"Divisions" of a University The separate colleges within universities are often operated as profit centers. While a student takes courses throughout the university, the budget of a specific dean is based on the students it serves. Two models are 1)

Question

basing funds on the number of student hours generated by a college and 2) basing funds on the number of students completing majors within the college. How do these two models affect the incentives for which courses included in the degree programs?

Answer 1

Under the first model, course enrollments by students in majors within the college are a revenue source. To increase a college budget, a dean might prefer to keep its majors from taking courses outside of the college. In this case, degree programs may have many required courses with some being duplicative of courses offered in other colleges. Under the second model, course enrollments by students in majors within the college are a source of costs. To keep costs down, degree programs may have few required courses and may be generous with accepting coursework from outside the college.