In an era where institutional budgets are facing unprecedented pressure, the decision to maintain or dissolve academic programs has become one of the most contentious tasks for university leaders. Camille Faivre, an expert in education management and institutional finance, has spent years navigating the post-pandemic landscape, helping colleges implement sustainable e-learning and open-access programs. With the stakes rising—ranging from faculty no-confidence votes to state-mandated closures—Faivre offers a critical look at why the numbers behind academic costing are rarely as simple as they appear.
This conversation explores the complexities of university accounting, the hidden “cross-subsidization” between departments, and the dangers of making sweeping structural changes based on raw data without accounting for institutional mission or regional needs.
How do you distinguish between direct faculty salaries and shared expenses like administrative overhead or campus maintenance? What specific accounting steps should leaders take to ensure that assigning indirect costs doesn’t inadvertently make small departments appear more expensive to operate than they actually are?
The process of “costing” is far more of an art than a science, and the first step leaders must take is to avoid the trap of believing these numbers are absolute. Direct expenses, such as faculty salaries, research labs, and specific classroom materials, are relatively easy to track, but the waters get murky when we attempt to divide “holistic” numbers like operations, maintenance, or the 5% of a dean’s time spent on a single department. To protect smaller programs, administrators should focus primarily on incremental costs; for instance, a dean’s salary remains the same whether a Classics department exists or not, so assigning a portion of that salary as a “cost” to the department artificially inflates its budget. I recommend that leaders keep indirect cost allocations as a separate informational layer rather than using them as the primary trigger for program elimination, as cutting the program often fails to save the university the overhead it supposedly “cost.”
When tuition revenue from undergraduate instruction is used to fund research offices or grant cost-sharing, how does that affect the overall classroom experience? What metrics can administrators use to track these subsidies and maintain a fair balance between institutional prestige and the core teaching mission?
There is an “elephant in the room” regarding research costs, where universities striving for prestige often “milk” instruction to fund research offices or satisfy cost-sharing requirements for grants. This can diminish the classroom experience by diverting funds that could have gone toward teaching resources or lower faculty-to-student ratios, essentially asking undergraduates to subsidize activities they may never see. To maintain balance, administrators should track the “net margin per credit hour” and explicitly report how much instructional revenue is being diverted to non-instructional prestige projects. By visualizing this cross-subsidy, stakeholders can have a more honest conversation about whether the institution is still prioritizing its core teaching mission or if it has become a research engine fueled by student debt.
Since many low-enrollment programs utilize courses required for other majors, they often remain revenue-positive. How can a college accurately calculate the potential financial loss of cutting such a “contribution-positive” program, and what specific data points are needed to avoid decisions that actually increase budget deficits?
It is a major blunder to assume that cutting a small program will automatically improve the bottom line; in fact, it often makes the institution worse off financially. To avoid this, leaders need to look at “curricular-level” data, examining whether the students in a small program—like a niche Master’s in math instruction—are actually filling seats in courses that the university is required to offer anyway. If the courses stay because they serve other majors, but you lose the four or five students who were specifically enrolled for that minor or degree, you have successfully deleted revenue while keeping 100% of the costs. A true calculation requires looking at the “net tuition” paid by those specific students and assessing the “fill rate” of the classes they attend to see if their presence provides a margin-positive contribution to an existing expense.
Humanities programs often have lower overhead than lab-intensive STEM fields, yet they are frequently targeted for cuts despite their healthy margins. How should a university reconcile the profitability of “chalk and talk” disciplines with the high cost of technical training, and what are the risks of ignoring this cross-subsidization?
The “chalk and talk” disciplines, such as religious studies, history, and creative writing, are often the unsung financial heroes of a university because they have incredibly low overhead compared to engineering or lab-intensive STEM fields. Because undergraduate tuition is generally uniform across majors, these profitable humanities programs effectively subsidize the more expensive technical training required elsewhere. The risk of ignoring this cross-subsidization is that by cutting “impractical” liberal arts programs based on low enrollment, you are actually removing the very programs that generate the surplus needed to keep the lights on in the expensive labs. Universities must reconcile this by acknowledging that a diverse academic ecosystem requires “margin-generating” programs to support “mission-critical” but high-cost ones.
Some states are mandating program cuts based strictly on graduation thresholds rather than financial performance or regional need. How does this shift toward raw enrollment metrics affect a university’s autonomy, and what step-by-step approach should be used to evaluate a program’s value beyond simple student headcounts?
Mandating cuts based purely on graduation numbers is an “educational disaster” that effectively hands the keys of institutional strategy to 18-year-olds who may not yet know what they want to study. This shift erodes the autonomy that has been the foundation of American higher education, forcing schools to delete whole areas of human knowledge based on short-term trends. A better approach is to evaluate a program through a three-tiered lens: first, its financial contribution margin; second, its service to the “general education” core; and third, its alignment with the institution’s long-term mission and regional economic needs. Only after looking at how many other majors a program supports and its role in producing well-rounded citizens should a headcount ever be considered a deciding factor.
What is your forecast for the future of liberal arts programs in state-funded universities?
I forecast a period of painful contraction followed by a hard-earned realization that the liberal arts are functionally the “operating system” of the university. We are currently seeing a wave of metric-driven cuts in states like Ohio and Indiana, which will likely lead to a decline in institutional prestige and a loss of revenue as students realize these universities offer a narrower, more vocational experience. However, as budget deficits grow despite these cuts, leaders will eventually have to rediscover the financial efficiency of the liberal arts. The future of these programs will depend on faculty and administrators becoming more “data-literate,” proving their worth not just through philosophical arguments, but by demonstrating their role as the high-margin engines that make expensive research and technical training possible.
