Friday, December 16, 2005

 

Uh-Oh

Every once in a blue moon, I read something that makes me stop in my tracks and say “uh-oh.” It happened the first time I read about the University of Phoenix, and the first time I read that Lieberman decided not to contest the Florida recount.

This week it happened when I read a piece in IHE that connected a couple of dots I hadn’t connected before, but recognized immediately.

I’ve written before on the similarities between higher ed and health care. Basically, both are labor-intensive industries that adopt technology regardless of economic efficiency. Hospitals adopt expensive technologies to save lives, and pass the costs on where they can. Colleges and universities adopt technologies when the industries for which we prepare our students do, so they will be ready. If the graphic design field goes from t-squares to AutoCAD, our costs climb exponentially, but we suck it up. Companies adopt AutoCAD for perceived efficiencies; we adopt it simply to be current. It doesn’t help our ‘efficiency’ at all, but if we didn’t use it, we would quickly become obsolete. So we pile on the technology, and pass on the costs where we can.

What the IHE piece added to the puzzle was the observation that over the last twenty years, the big news in the world of hospitals has been non-profit hospitals being bought out by for-profit companies, and turned into for-profit enterprises. After all, the inefficiencies of health care present profit opportunities to the first folks who streamline them, the hospitals need the money, and the entrepreneurs have the money.

Wait for it...

Slowly, a few marginal non-profit colleges are switching sides, getting bought by for-profit companies. In the words of the bank robber Willie Sutton, that’s where the money is.

I’ve worked in for-profit higher ed before, but the company for which I worked grew its own campuses. It didn’t buy up existing nonprofits and convert them. Still, having worked in the for-profit side, and having moved now to a more traditional, public-sector college, the differences are staggering. In the for-profit model, a certain clarity of purpose can lead to a certain ruthlessness on the ground. Many of the niceties of academic life fall by the wayside, in the name of increased efficiency. Summer vacations, tenure, ‘faculty governance,’ research support: all eliminated. Layoffs are part of the business model; I personally had to lay off a friend. It was one of the ugliest moments of my career, and to this day, I can tell you word-for-word what I said. If I never have to do that again, it would still be too soon.

Having crossed over into traditional higher ed, I can say that the inefficiencies are legion. A capitalist with a sense of mission could make this a very different, much more efficient place, in ways that most faculty don’t begin to understand.

Faculty and others who decry managers focusing on efficiency haven’t grasped this yet. We traditional academics will have to make a choice. Either we can get our act together, or some very wealthy and impatient people will come along and do it for us.

Many Southern and Western states are decreasing their support for ‘public’ higher ed to token levels, granting the campuses greater ‘autonomy’ in return. Follow the trend to its logical conclusion: separation. Upon separation, what’s to keep a struggling college that badly needs a major infusion of cash from selling itself to venture capitalists?

Banks used to run on ‘bankers’ hours’; now they’re 24/7 operations. Doctors used to golf on Wendesdays; now managed care has ‘rationalized’ the profession, arrogating the resultant profits to itself. What’s so sacred about higher ed? If doctors and bankers couldn’t defend their ways of life, what makes us think professors can?

Cost pressures, internal inefficiencies, and high public demand – takeover target?

We can’t keep increasing costs to students at the rate we have, and we can’t stop (or even slow) the rate of technological change. The public sector is pulling out its support, and even going half-adjunct hasn’t balanced our budgets.

We are in very deep trouble.

Barring some sort of unforeseeable political sea-change, higher education now is about where the health care sector was in 1980. I’ve seen this movie, and I don’t like how it ends.

If we don’t get our stuff together while we still can, things will get very, very ugly.

Uh-oh.

Comments:
My, what a depressing way to begin my teaching day, Dean Dad! Have you read Margaret Atwood's book Oryx and Crake? It is about a dystopian future where the world is run by corporations (the governments work for them). The better-funded universities in the novel train students to be corporate wonks. There are very few liberal arts schools left, and these are run-down, barely funded, and train students to be technical writers or graphic artists. Your vision of the future sounds to me as grim as hers. . . . I'm not sure what I, as a liberal arts prof working hard to learn the current system so that I can get tenure, can do to prevent this future. --Professor Mom
 
Below is an impressionistic response. I have little data, only experience and reason on my side. Plus, I am speaking from the perspective of a professor in Florida, an...ahem.."unique" a state as can be imagined. I'm sure my post has shortcomings, but I did want to make these points.

I worked in the corporate world as a large-firm Washington lawyer.I left for academics (only) in part because I desired some of those inefficiencies you discuss, and certainly I acknowledge some of those, such as summer vacations.

Other perspectives, however, need to be added here. 1) We have far lower salaries than our level of education would command in the ruthless "efficient sector." 2) We do, as acknowledged, exploit the lowest paid labor around--adjuncts--often on an indentured servitude basis. Here in Florida, our adjuncts can earn a whopping 15 or so grand a year by taking whatever scraps come their way (as close to a full load as we allow), with no benefits. We even implemented a sldiing scale this summer where adjuncts covering small classes had their rate cut by two thirds. Tell me what other professions hire free-lance, wage-slave, piecework professionals to perform the most important functions. None. 3) Our physical plants are dismal compared with the corporate offices with which I am familiar. 4) I for one, work as hard or harder on an annual basis as when I was billing 2000+ hours per year and making triple what I am now. I do get part of the summer off (seven weeks), and vacation time besides. I appreciate that and am willing to acccept lower wages for it, but the state is certainly getting its money's worth. 5) In Florida, public colleges (and especially cc's) are an absolute steal in terms of tuition and fees. 6) From what I have read--and you, DD, are much better informed on this than I--tuition increases (decried by the enemies of higher learning) have typically resulted from cuts in state funding, not from an out-of-control ramp up in college gluttony. 7) We had a 2.5% raise this year. Sometimes we have a 0% raise. Inflation consistently outpaces us. This was never the case in law (first year associates at big firms are starting at 100 grand). 8) We are in demand, at least in Florida. With a booming population, cc's are or will soon be offering 4-year degrees. Market forces would suggest we should RAISE tuition to meet demand.

So, when I compare us with other professions, say, law, I see that we are actually super-efficient and charge far less than we are worth. When I was in law, a long time ago, my billing rate was $150 per hour. Students get my abilities for a tiny fraction of that (would that they realized as much...but that is a different issue). As a teacher, I know what I am doing, and I care deeply about it. I work hard. I give students the best, most professional service I can.

So...what would "efficiencies" look like? Well, I can't imagine that we can get paid less. Removing tenure isn't going to save much, except that it means that, as you note, we can have layoffs and increase numbers of adjuncts. But with the number of retirements we have, that can be accomplished through attrition.

All I can imagine to increase efficiency is going to large lecture hall classes with TAs for grading. That would be more efficient, though in my view, the education would surely suffer.

Speaking in terms only of Florida, the state needs us, every bit as much as it needs the highways that allow tourists to get here; as much as it needs Disney, to which it gives sweetheart deals; as much as it need the Scripps biotech institute, to which it granted 300 million in tax breaks. Plus, with our preposterous "Bright Futures Scholarships" (upper middle class welfare--full or amlmost full scholarships based on a 3.0 GPA and 1000 SAT score), voteers want public education.

So, my perspective is limited, and I can speak only to my state, which has an astonishing growth rate. I fully realize that the situation is not the same elsewhere. Nevertheless, compared with other professions, I see reamarkable product offered at cut rates. Maybe the response should be to demonstrate this to legislators.

Peter
 
I haven't read the Atwood book, though it sounds plausible enough. The description reminds me a little of Neal Stephenson's "Snow Crash," at least in terms of the fate of the public sector.

What efficiencies am I talking about? Start with 12-month teaching calendars at the same salary. (That's what my old school does!) There are more than enough starving adjuncts out there to fill the positions. Then, move much more quickly to eliminate low-enrollment programs and their instructors. (Notice that Post University, when it went for-profit, quickly dropped its liberal arts majors.) Stop cross-subsidizing expensive programs (nursing, music) with profitable ones; either charge more for the expensive ones, or don't offer them at all.

In terms of process, have deans act like managers in corporations. The time delays involved in 'faculty governance' are substantial. Mandate (or at least practice) seamless transfer across institutions, which I think is coming soon anyway. Fire deadwood employees. Pay admissions staff on a commission basis. Drop sports.

More? Why does each college need its own library? Why does each college need its own performing arts center?

These are just off the top of my head; most of them were actually practiced at my previous school.

You're certainly right that much of the pace of tuition increase can be explained by flat or declining state support. The good news there is that you can't go below zero -- there will come a point, sooner rather than later, at which there will be nothing left to cut. The bad news is that cost pressures won't stop when state support does.

The point of my Cassandra moment is to get those of us in higher ed, who actually care about it, to start taking the threat seriously while we still have time to get our own houses in order. If we don't, others will. (And a word to those who use 'Cassandra' as an insult: she was right.)
 
Not a representative sample by any means, but how's this for some inefficiencies:
- The fact that my university charges 60% overhead on equipment that costs less than $3k, leading to the stupid contortion that people intentionally pad their orders to be above $3K.
- A professor who hires an administrative assistant who is so underemployed that she only has about 30 mins of real work to do each day and can spend the rest of the time pretty much as she pleases. And the professor knows this, and is ok with it because he's not actually paying most of her salary, it's coming from the department.

With respect to professors being underpaid relative to their level of education: that may be true for professors in the sciences, engineering and "professional" subjects [eg law, business, medicine]. However, I don't think it's really true for a lot of professors in the arts -- in general, the fact that you know a lot about, say, 18th century German lit isn't worth a whole lot in the non-academic world, and you'll get compensated (or not) accordingly.
 
Ah, Anonymous,...but I said that profs were not being paid commensurate with level of education, not specialization, first of all. So, German professors with PhDs have more education than a JD coming out of law school. And, of course, we need not debate the value of the liberal arts here, since we are all true believers. That debate is to be had externally.

To respond to some points by Dean Dad, we do have increasing emphasis on marketable skills here, but liberal arts are not under siege here despite all the David Horowtizian wack rhetoric floating around. The "cultural literacy" strand of the Rep. party is too pwerful to seriously encroach on the gen ed core (thanks, Bloom and Hirsch!).

We are experiencing the opposite in terms of 12-month teaching calendars. Rather than increasing load, at my college, we may be decreasing (while boosting percentage of sections taught by adjuncts to help pay for it). We may well go to a two-term contract, rather than the 2.5 contract we have now, mostly because we cannot compete against other colleges looking for the same faculty. We have lost profs to other colleges which have better pay and more time for professional development. Other colleges in the state have recently done the same. It will in fact mean a wage freeze for faculty for some years, but with a commensurate drop in load.

BTW, we cannot get enough adjuncts for many of our programs, despite being colocated with a major state university and its students, grad students, trailing spouses, etc.

In terms of nursing, yes, it is expensive. That is where the free market needs to work a little. Given the tremendous demand for nurses, the hospitals and other health care institutions need to start ponying up subsidies. That is where the market should be working in our favor. Plus, students want to get in the programs, can get immediate jobs, and will have high-paying jobs. Perhaps they should pay more, and perhaps future employers should begin apprenticeship contracts with current students. Music? I don't know...don't have an answer for that except for the general principle above that a solid liberal arts education leads to all sorts of employment, regardless of major.

Dead wood employees, by rights, should be dropped. My institution is top-heavy with administrators. As the various VPs retire, they are not being replaced.

Libraries...who knows? Regardless of our love of books (and I could rave about this all day), completely virtual libraries are on the near horizon, and are inevitable at many many cc's and smaller colleges.

Seamless transfer ain't a bad thing in all cases (note: lots of pedagogical debates to be had here, I recognize). We aren't seamless, but transfer is easy.

Admissions commissions are scary, but I did limit my remarks to Florida, where we have a huge demand for well educated employees. So, I don't think that is on our doorstep.

So, once again, I just am not seeing the "inefficiencies" in the system. I again come to my first point: great product, low price, delivered on the backs of piecework adjuncts.

DD, what you are talking about in many ways is 1) pay scale--let's lower pay by increasing workload or 2) the nature of the product--do employers want welders or do they want specialists in the morality play? My take is that they want some of both and a little of both in every employee. They want people who have substantive work knowledge but who can also write, manage time, think through an idea, work collaboratively, discover creative solutions, etc. But then, I am back at the value of liberal arts education. I know we agree on the value; I also feel that employers do.

Again, I have to express my limitations in terms of lack of data and state-specific familiarity. But I don't feel overly threatened.

Peter
 
California is often described as a bellwether state. Here (in California), I think it would be fair to describe the for-profit institutions (DeVry, University of Phoenix, National University, and so forth) as little more than a pimple on the ass of higher education. Seriously.

Those businesses are not commonly well-regarded in any way that I am aware of. I suppose this could change, but it is very hard to imagine how.

Here in California, the single largest recipient of state funds is public education; about half of the states' 100+ billion dollar annual budget flows to public education.

One of the most powerful lobbies in the state, if not the most powerful, is the California Teacher's Assn., a.k.a. the CTA, which supports anything that increases the flow of dues dollars (class size reduction in K-12 = hiring more teachers) and vigorously opposes anything which does the opposite (charter schools, ballot initiatives, whatever). The legislature, which is mostly liberal dimocrats, er... democrats, is practically beholden to the CTA.

The CTA is mainly a K-12 union, but the biggest higher ed union in the state (the CFA) is an affiliate of the CTA. So I think it is fair to say that the CTA is the face of *all* public education in Sacramento.

The CTA recently fought off a number of ballot initatives: changes to tenure in K-12, a budget reform initative which would have probably caused some cuts to the funding of public education here in Ca., and another which would have forced them to get the permission of their members to use their dues money for political purposes. They are as powerful now as they have ever been.

They fight anything which they believe will cause their power base to diminish.

In order for the for-profit higher education sector to overtake the public sector here in California, the first thing which would have to happen would be a massive increase in the cost of public higher education. Residents pay only $26/unit at the public community colleges in the state, and even the non-residents typically pay around $200/unit. The for-profits start at around $450/unit and climb from there.

Until just a couple of years ago, public community college tuition was just $11/unit for residents.

It is true that the financial health of California could be better. The people in Sacramento have made the state increasingly hostile to businesses, and the impact of that will take years to play out. I don't think many residents of the state really understand that; for example, my wife's employer, who has been doing business here for almost 140 years, recently moved their corporate domicile out of California. I don't recall seeing even a mention of this in the media, not even the merest blip, yet the move will cost California millions in tax dollars (lost) every year.

Too, about 40% (around $40 billion) of the state's revenue comes from personal income taxes; if you look at the distribution of the tax burden, a huge portion of that $40+ billion annually is paid by a very small slice of the state's 30+ million population. When those 40,000 folks have a bad year, so does the state.

My son is pressuring me to go and play right now, so I need to stop.

Final thought: unexpected things can happen. For example, we could have a flu pandemic, and I suppose if it was really bad, it could cause severe economic problems. Even if something awful like this happened, I'm not at all sure that for-profit education could overtake the public sector here in California. The corporate entities who would like to wring a profit from higher education are fighting, at least in part, against the public's desire to vote themselves a largesse from the state treasury.
 
Drop sports? Dispense with the libraries and the performing arts centers? Could we mention the climbing walls?

What your post suggests is that there might be more than one audience for higher education. To some extent, the no-frills corporate training center approach might address perceived "organizational slack" in vocational programs of various kinds, many of which arguably exist to address deficiencies in the performance of high schools, making the real threat to many institutions of higher learning a reform of the high schools.

But the existence of the sports programs, climbing walls, and student amenities suggests a different kind of audience, and different problems. (I have been doing some digging into the recent renaming of [Southwest] Missouri State and something entirely different -- and wasteful in a different way -- emerges.)

To what extent is the repackaging of some universities as country clubs with some incidental education going on a reaction to perceived dumbing-down in the name of "access" or "diversity" or "inclusion" elsewhere?

My perspective -- briefly -- is similar to that offered by Peter; I'd go one further and suggest that, if anything, the professoriate has given too much and asked too little of legislators, administrators, students, and parents. Admittedly, I take more of a human-capital-investment view of higher education than many readers of this site. That stance, however, might better protect us against misplaced calls for "productivity" and "efficiency" such as cattle-call classes with fill-in-the bubbles or click through the script "assessment."
 
Having just seen a wonderful presentation on the financial state of my own institution, I have a few thoughts. Our biggest cost right now is our discount rate--how much of each student's tuiton we pick up. From a moral standpoint, I wouldn't want to decrease that since it would mean that students of a certain means might not be able to attend. But if you want to be ruthless, there ya go.

How about moving to open source software, even for registration and other systems? You might save a few hundred thousand there. Keep people around for a while as long as they're productive. There's dead wood on the staff side too, but more frequently staff leave for greener pastures. Hiring is expensive and the costs in terms of lost productivity and perhaps losing even more staff who have to take on the work, etc. Trim staff when you really need to.

How about every purchase of a certain price tag must undergo a bidding process and a cost-benefit analysis? Don't just buy what looks good. Charge for services--printing, copying, scanning.

Some of these might be nickel and dime things, but they do add up.
 
I'd like to comment on Laura's "use open source" comment. Generally, Open Source software is free, but still requires money for machines to run it on, and generally, higher quality people to implement it and make it work well (eg, they pick up where in a more traditional model a vendor would).

The overall cost, assuming you have a well implemented infrastructure to depend on, *can* be lower, but is not a given once you factor in the cost of the people and time required. Dean Dad picked up on this a little a few weeks ago when he posted about the reaction he got from talking to his IT staff about using something like Moodle, or other open-source learning management system.

Generally, what you *do* get is a higher quality product and staff who has more hands-on and in-depth knowledge of it which can lead to greater efficiencies down the road (5-10 years, assuming your instiution can keep their high quality staff that long to see things through at least one full lifecycle). The savings are hard to quantify and thus harder to pitch to upper administration.

Not to be a nay-sayer, I've advocated and implemented open source systems for in the higher-ed space and continue to do so as a admin at a large R1. I know it's possible, just non-trivial given most environments and possibly not the best place to initially look for cost savings as it can require some inital outlay and risk.

I do see places charging for printing, copying and even additional email storage space, so there is some of the passing the cost onto the consumer going on already. I think that will only get more prevalent as the technology to do it gets cheaper. For instance, when everything has an RFID reader embedded in it and your ID Card has an RFID chip, it's easy to start charging for anything that you pass by.

That all said (and to stay on topic) I think I agree more with Stephen's assement that modern universities are leaning toward the [non inclusive] "Cruise Ship" model whereby things are very comfortable, shiny and education is something that you plan into your day along with spinning class, dinner, and drinks on the poop deck.

The cynic in me made me type:
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All while the research units quietly bring in the real dollars (both in the front door with grants and the back with IP and patent licensing) from private companies who use large universities as goverment subsidized R&D labs.
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Thanks,
- your friendly neighborhood system administrator
 
The latest word in the Land of Oz is that our state education agency is taking a serious look at accrediting U of Phoenix to license teachers since state universities are not meeting all of the "state's needs" (we won't get into other related issues such as state board of education and standards)
 
I have not verified this, but I heard it on Public Radio, so it must be true! Anyway, now financial aid has the potential to be supplanted by syndicates of investors who, quite literally, bank on a given student's future earnings potential - they put promising students through undergrad or grad programs in return for a percentage of the student's income for a fixed amount of time. (The name of the company mentioned was "My Rich Uncle.")

I'm not sure if I think that's terrifying, or kind of cool....
 
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