Agenda

1. K a n n o n Agenda A Introduction B National and Marketplace Trends C Higher Education Trends D Instructional Faculty Trends E Colleges in Transition F Ferrum College G Ferrum Freshman Segmentation H Competitive Set I Operations I Confidential information of Ferrum College. FER1015I.PPT - CEK

2. Operations … Introduction • This chapter examines the operations of Ferrum College and the set of primary competitors. • Ferrum College total educational and general revenues • Revenue trends, 1991 to 1996 • Competitive Set comparisons • Ferrum College total educational and general expenses • Expenses trends, 1991 to 1996 • Competitive Set comparisons • Ferrum College staff ratios • Competitive Set comparisons • Competitive Set average faculty salary

3. Expenses as Percent of Revenues: 104.9% Operations … Introduction • Ferrum College had educational and general revenues of approximately $14 million and expenses of about $15 million in 1996. Ferrum College Educational and General Revenues vs. Expenses, 1996 Millions Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997

4. Operations … Revenues • Ferrum College revenues derive from several different components, the highest percentage represented by tuition and fees at 48%. Ferrum College Educational and General Revenues, 1996 Total E & G Revenues* Components of E & G Revenues Sales, Service, Other 7% Grants and Contracts 5% Tuition and Fees48% Endowment Income9% Private Gifts9% Federal, State, Local Revenues22% • Definitions of each component included on next page. Note*: 1996, in millions. Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997

5. Operations … Revenues • Tuition and Fees includes all tuition and fees (including student activity fees) assessed against students for education purposes. Also included are tuition and fees that are remitted to the State as an offset to the State appropriation. Room, board and other auxiliary services are not included. • Federal, State and Local Revenues include all amounts received by the institution through acts of a legislative body, except grants and contracts. • Private Gifts include revenues that are directly related to instruction, research, public service or other institutional purposes that come from private donors for which no legal consideration is involved. • Endowment Income includes income from endowment and similar funds and income from funds held in trust by others under irrevocable trusts. Normally, this does not include capital gains or losses. • Grants and Contracts include revenues from governmental agencies that are for specific research projects or other types of training programs. Pell Grants are included in the Federal grant figures. • Educational Sales and Services includes revenues derived from the sales of goods or services that are incidental to the conduct of instruction, research or public service. • Other Sources include all revenues not covered in other categories (e.g., interest income, net gains from investments of unrestricted current funds, terminated life or annuity agreements). Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997

6. Operations … Revenues • From 1991 to 1996, tuition as a percentage of revenues decreased, while endowment income increased for Ferrum College. Ferrum College Components of E & G Revenues, 1991 to 1996 Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997 FER105I03.xls

7. Operations … Revenues • Across competitors, tuition and fees represent a higher share of revenues for Roanoke and Lynchburg than Ferrum College. Ferrum College and Primary Competitors –Components of E & G Revenues, 1996 Note*: 1996, in millions. Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997 FER105I02.xls

8. Operations … Revenues • Endowment assets and building values also represent the financial health of the college. Ferrum College E & G Revenues, Endowment Assets and Building Values, 1996 Millions Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997

9. Operations … Revenues • Each of the 4-year private colleges within the competitive set have higher endowment assets, while several of the public colleges have significantly lower endowment assets than Ferrum College. Ferrum College and Primary Competitors –E & G Revenues, Endowment Assets and Building Values, 1996 Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997 FER105I01.xls

10. Operations … Expenses • Turning to expenses, instruction represented the highest percentage of total educational and general expenses, at 36% in 1996. Ferrum College Educational and General Expenses, 1996 Total E & G Expenses* Components of E & G Expenses Plant Operation 9% Instruction36% Academic Support 9% Student Services22% Institutional Support 24% • Definitions of each component included on next page. Note*; 1996, in millions. Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997

11. Operations … Expenses • Instruction includes general academic instruction, occupational and vocational instruction, special session instruction, and remedial and tutorial instruction conducted, and expenditures for departmental research and public service that are not separately budgeted. Expenditures for both credit and noncredit activities are included. Expenditures for academic administration where the primary function is administration are excluded. • Institutional Support includes expenditures for the day-to-day operational support of the institution, excluding expenditures for physical plant operations. Included are expenditures for general administrative services, executive direction and planning, legal and fiscal operations and public relations/development. • Student Services include funds expended for admissions, registrar activities, student health services and activities whose primary purpose is to contribute to students' emotional and physical well-being and to their intellectual, cultural, and social development outside the context of the formal instructional program. • Academic Support includes expenditures for the support services that are an integral part of the institution's primary mission of instruction, research or public service. Included are expenditures for libraries, museums, galleries, audio/visual services, academic computing support, ancillary support, academic administration, personnel development and course and curriculum development. • Plant Operation and Maintenance includes expenditures for operations established to provide service and maintenance related to grounds and facilities. Also included are expenditures for utilities, fire protection, property insurance and similar items. Expenditures for plant fund accounts are not included. • Research includes all funds expended for activities specifically organized to produce research outcomes and commissioned by an agency either external to the institution or separately budgeted by an organizational unit within the institution. Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997

12. Operations … Expenses • From 1991 to 1996, institutional support as a percentage of expenses decreased, while student services increased. Ferrum College Components of E & G Expenses, 1991 to 1996 Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997 FER105I05.xls

13. Operations … Expenses • Institutional support and student services represent higher shares of expenses for Ferrum than other schools within the competitive set. Ferrum College and Primary Competitors –Components of E & G Expenses, 1996 Note*: 1996, in millions. Source: John Minter Associates; U.S. Department of Education Integrated Postsecondary Education Data System, 1997 FER105I04.xls

14. Total Staff, 1996: 289 Operations … Staff Ratios • Faculty represented the largest share of Ferrum College’s staff, at 34% in 1996. Ferrum College Staff Ratios, 1996 Executive2% Skilled Crafts4% Clerical10% Faculty*34% Service, Maintenance20% Professional Non-Faculty30% Note*: Includes both full- and part-time faculty. Source: John Minter Associates; U.S. Department of Education, 1997

15. Operations … Staff Ratios • Faculty employees are persons whose assignments are customarily made for the purpose of conducting instruction, research, or public service and who hold academic-rank titles or equivalent. • Teaching/Research Assistants are students employed on a part-time basis for assisting in classroom or laboratory instruction or in the conduct of research. • Non-Faculty Professionals are persons employed for the primary purpose of performing academic support, student service, and institutional support activities, whose assignments would require either college graduation or experience of such kind and amount as to provide a comparable background. Includes Technical and Paraprofessional staff who are persons whose assignments require specialized knowledge or skills which may be acquired through experience or academic work, such as offered in many 2-year technical institutes, junior colleges, or through equivalent on-the-job training. • Service/Maintenance staff are persons whose assignments require limited degrees of previous acquired skills and knowledge and in which workers perform duties which result in or contribute to the comfort, convenience, and hygiene of personnel and the student body or which contribute to the upkeep and care of buildings, facilities or grounds of the institutional property. • Clerical and Secretarial staff are persons whose assignments typically are associated with clerical activities or are specifically of a secretarial nature. • Skilled Crafts staff are persons whose assignments typically require special manual skills and a thorough and comprehensive knowledge of the processes involved in the work acquired through on-the-job training and experience or through apprenticeship or other formal training programs. • Executive Administrative and Managerial employees are persons whose assignments require primary responsibility for management of the institution, or a customarily recognized department or subdivision thereof. Source: John Minter Associates; U.S. Department of Education, 1997

16. Operations … Staff Ratios • Across competitive private colleges, faculty represents a higher share at Roanoke and a lower share at Emory and Henry compared to Ferrum. Ferrum College and Primary Competitors –Staff Ratios, 1996 Note*: Includes both full- and part-time faculty. Source: John Minter Associates; U.S. Department of Education, 1997 FER105I06.xls

17. Operations … Faculty Salaries • Based on a recent study, on average, faculty at Ferrum College are paid less than at competitive institutions. Ferrum College and Primary Competitors –Average Faculty Salaries, 2001 Note*: Adjusted to a 9-month work year. The figures cover full-time members of each institutions staff only. Source: American Association of University Professors, 2001 FER105I07.xls