How can ratio analysis help with budget cutting?
Minter: Ratios offer no magic answer – they give clues as to where to start looking. Its like peeling an onion. The macro ratios are the first layer. The next layer is typically the major cost, salaries and fringe benefits. Comparisons have proved useful in identifying significant differences from the norms of comparison groups. The intent is not to suggest that all institutions should strive to be the same, but rather to demonstrate that institutional differences do exist and to permit trustees and administrators to explore the reasons for them. Often the recognition of such differences pinpoints the need for change. HED: How does an institution decide whom to compare to? Minter: Find a peer institution or a university your campus aspires to be like. Then ask how much more resources have to generate to be like college X. In the first edition of Ratio Analysis in Higher Education, all institutions were measured according to operating size and cost per FTE student. HED: Can ratio analys
