Wednesday, October 21, 2015

The “O” word

Kellie Woodhouse's story yesterday about Wagner College and its plans to shrink strategically should be required reading for people at teaching-intensive institutions in the Northeast, and for the politicians who decide on budget allocations.

Much of the Northeast and Midwest suffers from a decline in the number of 18 year olds, and the decline is likely to continue for the next decade or more.  The geographic distribution of colleges more closely resembles the population distribution of fifty years ago than it does the distribution now, adding a supply issue to the demand issue.  Add an economic recovery and counter-cyclical enrollments -- recessions boost enrollments and recoveries dampen them, due to the change in opportunity cost -- and it's not a pretty picture. Predictably enough, colleges are competing more vigorously for enrollment than they once did, with high discount rates among the private ones as an easy indicator.

But it isn't just the privates.

Over the last ten years -- twenty, really -- public colleges' revenues have shifted from states (and sometimes counties) to students.  As their revenue sources start to look more like the privates, they start to behave more like the privates.  

Except that the mission is different.  Private colleges can choose to shrink via increased selectivity, which seems to be the route Wagner has chosen.  Selectivity can make life easier for a private college, since it can outsource the riskiest populations to community colleges.  Change the risk profile of your student body, and you will change outcomes.  Improved retention and graduation rates can offset some of the tuition loss over time.  

For community colleges, selectivity isn’t an option; it would violate the mission.  In an environment in which tuition is sixty percent or more of a college's budget, enrollment drops mean immediate budget crunches.  

For-profit colleges are tuition-driven, too, and we’ve seen how some of them respond to declining enrollments: by abandoning academic standards and pressuring faculty to pass everybody.  That, too, would violate the mission of a community college.  I've been proud to note that this sector is largely immune to grade inflation; the really egregious grade inflation occurs at the Ivies, not here.

If we want community colleges to maintain academic standards while serving smaller populations, we're going to have to come to terms with the trend of cost-shifting to students.  States offloaded costs onto students; then, the students went away.  That leaves colleges in a bad spot.

Here I'll make the one argument that I have not seen a single, solitary candidate make, from either party.  It's simply off the charts politically, but it's true.

If you want to maintain quality with shrinking enrollments, you'll need to offset the shrinking enrollments with...


Increased operating aid.

Notice I didn't say "maintenance of effort."  When the effort is too low, maintenance of effort isn't good enough.  And in states in which counties or districts matter as much as states do, even defining maintenance of effort becomes a problem.

Increased Pell grants are great, and I'm all for them.  But the only way that colleges benefit from them is through tuition.  When colleges price their tuition below the Pell maximum, which nearly all community colleges do -- partisans of the "Bennett hypothesis" ignore this, but it's true -- then Pell increases don't hit the budget.  At all.

Nor did I say "grants" or "corporate partnerships."  Grants have expiration dates.  Corporate partnerships are circumscribed around specific programs.  Both can and do play helpful roles, but they can't carry the ball.

Nor did I say "capital funding."  Facilities matter, and deferred maintenance is real, but this is not primarily a function of too few buildings.

I'm talking about the one category that would do more good, yet gets less press, than any other.  Operations.  The money with which we pay salaries.

Put operating subsidies on a substantial and predictable upward trend, and colleges can enforce academic standards without fearing bankruptcy.  They can continue to take all comers and provide excellent education.  Raise them enough, and we could even make a dent in the trend towards increasing adjunct percentages.  Let them continue to stagnate or fall, and the only institutions that serve everybody will flounder.

Privates can move to selectivity and/or philanthropy without violating their missions.  Community colleges can't; they need operating aid.  That's what will make the difference between downsizing-as-exclusivity and downsizing-as-death-spiral.  

Operations.  It's about operations.   It's time we say the "O" word in public.  Either that, or we let higher education retreat once again to become the exclusive playground of the wealthy.