Cheryl DePaolo

EDLD 8432 01F

Reflective Essay 1-Midterm

The first reading I would like to discuss is The Revenue-to-Cost Spiral in Higher
Education by Robert E. Martin, 2009. This article supplied me with a basic understanding of the
difference between for-profit and not for-profit organizations, as well as a foundation in
understanding the ways in which administrators use their revenue. It was interesting that the
author noted that increased revenue increases cost. Martin (2009) notes when revenues rise,
costs rise to fill the gap between the last periods expenditures and the new revenues. (p. 11)
When looking at revenue in this way, it offered me a new understanding of the funding that goes
in to the programs on campus. The article explained that once there is receipt of those funds,
there is an expectation that the funding will continue, and in some cases it may need to increase.
Martin offered three types of solutions to this spiral in higher education. One of these
solutions was transparency. He recommends objective measures of productivity and cost control.
In other words, reviewing teaching loads, class size, grades given, and student/faculty ratios will
help to evaluate productivity related to cost. Martin suggests this being done every ten years so
as to evaluate why costs are increasing and to gauge whether or not these costs can be decreased.
He also proposes that higher education institutions should report actual revenues and costs, as
opposed to projections. This financial transparency will force administrators to look at the real
figures, and to determine whether revenue is covering cost. This basic understanding will afford
me the ability to evaluate programs to determine whether they are meeting the basic needs of the
students, as well as to make sure that we are utilizing our staff and faculty to the fullest extent.

Kretovics (2011) also stresses, it is incumbent upon administrators to become more

transparent with regard to financing public and private higher education. (p. 78) It seems to me
that financial transparency is an important part of the financing of higher education. The
implications of transparency, in my opinion, can provide an accurate evaluation of cost and
revenue, as well as for the institution to be held accountable to its stakeholders, both internal and
external.
The second chapter in Barr and McClellan offered some practical value for me in an
administrative capacity. The chapter discussed the primary elements of the budget, focusing on
revenue and expenses. The reading helped me to understand the different state and grant funds,
as well as tuition, student fees, endowment income, and gifts. I can see how building
relationships with everyone I meet can impact the institution that I represent. Fundraising is a
very important part of the revenue process, and my interactions can positively influence a gift to
the university. This chapter also explained how auxiliary units are supposed to generate their
own income, and in turn, cover their own expenses. This chapter offered a lot of basic
fundamental information that will be helpful in my future career that will allow me to understand
the importance of budgeting, revenue, and expenses involved in higher education.
The readings in the Kretovics text have offered a general understanding of the basic
economic principles involved in all aspects of higher education. It helped me to see how
population changes, as well as federal regulations have impacted higher education in the past,
present, and how it may affect the future. For example, the Morrill Land Act introduced different
institutions into the market. The GI Bill changed the demographics of students entering higher
education. These changes affected supply and demand. I never realized how supply and demand
affected higher education. The readings in this text have opened my eyes to course scheduling,

as well. For example, one professor teaching a large lecture class saves money, as well as can
count in different sections to meet the requirements of multiple majors.
Kretovics also discusses globalization of higher education. It is important to understand
the impact of globalization. Technology has changed the way in which one can obtain an
education, which pushes the boundaries of education. Students in other countries can take
advantage of degrees from American institutions, and vice versa. Keeping this in mind, one will
need to be aware of the impact of the curriculum, as well as tuition and fees when providing a
postsecondary education. There are different requirements for international students, as well as
the institution being prepared to offer additional services for them. I believe it is important for
students to take advantage of study abroad programs, and understanding globalization in higher
education will afford me the skills needed to advise my students in this area.
The readings thus far have provided me with a foundation in understanding how funding
and cost can affect the day to day operations of higher education. I look forward to gaining more
in depth knowledge, so that I can understand the impact of financing on higher education.

References
Barr, M. J. (2011). Budgets and Financial Management in Higher Education. San
Francisco: Jossey-Bass.
Kretovics, M. A. (2011). Business Practices in Higher Education A Guide for Today's
Administrators. New York: Taylor & Francis.
Martin, R. E. (2009). The Revenue-to-Cost Spiral in Higher Education. Raleigh: Pope
Center Series on Higher Educaiton.