Universities need to balance Mission, Market, and Money. - All programs should further the university’s mission. - Some programs need to make money so that others can operate at a loss. • Some mission-critical programs may have small markets, low enrollment, and losses. • Other programs central to the mission may have high costs. • Larger, lower-cost programs can help to fund them. - These cross-subsidies enable universities to fund and assert their academic values. - Good estimates of program margins are needed to maintain a prudent balance.

1. www.GrayAssociates.comwww.GrayAssociates.com
Program Sustainability:
Integrating Market and Economic Data

2. 2
Introductions
Bob Atkins
Bob Atkins - Bob is the CEO and founder of Gray Associates. He
has over 30 years experience in strategy consulting, including ten years
focused on higher education. Bob continues to lead large engagements
as well as the firm’s development of new services, including Program
Economics and Program Portfolio Strategy.
Lisa Kopecky
Lisa Kopecky. - Dr. Kopecky previously held the position of
Assistant Vice President for Academic Operations and Finance at
California State University Fullerton. There she served as the Academic
Affairs division manager for fiscal and facility resources for 150
departments, serving more than 40,000 students at CSUF. She earned
a bachelor’s degree in marketing and communications from Bryant
College and an M.B.A. from WPI.
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William F. Massy
William F. Massy, Ph.D. - Dr. Massy has been a professor,
consultant, and university administrator at Stanford University for
more than forty years. Dr. Massy earned tenure as a professor in
Stanford’s Graduate School of Business where he also served as
Director of the Doctoral Program and Associate Dean. He then moved
to Stanford’s central administration as Vice Provost and Dean of
Research, Acting Provost, and Vice President for Business and
Finance.

3. 3
Program Sustainability: An Integrated View
Healthy programs have four strong foundations.
Program
Economics
Institutional
Mission
Academic
Standards
Program
Markets
Foundations of Program Sustainability
Traditional Academic Review
§ Capacity
§ Quality
§ Fit
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4. Maximize Mission
Attainment,
subject to:
Market Demand
Program Profitability
Thresholds
Not-for-Profit
Entities
“Money is a means to an end.”
Integrated Program Evaluation
Looking at profitability does NOT undermine academic values.
Maximize
Program
Profitability,
subject to:
Market
Demand
For-Profit
Entities
“Money isn’t
everything, it may be
the only thing.”
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5. Integrated Program Evaluation
Universities need to balance Mission, Market, and Money.
§ All programs should further the university’s mission.
§ Some programs need to make money so that others can operate at a loss.
- Some mission-critical programs may have small markets, low enrollment, and losses.
- Other programs central to the mission may have high costs.
- Larger, lower-cost programs can help to fund them.
§ These cross-subsidies enable universities to fund and assert their academic values.
§ Good estimates of program margins are needed to maintain a prudent balance.
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Source: William Massey, Ph.D., ex CFO and Provost at Stanford University.

6. Why Now?
Advances in data and systems make the analyses possible.
§ Several sources of data are now available on program markets:
- Student demand: IPEDs, Google, and inquiries
- Employment: BLS, Burning Glass job postings and others
- Competition: IPEDs, Google, inquiries
§ Advances in university data systems now support good measurement.
- Timetabling and student registration systems
- Student-specific tracking of tuition, scholarships, courses, and expenses
- Faculty-specific tracking of courses taught and compensation
- Course-specific data on costs
§ Schools can now use data on markets and money to inform program decisions.
Flat growth and challenging budgets make the work necessary.
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7. Why Bother?
Improve financial sustainability.
Cost
Enrollment
+
Revenue
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8. Growth
Selecting the right new programs can drive substantial growth.
Actual
Plan
New Programs Launched
Ending Enrollment
Data Disguised
(Real Results Were Higher)
Ending
Enrollment
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9. Cost Reduction
There is room for productivity improvement…
Source: Gray analysis of IPEDS completions
6% 7%
39%
48%
45%
18%
30%
7%
0%
10%
20%
30%
40%
50%
60%
Over 99 50 - 99 10 - 49 Less than 10
Percentage of
Programs or
Completions
Program Size
(Number of Completions)
Program Productivity
Programs
Completions
Over 99 50-99 10-49 Less than 10
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10. Cost Reduction
A few schools have developed extremely productive program portfolios.
§ 52% of Western Governors’ programs have over 99 completions.
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Percentage of
Programs or
Completions

11. Program
Economics
Institutional
Mission
Academic
Standards
Program
Markets
Program Sustainability: An Integrated View
We will start with market analysis and then focus on program economics.
Foundations of Program Sustainability
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12. Program Scoring
We suggest using four categories of market data.
Student
Demand
Employment
Degree
Fit
Competitive
Intensity
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13. Program Scoring Rubrics: Student Demand
Scoring rubrics enable an objective evaluation of the market data.
Sample Scoring Rubric
Student Demand: Google Search
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14. Program Ranking
With data and a rubric, you can score and rank hundreds of IPEDS programs.
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15. Program Scorecard: Medical Assistant
A one-page summary of market data makes program decisions easier.
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16. Program Scorecard: Medical Assistant
A one-page summary of market data makes program decisions easier.
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17. Program Scorecard: Competition
Competitive information is critical to program decisions.
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18. Program
Economics
Institutional
Mission
Academic
Standards
Program
Markets
Program Sustainability: An Integrated View
Let’s turn to program economics.
Foundations of Program Sustainability
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19. 1. What is a Program?
2. How Do I Determine the Economics of Current
Programs?
3. How Can My Institution Use the Data to Make
Decisions?
Program Economics

20. Program Definition
So, what is a program?
Academic Program:
All courses, including electives, taken by students in a major.
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21. Program Definition
Program Case Study: Nursing
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22. 0 100 200 300 400 500
NUR201
NUR107
NUR108
NUR202
NUR203
SPN105
BIO281
GOV111
HIS216
ART100
HEA120
Student Credit Hours (SCH)
Nursing Students
Distinct Financial Entities
Programs cross departmental lines.
§ Many of the courses that nursing students take are outside the nursing department.
§ Most credit hours are within the department.
Non-Departmental
Courses
Source: Gray’s Program Economics Project *Not all courses displayed
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23. $0 $50 $100 $150 $200
NUR107
NUR108
NUR201
NUR202
NUR203
ART100
BIO281
GOV111
HEA120
HIS216
SPN105
Cost Per SCH
Distinct Financial Entities
For nurses, cost per SCH varies widely across departments.
Average Departmental
Course Cost per SCH:
$53
Average Non-
Departmental Course
Cost per SCH:
$91
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Source: Gray’s Program Economics Project *Not all courses displayed

24. $0 $100 $200 $300 $400
NUR107
NUR108
NUR201
NUR202
NUR203
ART100
BIO281
GOV111
HEA120
HIS216
SPN105
Revenue Per SCH
Distinct Financial Entities
In the nursing program, course revenue per SCH varies by $215.
§ The variation averages to a 6% difference between courses in and out of the department.
Average Departmental
Course Revenue:
$192
Average Non-
Departmental Course
Revenue:
$204
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Source: Gray’s Program Economics Project *Not all courses displayed

25. -$100 $0 $100 $200 $300 $400
NUR107
NUR108
NUR201
NUR202
NUR203
ART100
BIO281
GOV111
HEA120
HIS216
SPN105
Contribution Per SCH
Distinct Financial Entities
Course margins per SCH vary by $360.
§ The variation averages to a 19% difference between courses in and out of the department.
Average Departmental
Course Contribution:
$140
Average Non-
Departmental Course
Contribution:
$113
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Source: Gray’s Program Economics Project *Not all courses displayed

26. 1. What Is a Program?
2. How Do I Determine the Economics of Current
Programs?
3. How Can My Institution Use the Data to Make
Decisions?
Program Economics

27. Indirect
Costs
Direct Shared Costs
(e.g. Academic Deans)
Course-Level Input
Direct Variable Economics
(e.g., Faculty, Tuition)
Line-Item
Input
Department-Level
Input
Program Economics: Methodology
We start with a focus on direct variable economics.
§ The intent is to support program decisions.
§ Program decisions are unlikely to change fixed costs.
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Indirect
Costs
Direct Shared Costs
(e.g. Academic Deans)
Course-Level Input
Direct Variable Economics
(e.g., Faculty, Tuition)
Line-Item
Input
Department-Level
Input
Program Economics: Methodology
We start with a focus on direct variable economics.
§ The intent is to support program decisions.
§ Program decisions are unlikely to change fixed costs.
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28. Program Economics: Methodology
Accumulate student revenue and instructor cost per credit hour by course.
-
+
}= Program Cost
and Revenue
Tuition + Fees
-
Institutional
Scholarships
Students
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Nursing Course 1
Nursing Course 2
Humanities Course 1
Humanities Course N
Faculty
Review and
Refinement
+

29. Program Economics: Methodology
Nursing is one of the college’s top 10 programs for variable margin.
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$523,353
$469,547
$450,945
$330,859
$305,808
$282,866
$211,359
$132,842
$126,204
$85,673
$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000
Liberal Arts
Health Science
General Studies
Business Transfer
Nursing
Criminal Justice
Psychology
Business Administration Management
Fire Science Emergency Medical Services
Engineering in Advanced Manufacturing
Total Contribution by Program (FY ‘17)
Source: Gray’s Program Economics Project *Not all courses displayed

30. Economic Scorecard
The Scorecard summarizes and compares results to other programs.
§ Metrics per SCH enable apples-to-apples comparisons with other programs.
§ The color coding shows the program’s rank vs. other programs at the college.
§ Metrics by SCH also enable schools to use cost benchmark data from other institutions.
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31. Drill-Downs
Program leaders can track other departments’ effects on margins.
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Department Program
Nursing
Students
Nursing
Student Credit
Hours (SCH)
Revenue
per SCH
Cost per
SCH
Contribution
per SCH
Nursing Nursing 274 2,044 $ 193.37 $ 54.08 $ 139.65
Health Science Nursing 14 38 $ 151.40 $ 99.81 $ 51.30
Social Science Nursing 5 11 $ 271.57 $ 67.24 $ 204.25
Arts and
Communications
Nursing 2 4 $ 213.75 $ 67.21 $ 146.30
Language Arts Nursing 2 8 $ 164.83 $ 107.96 $ 57.00
Natural Science Nursing 2 7 $ 168.22 $ 90.36 $ 77.90

32. Course
Code
Nursing
Students
Nursing
Student Credit
Hours (SCH)
Instructors
Revenue
per SCH
Cost per
SCH
Contribution
per SCH
NUR107 63 504 2 $194.79 $63.32 $131.47
NUR108 59 472 2 $194.03 $61.31 $132.72
NUR201 53 530 1 $192.27 $45.97 $146.30
NUR202 49 392 1 $192.57 $49.08 $143.49
NUR203 48 144 1 $192.65 $41.48 $151.17
HEA200 9 27 1 $145.93 $98.09 $47.84
HEA201 2 6 3 $164.83 $47.13 $117.70
HEA130 2 2 1 $164.83 $124.89 $39.93
NUR100 2 2 3 $188.58 $56.21 $132.36
PSY100 2 2 1 $164.83 $121.72 $43.11
ART130 1 1 1 $360.53 $51.38 $309.14
ART100 1 3 3 $164.83 $72.50 $92.33
HEA120 1 3 1 $164.83 $203.93 ($39.11)
SPN105 1 4 1 $164.83 $126.76 $38.07
SPN101 1 4 1 $164.83 $89.16 $75.66
CON110 1 3 1 $164.83 $107.00 $57.82
BIO281 1 4 3 $170.76 $77.88 $92.89
BIO281 1 4 3 $170.76 $77.88 $92.89
SOC106 1 3 3 $360.53 $68.57 $291.95
HIS216 1 3 1 $360.53 $40.79 $319.74
GOV111 1 3 3 $164.83 $56.05 $108.78
32
Drill-Downs
Leaders can explore how courses influence program margins.
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33. Drill-Downs
Leaders can drill down to instructor productivity.
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Instructor ID
Nursing
Students
Nursing Student
Credit Hours (SCH)
Revenue per
SCH
Cost per
SCH
Contribution per
SCH
2645100 124 978 $194.41 $62.34 $132.07
785690 103 925 $192.31 $47.80 $144.51
785925 63 504 $194.79 $63.32 $131.47
674480 59 472 $194.03 $61.31 $132.72
786340 48 144 $192.65 $41.48 $151.17
2227270 9 27 $145.93 $98.09 $47.84
729710 2 2 $164.83 $121.72 $43.11
786330 2 8 $164.83 $107.96 $56.86
787195 2 6 $164.83 $47.13 $117.70
907905 2 2 $164.83 $124.89 $39.93
1111225 2 2 $188.58 $56.21 $132.36
2384340 2 4 $213.75 $67.22 $146.53
2744390 2 2 $188.58 $56.21 $132.36
545980 1 3 $164.83 $56.05 $108.78
546130 1 3 $360.53 $68.57 $291.95
713775 1 3 $164.83 $107.00 $57.82
786155 1 3 $164.83 $72.50 $92.33
787075 1 3 $360.53 $68.57 $291.95
858575 1 3 $360.53 $40.79 $319.74
861695 1 4 $170.76 $77.88 $92.89
2242640 1 3 $164.83 $72.50 $92.33
2381965 1 3 $164.83 $56.05 $108.78
2384420 1 3 $164.83 $56.05 $108.78
2463580 1 3 $360.53 $68.57 $291.95
2617650 1 4 $170.76 $77.88 $92.89
2671670 1 3 $164.83 $53.66 $111.16
2679325 1 4 $170.76 $77.88 $92.89

34. Indirect
Costs
Direct Shared Costs
(e.g. Academic Deans)
Course-Level Input
Direct Variable Economics
(e.g., Faculty, Tuition)
Line-Item
Input
Department-Level
Input
Program Economics: Methodology
Overhead analysis and allocations are frequently requested.
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35. Overhead Allocator
Gray enables flexible overhead allocations.
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(Partial Table)
Overhead Allocation Table

36. Gray Associates
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Fully-Allocated Economics
Including allocated costs, Nursing falls off the top 10 list.
11/15/18
$0 $100,000 $200,000 $300,000 $400,000
Health Science
Liberal Arts
General Studies
Business Transfer
Criminal Justice
Psychology
Science/Math/Pre-Engineering
Fire Science Emergency
Business Administration
Paramedic
Contribution by Program

37. Gray Associates
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Fully-Allocated Economics
Nursing indirect costs are in-line with other programs.
11/15/18
$0 $20,000 $40,000 $60,000 $80,000 $100,000
Health Science
Liberal Arts
General Studies
Business Transfer
Criminal Justice
Science/Math/Pre-Engineering
Psychology
Nursing
Business Administration
Computer Science
Indirect Costs by Program

38. Gray Associates
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Fully-Allocated Economics
Nursing’s departmental costs appear to be unusually high.
11/15/18
Net Margin, after Allocations: -$8,606
$0 $50,000 $100,000 $150,000 $200,000
Nursing
Health Science
Liberal Arts
General Studies
Business Transfer
Criminal Justice
Science/Math/Pre-Engineering
Psychology
Computer Science
Business Administration
Department Costs by Program

39. 1. What Is a Program?
2. How Do I Determine the Economics of Current
Programs?
3. How Can My Institution Use the Data to Make
Decisions?
Program Economics

40. Integrated Report Cards
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41. Program Portfolio Strategy: Workshop
We recommend broad participation in Program Portfolio Planning
Workshops.
Day 1 Day 2
§ Present workshop objectives
§ Summarize approach
§ Share initial scoring outcomes
§ Discuss and refine scoring system
§ Evaluate scored programs
§ Select new programs
§ Review Day 1 outcomes
§ Rank current programs
§ Discuss high- and low-scoring
programs
§ Select programs to Stop
§ Select Programs to Grow
§ Wrap-Up
§ Programs to Start § Programs to Stop
§ Programs to Grow
Illustrative Workshop Agenda and Outcomes
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42. Program Sustainability: An Integrated View
A heathy portfolio of programs is critical to institutional growth and viability.
Program
Portfolio
Program
Economics
Institutional
Mission
Academic
Standards
Program
Markets
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43. Gray Associates
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Program Portfolio Assessment
Map market, institutional, and economic data to assess portfolio health.
-40%
-20%
0%
20%
40%
-20 -10 0 10 20 30 40
Percent Change
in Market Share
Completions 2016-2017
Market Attractiveness
PES Scaled Overall Score
Attractive Market
Gaining Share
Weak Market
Losing Share
Weak Market
Gaining Share
Attractive Market
Losing Share
Contribution per SCH

44. § Few of this institution’s programs have below-average contribution in weak markets.
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
-30 -20 -10 0 10 20 30 40
Percent Change
in Market Share
Completions 2016-2017
Market Attractiveness
PES Scaled Overall Score
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Program Portfolio Assessment
Map market, institutional, and economic data to assess portfolio health.
Attractive Market
Gaining Share
Weak Market
Losing Share
Weak Market
Gaining Share
Attractive Market
Losing Share
Contribution per SCH:

45. Gray Associates
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Program Portfolio Assessment
Map market, institutional, and economic data to assess portfolio health.
§ The largest programs are contribution-positive in attractive markets.
§ However, two large, high-contribution programs are losing share.
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
-30 -20 -10 0 10 20 30 40
Percent Change
in Market Share
Completions 2016-2017
Market Attractiveness
PES Scaled Overall Score
Attractive Market
Gaining Share
Weak Market
Losing Share
Weak Market
Gaining Share
Attractive Market
Losing Share
Contribution per SCH:

46. What’s Next?
§ Call or email Bob with questions:
- Bob.Atkins@GrayAssociates.com
- Phone: 617-366-2836
Have Pete run a demo for you and your team!
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