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Business and Policy Areas
Business and Policy Areas

Pending IPEDS Finance Survey Change Announced

February 7, 2008

Changes Proposed to IPEDS Finance Survey

In an effort to achieve greater comparability among independent and public institutions, the National Center for Educational Statistics (NCES) is proposing changes to the IPEDS finance survey.  The revised survey would require public institutions to allocate operation and maintenance of facilities, depreciation, and interest expenses among all other functional expense categories--just as independent institutions do.

The proposed changes began with the convening of a Technical Review Panel (TRP) in Washington, D.C., in January 2007. The TRP was convened to discuss enhancements to IPEDS finance forms that would increase commonality and comparability of the data collected from public and independent institutions. Panel members included 46 representatives of institutions, national associations, state governments, the federal government, and others. NACUBO staff and members from more than a dozen institutions participated in the two days of meetings. 

After discussing all finance survey questions, panel members concluded that the greatest potential for gathering comparative information existed in the functional categories of expenses. Consequently, the proposed changes for public institutions call for the operation and maintenance of facilities, depreciation, and interest to no longer appear as separate function columns. Instead, an allocation of these expenses will be required. Columns added to the survey form will allow for an allocation to the following functional categories:
• Instruction
• Research
• Public service
• Academic support
• Student services
• Institutional support
• Scholarships and fellowships
• Auxiliary enterprises
• Hospitals
• Independent operations

NACUBO establishes the definitions for the functional categories, which group and aggregate expenses by institutional purpose. Both independent and public institutions use the NACUBO definitions for external financial reporting--and the IPEDS finance survey also requires that institutions use the NACUBO definitions. 

In 1997, public and independent institutions veered away from comparability among the functional categories. That’s when FASB changed the not-for-profit reporting model and required independent institutions to follow the then new 1997 AICPA Not-For-Profit Audit Guide. Before that, the entire industry followed the AICPA College and University Audit Guide, which used fund-based reporting as its foundation; expense categories such as operation and maintenance of plant, depreciation, and interest were considered separate functions for the higher education industry.

The not-for-profit audit guide released in 1997, however, specified that depreciation, interest, and operation and maintenance of plant are not functions and should be allocated to the other functional expense categories. Consequently, for the past decade, independent institutions have been allocating these expenses to the functional categories and public institutions have not.

The proposed Finance Survey change, requested from the Office of Management and Budget (OMB), would become effective with collection of the 2008-09 IPEDS data. Unless otherwise indicated, following IPEDS policy, the changes or additions would be optional in the first year (2008-09) and mandatory in subsequent years; see specific items for exceptions.  Please see the January 29 Federal Register posting (Volume 73, Number 19, Page 5179) regarding a 60-day comment period on these changes.

NACUBO staff and members attending the TRP concluded that this change reflected the best possible outcome among the many scenarios discussed during the two days of meetings. The proposal carries a 60-day comment period. NACUBO will comment in support of the new definitions but request an additional year to comply with the requirements. 

Staff resource: Sue Menditto, director, accounting policy
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