Faculty Senate Meeting

November 19, 1996

 

Present: M. Abbott, J. Brunski, B. Carlson, A. Desrochers, R. Franklin, M. Goldberg, J. Haddock, G. Handelman, M. Hanna, T. Harrison, G. Judd, M. Kalsher, J. Newell, B. Racicot, E. Rogers, A. Wallace

 

Guests: R. Burnham, V. Gregg, S. Molloy, M. Galbraith, K. Trout

 

Announcements and Approval of Minutes

The Minutes of the October 22, 1996 Faculty Senate Meeting, as amended, were unanimously approved.

 

Faculty Senate Planning & Resources Committee – Professor Edwin Rogers

 

Topic 1: Rensselaer Satellite Video Program (RSVP) Financing Proposed Changes

 

RSVP generates significant revenue for the institute by arranging performance incentives at several different levels.  Departments receive a sliding scale percentage (0-47%) of revenues based on RSVP registration for the course.  Faculty compensations and TA support will be assigned by the department from this income.  The Institute will receive a sliding scale percentage (0-12%) of revenues.  RSVP will retain remaining revenues for marketing and operational expenses.  RSVP will assign 5% of all revenues for capital and R&D investments.  The incentive structure is designed to motivate departments to seek new outreach business through distance education as well as to make such education part of Rensselaer’s core business.

 

Concerns of the Faculty Senate Planning and Resources Committee concerning RSVP:

  • The disincentive for small enrollment courses could lead to missed opportunities for programs and courses with modest prospects but high intrinsic value relative to Rensselaer’s mission.
  • The potential for inequities which might be brought about by new departmental autonomy.

 

Faculty Senate Planning and Resources Committee Recommendations:

  • A portion of the RSVP income should be openly set up as a challenge incentive for faculty and departments to create new distance courses and programs.
  • The Dean of Continuing & Distance Education should monitor the use of incentives for faculty by departments, reporting on how well these are working and on differences in the manner and level of incentives applied by departments.

 

No Senate action was taken on these recommendations.

 

Topic 2: Contribution Margin Budgeting

A. Fiscal Methodology

E. Rogers described a method for assigning revenues and costs appropriately to the Institute’s academic units that derive direct revenue from net tuition (80% from student credit hours taught, 20% from majors), research, restricted gifts, and restricted endowment.  Academic units have unit expenses consisting of direct costs, utilities, and depreciation, as well as indirect costs (e.g. janitorial services, admissions, contracts & grants, human resources).  The difference between direct revenue and unit expenses is termed gross margin.  Indirect costs must be paid for by this difference; each revenue generating unit contributes a portion of its gross margin, termed contribution amount, for this purpose.  The results of the retrospective study will form the basis for establishing each unit’s contribution.

 

E. Rogers noted that it is possible, based on the results of a retrospective study, to determine how much money is required from each department and school to cover their expenses.  He next described the concept of a “revenue range’ as a means of establishing parameters for departmental/school budgeting.  A School’s contribution amount will remain constant provided its direct revenue remains within its revenue range.  If revenues fall outside this range, the contribution amount will be adjusted by the Executive Budget Committee.  Schools will be permitted to establish carry over reserves.  Shortfalls in contribution may be charged against future revenue.  Clearly, this budgeting approach establishes strong incentives to control/streamline costs and develop new revenue streams.

 

B Quality Assurance

E. Rogers noted that a purely “fiscal” view of the system could lead to a replacement of academic values with fiscal ones, clearly a detriment to the long-term well-being of the Institute.  To prevent this possibility, the Faculty Senate Planning and Resources Committee proposes the following safeguards:

  • Schools must propose and meet specific and quantifiable metrics which incorporate Rensselaer’s strategic goals and direction.
  • Interdisciplinary activity should be integrated under appropriate sharing arrangements.
  • Business units with direct revenue responsibility will be managed in a manner consistent with the responsibility model approach.
  • Vice Presidents will be responsible for maintaining support service norms with set targets and standards.

 

Monitoring, mediating, and policy and parameter setting will be the role of an Executive Budget Committee, consisting of the President, Dean of Faculty and Vice President of Finance.

 

C. Concerns expressed by the Faculty Senate Planning & Resources Committee

  • Academic quality and maintenance of clear linkage to Institute mission and strategic directions.
  • Setting of suitable measures and goals for each unit.
  • Quality, appropriateness and flexibility of internal business services.
  • Revenue unit options to seek external services.
  • The application of contribution margin budgeting to academic departments.
  • Making incentives for new revenue programs equal across schools/departments.
  • Institutional citizenship in the face of strong motivation for units to engage in direct and detrimental competition among themselves.
  • The appropriate setting of policies and parameters as this new territory in university operation is explored.
  • The appropriate faculty role in oversight of the system (e.g., a faculty presence on the Executive Budgeting Committee).

 

A. Wallace proposed the following Motion:  that a representative of the faculty senate be a member of the Executive Budget Committee.

 

The motion passed unanimously, with no abstentions.

 

J. Newell proposed the following motion:  the faculty senate endorses the proposal to institute a contribution margin budgeting process for Rensselaer, subject to continuous attention to the identified concerns.

 

A motion to table J. Newell’s motion was rejected (6 in favor, 7 opposed.)

 

A vote on J. Newell’s motion passed (8 in favor, 1 opposed, 6 abstentions).

 

Topic 3:  Tuition for 1997-98

Rensselaer’s average annual tuition growth rate has been 5.9% over the last 10 years and was 11.1% over the previous 10 years.  In comparison, the Consumer Price Index (CPI) rose 3.7% and 6.5% in those two decades.  The increase for 1995-96 matched the CPI’s 3% growth, after 15 years in excess of the CPI growth rate.  The results of a marketing study recommended that Rensselaer engage in Prestige Pricing, setting tuition levels high to reflect the extraordinary value of a Rensselaer education.  This method is contrasted with Value Pricing, setting tuition prices congruent with the CPI.  Rensselaer experimented with modest prestige pricing, increasing tuition 6% during the 1996-97 school year.  This increase was larger than the increases enacted by MIT, Brown, Cornell, Union, Lehigh, University of Rochester, CMU, WPI, Clarkson, and Case Western.

 

The options being considered for the 1997-98 school year are:

1. 3% value pricing.

2. 5% or higher continuation of the prestige pricing experiment.

 

E. Rogers also raised the issue of whether graduate and undergraduate tuition increases should be set independently.  Distinct markets exist for all degrees and disciplines.  Therefore, Rensselaer should consider better targeting of markets with tuition policy.

 

Based on this discussion, it was moved that the faculty senate recommend that the Dean of the Graduate School develop a process and policy template for setting graduate tuitions independent of undergraduate tuition.

 

Faculty Evaluation Project – Kristen Trout, Grand Marshall

Ms. Tout provided a brief description of the project:  A faculty evaluation system designed and conducted by students.  The goal of the project is to publish the results of the evaluation in the student newspaper (The Polytechnic).  Currently, evaluations are being carried out on a limited number of faculty in the School of Humanities and Social Sciences.  Apparently, the process has had a lot of faculty input.  Ms. Trout added that the purpose of the guide is not to trash professors, but rather to make students more informed about available courses.

 

New Business

G. Judd reported on the “Return to St. Louis” meeting, a continuation of the Pew Roundtable discussion that occurred three years ago.  He reported that there is widespread awareness of the curriculum reform activities that are going on at Rensselaer and feels that it is important for faculty to recognize that our efforts are having widespread effects.

 

A. Desrochers and A. Wallace asked for volunteers to act as facilitators at the afternoon discussions (6-7) that will precede the Annual Faculty-Trustee Dinner.

 

Adjournment.