The business behind the schools: finding new revenue streams at South Florida's colleges and universities: Show me the money

South Florida CEO, August, 2004 by Catherine McElrath

In days past, a college education meant all-night cram sessions, dorm rooms, campus pranks, and frat-boy hijinks. The typical under-graduate lived, played, and--(gasp!) even attended class--on campus. Fast forward to the new millennium, a time where landing a good job means possessing at least a bachelor's degree, where four years of full-time studying is a luxury and today's student might be juggling children and work instead of football games and sorority pledging.

Today, colleges and universities are marketing their services to a changing clientele. As this clientele evolves, so do the avenues pursued by those schools to bring in revenue.

Traditional streams of income for colleges and universities--tuition, activity fees, endowments and gifts--are still a major part of most schools' budgets. For example, in the University of Miami's 2003 to 2004 fiscal year, the school collected $70.6 million in gifts and trusts; Florida Atlantic University brought in $94.1 million in endowments and $20.7 million in gifts. State schools such as Florida International University and Miami-Dade College receive money from the State of Florida's budget.

But colleges and universities say they need money beyond those traditional sources to expand and compete in today's competitive higher education market. They are increasingly turning to innovative methods to bring in funds.

One of the most lucrative methods of bringing in dollars is what is known as continuing education and long-distance education. Whether they be classes to learn salsa, become a dental hygienist or earn a Masters in Business Administration, during the last 10 years, South Florida universities and colleges rapidly increased their offerings in these areas, opening up much-needed sources of funds for the schools.

Outside of its traditional university curriculum, Miami-based Florida International University offers an array of degrees, certificates, workshops, professional training and personal enrichment courses. The classes take place at FIU's seven South Florida campuses, online and in off-campus classrooms. All are designed to meet the needs of a college consumer who might very well be married with children. Offerings include degrees such as an Executive Master of Science in Taxation, classes which takes place on Saturdays (except during tax season) and certificates such as an Advanced Management Professional and Project Manager.

"The concept of certificates is becoming much more popular," says Vincent Daniels, director of business development for FIU's Office of Professional Education, part of its College of Business Administration. Demand is being driven largely by employers. For example, he says, "One of the markets here is the banking industry, and at the big banks like Wachovia there is a demand for people with treasury knowledge." To fill that demand, the school just launched a Certified Treasury Professional course--which will be held in downtown Miami, close to the city's banking center.

Both employers and students are willing to pay for these continuing education classes. "I don't mind paying for these classes because it seems like they've tailored these classes, in terms of scheduling and online classes, for someone like me who has to work full-time," says Geiselle Leon, a part-time student in FIU's Legal Studies Institute.

Daniels says, "We're a profit center. I have to make a profit or I don't run [the course]."

FIU's continuing education programs brought in $16.8 million during the 2003 to 2004 fiscal year. That represents 25 percent of the university's total revenue. Contrast that with how much the programs cost the university: FIU's 2003 to 2004 overall operating budget allocated $59.5 million, only 12.6 percent of the university's total spending, to the "Auxiliary Enterprises" category under which its continuing education programs fall. The category of "Education and General" takes up 50 percent of FIU's budget, at $235.2 million. (FIU's total budget has increased almost 300 percent since 1992.)

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Other universities, too, are looking to continuing education programs as sources of income. At Boca Raton-based Florida Atlantic University, weekend and executive programs, both degreed and nondegreed, supplement revenues from traditional students and from the state. "Students or their employers pay a higher tuition rate to graduate in either a shorter period of time or by going to class only on the weekend," says Diane Alperin, FAU's associate provost of academic personnel and programs. Among the most popular offerings, Alperin says, are the executive MBA and weekend bachelor's in business administration. She says FAU's College of Education is seeing increased demand for its continuing education programs, too, as teachers seek the higher pay scales and administrative jobs that a master's or doctoral degree opens the door to. In January, FAU's College of Engineering began offering an executive Master of Science program on weekends.