Thursday, January 24, 2008

“Financial Outlook for UA ‘Negative’”

Not exactly a shock, given that the University of Akron has been busy making over the entire campus, buying up downtown, and launching a football stadium project.

Also not surprising is the planned increases in student fees. Beginning with Fall 2006, the full time undergraduate cost looked like this:

Tuition.: ..................$3,609.24
“General Service Fees”: $359.64
“Facilities Fees”:...........$222.60
Total:.......................$4,191.50

So, “Fees” already amount to $582.64, or about 14% of the total bill. And now we’re going to add in the cost of a football stadium ($61.5 million), parking deck ($26 million), and dorms ($32.5 million). Pretty soon “Fees” may well be 20% of the bill or more. Per semester. It’s not like Akron is likely to see even the dubious benefits associated with becoming a football factory.

The dorm cost is pretty interesting - $32.5 million for a dorm designed to hold 470 students seems pretty high. Assuming a useful life of 30 years, and 470 students per year, that’s a rough structure cost of $2,300 per student, or about $192 per student per month. That’s ignoring building maintenance, utilities, other operating costs, etc. Now, the university may very well be able to charge enough board to more than cover costs, but this seems a pretty steep hole. And that’s before we deal with any cost overruns.

As far as comparisons go, the University of Texas in 2004 approved $50 million on a new dorm complex housing 574 students. Using the same 30 year depreciation, that’s about $240 per student month. Of course, one notes that the original projected cost was “only” $30 million, and there are probably construction cost differences between Akron and Texas.