Strategic Cross-Subsidizations Among Colleges/School

Definition

The two-way arrows connecting the colleges/school represent the strategic cross-subsidization among the colleges/school. The amount of subsidy, either given or received, is based on the target contribution margin of the college/school, which is the margin after direct and support expenses have been deducted from total revenue.

Decision

After administrative/support costs are allocated, each college will have a target contribution margin to meet each year that would be defined two to five years into the future.

The contribution margin expectations are set strategically by the Provost and are used for cross-subsidization between colleges as well as for strategic initiatives that benefit the colleges (such as strategic hires).

Impact

This creates a pool of funding that allows for strategic investments that benefit the academic colleges/school.