Wednesday, August 08, 2012


Cash Cow or Money Pit?

Yesterday I received two emails in rapid succession that fairly begged for a single response.  One of them seemed quite confident in asserting that developmental education is a cash cow for community colleges.  The other seemed equally confident that developmental education is a money drain for community colleges.

Those can’t both be right.

In truth, I’m not even sure I could answer the question confidently about my own college.  Developmental courses tend to be more expensive in that they run smaller, so we have fewer tuitions to amortize the cost of the instructor.  But they also tend to be staffed with adjuncts, who make less money.  (We’re getting more of a full-time presence, but it’s a slow process.)  They have lower pass rates than credit-bearing classes, so there’s an attrition loss.  Developmental students also make considerable use of the tutoring center -- especially in math -- which is a cost center in its own right.  That said, though, developmental classes don’t need chemistry labs or a lot of specialized equipment, which many credit-bearing classes do.  

Annoyingly, our state funding is independent of current enrollment figures.  (It’s based on a decades-old snapshot of enrollment, adjusted in across-the-board increments since then.  Current enrollment fluctuations affect tuition/fee revenue, but they don’t affect our appropriations.)  So the idea that we’re trying to cadge more money out of the state is false.  It’s a nice theory, but it just doesn’t hold.

More to the point, both credit-bearing and developmental instruction are run at losses.  That’s where the public appropriations come in.  The idea is to price education below the cost of providing it, to encourage people to take advantage of it.  The theory behind that is that an educated workforce and citizenry is a public good.  (I believe strongly in this theory for any number of reasons, but that’s another post.)  Other parts of the college are run for profit -- non-credit courses, summer camps, the bookstore -- but those profits are used to partially offset the losses from core instruction.  

In other words, it isn’t as simple as saying “developmental courses are cash cows” or “developmental courses are money pits.”  All credit-bearing instruction loses money, more or less, and the biggest money pits are likely the low-enrollment upper-level classes that require specialized spaces, like music, studio art, Nursing, or lab science.  But I don’t hear the same questions being asked of those.

It gets even more complicated when you factor in the students who pass through developmental courses and then go on to take credit-bearing courses.  A non-trivial portion of our upper-level enrollment consists of students who made it through developmental classes.  Lose that pipeline, and over time, we’d see effects even on the high end.

Theoretically, I guess, lower enrollments could lead to staffing cuts that would save money.  But the first round of cuts would be the lowest-cost people, who, by definition, would save the least money.  

To my mind, the relevant question with developmental courses isn’t so much whether they generate profits.  It’s whether they generate success.  If they do, then I can see a valid business case for a “loss leader” model; if they don’t, then I see a valid educational case for junking them, or at least re-envisioning them in a pretty drastic way.  (I’m in the latter camp.)  

Of course, there are also the much larger issues of social mobility, the failings of an economically segregated K-12 system, and the fixed costs associated with physical plant.  (If enrollment drops five percent, library costs don’t drop at all, so the cost per remaining student automatically goes up.)  

I’d prefer to see the debate shift.  I can see a valid social argument for public investment that maintains social mobility for people who have been excluded, even if the payoff occurs only over time and off the balance sheet of the college itself.  (Economists call that a “positive externality,” and it’s another argument for a public subsidy.)  To the extent that’s true, let’s discuss how best to improve opportunity, rather than calculating the cost of the poor to three decimal places.  Frugality as selective as this isn’t really about frugality.

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