EC261 Case Study #1

Assignment Description:
Class time is often dedicated to analyzing case studies in a group setting. Students should come to class having already individually analyzed the case and its associated rubric(s). Students should use class time to collaborate with other classmates and gather further peer insight in a group setting. To be clear, collaboration does not mean “copying”, but rather sharing insight, assisting, discussing, equitably working together, and more. Remember that a strong emphasis in the grading process is placed on your portrayal of your critical thinking in the submission of the case study report. It is important to arrive at the proper calculations, though it is very possible that classmates may arrive at different “correct” calculations dependent upon individual mathematical or contextual assumptions/choices. Be sure to state all assumptions made and cite every source used. Students must individually submit their case study reports. The case study reports should consist of the following components:
• Responses to the posed questions within the case.
• A summary of the microeconomic issues within the case and how firms, individuals, etc. would be affected by the situation.
• An overall conclusion of your findings comprehensively detailing proposed solutions to the above microeconomic issues.
• All references (be sure to cite in-text also).

 If you find this symbol, a response is needed.
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EC 261 Microeconomics Case Study 1- Higher Ed
Despite its size or population demographics, the state of Vermont is home to a variety of big business: maple syrup, ice cream, tourism, and more. Another large industry within Vermont that employs a significant number of its citizens is education. In 2016, approximately the population size of Vermont was 600,000 citizens- one of the lowest in the United States (US). Historically, when comparing Vermont to all other states, Vermont’s high school graduation rates have been second highest in the US at approximately 93% of its high school students successfully graduated with a high school diploma. At the same time, historically, when comparing Vermont to all other states, Vermont’s post secondary-education graduation rates have been second lowest at approximately 31%. The 31% includes but is not limited to any level of college, trade school, certificate program, etc.
In 2016, Vermont was home to highest amount universities of per-capita: 18 total university systems which includes both public and private universities. Due to basic concepts of supply and demand, there was not enough state resident university bound students to fill the vacancies among all the universities within the state.
 According to overall age demographics, approximately how many individuals would you classify as Vermont citizens who were traditional age university bound students? How did you go about estimating that figure?
 Now assume that the following universities have a resident population rate of the following:
 UVM- 48%
 CCV- 94%
 Castleton, Lyndon, Johnson- 62% each
 On average, how many traditional age university bound Vermont citizen students would then be able to attend other university systems?
 What type(s) of strategy/strategies must an individual university employ in order to “fill vacancies”?

In 2016, Burlington College found itself in a conundrum. In approximately 2010, Burlington College was outgrowing its facility and was looking to expand. In 2010, Burlington College had approximately 267 students with a Full-time equivalency (FTE) of 189. Total revenues generated in 2010 was approximately $2,835,000.00 and its only source of revenue was tuition and government funded financial aid awarded to students. Total labor expenses were approximately $1,800,000 among its approximately 40 full time employees, with an additional $650,000 committed to PPE and other operational expenses. Burlington College President, Jane Sanders, made the decision to purchase an approximately $35,000,000 piece of property that was approximately 2 miles down the road from the then current location and thus move the entire college to the new location. 

 With the drastic change in expenses how might your strategy from Q3 change to fit the needs of Burlington College?

In 2012, Burlington College chose to partner with through a purchase agreement with the Vermont Woodworking School. Historically the Vermont Woodworking School was an artisan “trade school” though did not provide its students with a certificate from an institution of higher education. Historically approximately 45 FTE students were in the program per year, generating approximately $1,575,000.00 in revenues with total expenses at approximately $1,200,000.00. Approximately 37% of the student body we citizens of the state of Vermont. Non-state residents were able to stay in the school’s “residence halls” which were old silos converted into student housing. The purchase agreement “married” the two entities and allowed the woodworking school students to begin using federal financial aid to fund their education, while also being able to award bachelor’s degrees in woodworking. As part of the agreement, if at some point either entity was to become financially insolvent, then the two entities would then disband the agreement, allowing the one to remain operational.
In 2012, 2013, and 2014 enrollment of Burlington College and the Vermont Woodworking School grew by approximately 18% FTE year over year. Though cash flow continued to drastically decrease year over year for Burlington College due to loan interest rates because of the large purchases in 2010 and 2012, discount rates increasing on tuition in order to increase enrollment, etc. In 2015, it became more and more apparent that Burlington College was unable to remain financially stable, and talks of closing Burlington College started circulating. FTE Enrollment in 2015 at the Vermont Woodworking School also decreased by approximately 25%, and in 2016 they saw a 13% FTE enrollment decrease. At the end of the 2016 academic year the Burlington College Board of Trustees voted to close the college and shut doors. With the close of Burlington College, the Vermont Woodworking School and Burlington College dissolved their agreement and thus the Vermont Woodworking School became its own entity again similar to how it was for them in 2011 prior to the agreement that began with Burlington College in 2012.

If you were a decision maker for the Vermont Woodworking School….
 …and now understanding the economic factors associated with the state of Vermont, student body of the Vermont Woodworking School, and the financial economics of the situation, what now would be your strategy moving forward for the Vermont Woodworking School?
 …what new business policies would you implement that would help address the economic issues of the school, region, and beyond?

 A summary of the microeconomic issues within the case and how firms, individuals, etc. would be affected by the situation.

 An overall conclusion of your findings comprehensively detailing proposed solutions to the above microeconomic issues.