Monday, January 09, 2012


Rationing and Rationality

Apparently, a few California community colleges have taken to rationing seats.   Since their funding is entirely disconnected from their enrollments – astonishing, but true – the only way the colleges can make do on shrinking state allocations is to turn people away.  While most campuses have resorted  to the easy and time honored  “first come, first served” method of allocating seats, a couple campuses have started consciously rationing seats, giving priority to entering students and/or students identified as likeliest to graduate.

At the same time, IHE reports that at the meeting of the Council of Independent Colleges, a gathering of private nonprofit colleges across the country, the discussion centered around programmatic rationing on campus.  (I couldn’t help but notice that the story didn’t draw a single comment.)  One President mentioned telling her Board of Trustees that this is exactly the kind of exercise that garners votes of no confidence in presidents, as faculty circle the wagons to protect their (and their friends’) curricular turf.

I’ll register a mixed reaction to these stories, which strike me as basically the same story.  They’re both attempts to bring conscious thought to prioritizing the allocation of scarce resources.  In the former case, the scarce resources are seats for students in classes; in the latter, funding for faculty positions.  But at the end of the day, they’re really both about scarcity.

Off the top of my head, I can come up with several different ways to allocate scarce resources.  And let me be clear that I’m not celebrating the fact of scarcity, especially in the case of California.  I’m just assuming that scarcity will be a recurring condition, and it would make sense for colleges to decide consciously how they want to handle it.  Obviously, windfalls of resources that make difficult choices moot are always welcome and preferable, but sometimes they just aren’t in the offing.

One method is inertia.  Use “first come, first served” for student seats, attrition for programmatic cuts, and hope for the best.  This is the default method, and it’s by far the most common throughout higher ed.  The advantage of this method is that it’s politically easy, and it works well when the scarcity is mild and passing.

Another is pricing.  This is how economists usually recommend dealing with scarcity.  In the context of student seats, this would involve raising tuition and fee charges until demand falls naturally to the desired level.  From an institutional perspective, this has the added benefit of raising considerable revenue.

Pricing doesn’t work as well for allocating internal resources, though.  A close variation would look at the profit and loss generated by each program, and treat losses as costs.  Pick the programs that cost the institution the most – that is, the ones that lose the most money – and eliminate those.  The advantages of this method are that it offers the most bang for the buck, by definition, and it shifts the discussion from unanswerable questions (“which is more important, sociology or history?”) to easily answered ones.  The obvious disadvantages are twofold.   First, it tends to favor the students who have the most to spend.   Culturally, we’ve decided that that’s okay for private goods, like ipads or jet skis, but it’s not ideal for public goods.  Since higher ed partakes of both, it seems extreme to base the entire decision on one set of rules.  The other disadvantage is that it can easily lead to programmatic incoherence, faddism, and a loss of mission.  If we assume that students don’t always know what’s best for them – anathema to free market absolutists, but common sense to educators – then we have to assume that defaulting to the way students vote with their dollars is an abdication of professional responsibility.

Alternately, a college could make explicit, conscious decisions based on publicly announced criteria.  This could be done autocratically, through administrative dictat, or inclusively, through open discussion and debate.  (Obviously, I favor the latter, though I know that isn’t always easy.)  Either way, the college would have to decide – explicitly – what it considers most important (and by implication, what it considers less important).  It would have to spell out its rationale, and justify its rationality.

The downside of the explicit approach is that it tends to generate wildly disproportionate outrage.  (Witness the excoriation SUNY Albany endured when it proposed eliminating a few departments last year.)  Cuts by attrition feel neutral, which can be politically useful; cuts by deliberate design, whether autocratic or democratic, necessarily involve targeting.  It’s unsurprising that the targeted take offense.

As much as I hate the idea of community colleges turning capable students away, I have to welcome the clarity that results from forcing a serious discussion about priorities.  If we can’t do everything -- the old “comprehensive” model -- then what should we do?  The answer will probably, and properly, vary from one setting to the next, but it strikes me as the right question.  And I’d rather answer it honestly -- even to the point of having to name who loses -- than keep defaulting to institutional inertia.  Democracy isn’t always pretty, but I’ll take it over denial.

"From an institutional perspective, this has the added benefit of raising considerable revenue. "

Not in the state of California. Increases in fees don't go to the colleges. They go to the state. It might help with the amount of apportionment that comes back to colleges, but the history of increased fees is decreased enrollments, leading to decreased state apportionment/funding. Not exactly what the economist's model predicts.
In the case of linked community colleges, as when all in a city are at least to some extent the same body, there is also the reality that elected officials will lobby to get their "share" of attractive programs or maintain popular programs that they think they can claim credit for, regardless of whether this makes sense system-wide or even makes sense for the specific CC at hand.
I can't offer anything useful, other than to say it's a shame how things are turning. While I attended a California Community College as an out-of-state student in the mid-2000's, I had to marvel at how cheap ($20/credit-hour) tuition was for in-state student. I thought they had an awesome thing going there.

Quite frankly, it was good to know that the traditionally disadvantaged had dirt cheap access to a shot at a better life.
Just a note to clarify that in CA, funding isn't completely disconnected from enrollments. We have enrollment caps--if we serve the maximum number of FT students, we get the maximum funding. If we go over the cap, though, we get zippo for teaching the extra students. So the trick is to hit just over the cap (in case any extra funding shows up) but not exceed by too much . . . and the other part of the trick is that we typically don't know the caps until halfway through the year. Sometimes, they even get revised after the year is over. Yep, it's crazy.
Speaking as an economist, any non-crazy economist will tell you that in the presence of large positive externalities (as in education), market pricing is an inefficient allocation mechanism.
I have to disagree. If you don't have a real price, you don't have a real product.

Instead, you have politics.
One of the comparisons in that second (STILL not commented on) article concerned

"understanding which of a college's programs produce more (or less) net revenue than comparable programs at other institutions"

rather than absolute comparisons between very different programs at the same institution.

This could offer some valuable insight into the character of each community college and how it should or could sell itself in the region. There is no reason why you can't consider such other key parameters as distance between schools, because the system-wide management issues are quite different when several colleges are all within easy commuting distance of each other.

One of the comments on IHE mentioned science majors, but I think our college is pretty efficient there even though almost all of our "majors" classes are taught by full time tt faculty. They are all full.

As another example, enrollment and retention numbers can have a huge effect on the actual cost of programs like nursing. Yes, they are expensive, but less so if you start with a full classroom and retain most of those students through the program than if you don't.
@Edmund Dante: I hate to get into this, but my statement was not, "suppress the efficient price." It is, "the processes of a market produce an inefficent outcome in the presence of large (positive) externalities." To some degree, this is a tautological statement. To "disagree" is to state that a false price is likely to produce an efficient outcome, which is to say that you are advocating against the free market and in favor of price controls.
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