Hello I did a research paper and I want help in doing the conclusion aspect. Attached is my write up and i want the conclusion to be base on my write up. will be great full for any help
Running head: GOVERNMENTAL AND NONPROFIT UNIVERSITIES Government and Nonprofit Universities:
A Short History 1 GOVERNMENTAL AND NONPROFIT UNIVERSITIES
From the start of the Greek Empire, with famous scholars like Plato, Aristotle, and Socrates, until
current day higher education has played a role in civilization. Today, higher education takes on the form
of Post-Secondary education. Traditionally, only the wealthy were able to attend private Post-Secondary
schools, but following many reforms it has become increasingly accessible to people of all income levels.
An example of this can be seen with the creation of numerous community colleges throughout the US
[Eck16]. While European history runs deep with notable colleges that are over a few hundred years old
the United States (US) history is still fairly young for the most part. Nonetheless, as a nation, US higher
education has always been a part of our roots. In fact, the first college in the American Colonies began in
1636 [ASH06]. That is 159 years before we declared our independence from the British and became the
great nation we are today.
Over time universities have expanded both publicly and privately. Today there are thousands of
post-secondary educational systems in the United States alone. Even though public and private
universities are similar in providing further educational studies to their students, both have their
differences based on their: accreditation, population demographics, growth, finances and of course their
governmental relationship. As presented below, while both public and private universities do share the
same general mission, they are very different when it comes to their accounting framework based on
reporting and recognizing of revenue and expenditures. For instance, public universities follow the
financial reporting that is similar to the government entities. While private universities follow the
financial reporting that is similar to other not-for-profit organizations.
Some of the differences might not seem like a big deal. It does pose challenges to both private
and public universities. For instance, in recent years for-profit universities are getting tightly regulated by
the US Government due to the grants and financial assistance provided to the students that attend these
universities. The other potential challenges will be discussed. GOVERNMENTAL AND NONPROFIT UNIVERSITIES
In the last couple of centuries, the growth of public and private universities has grown
exponentially since the Colonial Era in the United States. Public universities have evolved into one of the
most significant social institutions of contemporary society. Our country?s public colleges and
universities have democratized higher education, extending the opportunities for a college education to all
citizens and research to serve the diverse needs of society, and engaging with local communities and
regions to provide the knowledge and services critical to economic prosperity, public health, and national
Throughout the latter half of the twentieth century public and non-profit higher education
flourished, sustained by strong social policies, public funding, and economical donations from
investments in non-profit aimed at providing educational access and opportunity to a growing population.
The higher education system has been molded and influenced by a variety of historical forces. During the mid-1990s public educational institutions in many states faced increasing stringent state legislatures
that minimized the budgets of higher education institutes. Historically what role has the government has
in maintaining the higher education system? The federal government has long provided substantial
funding for higher education spending that has surpassing state spending as the main source of public
funding in higher education.
The role of state governments in maintaining public colleges and universities dates back to the
nation?s inception. Colleges and universities can be divided in broad categories of public and private nonprofit. The public institutions range from community colleges to large research institutions while nonprofit institutions that typically receive a portion of funding from state and local governments. Private
non-profit institutions include selective ivy leagues and are given tax-preferred status. When choosing a
college/university in the United States it?s so important to understand all of the options: such as public or
private vs. location, costs, and program of study. GOVERNMENTAL AND NONPROFIT UNIVERSITIES
Most public universities are different from other government institutions based on how they are
funded. Most do not budget by fund. Universities are to use the Financial Accounting Standards Board?s
(FASB?s) categories of restrictiveness for external reporting; however, they can use the American Institute
of CPAs model funds structure for internal accounting and reporting only [Gra16]. Public universities are
also likely to have an auxiliary enterprise such as bookstores and dormitories that are engaged in a
business type activity. Due to these and some other activities public universities have a choice of
reporting as special-purpose entities engaged only in business-type activities, as special-purpose entities
engaged in governmental activities, or in both (Granof et al, p. 590). Both private and public universities
are also required to show their tuition revenues net of discounts and net of estimated uncollectible
amounts. Instead of writing off uncollectable amounts as bad debt expense, they have to adjust their
revenue by reducing the estimated uncollectible amount (Granof et al, p. 598).
Both governmental and non-governmental universities have the same practices of classifying
revenue by sources such as tuition and fees, endowment, revenues from auxiliary enterprises or through
government appropriations. Both types of universities also classify expenses by function such as
academic support, student services and institutional support (Granof et al, p. 596). The National
Association of College and University Business officers (NACUBO) defines scholarship allowances as
the difference between the stated tuition charges and the actual amount paid by students. If the difference
is due to employee reduction the balance should be charged as a compensation expense. The same applies
for those differences due to graduate assistantship expenses as well as work-study programs. On the other
hand, if the reduction is not due to service related to the university, such as athletic scholarship, the
balance should be offset by a reduction in revenue (Granof et al, p. 599).
While most colleges and universities are clearly either public or private. Some, however, face an
accounting and reporting identity crisis. Private not-for-profit colleges and universities are subject to the
same FASB standards as are other not-for-profit entities. As pointed out in the previous section, most
government colleges and universities exercise the GASB Statement No. 34 option that permits them to GOVERNMENTAL AND NONPROFIT UNIVERSITIES
account for their activities in enterprise funds. Therefore, inasmuch as both government and not-for-profit
colleges and universities account for their activities on a full accrual basis, the differences are likely to be
less pronounced as they were when they used different models.
Colleges and universities are unique institutions that differ from other governments in how they
are funded and managed. For example, although colleges and universities have both restricted funds and
auxiliary enterprises, most do not budget by fund. (Granof et al, p. 589). More state legislatures are
seeking and holding public colleges to higher standards by implementing accountability regulations that
tie some funding to the performance of the institution. Nonprofit (Public) Universities in the US
Nonprofit colleges and universities sometimes receive unfavorable criticism from individuals and
groups who believe public universities/colleges are not as thorough or prestigious as their private
university and college counterparts. In any case, state universities and colleges offer numerous focal
points that may not be accessible at private universities and colleges. Private colleges tend to be smaller
and oriented towards specific degrees within a specific subject area while public colleges offer a variety
of degrees within numerous subject areas. This typically means public colleges have much larger
campuses and many more students. Public colleges are also likely to receive government funding.
Public institutions are regularly led by administrators, personnel and staff. These leaders are
frequently under the heading of a Board of Trustees. Public institutions usually offer low educational
costs to in-state and out-of-state students. The institutions are philanthropic organizations that
traditionally received a vast majority of their subsidizing from state government. According to one study,
public colleges ?received an average of 21 percent of their funding from state funds and 16 percent of
their funding from the federal government? [Woo15]. They also depend on educational costs they receive
for tuition and fees as well as grants, donations, and endowments. As of late as states have cut their
instruction spending plans to fix their budgets. GOVERNMENTAL AND NONPROFIT UNIVERSITIES
Accreditation is a way of certifying that a school or program meets a required academic standard.
It is very important to know that a college or university is accredited. Here, most public universities are
regionally accredited. This means that the institution has maintained, and will maintain, the standards
requisite for its graduates to gain admission to other reputable institutions of higher learning or to achieve
credentials for professional practice. Regional accreditation agencies are recognized by the US
Department of Education to accredit degree granting colleges and universities and the goal of
accreditation is to ensure that education provided by institutions of higher education meets acceptable
levels of quality. If you attend a college or university that is not accredited, you will likely be unable to
transfer your credits to an accredited college or university.
The number of degrees is another thing to consider when looking at public universities. Unlike
private universities, public universities and colleges can be huge. Academic programs range from
traditional liberal arts to highly specialized technical fields which may focus on engineering and computer
science. In general, public universities tend to offer a wider range of courses, degree programs and
activities than private colleges. They are generally less expensive to attend as well.
With a large student population comes a large student activities list. Smaller colleges usually offer
less than 50 student organizations. However, large public universities can easily have hundreds of
established student organizations, ranging from general interests to very specific focuses. Most students at
public institutions will not need to spend the time starting their own organizations because they will be
able to find anything they are looking for at a public university.
Many of the public institutions have name recognition in their area, and many are known
nationally. Numerous companies come to public universities/colleges seeking future interns and
employees for their companies or organizations. Students can meet these employers on campus at career
fairs, in career centers, or even through introductions from their professors. GOVERNMENTAL AND NONPROFIT UNIVERSITIES
7 Problems facing Nonprofit and Government Universities
Since the early 2000's, universities and colleges in the United States have been having a difficulty
earning and growing their revenue base to keep up with rising costs. The primary reasons for the lack of
revenue is a decline in enrollment and a decline in funding from the states [Sel13]. As State governments
continue struggling to balance their budgets, their allocation to their public universities has continued
sliding down. As pointed out by the American Association of State Colleges and Universities (2012) the
year 2011 turning point in which the major funding source for American public universities shifted from
the states backed by taxpayers to tuition payment of students and parents. Reasons for the decline in
enrollment include an improving economy, in which the unemployed are going back to work instead of
utilizing education in order to obtain a job, and a cost-value analysis that questions the investment in a
degree at today's prices. States are reducing appropriations to public colleges and universities due to tax
revenue decreases and the decision to create budget cuts instead of reducing spending and increasing
revenues [Mit16]. To compensate for this loss in revenue, educational institutions have acquired large
amounts of debt.
The magnitude of the impact regarding funding also differs depending on the type of university.
Research public universities are believed to be the hardest hit which would have an adverse impact on the
overall research outcome for the country. According to Peter Gwynne, a contributing editor at the
industrial research management institute, noted that public universities educate 85% of the undergraduate
students and 70 % of the graduate students enrolled in all research universities in the US [Gwy10]. The
research also indicated that 62% of all federally financed research is performed by public universities.
A number of groups are working to find a way to address these funding issues that public
universities face. Some suggest an improved public-private partnership while others suggest aligning the
public universities objectives with those of the state. One of these efforts built on performance based
funding was led by the Lumina Foundation for Education. The foundation focuses more on finding new GOVERNMENTAL AND NONPROFIT UNIVERSITIES
ways of servicing more students and producing quality education within the existing budgetary
constraints [Har11]. Colleges have also taken on the issuance of bonds and taking out loans.
According to (Seligo, 2013), colleges and universities have nearly doubled "the amount of debt
they've taken on in the last decade to fix aging campuses, keep up with competitors and lure students with
lavish amenities". Bonds issued by many colleges and universities have poor ratings. Moody's Investors
Service (2015) just recently increased their outlook for the U.S. higher education sector from negative to
stable, citing continuing fiscal challenges such as keeping expenses low and being able to invest
adequately. Many colleges and universities have closed, merged with other educational institutions, or
transitioned to a for-profit platform or have been bought by a for-profit school [Sel13]. Good investment
returns are a large part of Moody's upgrade in ratings, due to an upswing in the economy. Modest growth
of 3% in revenues and increases in reserves and endowments also contributed to the upgrade.
Earlier this month, NACUBO members had a discussion on Capitol Hill regarding Federal
policies that impact higher institutions as well as their students and families. Some of the discussions
were about how institutions are affected by recent government less appropriations and its impacted on
higher institution. Cost drivers in the sector were also raised (NACUBO, 2016). During these discussions,
NACUBO noted that there seems to be a tendency of law makers towards making an effort to work on tax
reform and reauthorization of higher education act (HEA) in the near future[Nat16]. According to
NACUBO (2016), there are ?efforts to reauthorize HEA will focus on making college more affordable,
providing students with better information about college costs and student aid, and increasing
instructional accountability for student access and success.?
FASB recently has issued a new standard for not-for-profit financial reporting: Topic 958. Topic
958 is applicable to colleges and universities for FY19. Early adoption of the standard is also allowed.
The update is an effort to try to address the issues on the current reporting requirements for not-for-profit
entities. One of the major changes is replacing the three classes of net assets currently in use by two GOVERNMENTAL AND NONPROFIT UNIVERSITIES
classes; net assets with donor restrictions and net assets without donor restrictions. Also, this update
relieved the requirement of disclosing the indirect method reconciliation for those not-for-profit entities?
statement of cash flows prepared under direct method. Regarding investment returns, not-for-profits are
no longer required to disclose netted expenses when reporting investment return. Investment returns are to
be reported net of external and direct internal investment expenses (FASB, 2016). Concluding Thoughts GOVERNMENTAL AND NONPROFIT UNIVERSITIES
10 References American Association of State Colleges and Universities. (2012). Top 10 higher education state policy
issues for 2012. Retrieved from AASCU: http://www.aascu.org/policy/publications/policymatters/previous-years/
ASHE. (2006, February 1). From the beginning: development of for-profit higher education in the united
states. ASHE Higher Education Report, 31(5), pp. 13-24.
Brubacher, J. S., & Rudy, W. (1997). Higher education in transition: a history of american college and
universities. London: Transaction Publishers.
Duderstadt, J. J., & Womack, F. W. (2004). The future of the public university in america: beyond the
crossroads. Baltimore: Johns Hopkins University Press.
Eckel, P. D., & King, J. E. (2016). An overview of higher education in the united states: diversity, access,
and the role of the marketplace. Retrieved from ACENET: http://www.acenet.edu/newsroom/Documents/Overview-of-Higher-Education-in-the-United-States-Diversity-Access-and-theRole-of-the-Marketplace-2004.pdf
Financial Accounting Standards Board. (2016, August). Accounting standard update (ASU) No. 2016-14.
Retrieved from FASB: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
Granof, M. H., Khumawala, S. B., Calabrese, T. D., & Smith, D. L. (2016). Government and not-forprofit accounting (7th ed.). New York: Wiley. GOVERNMENTAL AND NONPROFIT UNIVERSITIES
Gwyne, P. (2010). Public universities face funding crisis. Research Technology Management, 53(5), pp. 45. Retrieved from http://ezproxy.umuc.edu/login?
Harnis, T. L. (2011). Performance based funding: a re-emerging strategy in public higher education
financing. Retrieved from AASCU: http://www.aascu.org/policy/publications/policymatters/previous-years/
Mitchell, M., Leachman, M., & Masterson, K. (2016). Funding down, tuition up. Retrieved from Center
on Budget and Policy Priorities: http://www.cbpp.org/research/state-budget-and-tax/fundingdown-tuition-up
National Association of College and University Business Officers. (2016, October 3). NACUBO members
discuss college cost drivers on capitol hill. Retrieved from NACUBO:
Seligo, J. J. (2013, April 13). Colleges struggling to stay afloat. Retrieved from The New York Times:
Sharma, P., & Fitzgerald, S. I. (2015). Modest revenue growth supports table outlook for us higher
education in 2016. Retrieved from Moody's Investors Service:
Woodhouse, K. (2015, June 12). Impact of pell surge: federal spending has overtaken state spending as
the main source of public funding in higher education. Retrieved from Inside Higher Ed: GOVERNMENTAL AND NONPROFIT UNIVERSITIES
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