Suppose you are the controller of Nebraska State University. The university pres
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Question
Suppose you are the controller of Nebraska State University. The university president, Lisa Larsson, is preparing for her annual fund-raising campaign for 20X7–20X8. To set an appropriate target, she has asked you to prepare a budget for the academic year. You have collected the following data for the current year (20X6–20X7):
For 20X7–20X8, all faculty and staff will receive a 6% salary increase. Undergraduate enrollment is expected to decline by 2%, but graduate enrollment is expected to increase by 5%.
The 20X6–20X7 budget for operation and maintenance of facilities was $500,000, which includes $240,000 for salaries and wages. Experience so far this year indicates that the budget is accurate. Salaries and wages will increase by 6% and other operating costs will increase by $12,000 in 20X7–20X8.
The 20X6–20X7 and 20X7–20X8 budgets for the remaining expenditures are as follows:
Tuition is $92 per credit hour. In addition, the state legislature provides $780 per full-time-equivalent student. (A full-time equivalent is 30 undergraduate hours or 24 graduate hours.) Full-tuition scholarships are given to 30 full-time undergraduates and 50 full-time graduate students.
Revenues other than tuition and the legislative apportionment are as follows:
The chemistry/physics classroom building needs remodeling during the 20X7–20X8 period. Projected cost is $575,000.
Prepare a schedule for 20X7–20X8 that shows, by division, (a) expected enrollment, (b) total credit hours, (c) full-time-equivalent enrollment, and (d) number of faculty members needed.
Calculate the budget for faculty salaries for 20X7–20X8 by division.
Calculate the budget for tuition revenue and legislative apportionment for 20X7–20X8 by division.
Prepare a schedule for President Larsson showing the amount that must be raised by the annual fund-raising campaign.
Undergraduate Division Graduate Division Average salary of faculty member $58,000 $58,000 Average faculty teaching load in semester credit-hours per year (eight undergraduate or six graduate courses) 24 18 Average number of students per class 30 20 Total enrollment (full-time and part-time students) 3,600 1,800 Average number of semester credit-hours carried each year per student 25 20 Full-time load, semester hours per year 30 24Explanation / Answer
Schedule for 20X7-20X8
a) Expected Enrollment
Undergraduates : Number of Students.in 20X6-20X7 = 3600
Expected Decrease = 2%
Therefore no. of Students expected in 20X7-20X8 = 3600*98%
Graduates : No.of students in 20X6-20X7 = 1800
Expected increase = 5%
Therefore enrollment expected in 20X7-20X8 = 1800*105%
= 1890 students.
b) Total Credit Hours
Undergraduates
Avg. credit hours each year per student = 25
Estimated no. of students for 20X7-20X8 = 3528
No.of credit hrs. for the year for undergraduates = 3528*25 = 88200 hours
Graduates
Avg. credit hours each year per student = 20
Estimated no. of students for 20X7-20X8 = 1890
No.of credit hrs. for the year for graduates = 1890*20 = 37800 hours
Therefore total credit hours required = Cr.hrs. of undergraduates + Cr.hrs. of Graduates
= 88200 + 37800 = 126000 credit hours.
c) Full Time equivalent enrollment
(Assumed - not sure)
Undergraduates
Total Cr. hours = 88200
Full time eqv = 30hrs per student
Therefore , full time equivalent enrollment = 88200/30
= 2940 students
Graduates
Total Cr. hours = 37800
Full time eqv = 24hrs per student
Therefore , full time equivalent enrollment = 37800/24
= 1575 students
d) No.of faculty members needed
Undergraduates
Avg. faculty load = 24 credit hours
Total credit hours = 88200
No. of faculty req. = 88200/24= 3675 members
Graduates
Avg. faculty load = 18 credit hours
Total credit hours = 37800
No. of faculty req. = 37800/18 = 2100 members
Budget for Faculty Salaries for 20X7-20X8 by Division
Undergraduate
Salary in 20X6-20X7 = $58000
Expected increase = 6%
Expected salary for 20X7-20X8 = 58000*106% = $61480
Graduate
Salary in 20X6-20X7 = $58000
Expected increase = 6%
Expected salary for 20X7-20X8 = 58000*106% = $61480
Budget for Tuition revenue
Undergraduate :
No.of Cr. hrs. = 88200 hrs
Fee / hr = $92
Therefore revenue = 88200*92
= $8114400
Graduate :
No.of Cr. hrs. = 37800 hrs
Fee / hr = $92
Therefore revenue = 37800*92
= $3477600
Total revenue from tuituion fees = 8114400 + 3477600 = $11592000
Revenue from legislative appotionment
Undergraduates
Legislative apportionment per full time eqv student = $780
No. of full time eqv student = 2940
Revenue = $780*2940
= $2293200
Graduates
Legislative apportionment per full time eqv student = $780
No. of full time eqv student = 1575
Revenue = $780*1575
= $1228500
Total revenue from Legislative apportionment = 2293200+ 1228500
= $3521700
Schedule showing the amount that must be raised
Expenses
Faculty Salaries = 61480*2 = 122960
Salaries and wages of Operating staff = 240000*106%=254400
Other operating Expenses = 260000+12000= 272000
Projected cost of remodelling classroom building = 575000
Remaining expenses ( Total calculated from above table) =1870000
Total Expenses =3094360
Less : Revenue
Tuition fees
Legislative Apportion
Other revenue =(845000)
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