A Planning Program for Worcester Polytechnic Institute: The Future of Two Towers - Part Three: A Model

APPENDIX: ESTIMATED COST OF PROGRAM

A: Estimated Operating Costs.

An attempt has been made to estimate the steady-state operating cost of the proposed program by adjustment of the expense items in the 30 June, 1969 Audit Report for the College. While it is recognized that this could lead to error, and that some items which must be changed cannot be easily estimated, the Committee believe that the resulting estimate is useful in evaluating the financial feasibility of the program.

From the 30 June, 1969 Audit Report (hereinafter called "Audit Report"), the College's Revenues and Expenditures are given as follows*:

	Revenues	Expenditures	Net
1. Education and General	$4,511,000	$4,654,000	($143,000)
2. Auxiliary Operations	937,000	855,000	83,000(1)
3. Other Educational Operations	172,000	165,000	7,000
4. Student Aid	567,000	567,000
5. Alden Research Laboratories	1,022,000	991,000	31,000
6. Worcester Area College Computation Center	234,000	322,000	(88,000)
7. Sponsored Research and Other Sponsored Programs	659,000	679,000	(19,000)
Totals	$8,102,000	$8,233,000	($130,000)
(1) Less: Restricted Auxiliary Operation Funds (Federal Loan Facilities)			-88,000
Net Unrestricted Profit			($218,000)

*All figures rounded to nearest $1,000.

Of these items, nos. 2-7 are unlikely to be affected as budget items by installation of the new program. Item 2 represents dormitory, bookstore, and similar operations. Other education (item 3) refers to evening and summer programs, School of Industrial Management, Techniquest, and the Athletic Association. With the exception of summer school, these operations will not be materially affected by the program change, although there could be an effect on the evening program which is virtually impossible to estimate. Student aid and the Alden Research Laboratory expenses are not particularly oriented to the program, but it is clear that proper use of the Alden Laboratories could materially reduce some of the cost items given elsewhere. Item 6, the figure for the Computation Center, is determined by the cost of the Center rather than the program, and while the new program would undoubtedly increase use of the computer, the figure itself would be largely independent of the academic program.

The major item to be affected by the new program proposed is item 1, Education and General, which in the Audit Report is subdivided as follows:

A.	General Administration	$271,000
B.	Student Services	228,000
C.	Public Service and Information	136,000
D.	General Institutional	206,000
E.	Staff Benefits	453,000
F.	Instruction and Departmental Research	2,623,000
G.	Operation and Maintenance of Plant	736,000
	Total Education and General	$4,654,000

Item A includes salaries and expenses for the Trustees, President's Office, Dean of Faculty's Office, Director of Research, Director of Planning, Business Office, and Bursar's Office. This figure will undoubtedly be affected by the change in the organizational structure proposed, but no estimate can be given at this time.

Student Services, item B. consists of costs of the Office of Student Affairs, Admissions, Registrar, Placement, Health Service, and student activities. While these items will be affected somewhat by the new program, the effect cannot be fully estimated until the College environment has been worked out.

Item C includes the costs of the office of Development and Public Relations and the costs of publications, and is not considered to be affected by the program change per se.

The General Institutional Expense contains as major items bank management, insurance, legal and auditing fees, telephone, data processing, and staff recruitment.

The Staff Benefits expense includes, as major items, faculty and employee pension costs, Blue Cross-Blue Shield, Social Security, and Tuition for Faculty Children. This item (E) is directly influenced by the number and kind of faculty and staff employed by the college and will be affected by the program. For purposes of estimating this item, the ratio of Staff Benefits to total salaries and wages in the audit report will be used. While it is recognized that use of such a ratio assumes that the distribution of the various kinds of employees is not affected by the change in program, the fact that the new program requires an increased ratio of ancillary staff to faculty means that estimates so based will be conservative. The total salaries and wages is $3,145,000 and the Staff Benefits figure is $453,000. This makes the ratio for estimation of Staff Benefits 0.144.

Item G will not be significantly affected by the program at steady state operation.

The Business Office estimates that an additional annual expenditure of $150,000 should be distributed throughout items A,B,C,E, and G for service personnel no matter what program is implemented.

Item F. Instruction and Departmental Research, is the major item to be affected by the new program and is a major item in the total expenses of the College. Included in the total, in addition to the salaries, wages and expenses of the several departments are: military science, physical education expenses, off-campus tuition, travel, miscellaneous, and the library. Of these items, salaries, wages, and expenses of the departments and of the library will be replaced by new figures. The expense item for the physical education department will also be retained since those costs are not replaced by the proposed projects and independent study work.

The departmental salaries and wages should be replaced by (2000 student base):

	Minimum	Optimum
Faculty Salaries (133)	$1,678,000	$1,678,000
Graduate Assistants (47)	116,000	116,000
Technicians (40-70)	343,000	600,000
Secretaries (14-33)	70,000	161,000
Administrative Assistants (8)	100,000	100,000
Total	$2,307,000	$2,655,000

The departmental non-salary expense of $261,870.16 should be replaced by:

	Minimum	Optimum
Equipment*	$ 215,000	$ 247,000
Supplies and Expense*	151,000	173,000
Total	$ 366,000	$ 420,000

To these figures should be added items from the current non-salary expense which are not replaced by the projects:

Military Science	$ 2,000
Physical Education	14,000
Off-campus tuition	4,000
Miscellaneous	1,000
	$ 21,000

*These figures are based on an average of eleven research proposals with equipment at 10% and supplies and expense at 7% of salaries and wages plus 72% overhead. The resulting figures were then halved because it is assumed that on the average first and second year students would be assisting upperclassmen in experimental work. The resulting figures are considerably larger than obtained by estimates based on project-type courses in the College (see Appendix C).

As discussed in Appendix: C, the estimated costs for the library are:

Salaries and Wages	$295,000
Supplies and Expense	215,000
Total	$510,000

With the additional salaries and wages envisioned, the cost of Staff Benefits is computed as 0.144 times the total salaries and wages of the College, viz:

	Minimum	Optimum
Instruction	$2,307,000	$2,654,000
Library	295,000	295,000
Other (from Audit Report)	1,099,000	1,099,000
Total	$3,701,000	$4,048,000
Estimated Staff Benefits	533,000	583,000

With the above figures, the estimated Educational and General Expense becomes:

	Minimum	Optimum
General Administration	$ 271,000	$ 271,000
Student Services	228,000	228,000
Public Service and Information	136,000	136,000
General Institutional	206,000	206,000
Staff Benefits	533,000	583,000
Instructional Salaries and Wages	2,307,000	2,654,000
Equipment and Supplies (projects)	366,000	420,000
Equipment and Supplies (miscellaneous)	21,000	21,000
Library Salaries and Wages	295,000	295,000
Library Expense	215,000	215,000
Operation and Maintenance of Plant	736,000	736,000
Total	$5,314,000	$5,765,000
Increase	$ 660,000	$1,111,000

In considering this increased cost it is important to bear in mind that the more than 140% increase in library costs reflects some present in- adequacies (cf. Appendix: E). Further, the estimated equipment and supplies figures are considered generous. The Optimum estimate, in addition, reflects inadequacies in the present ancillary staff to a significant extent.

A possible Revenue and Expenditure statement can be expressed as follows:

	Minimum	Optimum
Revenues (Education and General)
1500 Undergraduates	$4,211,000	$4,211,000
+ 500 additional undergraduates	1,050,000	1,050,000
	$5,261,000	$5,261,000
Expenditures (Education and General)
1500 Undergraduates	$4,654,000	$4,654,000
+ increased cost of new program for 2000 students	660 000	1,111,000
	$5,314,000	$5,765,000
Additional Student Aid	189,000	189,000
Total Expense	$5,503,000	$5,954,000
Net Surplus	($ 242,000)	($ 693,000)

While both the minimum and optimum plans show a deficit, it is emphasized that some of the increased costs are a consequence of deficiencies in the present program. It is concluded that the minimum program is probably feasible, financially. Although the optimum program shows a sizeable deficit, the costs involved reflect some additional deficiencies in the present program. In any case, it is emphasized that fund raising should be aided materially by the uniqueness and goals of the proposed program.

B. Equipment, "Supplies and Expenses" in Project Work

The cost of operating student projects can be estimated through experience with sponsored research and project work undertaken to date. While the actual costs will vary widely from project to project, some average figures can be developed to help forecast the incremental effect on equipment costs and those in the "Supplies and Expense" categories.

As an upper limit, it might be expected that about two-thirds of the students would be involved in the type of project which will involve laboratory or hardware orientation. Based upon the proposed budgets of eleven sponsored research programs undertaken in the past, equipment costs amounted to about 10% of the total budget while the "Supplies and Expense" item required about 7%. These percentages, when translated into figures involving total campus operation of the project program would indicate an annual equipment cost of 215,000 - 247,000 $/year and an annual supplies and expense cost of 151,000 - 173,000 $/year. It must be kept in mind, however, that these costs are based upon requirements for special graduate research work, whereas the undergraduate program would make wide use of existing general-purpose equipment and much less sophisticated supply items. It must also be remembered that these figures involve projected budgets for anticipated funding where requirements for equipment and supplies are seldom understated. It is, however, interesting to observe the ratios of costs involved.

There has already been experience in several project-oriented courses, two of which are described here. one was conducted entirely on campus, the other conducted in cooperation with industries, most of the work being done on campus. The Department of Chemical Engineering operated an on-campus project. In 1963 there was an initial outlay of $1,800 for glassware, pipe and fittings, some of which is still in use. Following that initial outlay, the annual cost of operating the program has been about $18.75 per student for supplies.

In the Department of Electrical Engineering there has been in operation for two years a course involving project work with 15 different industries. Approximately 45 students per year take the course. No new laboratory equipment has been required, since existing general purpose equipment has been found to be quite adequate. Supplies have been in the nature of projection transparancies, small inexpensive components and telephone calls. A large supply of "war surplus" stock has proven helpful in providing breadboard components in some projects. The annual cost of supplies and expense might average $5.00 per student. Many projects do, however, require special and sometimes expensive components. In each case to date the sponsoring company has either loaned or donated such items which have ranged from lighting fixtures to special purpose motors. One company established a $1,500 budget for the project team which has been used in developing a large motor control system over two years of work. In another situation where weekly visits to their out-of-town plant were required, the company authorized the project team to submit travel expense vouchers in the same manner as their regular employees.

It might be concluded that the cost of maintaining a laboratory or hardware-orientated project program would likely range from $5.00 to $20.00 per student per year for supplies. Costs exceeding these figures should be considered in a category which would require assistance from a supporting agency.

It has proved very difficult to obtain a clear picture of the overall situation relative to laboratory equipment on the campus, since all equipment is in the custody of the several departments. While there appears reasonable cooperation in the exchange of equipment, there also appears to be a degree of reluctance to request the assistance of another department in equipment matters. Generally, the faculty of one department have very little idea of the laboratory capabilities of other departments. There is an obvious need for a campus wide, computerized index of laboratory equipment classified in a manner which would make the existence, state of repair, and availability of equipment a matter of record for all interested workers in the College. A central equipment control system will be necessary to increase the equipment utilization level in a large project program. While students should certainly be taught to respect good equipment, and abuse of it never tolerated, there appears to have been such emphasis on protecting equipment from students in the past that there has been a tendency for equipment to become obsolete without ever playing a significant part in the educational process.

While new equipment will be constantly needed in the total project program, this item should not present a significantly different cost involvement than that currently experienced in existing up-to-date laboratories. The equipment would be used more, and therefore have a shorter useful life. This effect, however, may be more than offset by the development of much closer relationships with industries and agencies which, realizing the needs of the College, will make more gifts of desirable, "state-of-the-art" equipment. One initial equipment need, however, will be in the form of a variety of small hand tools and fabrication devices, averaging, it is estimated, about $10 per student the first year and $3 per year thereafter. The role of Washburn Shops could be greatly increased to support new activities in prototype development.

C. Estimated Library Costs

In the June 16, 1966 Library Committee report submitted to the Dean of Faculty, a library expansion program was outlined. The Library Committee recommended as a realistic working size that our holdings be increased to 90,000 volumes by 1971 and to 105,000 volumes by 1975. Thus, the new planning model (calling for 135,500 volumes) is asking for an additional 30,500 volumes. However, recalling that the 105,000 figure is based on data that did not fully account for the increased activity in the Master's and Doctoral programs at WPI, it is realistic to charge only a fraction of the additional requirement to the new program - a 50 percent figure seems appropriate, i.e. 15,000 volumes.

Costs for additional library personnel "rendering service to students and faculty" and special services would be higher under the model program. A measure of this increase can be obtained from the library budget figures for 1967, 1968, and 1969 which gave a library budget to book and journal ratio of approximately 2.86 to 1.00. The new model calls for a ratio of 3.4 to one reflecting a slightly higher percentage (16%) of the total library budget being allocated for personnel and services. ( a cost figure of $510,000 x .54/3.4 = $81,000 for the year 1975)

A parallel operation or library enrichment program will be required to bring our holdings to a 135,300 volume figure by 1975. At the suggested rate of increase by 1975 we would have approximately 105,000 volumes requiring approximately 30,500 volumes to complete a reasonable working library.

The proposed model budget does not reflect the purchase of audio visual equipment, reading machines, film loop readers and other possible teaching aids necessary to put that aspect of the operation into effect (one time estimate = $18,000). In addition it does not reflect the purchase of typewriters, desks, chairs, shelving, carrels, tables, chairs, etc. (one time estimate = $20,000).

If the model program is effected, it might be time to adopt the basement of the Gordon building for library use as originally contemplated.

Current holdings
Books and bound journals as of June 30, 1969	56,517
Microform Volumes	1,000
Unbound Journals	5,000
	62,517
Formula from Association of American Colleges for estimating a minimal collection of senior College and University Libraries
1. Undergraduate collection	50,750
2. Faculty members x 100 = 150 x 100	15,000
3. Students x 12 = 2000 x 12	24,000
4. Undergraduate Students in honors or independent study x 12 = 1500 x 12	18,000
5. Masters Work	3,050
6. Doctors Work	24,500
Total Volumes	135,300
Net additions needed 135,300 - 62,517 = 72,783 volumes

Recent Library Budgets (from Business Office)
fiscal year ending	6/30/67	6/30/68	6/30/69
Salaries; Wages, Casual Wages	64,758.14	103,009.58	109,541.49
Books and Periodicals	74,668.10	128,338.86	80,274.65
Other	12,129.02	17,812.44	20,830.27
Total	151,555.26	249,160.88	210,646.41
Ratio total budget to Books and Periodicals	2.03	1.94	2.86

NOTE: This shows an approximate 20% increase per year, discounting 1968 with its unusual gifts.

Suggested Five Year Library Budget
Fiscal Year Ending	Lib. Budget	Books	Journals	Total	Book and Journal Cost	Ratio of Lib. Budget to Book & Journal Cost
1971	$300,000	5000	1000	6000	$105,000	2.85
1972	345,000	5500	1125	6725	116,250	2.96
1973	400,000	6000	1250	7250	127,500	3.14
1974	460,000	6500	1375	7875	138,750	3.31
1975	510,000	7000	1500	8500	150,000	3.40
				36,350

Library holding at end of five years (i.e.1975 if we start in 1970).

As of June 1969	62,517
Estimate 1970	6,000
5 year additions	36,350
	104,867

D: Costs involved for Technicians Supporting the Educational Program

The proposed model with its emphasis on interdisciplinary project work will require the support of various technicians to a substantially greater degree than the present program. It is important to estimate the level of this required technical support, for it represents a major cost.

Before this estimate is presented, however, an important consideration should be mentioned. The necessary increase of 80 - 100% in faculty salaries in the past 10 - 15 years has created severe financial problems for almost all private institutions of higher learning. There now is a great hue and cry for increased efficiency in the educational program. Since faculty salaries are a direct cause of the problem, solutions might be found from examination of this major expense area. Part of the solution is painfully obvious. Colleges, to an extent which few businesses can possibly afford, use their relatively highly paid professional staffs to perform services that could and should be undertaken by technicians and clerical help. Professors do their own typing; research supervisors do their own instrumentation work. Examples are so numerous and familiar that no listing is required, and WPI is certainly no exception to the usual case. It seems obvious that to promote financial solvency in the future, private colleges are going to have to hold back enlargement of their professional staff, while increasing the number of technicians and clerical staff. A major educational efficiency will result when professionals are used as professionals and not as technicians or secretaries.

It follows directly that the level of technical support at WPI has been inadequate. It is true that the project vehicle requires a substantial increase in technical support. Most of this increase, however, is required for a financially efficient operation regardless of program, and it would be unfair to charge the total cost of an adequate technical support staff to the proposed model.

It is difficult to estimate accurately the number of technicians required to support the proposed model. Perhaps the best approach is to present bounds on the number of required technicians. For a lower bound the technicians could be used to supervise and advise the project experimental work, while the project students would actually act as their own technicians. This, while perhaps not an optimum situation, is certainly not a bad limiting case. The experience gained by the students would be quite valuable if not carried to extremes.

Under the assumption that there are 510 projects on campus at any given time, two-thirds of which involve model building or experimental work at some stage, it seems reasonable to estimate that about one-third of those involved are actually building hardware or in the laboratory at any given time. Thus as an approximation, 115 of the total 510 projects would require technician support at any given time. If it is assumed that a technician can concurrently supervise three projects, with the students performing the work, then forty technicians are required to support the project program.

Current Technician Support at WPI by Department

Department	No. of Full-time Technician
Civil Engr.	0
Chemistry	0
Chemical Engr.	1
Electrical Engr.	2.5
Mechanical Engr. (excluding Alden Lab.)	6
Physics	2
Total	11.5

For an upper limit on technical support, some research facilities estimate adequate support as one technician for each full-time research professional. From section V-C of this report, there would be approximately ninety full-time equivalent faculty doing project supervision under the proposed model. Thus, for an upper bound, ninety technicians would be required. This figure, however, assumes that the student performs relatively few technician services himself, and this might in fact be detremental to his educational program. Perhaps 70 technicians would represent a reasonable optimum.

E: Costs Involved with Construction of Project Work Areas

With the proposed program, it is anticipated that much of the intellectual focus for the student will be provided by the project experience. It is important that these student groups have access to semi-private areas for their meetings and work. Providing such areas will result in construction costs that can be estimated as follows. Approximately 200 work areas, 10' x 10' each, ought to be provided. Renovation costs for work areas with separating partitions, not full walls, might be estimated at $6 per square foot. A table, chairs, and file cabinet for each area would be about $200. The total expense for 200 areas would be about $160,000. As a lower bound on work space cost, project teams would not be supplied work areas but only with storage cabinets in existing laboratories. This cost at $100 a cabinet would be $20,000.