Archive for Monday, November 15, 2010

MBA students respond to KU School of Business differential tuition audit

November 15, 2010


Over the last eight months, KU MBA students have called into question the use of differential tuition funds at the KU School of Business. In previous columns and newspaper articles, students have articulated their concerns with the effectiveness of the use of these funds and the governance of these funds when compared to the requisite requirements for the funds as outlined by a proposal that was approved by the Kansas Board of Regents. As the result of the Dean’s decision to eliminate oversight of these funds, students pushed for an outside audit. With BKD’s recently completed review of how the differential tuition funds have been spent, the University has taken a step forward in helping to restore transparency at the School of Business.

We have never claimed criminal activity, just that there was no oversight and accountability for these funds. The review completed by BKD confirms that proper governance of these funds did not exist. With its findings that the student advisory committee was disbanded after its first year and that none of the required financial statements were ever produced or distributed, our key concerns with the lack of transparency and accountability by the leadership of the School have been confirmed. BKD’s recommendation that the accounting system and related internal controls behind the differential tuition fund be changed so as to use standard fund accounting shows just how recklessly these funds were supervised. Furthermore, BKD’s statement that the availability of funds was the determining factor as to whether expenditures were paid by general or differential tuition funds shows that these funds were expensed in a slush fund-like manner. The School was fortunate that the expenses broadly matched the original differential tuition proposal. One big question that remains is if differential tuition funds had such poor controls, what does this say about the controls in place to protect state funds?

The original differential tuition proposal was without a doubt a very ambitious document with numerous qualitative factors that are hard to measure. However, the agreement did state that the funds should be used in a manner that improved the School’s ranking and that the Dean’s Office was to be held accountable for the efficient use of these funds. To us, it is clear that these funds have not been used efficiently. Despite the School offering several new majors and collecting $29.9M in additional tuition, the School has, according to BKD, seen “total instructors” drop from 126 the year before differential tuition to 108 last year, causing class sizes to soar. Statistics like these naturally make students question whether the School has been managed properly and differential tuition funds used efficiently.

One of the primary goals of differential tuition was to use the funds to help propel the School of Business into the Top 25 of national rankings. In 2004, the School of Business ranked 30th among public institutions in the U.S. News and World Report magazine, and 57th overall. In 2010, the School ranked 35th among public institutions and again, 57th overall. Despite collecting $29.9M in differential tuition, the School of Business has slipped in national rankings.

Furthermore, the inefficient manner in which the School has been operated, and differential tuition funds used, can be seen in the following data taken from the AACSB (The Association to Advance Collegiate Schools of Business) for the 2009-2010 year:

The KU School of Business had a total operating budget of $16.8M and an enrollment of 1,613, meaning that the School spent $10,400 per student to achieve a 2010 ranking that tied it at 57th overall.

The Trulaske College of Business at MU had a total operating budget of $19.9M and an enrollment of 4,299, spending $4,600 per student to achieve a 2010 ranking that tied it at 42nd overall, according to U.S. News and World Report.

Also tied at 42nd overall was The Price College of Business at OU, which had a total operating budget of $18M and an enrollment of 3,113; a mere $5,700 per student.

The business programs at MU and OU are both direct competitors to the KU School of Business, yet despite being the third highest funded School of Business in the Big 12 on a per-student basis — thanks to differential tuition — the School is still not competitive with our regional peers.

Why do we, as MBA students, care about the oversight and accountability of the differential tuition funds? For the same reason we have seen such swings in politics over the last two election cycles — we simply do not feel we are getting our money’s worth. For students, perception is reality and our reality lies in our experiences: promises that haven‘t been upheld, decreasing academic standards, increasing class sizes, lacking curriculum, lost international programs, problems associated with a multi-campus program, limited advising support relative to the undergraduate students and a multitude of other concerns we’ve already communicated.

This has been a difficult and arduous process. In our eyes, the current administration has lost sight of what is important to the students. As a result, the School and MBA program in particular have suffered a serious decline that cannot be adequately substantiated through a one-time review. At the end of the day, it is our tuition dollars that fund this program. As a result, students should have a continuing voice in how it operates. We are disappointed that — through both public and private channels — no specific goals, actionable timelines, or criteria for judging progress have been put forth by KU leadership.

We would like to ask Provost Vitter to work with us to move the School forward. Throughout this whole process, Dean Fuerst has publicly and privately described us as a small group of “disaffected” students who are upset about merely driving to the Edwards Campus for class every week. That could not be further from the truth. We and the entire MBA program care deeply about our School, our alumni, and future Business School students. We raised these concerns because we wanted to make the KU School of Business better. Now that student concerns have been fully identified, the School has every opportunity to prioritize and begin rebuilding, a process we wholeheartedly encourage and support.

This a very exciting time for the Business School as it is searching for a new Dean, Associate Dean, and MBA director. The school is well funded from an operating perspective, has a vibrant alumni base that is excited for change and a well-regarded faculty base that is positioned to make numerous new hires. We look forward to the School of Business rising to its potential.


Boone Bradley

David Cantrell

Andrew Carlson

Tim Metz


commenterX 3 years, 5 months ago

Cheers Nate. I do not understand the purpose of this editorial. The dean has stepped down. The review board has been reinstated. The audit (review) has been performed and the results have been made public. No criminal activity occurred. It is time to move on.

Numbers seem to be incomplete and massaged on both sides of the aisle. There was a clear lack of accountability by the administration. There is also clear misunderstanding of some of the school's numbers by the students (see Jack's comments about KU's $/student or the skewed numbers on faculty salary increases that has been presented). While I understand the anger over dropped classes or promises that were not kept, there is little that the mud slinging will accomplish at this point. The new leadership should be given a chance to guide the school with their vision. As a graduate I'm glad that the issue has been investigated and I'd prefer the school moves past this embarrassing incident and rises to its potential as soon as possible.


Natebrady 3 years, 5 months ago

A key factor that has been ignored around the sinking rankings is that rankings are not absolute, but relative measures. Sure, the KUSB ranking fell while the School of Business spent $32+ million to improve it. But this $32M is only relevant in the context of how much other schools have spent. If leading schools have outpaced KU in spending, then this fall in ranking shouldn’t be a surprise. Considering the lackluster effort displayed in the KU-MU comparison, it’s probably safe to assume this analysis hasn’t been completed.

As a 2010 graduate of the MBA program, I too was concerned about where my differential tuition dollars were going and thought that the students were right to question the decision to disband the oversight committee. However, I wholeheartedly disagree with any notion that KU is providing a subpar business education or that I somehow did not get my money's worth.

Rock Chalk, Jayhawk!


carrottop 3 years, 5 months ago

This is a well-written and sincere editorial. An excellent example of taking the high road. Students, I commend you for following your instincts and chasing this bugger down. Couldn't have been easy and it certainly sounds like you hit some walls. Know that those walls only went up because you were right and those old dudes were caught with hands in the cookie jar. I'm sure it still doesn't feel like it, but the truth (at least some of it) is out there and change is coming. At the risk of sounding paternal, I hope you will always remember to follow your instincts and do the right thing. As you've discovered, you won't always be popular, but you will be able to live with yourself.


BillyGoat 3 years, 5 months ago

Connecting the dots, the major transgressions of the business school in this issue seems to be (1) failing to follow through on having the student advisory committee in place and (2) failing to communicate the expenditures of the differential tuition monies on an ongoing basis. This was clearly a mistake on the part of the b-school and at variance with the original agreement. More importantly, this allowed for things to get to where they are today. A number of students, disappointed at some of their MBA experiences, have seized upon this as a "smoking gun" suggesting inefficient or, more seriously, inappropriate use of this money. Posters elsewhere have claimed that the students' "data" is better than the auditors' "data". The above response from KU Communications questions this assertion. While the students have some legitimate grievances, it doesn't look like the situation is as problematic as the Editor has consistently suggested or as the students have consistently assumed. I am not sure what the Editor's motives are. He seems to have a long-standing problem with KU and his views of this and other issues seem to always reflect this negative orientation. The students' actions are more understandable --- they believe they have been short-changed. At this point, however, it seems they are over-reaching. I suggest the students take their own written words seriously: Stop spending your time and energy trying to prove that the audit was "wrong" and that you were "right". Most importantly, stop making inflammatory charges. This approach is counterproductive. Instead, devote your time and energy to positively and productively improving your business school, including how the monies are spent going forward. If your goal is truly trying to help your business school "rise to its potential", then this latter strategy is much more likely to achieve this end. If, on the other hand, your goal is really to prove that you are "right", you are getting side-tracked from the bigger picture.


Jack Martin 3 years, 5 months ago

Regarding the number of faculty and the effect on class sizes, the figure cited in the column is headcount, which treats full- and part-time faculty the same. A more accurate measure is FTE (full-time equivalent) positions.

In Fall 2004, there were 78.7 faculty FTE positions and an enrollment of 1,374, meaning there were 17.5 students per FTE.

In Fall 2009, there were 98.6 faculty FTE positions and an enrollment of 1,651, meaning there were 16.7 students per FTE. (2010 figures have not yet been posted but will be similar to 2009.)

Regarding the amount of money spent per student, Missouri and Oklahoma both admit freshmen into their business schools. KU has competitive admissions for the School of Business, with freshmen and sophomores classified as pre-business majors before they are formally admitted to the school as juniors. AACSB does not include these roughly 2,000 pre-business students in the KU enrollment figures, even though they take similar courses as students at schools that admit freshmen business majors.

An apples-to-apples comparison would count these pre-business students when calculating the dollars-per-student figure. For KU, that figure would be $4,650 – in between the MU and OU figures – not $10,400, as listed above.

Jack Martin University Communications


pat1888 3 years, 5 months ago

Why aren't any of you looking at this as a systemic issue resulting from a growing gap in funding by the state of Kansas? Course fees wouldn't be necessary if the state actually paid more for students' education at public institutions.

Congrats! You've done a wonderful job of villainizing an entire group of people. People you clearly don't know.

You are all just a bunch of pissed off, know-it-all, 20-somethings with an absurd amount of free time and hate to throw around.


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