Piedmont University Essay

1059 words - 4 pages

University's student enrolment is in the decline and there has been escalating cost to the point where the university is in a financial difficulty, but they continued the operations by using the accumulated reserves. Hugh Scott joined as the new President, and immediately he raised the tuition fees and froze faculty staff hiring. Within one year of operation, he managed to accumulate a small operating reserve.Annual expenditure budgets were submitted by the deans to the president and financial vice president, where faculty size and salary, adhering to the budget is stressed.Neil Malcolm, Piedmont alumnus, reviewed the financial situation and suggested that the University should increase student recruitment, reorganize the departments into profit centers and increase fund raising activities in the community.Malcolm's proposal created disagreements in many aspects in dealing with administrative costs, gifts and endowments, athletics, maintenance, computers, library, cross registrationProblem IdentificationDepartments that typically do not bring in revenue for the university, has created concerns about the operational feasibility being a profit centres. There were dilemma regarding the determination of "additional fees" and the "overall implications" in charging additional fees for usage of the library, computer labs, and athletic facilities.Additional fees will create dissatisfaction among students, and also discourage potential student from enrolment. This will contradict with the University's objective in attracting potential students.Functionality on how to charge students library fees and other specifics may add additional administrative expense instead of reducing it.Other than controls on faculty size and salaries, there are no budgetary controls on other expenditures. In fact, other expenses were approved at the desecration of the schools.Maintenance and central administration expenditures may not directly affect the student's fees but it is substantial portion to the individual schools.Profit Centre;As suggested, converting to "profit centres" will induce each school or department to be more responsible for their operation and enables to monitor the efficiencies and improve competitive performances.Detraining appropriate transfer price will be major challenge to each profit centre, and also the concept of profit center is lost when converting the administrative andManagement Control IssuesFirst option to consider would be that the University would continue under the same structure and provide further opportunities to the new president to peruse with his management policies, as he had been able to generate small surplus at the end 1986. Meanwhile Scott's should implement full budgetary control, and use budget as a controlling tool to optimize expenditures, instead controlling faculty size and salaries alone.Importance of adhering to budgetary guidelines should be emphasised. Drastic changes such as focusing each department into a profit...

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