 10, 2006
Harvard Magazine, “Summers in Summary,” September – October, 2006
Huntsville Times, “Auburn University Professor: Football Too Big,” September 15, 2006
McKinsey Quarterly Web Exclusive, “An Executive Take on the Top Business Trends: A McKinsey
Global Survey,” April 2006
McKinsey Quarterly, “Ten Trends to Watch in 2006,” January 2006
McKinsey Quarterly, “Sizing the Emerging Global Labor Market,” 2005
Montgomery Advertiser, “ASU Goes Over the Top,” October 10, 2002
Montgomery Advertiser, “At Auburn, AUM, Tuition Hikes Come Despite Better Funding,” April 16,
2006
Montgomery Advertiser, “Collegians Rally For Record Budget,” March 3, 2006
Montgomery Advertiser, “Local Colleges Expect to See Jump in Enrollment,” August 15, 2005
Montgomery Advertiser, “Students Find it Pays to Travel, Universities Reach Out to Commuting
Students,” February 24, 2005
Motley Fool, “eCollege: Getting Good Marks,” May 11, 2006
The New York Times, “BMW’s Custom-Made University,” August 28, 2006
Opelika-Auburn News, “Auburn University Receives $5.6M For Aquatic Research,” September 18,
2006
Messina & Graham
170
Selected Information Sources (Continued)
Periodicals
PARCA Quarterly, Winter 2005 – 2006
The Presidency, Winter 2006
The State.com – South Carolina’s Home Page, “Higher Education Panel Calls for Strategic Plan,”
September 29, 2006
University Business, White Paper “Connecting Enrollment and Fiscal Management,” January 2006
USA Today, “Retiree Benefits Grow Into Monster,” May 25, 2006
The Wall Street Journal, “Degrees at StateU.Edu,” May 9, 2006
The Wall Street Journal, “Hispanics Gain in Census,” May 2006
The Washington Post, “Canada Pays Environmentally for U.S. Oil Thirst,” May 31, 2006
The Washington Post, “Online Degree Programs Take Off,” May 16, 2006
Other Sources
Alabama Cooperative Extension System, website
Alabama Economic Outlook, Center for Business and Economic Research, University of Alabama,
2006
Auburn University Competition Analysis – Fall 2003 Freshmen Applicants Not Enrolled – Where
They Enrolled, May 2004
Auburn University Comprehensive Annual Financial Report, 2005
Messina & Graham
171
Selected Information Sources (Continued)
Other Sources
Auburn University Montgomery Market Surveys and Focus Groups, August 2006
Auburn University Montgomery Office of Institutional Research and Assessment (OIRA)
Auburn University Office of Institutional Research and Assessment (OIRA)
The Boeing Company, website
Center for Demographic Research at AUM
College Board, “Advanced Placement Report to the Nation,” 2006
Faulkner University, website
IBM, website
International Telecommunications Union, website
InternetWorldStats.com
Jet Propulsion Laboratory, website
National Merit Scholarship Corporation Annual Report, 2005
Pew Internet and American Life Project
Southern Regional Education Board (SREB), Legislative Report, July 2005
Southern Union State Community College, website
Texas A&M Fact Book
The University of Alabama, website
Messina & Graham
172