From Aggregated Cost Accounting to a Program-Based Financial Model: A Pilot Transformation in University Management

   This article explores the need for universities to transition to a program-based financial model, in which the educational program is considered the key unit of economic analysis and management decision-making.

   The relevance of this work stems from the limitations of traditional approaches based on aggregated cost accounting, which do not adequately assess the economics of individual educational programs and make informed management decisions in the face of increasing competition and resource constraints.

   This paper analyzes existing approaches to cost assessment in higher education, identifies their limitations, and proposes a tool for detailed cost accounting at the educational program level. This study developed and tested an approach to allocating direct and indirect costs, including salaries, infrastructure maintenance, and general university expenses.

   The novelty of this proposed approach lies, firstly, in its accurate attribution of faculty salaries to a specific educational program at a large university with complex cross-departmental relationships. Secondly, the correct distribution of university-wide (indirect and overhead) costs between programs by using coefficients characterizing the capacity of academic buildings and the number of students should be considered new.

   The empirical part of the study is pilot in nature, based on data from a specific university (KNRTU-KAI) and four bachelor’s degree programs (EP, EP of HE). For each, annual expenses and the cost per student were calculated, and the results were compared with the actual cost of tuition.

   Furthermore, the article emphasizes the need to integrate qualitative performance indicators (demand for graduates, strategic significance of the program) into the portfolio management system for educational programs.

   The obtained results substantiate the need to move to an analysis of the economics of educational programs in the university management system, as well as the integration of economic and qualitative indicators in the formation of the portfolio of educational programs. The proposed approach requires further testing on an expanded sample of universities and taking into account differences in organizational models.

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