Question

South Hampton University is preparing its budget for the upcoming academic year. This is a specialised private university that charges fees for all degree courses. Currently, 30,000 students are enrolled on campus. However, the university is forecasting a 5 per cent growth in student numbers in the coming year, despite an increase in fees to $3,000 per subject. The following additional information has been gathered from an examination of university records and conversations with university managers:

 South Hampton is planning to award scholarships to 200 students, which will cover their fees.

 The average class has 80 students, and the typical student takes 4 subjects per semester. South Hampton operates 2 semesters per year.

 The average academic staff salary is $120,000 per annum including on-costs.

 South Hampton’s academic staff are evaluated on the basis of teaching, research, administration and professional/community service. Each of the academic staff teaches the equivalent of three subjects during the academic year.

Required:

a) Prepare a revenue budget for the upcoming academic year.

b) Determine the number of staff needed to cover classes.

c) Assume there is a shortage of full-time academic staff. List and explain at least five actions that South Hampton might take to accommodate the growing student numbers. (200 words)

Answer 1

Answer (a)

Preparation of a revenue budget for the upcoming academic year:

Number of Students in the upcoming year is 30,000 + 30,000*15% = 31,500 students.

Revenue Budget:

Particulars	Calculation	Amount ($)
Income from students	31500 x 3000 per subject x 4 subjects x 2 semesters	756,000,000
Less: Staff salary	120,000 x 525 {refer Answer (b)}	63,000,000
Less: Scholarships	200 students x 3000 per subject x 4 subjects x 2 semesters	4,800,000
		688,200,000

Answer (b)

Calculation of the number of staff needed to cover classes:

Number of classes = 31,500 students / 80 per class

=393.75 OR 394 classes

Given each of the academic staff teaches the equivalent of 3 subjects during the academic year student takes 4 subjects per semester,

Number of staff needed to cover classes = 394 x 4/3 = 525.33 OR 525

Note: If it is taken mathematically it will be 525 numbers to cover class but 0.33 staff cannot be appointed so it will be considered as 1 and the number of staff required will be 526 and accordingly the above revenue budget Income changes. Staff salary becomes 526*$ 120,000 =$ 63,120,000 and net income will be $ 688,080,000.

Answer (c)

If there is a shortage of full-time academic staff, five actions that South Hampton might take to accommodate the growing student numbers are:

1. The teachers who are available currently should be trained properly so that the equivalent number of subjects that each teacher can teach can increase during the academic year. Currently, each teacher can teach the equivalent of three subjects during the academic year, this can be increased by training the available teachers.

2. Recruit more competent teachers who are capable enough to multitask and teach more classes, this action may mean that University will have to pay extra compensation to such teachers but this action is required to accommodate the growing student numbers.

3. Referral bonus program may be started wherein current teachers are provided referral bonus commission if they refer a person to be a teacher and that person get selected. This would encourage teachers to search for more competent teachers in an urge to earn extra commission.

4. If full time academic staff is not available, University should start recruiting teachers on the basis of shifts. For example, some teachers may be appointed for morning slot to teach some subjects and some other teacher for afternoon slot.   

5. Teachers’ recruitment should be outsourced to a recruitment agency, so that more full-time academic staff can be appointed.