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Your Money Matters: Event Coverage

On April 13, Miranda Carney, the editor-in-chief of Ball Bearings sat down with Acting President Terry King and Vice President for Business Affairs Bernie Hannon to discuss questions of tuition and transparency. This event was a part of an ongoing conversation about the cost of college that tied in with the print magazine “Our Money. Their Secrets.”

Miranda Carney (MC): Welcome. My name is Miranda Carney and I am the editor-in-chief of Ball Bearings Magazine. In a few weeks, I will join a group of the most indebted group of college graduates in history. The average debt of a Ball State grad is over 27 thousand dollars. And 72 percent this year will graduate with debt. Across the nation, state funding for higher education has decreased, causing us to pay more and more in tuition. Despite the fact that we pay so much in tuition, many of us know very little about where our money goes. Almost a year ago today, my executive team and I planned out how we would spend an entire semester writing about the cost of college.

Last semester, an investigative team started lots of research to look into tuition and economics at Ball State. I am proud to say that this week, we have released a thorough investigative magazine. One of our magazine’s goals is to create meaningful conversations about important topics. Today we will be doing exactly that. I am honored to be up here with Acting President Terry King and Vice President of Business Affairs Bernie Hannon. I will ask President King and Vice President Hannon the most important questions we have about our money. I invite you to continue this conversation after tonight’s event. Read our print magazine, read our online stories, and share your thoughts on social media. It’s our money, and it matters.

I would like to thank President King and Vice President Hannon for being with us tonight to help educate us on the financing of our university. And with that, I’d like to let you guys to make your opening remarks.

Acting President Terry King (TK): First of all, thank you very much for inviting us here, this is a really remarkable and wonderful opportunity for us to interact directly with students, which those of us in the administration building don’t often have. You may know that I spent fifteen years mostly in the classroom doing research before I switched to mostly administration. And so I’ve been in higher education now as a faculty member, and as a leader, in various institutions for thirty years or more. So that’s the perspective I come from. But I’m really impressed with what happens here at Ball State University and I see Ball Bearings is an award-winning magazine and wins national awards and that’s certainly something we look forward to bragging about to all of our constituencies out there so we really appreciate the opportunity to spend some time with you.

This is an important topic and I have to tell you, in my years in higher education this has been the most important change during that period of time. And I think those of you who have been around as faculty members in higher education perhaps have seen these changes happen. It’s a huge area of discussion, we can talk about that, I’ll make some very general comments about what’s happening nationally and then Mr. Hannon will talk more about facts and figures and specifics for Ball State to put it into that context. What’s happening here is not unusual. First of all, you have to realize that there are literally a couple thousand–almost 2500–universities and colleges across the country. Now most of those are private. There’s about 500 public colleges and universities, and Ball State is actually considered a public research university, characterized as one of the top ten percent perhaps  in that large category so we’re a large, well-known university doing a comprehensive education scholarship you’d expect of a major university.

Over the last fifteen to twenty years we have seen a shift in the funding and in the demands placed on different universities. There is actually a very good study out there I will refer you to that just came out from the American Academy of Arts and Sciences called Public Research Universities: Understanding the Financial Model. And it’s really focused on universities like Ball State, so, for example, it gives a lot of figures nationally for the drivers of rising tuition at public universities between 2001 and 2011 or that day the 6 percent increase due to spending on construction, new construction, 6 percent increase on administration support. A large number of new regulations have come to higher education over the past twenty years. A lot of regulations that means a lot of work has been done with that. Nine percent increased spending on instruction, often that’s associated with instruction with the new technologies, Ball State’s really good with that. And nearly 80 percent, 79 percent, of the increase in tuition at public research universities has been associated with the decreases in state support. You know, one time, probably starting with the More Land Grant back in the 1860s, universities were seen as the drivers for economic development, education of the masses, helping people move up the economic ladder. So those were heavily financed by the state. And over the years, demands from the states for other things, increased costs associated with other drivers, the non-discretionary demands on state budgets have pushed and universities have given. So that’s what’s really been an important factor for us. I can tell you that those of us here as well as all of my colleagues in higher education across the country take this matter very seriously and spend a lot of time. Bernie and I and the rest of the cabinet members spend a good fraction of our time looking at how we can conserve money and put it where we think it deserves to go.

You’ll find that at an institution like ours, almost all of our major operational expenses are associated with personnel. So for a college for example, a college’s budget like the College of Communication Information and Media,  probably over 85 to 95 percent of the operational budget is for salaries. And so that is what often is looked at when we try to make efficiency moves. Let me stop at that point, I know you’ll have a lot of questions later, I’m going to turn it over to Mr. hannon here who can give you some figures about Ball State and put things in perspective. Besides, he really does understand all of the details of the budget here, every penny.

Vice President for Business Affairs Bernie Hannon (BH): The magazine is great, so congratulations to everyone who worked on this. It’s a wonderful piece, chunk-full of information and very interesting and insightful so congratulations, very nice. I actually count about 4,600 colleges and universities in the country, if you include all of the Jim Bob’s bait shops and business schools and any accredited college where a student can take federal money and go, is an accredited university. So with almost 5000 colleges, that’s when we tend to paint kind of a broad brush. Where we say a college can be anything from Harvard to Yale to Stanford to Ball State to Ivy Tech to Jim Bob’s bait shop to online colleges. They’re all different and they all have different models. So sometimes we tend to paint a little too broadly when we talk about college because they’re all a little bit different. And sometimes we tend to overgeneralize. We hear these memes that come out the skyrocketing tuition the administrative boat, the runaway this or that. It’s not the same for everybody, so we shouldn’t want to paint every college the same way.

We should look a little more carefully about what we’re talking about, so with Ball State we’re talking about Ball State. And then bear in mind that Ball State is a very complex organization, this type of college. We’ve got 20,000 students here, we’ve got almost 4,000 employees, we’re basically a city. Sure we instruct, we have teachers and students and classrooms, but we have buildings and we have roads, and we have infrastructure. We have hotels, basically, and restaurants and entertainment and sporting events and powerplants and police. We are a very large, complex organization not unlike a medium-sized city. And all that require a fair amount of money to keep running and a lot of complexity to sort of organize and make sure it’s operating appropriately. And then Terry also talked a bit about the shift in public policy and funding. So the first college in the country was founded in 1636, Harvard, we had probably a dozen or so colleges operating in this country before the Civil War, before the American Civil war, which sort of blew up after the Civil War into the 1862 More Land Grant Act where the federal government gave tons of land to states to start colleges. These were all of the A&M’s: Texas A&M, Alabama A&M, Indiana has an A&M, but they call it Purdue.

Ball State was founded in a giant wave of teachers colleges, or normal school as they were called at the turn of the last century, and Ball State has grown up now through the industrial revolution and WWII and the rise in research campuses and now Ball State is a full-fledged bona fide research campus and a complex sort of organization that requires a lot of management. And money, so most of our money at Ball State comes from you all, from student fees and through state appropriations. And indeed state appropriations have dropped precipitously, not just at Ball State but in the country. And some of that is related to the Great Recession that hit the US, and every ten years or so there is a recession, and it’s been that way since the 1950s, ’60s, ’70s, ’80s, ’90s. We got into a recession in 2004 and thought, “oh well, just another recession, we’ll roll back out of it” and then the Great Recession hit in 2008 to 2009 and we have, to this point really, never fully recovered from the 2004 recession. So Ball State for example, and I have data going back to about the 1960s, so about 1970 to 2004, Ball State could count on about a 5.5 percent increase in state funding every year. The taxpayers were giving 5.5 percent increases.

Since 2004, our state appropriation increase is zero. We’re operating on the same money that we had in 2004, and it’s not unusual across the country. Indiana as a state is a relatively low income state, right now we’re down to about 38th in the country in per capita income, so we just don’t have a lot of tax revenue in the first place, and it carries a lot of demand on the budget.  And we also know there’s been a pretty big backlash against government, and government is sort of seen as a bad thing, overspending and overreaching and so on, and so there just hasn’t been much desire to put money into the government and into taxes and there’ve been a great wave of tax cuts. So as taxes are cut and as income goes down there’s less tax revenue to distribute to the universities. I’m not pointing a finger at the general assembly, they’ve done a wonderful job in keeping us where we are.

Many states have had huge cuts in their funding, and so for us to be at least staying the same, compared to some of our peers, we’re sort of holding our own. But because of that, our costs keep going up, people expect raises around here every year, the cost of pencils and paper and computers and lawn mowers, and technology, and all these seem to go up every single year, health care is one of the really big ones, so we have to have revenue to fund the costs. So the cost is then pushed onto students. And some of that I think is a very deliberate public policy. So as Terry said, colleges grew up in this country as way of improving the country. In the early days it was just being able to build a city and not die of dysentery. Being able to move the sewer system and get people through the towns and we had to build bridges and we wanted some ability to be able to know how we could increase our production of grain and food to feed the country. And extending the electric infrastructure and so on. So colleges grew up doing all of those things, curing cancer and advances in medicine and so on. And that was the way that people looked at higher education, it was a public good, it helped the public become a better place. And now people look more at colleges as sort of a private good.

So, when you all graduate from college, hopefully, you’ll get jobs and you’ll make income. And you know that people who graduate from college have on average much higher income than people who don’t. And so you benefit from your college education. And so why shouldn’t you pay for it, why should the collective taxpayer pay for you to make more money, and that’s the argument. Higher education has always been in the public sector, sort of this balancing act between how much should come from the taxpayer as a collective payment and how much should come from the individual who attends college. And clearly the fulcrum has switched so that more and more we’re putting the cost off on the individual and on the family and less on the public. Some of that I think is intentional, some of that I think is just unintended consequence of cutting taxes and running out of money. But to me that’s sort of the really big, I think, public policy issue that’s pressing this country is: how much do we as a collective taxpayer want to support education in general, but particularly in higher education?

MC: So you talked a lot about state funding. Obviously that’s decreased across the nation. What is the biggest challenge that Ball State faces in receiving funding from the state?

BH: Well, first, there are two big obstacles. One is just the total amount of money available. Indiana per capita income is dropping compared to the rest of the country, and there have been a number of tax cuts that have been enacted by the state legislature over the last several years so there’s just less money in general and people are making less money. For example, Indiana has gone from probably 14 or 15 percent unemployment rate at the height of the Great Recession down to under 5 percent now, but our tax revenues really haven’t increased very much, which means there are people working for less money, and there is less money to be spent on things like education.

And then there’s a great deal of competition in the state budget. K-12 of course needs money, prisons, roads, all of the other things that the state funds compete with higher education, and I think that one of the people said in the magazine, the legislators have found higher education to be kind of an easy target to cut, because they know that if higher education gets cut from state funding, they can probably make up at least some of those cuts in student tuition. So just the general amount of money that’s available, and second of all, how much of that goes to higher ed. And within that higher education budget, there’s competition as well. There are seven public colleges in Indiana, about fifteen, sixteen campuses, depending on how you measure it. And those campuses all compete with each other for funding as well. Indiana started a community college system in the early 2000s, Ivy Tech Community College, which was a relatively new approach to community college, and it’s taken an enormous amount of the state budget. So less money available, more competition within the budget for the funding.

TK: One new wrinkle that’s happened here in Indiana and has now grown into other states is performance funding. So many people think that we get a reimbursement or funding from the state by how many students we have. That’s not true. It used to be true. So enrollments went up and we can make an argument for more money. What’s happened in the last few years is a decrease in performance funding. Actually, I’ll let Bernie explain this because in one of his previous employments he worked for the Indiana Commission for Higher Education and he was involved with creating this policy, so now he has to work with it from this end. Performance funding says that we’re going to do a standardized cut of everyone’s budget, let’s say 3 or 5 percent, and now you’re going to compete for that 5 percent that we collected from everybody in various categories. And the categories tend to be things like “How many more people got degrees now than in the past?” “What was your increase in number degrees what was your increase in specific kinds of degrees?” Like STEM degrees or graduate degrees. How effective are you with at-risk students, Pell Grant eligible students, for example. So we look very carefully at these and tiny degrees become an important factor and that has driven some of the policy changes we’ve had here at Ball State, as well as elsewhere. So it’s changed the way we operate, the idea is that they can use that as a sort of mechanism to sort of force certain behaviors on universities to make us more efficient on getting students through faster.

MC: So you talked about performance. When allocating money to universities sometimes the state looks at how the university has spent money in the past. So how would something like having three presidents in three years affect future money we’d be given by the state?

TK: They’re looking more at the performance of the university not who’s at the university. So in the past couple of months I’ve had the opportunity to spend some time with legislators and talk with them. I think they understand the value of Ball State University. Congresswoman Brooks was on campus, last week I think it was, and she was talking about the value, what she sees at Ball State University. So knowledgeable people, the legislators, they’re all well-intended people, they really look at how effective is this institution, do we need the graduates that are coming out of this institution, and what are the needs that the institution has. I would say that Ball State has a problem in the sense that Purdue and IU tend to have higher support per student than we have, and our folk have worked really hard to build that up, and we think that we’ve gotten through to a few legislators recently and they’re starting to pay more attention to us. I’ll let Bernie comment more on that.

BH: At least in theory it should have zero effect whatsoever on our funding, because it’s formula driven, it’s a performance funding formula that drives money through the system. But having said that there are some discretionary abilities that key legislators have to influence how corporations come and go and we have a great relationship with the legislature and we make sure that they understand that we’re moving forward, a lot of good things happen at Ball State and a lot of good people are here and we’re worth the effort and we’re worth the funding.

MC: Thank you. So, in 2004, President Gora’s base salary was 260,000 and just this past year President Ferguson’s made 450,000. What has led to this huge increase in president’s salaries over this past decade?

TK: You know, I don’t have my calculator and my arithmetic abilities are not as good as they used to be when I was teaching those types of courses, but I’d have to look at what the average percentage increase over a period of time would be. And one of the issues with administrators, you have to remember, is that there’s a high turnover rate of administrators just nationally. Ten years in a position is a long time, and Dr. Gora — who I worked for, she hired me — was remarkable in the sense that she lasted ten years in a position and was extraordinarily successful. When you go in the market and compete for people in that level, you’re competing with many institutions. So when there’s a high turnover, there’s a higher growth rate in the overall salary. Having said that we’ve done a pretty good job with dealing with faculty salaries over the last five or six years. In my previous role as provost I used to track faculty salaries by person, so I’d be curious if I could find what that was. So if you look over 5 – 6- 8 year period, that’s 20-30 percent in increases, so those things are not uncommon.

MC: So how does the university decide what’s important to fund?

TK: Well this is actually a really interesting question and we could spend a lot of time on this. Because I have to tell you, as a university here, we have 20,000 students, we have a thousand full-time faculty members, if you add on the part-timers that works out to about 1,200 equivalent, distributed among seven academic colleges, and we’ll have an eighth academic college next year, and approximately 40 academic departments distributed amongst those colleges, offering around 200 undergraduate degrees and programs, and a hundred graduate programs. And every one of them is different. So when we make a decisions about what do we do we do as an example, let’s take the College of Health, that was a three or four year planning process where we look at creating a college, the expenses associated with that, and if those expenses can be paid for by increased efficiencies in enrollments and collocating those similar programs, like what’s happened in the past when we created the College of Communication Information and Media. For example, the College of Fine Arts. Or the College of Architecture and Planning. Those were decisions that had budgetary implications.

Another example of adding a new program specifically is a program that’s upstairs here, in the Teacher’s College, is the graduate program of applied behavioral analysis. And in that case we did a very formal budget analysis of how much would it cost us to move our master’s program online by hiring new faculty members and how much revenue would we generate through tuition. So we built that model, we hired an appropriate number of people that we thought we would break even with something like 150 in a master’s program. Currently the enrollment in a master’s program is well over a thousand. So that’s an example of how business-like decisions are made for adding a new program. It’s a little bit harder when you want to eliminate a program. We have eliminated some programs in the last few years. Those decisions tend to be driven by lack of enrollment, very few students left, we closed the programs and taught the students until they graduated. Those kinds of decisions are driven by the academic needs but the way we implement them is driven by the business model. There are other decisions we make that are based not on business decisions, things that are just absolutely necessary to do, for example, changes in Title IX, restrictions on the university,  we had to hire new staff to do those things, we could not continue without hiring new people. So there’s some regulatory things that cause us to do some of these things as well.

BH: I just add this from a higher level, we are what’s called a very fixed-cost industry. So Terry’s spot on. About seventy cents to a dollar that we spend goes to a person on this campus, whether it’s a faculty member or a grounds keeper or a food service worker or whatever it is. So when most of your money is tied up in people, if you’re going to change money you need to change people. A lot of our faculty of course are tenured and difficult to remove even if you wanted to. A lot of our services are fixed. We have to get reports, we have to get people, we have to mow the lawn, so these can be difficult to change. With a fixed-cost model, we try to do things incrementally, because we can’t just come in and wipe out half of our staff overnight. It wouldn’t be possible. So you have to reallocate money. And Ball State has actually done pretty good. It’s actually harder to reallocate money than it is to just cut money. If I’m taking money from you and give it to you and that’s a hard thing to do. But we reallocated over 40 million dollars in the last few years trying to do it more strategically as Terry was talking about. And that’s really the way we are able to sort of identify something different that might be more important than what we’re doing now.

TK: I have to give an example, if you don’t mind. I’m getting all mathematical because of my background, but you know if we talk about changes in enrollment, and 100 students roughly on average. One hundred new students would generate how much more to the university?

BH: About a milion dollars more.

TK: About a million dollars more. So 100 less students to the university would generate 100 million less. Now typically, if you have 100 new freshmen they’re going into freshman courses. And so for example, you all took English, I assume, sections typically at 20 to 25 students. If you have a hundred new students you have four to five new sections. And we can hire people to teach those four to five new sections. And that’s pretty easy to do with fluctuating enrollments. The real difficulty is all of those students move into their upper-level courses, and I said there are 200 academic programs at the university. So when your accounting class has only 35 students in it, and you have two students less, you can’t get rid of a faculty member, they’re still teaching the course. They can accommodate two to five new students easily in that class as well. So that’s part of the inflexibility of the funding of higher education, if you look at it that way.

MC: So we contribute more to the budget for Intercollegiate athletics than we do to the Health Center and the Counseling Center combined. So how do you weigh funding for something like athletics versus healthcare?

BH: Well see, you have to think first about athletics, the vast majority of funding for athletics is for student scholarships. So you have 400 plus student athletes who are on scholarship and that’s half the budget. So it’s a scholarship issue. We give out three million dollars a year in scholarships to students outside of athletics, another eight million or so in athletics, so that’s about 40 million bucks a year. Health care we try to find at a level that’s appropriate for fees. So, as you noted in your magazine, the health care center is primarily run through the health fee that you all pay here on campus.

In order to keep the fees as low as possible and try to provide the best service it’s always a balancing act. We could probably have a more robust, better staffed health center but it would cost us more money. We could spend less money on athletics but we’d probably have to end some athletic programs because again, of the student scholarships that are being funded. So again, we’re a fixed-cost now, and we have to make a decision about “this is more important than that.” And they’re hard decisions to make. But that’s part of what we do. We have to talk to students and that’s why we’re here.

MC: So how do you make those decisions? Because I know for a lot of students it seems like athletics is more important than maybe student health. I mean, student fees contribute more to the athletic budget than any other source of revenue for that budget, even though sports seasons aren’t always successful. So how do you decide that?

TK: Well, it’s interesting. I’m trying to figure out how exactly to say this. There’s not one budget for the university, there’s many budgets for the university. So on the structural side, we use what we call the general fund budget, which funds education. It pays the faculty members. It pays for the support of the institution. That’s from tuition fees and state support. The residence halls, the dining facilities, the health center, those are all different budgets and different sources of revenue. So, and athletics is a different source of revenue as well as the one fee, I can’t remember the name of it right now, that funds a lot of different things. Student services fee, so there is some money that may come from student services fees that may go to Ball Bearings, for example. There’s things funded across campus like that. So, if you’re saying how do we make a priority versus teaching philosophy versus playing football, those are just different budgets. So, we have to make a decision within those budgets how we make those allocations.

MC: So, some still think that Ball State invests more into athletics than academics. Why is the new head football coach paid over $100,000 more than you as the acting president?

TK: That’s a good question. You know, I was just with the football coach earlier this evening because they were showing some donors the new facility out there that was entirely funded through donations. A larger question is “what is the value of athletics at the university?” I have been at other major universities; the only major university that I have been at where athletics didn’t have a major impact was MIT. They were fun to watch because they were so bad. It puts out that if it’s done correctly, athletics can have an immensely enlivening effect on the campus.

Let me just give you an example, not from Ball State, but from where I was before, and we used the football program there as part of our fundraiser campaign. We hosted donors during away games, and from the academic side, that was enormously valuable because the budgets there were just as tight as they are here, but when we get gift money from our donors, saying “Here, use this to support the academic mission and your college, your apartments, your students and student scholarships.” That was enormously beneficial. So, on balance, it’s hard to make those comparisons right away, saying “This person makes this, this person makes this.” Everybody has a different part to play in the university. Not really directly at your question, but I think it really points out that there’s a larger discussion around these things. One could also say “what’s the value of the cultural activities?” I would say they are enormously valuable. They don’t generate revenue, necessarily, but they are enormously valuable to the institution.

MC: Does that differ at a university like Ball State, where not as many students are attending the football and basketball games?

TK: Actually, I think that that’s something we need to work on. Because our budgeting could be better on those if we had more people attending the game. Now, students get into those free. And so we don’t have many students attending. But, the same is with cultural events, students can get in free for most of those things. It’s a tremendous discount when it’s a paid event, but I think that that’s something that we as an institution could look forward to improving in the near future.

BH: The only thing I would add is, this is part of why we’re here. Your responsibility as students at this institution is to let us know what’s important to you. If you say to us, “Hey, we don’t want an athletic department. We don’t want to have Division 1 athletics. We would rather have money put into the health center or money put into reducing tuition or more money for – fill in the blank.” You have every right and responsibility. Let us know those things. Right now, we assume that you all want a Division 1 athletics program. That’s what we have. And unless we hear otherwise from you all, that’s what we will continue to do. And I will say on the question of salary that goes back to the president question as well, is the way this country operates is a free market supply and demand. As a career a dime a dozen, football coaches are hard to get. Whatever the market will bare, we will certainly make sure that when we were talking to the athletic department and they said we need to hire this coach and that this is the best guy you can get or if we can get someone else better than that for less money, it’s the best guy we got. Some of it’s just simple supply and demand.

MC: Okay, thank you. I’m going to transition a little bit. As we wrote our stories about the financing of the university, we found it was difficult to get some of the documents that we thought would be public information. So, what’s the importance of transparency to the university?

BH: We just talked a bit about the finances and with what Terry talked about. So, I’m university CFO. So, I live, breath, sleep, there’s not a day in my life that’s gone by that I’m not thinking about finances. So, for me to say it’s not transparent is like asking a swimmer, “Why don’t you know how to swim?” So, first I’ll step out of my role and look at it from the outside coming in. I would say that every question that was raised in the magazine and every issue that was raised, there is publicly available data that has all that stuff. It’s in the items that go to the Board of Trustees, it’s in our financial reports, it’s in the presentations that the president makes to the board or to the legislators.

And so I know it’s there and I know how to find it and I know where it is. But I think the issue is that it’s just not easily accessible and understandable. So if transparent means, “It exists but I don’t understand it,” then I think that we do have a problem. And I think we need to try and fix that. So, I’d also say again that I read the magazine and I listened to the online piece that you guys did. I’m the university CFO and no one came to me and said, “Hey, help us understand the university’s finances.” I’d think that you’d want to start at the CFO’s office and say “Help me understand this.” So, I am telling you all that I am more than happy to help you understand this. We’ll have all the meetings, discussions, powerpoint presentations until you’re so sick of them you’ll want to leave.

TK: I can verify that.

BH: Yes, he will. Nothing will make me happier than everyone understanding what we do and why we do it. That makes me feel good. That’s what I want you all to know. So maybe this is where we step back and say alright, maybe the stuff is there but it’s not as clear as it can be. And some of that is because of my own bias in contacts because I’m so used to it, I know it so well, I assume other people do as well. So my pledge to you all is I am more than happy to work with you and any other people to help understand this in any way that I can.

TK: Just to build on that, a few years ago, when President Gora was still here, we went to every college and gave a presentation about state budgets and how that was influencing what we do at the university, showing where the revenues are coming from and why they were there. And I have to say that most faculty members at that time said “Wow, we never knew that, we just didn’t know that was going on.” So, you know, it’s not an intentional program to shield you from any sort of knowledge there at all, it’s just like Bernie said, this is not simple stuff. It’s all there. We’re a public university, our finances are always public, they have to be, they go to the state board of accounts. So, we can work on that.

MC: Okay, so you said most of it is available online. If transparency was important, why wasn’t information about something like President Ferguson’s resignation made public, especially when it’s such a huge cost to the university?

TK: Well, I think you’ve got all the information about that that has been out there and there are contractual limitations to what anybody can say. Let me just say, as sort of a general comment that’s not about Dr. Ferguson or any specific case, but in any time there is executive hiring in any institution or corporation, there’s always contracts associated with that. And those are legally binding and specify financial connections. So, I think people are trying to look for more of a story and there really isn’t any more of a story out there. It’s just, as explained, he made the decision to resign and the trustees accepted it. Now, in terms of expense, again, these were contractual things and I can assure you that we have looked at the expenses and we’re not spending more money than we would have otherwise. So, in fact, in some cases we’re to economize in areas. So, I feel very comfortable that we’re not spending more money because of this, in fact, maybe spending somewhat less.

MC: So, whose decision is it to make those contracts confidential?

TK: Excuse me?

MC: Whose decision is it to make the contracts confidential?

TK: Those who are a part of the contract.

MC: Okay. And that’s happened with all presidents that have resigned in the past?

TK: Well, I don’t know. Because I wasn’t here then. But, I’m assuming so.

BH: But when you resign?

TK: When I resign, you can know exactly why.

MC: Okay, so how does the university decide how to allocate money in the general fund?

BH: Sure, so, as I said earlier, we are a very heavy fixed-cost organization. So, we sort of start with whatever got what last year. And because we’re so heavily peopled. And the general fund pays for what we call the core function [of the]university. The teaching, the research, the service. The general fund doesn’t fund athletics. It doesn’t fund the housing and dining system, the Emens programs. It only funds the core teaching and research function of the institution and all it funds. And really, that’s just primarily faculty salaries and the administrative overhead that makes a university run. To keep the lights on, to process the payroll, to make sure we are applying IRS rules and so on. We start with where the money was before. Now, you all have choices, which is a wonderful thing. You can be journalism majors, you can be math majors, you can be science majors, whatever you want to do. So students sort of ebb and flow through the system. And the colleges ebb and flow as people come and go as well. And so we have to make some adjustments to where people are. Generally speaking, with a very fixed-cost system, we take what we did last year and if we have any extra money, which we haven’t had in quite a while, since the great 2004 and the 2008 recession. We’ve had virtually no real money and our total budget has only gone up about two percent each year since 2008. That barely keeps up with inflation. Without some way to try and reallocate funds. So, sort of a long answer to the question, it’s primarily what we spent last year and if we’re doing something we shouldn’t be doing we try and cut it out or reallocate it.

MC: You kind of talked about, before the health center being funded completely by student service fees. Why is that the only free student service funded completely by students?

BH: Well, it’s actually not. So, for example, the housing and dining system, entirely funded through fees. So, we call it the close system. Every dollar that goes into housing and dining stays in housing and dining. It only pays for the housing and dining system. It pays for the residence halls. It pays for the food system, pays for the food, pays for the people who run it. So it’s entirely fee-driven. A lot of the student organizations, I can’t even think of them off the top of my head. There are dozens of student organizations and programs out there and they are funded entirely by student fees. The recreation center is funded entirely through student fees. Having said that, being a broad and complex organization, lots of money comes in from lots of different ways and so we are always trying to come up with whatever we can do to raise some money. If someone walks off the street, you know the general public can go eat in the Atrium or the Tally and that’s money into our system. People can rent the facilities on campus for a wedding or for some event. So, it’s pretty rare to have any one thing funded by one source. Most things have multiple sources of funding. Then I think it’s important to think of the general fund particularly as sort of a punch bowl of funds. So money comes in from the state legislature, it comes in from student tuition, it comes in from student fees, it comes in from lots of different sources. And it gets dumped into this one big pot and then it gets distributed out. It’s impossible to say how much of that general fund money that went to journalism, for example, came from student fees, how much came from corporations, how much came from a gift from the grant. It’s all contributed in the funds in general. And so it’s difficult to say very few things are funded only by student fees because it’s usually some sort of mix of funds. But as Terry also said, we also try and do our cost accounting and try to direct certain funds to different things. So we can both keep track of where the money comes from and where it goes. And there’s also a bit of a principle of financing that people should pay for what they use. And people shouldn’t pay for what they don’t use. We don’t charge people who don’t live in the residence halls residence fees because they don’t use them. And so that model is what we sort of use to guide what we fund with student fees, what we fund with restricted funds.

MC: So if you’re basing it on what students use, I know the student center, using the health center and the counseling center is going up, where as a lot of students aren’t going to the athletics games. So, how does that play into what students use?

BH: Well, I’d say that, again, if students don’t want an athletic program then we need to cancel it. But in lieu of canceling it, we have salaries to pay, we have students who are on scholarship, we have facility buildings. It would be difficult to shift the funding. If we see a bigger demand in the student center than we can handle, of we start to see our students are being at risk because their health is not good, then we would find some other way to reallocate funds and maybe increase fees to help pay for it.

MC: So, the university must submit a line item report to the state each month regarding how state appropriations were used. Why is this report not available online so that students can understand where the money is being spent?

BH: It doesn’t exist. We don’t report to the state every month on how our money is spent.

MC: You don’t?

TK: How often do we report it?

BH: Well, it depends on the level of funds and the project but we report back to the state every year through a budget request generally how our money is spent. There’s a monthly request for funds but there’s not a monthly report that says how our money is spent.

MC: Are those reports ever put on line?

BH: No, I don’t think they exist.

MC: So, what do you do to report to the state? I’m just trying to understand how you report to the state. Do you report to the state at all how you use our money?

BH: Not in any detail, no.

TK: We are periodically audited by the state. In lieu of having voluminous reports every time.

BH: Sorry, I didn’t have my accounting hat on. We have to report how the money is spent; this much in salaries, this much in benefits, this much in utilities and so on. And that goes to the state board of accounts. It’s probably online on the state board of accounts web page. If you haven’t seen them, I’d be happy to show them to you.

MC: So, why isn’t specifics about how student tuition money is spent put online as well?

BH: Well, I guess I would say again, most student fees go into a big pot of money and goes into general funds. The general fund is distributed through the annual budget process, which is all available online and is all available through the documents that go through the Board of Trustees and says: “Here’s how much goes to Teacher’s College, here’s how much goes to College of Science and Humanities, here’s how much goes to IT, here’s how much goes to Student Affairs.” It’s broken up by personnel and you can find out exactly how many people work in each department, how much they make, how much they spend on supplies and expenses, and travel and so on. So it is all available. Again, maybe hard to find and hard to understand. But it certainly exists.

TK: I guess I’m kind of struggling with that question as a faculty member, I probably would have said that’s probably the wrong question to ask. Here’s the question you should have asked, here’s the answer that I would give to that question. You know we analyze very carefully where money is spent so I can, at least for the last year, I can tell you how much every student credit hour cost in every department at the university. I know which programs are the most expensive courses to teach and which are the least expensive courses to teach. And it ranges, the cost per student credit hour. To deliver a course very widely across the institution and to find how many students are in the course, primarily it’s how many students are in the course. So, for example, the speech communications course that you all have to take in these large sections are some of the most inexpensive courses you can take because you have a lot of students in them. If you’re in music, those are very expensive courses to take because there are often less students. Architecture and planning, or any studio-driven program is more expensive than a lecture program. Business courses, you might expect them to be expensive to deliver, because of the high salaries of the business college, however, they have larger classes. And so actually, it works out that way.

So it’s an interesting phenomenon at the university. I can tell you, and we can all talk about this again, what it costs to deliver a certain kind of program. But institutionally we’ve had this decision for years that we’re not going to charge the music majors a whole lot more money because they’re music majors. We’re going to try to spread that across the institution because we may have accounting majors taking music courses or biology majors taking philosophy. So that’s where that sort of equalization takes place. It’s an integrated whole in the academic programming as well as…. So tuition goes into that as well as general, state money. And that’s the majority of the money for those operations. The only other sources of funding of any size are gift money and what we call sponsored programs, [and] research grants, so that does generate some revenue as well to support the teaching of those programs.

MC: Thank you. So, now I’m going to transition to student submitted questions. The majority of students on campus have a meal plan and many don’t use all the money during their swipe. So, why doesn’t the money roll over?

BH: Well, it could. So the way the housing and dining works is it’s a closed system. So, we figure out how much money it’s going to cost us to run housing and dining for the year. And that will include things that I think your article did a really nice job at pointing out. You have to pay for the buildings themselves, you have to pay for the heat, the light, the equipment, the stoves, the serving trays, the people to cook, you have to buy the food. And so after all those things are budgeted, you have to come up with a rate to pay for it. And some of those things are fairly fixed. Whether we have 7,000 students or 6,000 students living in residence halls, it costs the same to heat it or to light it or to clean it. It cost the same whether we have 1,000 people or 2,000 people eating in the Atrium, we still have to staff the cashiers and clean the tables and so on. But, usually you buy less food. So, the few variable costs in housing and dining are food costs and sometimes you can sort of control how late certain places are open. So, if people are buying less food, we’re charging less money. So if people are only using half or two-thirds of their food allocation, then we’re spending less money on the whole thing.

If people start using all of their money all the time, it would cost more money. So we would raise the price. Where it gets interesting is if one person is spending their full $8.20 for a lunch and some are only spending $4.00, the person paying $4.00 is not getting the full price of their meal. So they are subsidizing the people who are getting $8.00. So it makes sense that you all spend your full $8.00. But that’s up to you. So we could roll over those funds, a lot of colleges have that where you get this many points and if you spend them within a week, a month, a year, that’s what you get. We can do that. What is interesting, well you’ve probably not attended other colleges because most of you are undergraduates, but some colleges do it differently. Purdue, for example had all you can eat places. We call it “All-you-can-stand cafe” where you go in and eat yourself sick and you walk out again. And that’s how people gain fifteen pounds as freshmen. But at Ball State, we’ve got what we call equivalencies where you can walk in buy what you want and then walk out with it. You can take it back to your residence hall, you can sit out in the quad and eat it. You can do whatever you want with it rather than having to sit in the residence hall and eat your food at the same time. And so there’s this trade off between the model that we use and other models. Some are more expensive, some are less expensive.

Our model has the lowest amount of waste. I think we donated five million tons of food last year to food banks because it was food we couldn’t sell. Purdue donated 20 million tons and so it’s a very inefficient system. So we always try to find that right balance between how should we price our meal plan [and] how should we fund our meal plan? What’s the best way to give the best price to our students while still thinking economically and environmentally and socially efficient. So, we could go to a different plan if people would prefer to say: “I want my 18,000 points and I want all semester to use them.” We could do that, but it would probably be a more expensive system. But there are other models we can look at and we will have a brand new dining service person coming on this fall so it’ll be a great time to think about some changes.

MC: So how does a student go about voicing if they want that?

BH: What do you think? Do you want that? Well, we use this thing called MyVoice, you’ve seen that before? That would be one way to do it. But, just telling us. Email the board, email me, email the president. Show up at board meetings. Just let us know what’s happening. Put an ad in the Daily News. Write a magazine [for] Ball Bearings about it. You’ve just gotta let us know.

MC: So, my question is, why do we pay so much in tuition and turn around and pay hundreds more in fees including course fees and fees to graduate?

BH: Yeah, Terry.

TK: You know I have to say that in the past at other institutions I haven’t seen for differential tuitions and course fees that were appropriate. And this all evolves out of this changing model over the years. When we did have one price for everything and it didn’t matter what you studied or if you were taking an expensive course like a chemistry lab or whatever, it was all just that one price. And then when budgets started tightening up, we started looking at ways to do things differently and probably the first things that evolved were differential tuition or program fees for specific programs where salaries were having trouble tracking certain departments because the salary structure were lower, and we didn’t have money in the budgets. So, we did differential tuitions and programs like engineering. Almost every university has differential tuition. Or MBA programs is a big one, medical schools cost more, so those kinds of things. And that’s what’s starting to happen with that differential tuition and program fees in some cases. Other areas, there’s just different demands, like the College of Communication, Information and Media, departments like telecommunications and journalism, technology majors have a tech fee associated with what students pay. So there has to be additional ways of doing that. It’s just purely an economic thing, trying to allocate like we talked about earlier to pay for those things that students use. I think most of us on this side of the fence, if we had our ideal world we would not have those program fees and make it one-size-fits-all cost for going to the university. I hate to say this, but it’s kind of a socialist view of higher education if we socialize the cost and spread it across there.

MC: Okay, why do students have to pay to complete internships when most internships are unpaid?

TK: Actually, I think that most internships are paid.But where you pay for an internship is when you are also getting academic credit or there’s some requirement because those internships have to have some sort of supervisory imput from a faculty member. So, you’re paying someone’s salary basically. It’s an accreditation issue. So if you’re in a program like construction management, where a student is required to have an internship paid or not, and that internship is for credit, then faculty members are also associated with it. There are many internships where there is no connection to the academic program and in those cases the student doesn’t pay anything to the institution. In fact, the institution may not even know about it.

MC: I know, personally, I had to complete an internship. It was unpaid. I had to pay over $900 to do the internship, and most of my interactions with the professor were just turning in summaries of what I completed. There was no coursework or lecture or anything. So, is there a way to change that, maybe make it zero credit hours so we’re not paying for the credit hours we’re getting from that?

TK: Well, you’d also have to take out all the back office things that the faculty member is doing to report to the accrediting agency and all those things. It’s not only what you see as a student, it’s what goes on behind the scenes and documenting that. You know, when a program gets accredited, and I know journalism has just gone through the accreditation program, they look very carefully at a lot of things. One of them is what are the requirements for the academic programs? What are students expected to do? And you’ve got to prove that they’re doing it. So, what you see happening is only part of what that faculty member is doing for that internship. The other part is behind the scenes and making the case to the accrediting agency.

MC: The reason that we’ve had this conversation and we’ve had all these questions is because college is becoming less and less affordable for so many students. So, what solution, if any, is there for making college more affordable?

TK: You know, Ball State has done some really interesting things in the last few years and has been quite creative about it. I don’t think many of you were here, but we reduced the number of credits for a bachelor’s degree from 126 to 120. A whole six credits out of forced academic programs. The whole idea is you spend less time here, so that’s one thing to do. The other thing is that we now have degree maps in place so we can help students navigate through that fairly complex academic programming. They should know if you do this, you can get out in this period of time. We’ve made degrees-in-three available so you can graduate in three years in many of our academic programs. And some of the most credit-heavy and restricted programs, are the ones that are most effective at this university. We have a number of nursing students who do the degree-in-three. In fact I was talking to one of the parents of one of our baseball players as it turns out who’s finishing a degree in three years in entrepreneurship and is likely to get drafted into pro, so I don’t know if he’ll finish the degree but I think so. So we’re looking at that. The other thing we’ve done recently in the last few years is change the summer tuition so students can do things online or on campus during the summer. I believe it’s true today that at least 50 percent of our on-campus students are taking at least one online course.

It turns out that if you take longer to graduate, you’re spending more money to get out and you’re not making money, so it’s a double whammy for you. The biggest impediment to graduating on time is not taking enough credits per semester. That’s the single biggest factor. It’s not changing majors necessarily. It’s not a lot of other things you hear about. If you take 12 credits a semester successfully, you will not graduate in four years. You won’t. It’s arithmetically impossible. So, we’ve done everything we can to get students through in a timely manner and we’re constantly looking for ways to streamline the curriculum, make it more effective. Trying to double up on things so students get out sooner.

MC: Alright, thank you. I would just like to end by thanking both of you for speaking to the students about tuition and transparency. I know it’s a topic that not a lot of students know a lot about and like you said that information that is available is sometimes hard to understand, and hard for the average student to understand, and that’s what we’ve discovered in writing our magazine. So, I would just like to give each of you a chance to make closing remarks, anything you want to say.

BH: Great job and thank you for this. I’m very pleased to get a chance to get out of my office and meet with real human beings and see the world. And sincerely, I really want you all to understand what we do and why we do it. It’s a burden doing this job. A burden that I take very seriously and I enjoy a great deal, and if I had your input and knew what you wanted, what’s important to you and that you wanted to understand this stuff, I’d be very very happy to help you. So maybe the next conversation can be: “help us understand the budget and how it’s put together.” I’m easy to find, I’m in the directory. So, email me, call me, sincerely, any time.

TK: I certainly agree with everything Bernie said, and I’ll just make one comment. When you graduate and start looking for a job, recruiters will be talking with you and there will be a dozen other students just like you. So, what they’re going to be asking themselves when they’re talking to you is: “What sets you apart from the otherwise equally qualified candidates?” If all they were interested in were the courses you took and grades you got, they’d just look at your transcript and make a decision based on that. What they’ll look at is what kind of experiences you’ve had as a student while you’re here that demonstrate that you have the ability to work in their organization, whatever it is. What kind of leadership skills do you have? What kind of interpersonal skills do you have? What problem solving skills do you have beyond the classroom? It’s activities like this and organizations that you’re in that will demonstrate to them that you can do things. I have to compliment you that this is probably one of the most professional student-run symposiums I have ever participated in. Good questions, obviously it’s a big topic and I say good job. And by the way, I think we’ll stick around for a few minutes for those who have additional questions.

MC: Well, thank you President King and Vice President Hannon. Ball Bearings has spent all semester creating a conversation about the financing of college and what that costs us. I urge each of you in the audience to read our print magazine and to continue the conversation by sharing your comments and questions online using #MyMoneyBSU. You could also visit our website at It’s our money and it matters. Thank you.


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