Tuesday, July 19, 2016


Opposable Thumbs

A longtime reader wrote this week with a great question:

Between the subsidies on the one hand and the prestige pricing on the other, it's hard from the outside to figure out what it actually costs to deliver a college education. What's your rule-of-thumb figure?

I like this one a lot, even though I have no intention of answering it directly.  In fact, until some other questions get addressed, I’d oppose any rule of thumb.

First, be careful to make a distinction between “price” and “cost.”  (The question refers to both.)  I’ll use “price” to refer to what students and/or families pay.  “Cost” is the cost of provision by the institution.  If the two matched perfectly, the college would break even.  But that’s not how this industry works.  Third-party scholarships and Federal grants go directly to price, but have very little direct effect on cost.  Some people like to claim that the availability of scholarships and grants feed an arms race that feeds cost in turn; from what I’ve seen, there’s some evidence for that in the four-year sector, but almost none in the two-year sector.  

Public colleges charge less than cost, making up the difference through operating support from states and/or localities.  Well-endowed private colleges do the same, making up the difference through endowment income.  Poorly-endowed private colleges try to break even.  For-profits charge more than cost.  That allows for-profits to expand much more quickly than nonprofits, but it also makes enrollment drops hurt them more.  To be fair, for-profits are also taxable, which is a cost to which nonprofits are immune.  If large public universities paid property taxes, their balance sheets would look very different.

Next, define “a college education.”  That can mean a lot of things.  It’s a lot cheaper to educate a history or poli sci major than a nursing or automotive tech major.  (Budget hawks who suggest “vocational schools” as alternatives to college almost always get this wrong.)  A college with a high adjunct percentage can probably deliver classes less expensively than one with a lot of full-timers.  A college with lots of intercollegiate sports teams will typically spend more than a college that doesn’t.  Study abroad costs more.  Boutique or specialized programs cost more.  Location can matter, both directly -- housing costs for students -- and indirectly, in the salaries that have to be paid to keep people.  The presence or absence of unions will affect the bottom line, as will the 800 pound gorilla of higher education budgets: health insurance.  

We even need to define “student.”  A selective four-year residential college may have all or nearly all full-time students, so headcount and FTE will be pretty much the same.  Most community colleges have significant numbers of part-time students, so headcount and FTE will diverge.  Neither is a perfect measure.  If you look only at headcount to do a per-student figure, community colleges will look weird.  If you look only at FTE, though, you’ll understate some of the back-office costs that community colleges incur.  The truth is somewhere in between.

Hearkening back to Econ 101, we also have to distinguish between fixed and marginal costs.  If a college with a full campus and administration only has one student, that one student has to cover a whole lot of salaries.  Additional students allow the amortization of those costs over more tuitions.  Most community colleges have a core of full-time faculty who cost more than adjuncts, so the variable cost of instruction doesn’t vary linearly.  It’s high at the outset, then cheaper as enrollments grow beyond a certain point.  That makes enrollment drops uniquely painful.  (I’ve outlined the mechanisms here.)

I’m also assuming that we’re only looking at operating costs.  If you factor in capital costs -- which any new operation would have to do -- they’d be considerably higher.  

If you’re looking for what I sometimes call a “big, dumb number,” I’d just pick a few colleges in a given sector and divide their operating budgets by their enrollments.  That’s a hugely imperfect measure in any number of ways, but it’s reality-based.  It’s open to all sorts of objections, ranging from the definitional ones outlined above to a more philosophical objection that it normalizes the status quo.  (Hegel famously claimed that “the real is rational and the rational real.”  I respectfully disagree; the real can be terribly, persistently irrational.)  I would argue, for instance, that most community colleges are underfunded as they currently stand.  That underfunding manifests itself in a higher than optimal reliance on adjunct faculty, thin full-time staffing at every level, and a host of small compromises that vary from place to place.  

It also assumes that differences by sector are written into nature, which they aren’t.  As I’ve mentioned recently, the same Americans who argue that inequities across K-12 are objectionable take inequities across higher ed as normal and natural.  I’ve never even seen a principled argument for them; they’re just sort of assumed.  Costs follow from structures.  

Much of the debate around student debt gets these basic points wrong.  It assumes that higher debt leads to higher default, which is exactly backwards; balances under $5k are the likeliest to default, since they mostly represent dropouts.  It further assumes that colleges follow the economic logic of for-profit businesses.  Anyone who has worked at a community college for any length of time can speak to the centrality of “mission” in staffing and budgetary calculations.  And strikingly from the perspective of someone concerned about too heavy a reliance on adjuncts, the debate tends to assume that costs are a function of a lack of fiscal discipline.  That may be true in some places, but it doesn’t explain the ubiquity of adjuncts.  Reliance on part-time labor is a symptom of a much larger issue.

So no, I won’t take the bait and pluck a number out of the sky.  I’d oppose a rule of thumb like that.  But I’d ask anyone who would to first offer answers to the questions above.

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I was glad to see you make those basic economic points, because they are lost on journalists and politicians. It's like asking what it costs to produce a particular story in the newspaper we got this morning (we get it both digitally and on paper with lots of coupons at our house).

That said, it would be extremely interesting to get a take on the marginal cost of a single non-major gen ed class in various sectors under the assumption that there is a room available but the heating and cooling might be downgraded if it is not in use. (Answers for f-t extra class, adjunct, on-line would be enlightening.) That sort of class is tuition-dependent under the funding scheme used for public colleges and universities in this state, just as it is at private colleges.

We don't get an extra appropriation when extra students show up. I think that is not understood by journalists or politicians, even though the latter are the ones who can (and have) cut the appropriation retroactively after much of it has been spent, or never send any of it until the year is almost over (like in Illinois this year).
I'd be interested in some further discussion of the use of adjuncts from the administrative side. I think the assumption from the faculty side (I speak as a former/current adjunct) is that adjunct use is primarily or even solely a factor of the profit margin on some level, but I suspect that it's more complicated than that.
Mike, adjuncts are at least partially used for the flexibility they offer. Since they are hired by the section, and sometimes on short notice, they let collages schedule sections that are not guaranteed to fill up.

Here's a past article about it:
I'll second what Johan said (there is a minimum number of adjuncts required to avoid layoffs of tenured faculty or having adjuncts who only teach the fall semester), but that isn't to say that it isn't a good question. I would phrase it this way, and hope Dean Dad addresses it.

1) What are the enrollment changes (sections of "evergreen" classes like composition and the social sciences and math) from fall to spring at your college, Dean Reed? And how has the number of sections in the spring changed from, say, 2010 to 2016 at your current college? I am using spring as a way to measure the maximum number of f-t faculty you can have on staff with zero extra classes and no "exigency" to lay some of them off.

2) Our t-t faculty teach extra classes that are paid well below the hourly rate implied by our salaries. (Flat rate independent of salary, marginally higher than adjunct pay. I know that varies a lot from place to place.) Those extra classes are normally baked into the schedule rather than done at the last minute, but a discussion comparing the "profit" and the learning/retention info between the two groups available to deal with changing class loads would be interesting to read.

I take it for granted that some sectors minimize f-t faculty for profit reasons or minimize their lower-division teaching responsibilities for research grant reasons (a form of profit), so I am talking about CC's exclusively here.
Thanks folks (Johan, that link was particularly helpful, especially the comments) - I understand the need for flexibility, but surely we're looking at something more than that? I mean, where there are more adjuncts teaching in a department than full time faculty, that's something more than flexibility, that's replacing FT faculty with disposable workers. Is it just the profit motive (adjuncts are cheaper, get no benefits, etc), or is there a bigger reason that colleges are not hiring full time faculty? DD has mentioned previously that it's easier to hire a new secretary than a new professor...
Mike, in my division/department at my college, there are about twice as many adjuncts as full-time faculty BUT they teach around half of the sections. (On average: more than half in the fall, less than half in the spring.) That ratio is about the same in some other departments (like composition) but very different in some others (typically workforce ones where the classes are too small to pay for themselves). The right metric is number of sections, not number of people.

There is no evidence that we have replaced faculty with adjuncts. Retirees are replaced, although not always in the same subject area, and the total size of the t-t faculty is greater than it was a decade or two ago.

That said, I know for a fact that we control the employment load (not just the teaching load) for adjuncts so they are not eligible for health care under the provisions of the affordable care act. We don't get enough from the state plus tuition to have more than a handful of full-time untenurable instructors who get insurance and benefits (even if for only one semester) on top of their low salary, and we have no ability to increase either of those income streams. That isn't a matter of profit, it is a matter of breaking even.
I'll echo CCPhysist:
That isn't a matter of profit, it is a matter of breaking even.

My department is about 50% FT and 50% adjunct, with each adjunct teaching 2-3 sections per semester. Yes, we also have some FT faculty who teach overload (extra) classes which are paid at the adjunct rate for the extra class (so really there is no financial difference for us between a section taught as an extra class and one taught by an adjunct).

CCPhysicist -- interesting that you have such differences between fall and spring numbers. I believe our numbers are pretty much even between the two semesters and I don't believe we have anyone who works falls only. We offer all our two-semester courses starting in both terms (so BIO 101 & 102 can be taken fall, spring or spring, fall). It does make sense that you would expect spring enrollment to be a little lower than fall (more dropping out after fall term than new students entering in spring) so I'm not sure why we don't see that in our section numbers. Perhaps our spring sections are just a tiny bit less full?

The tricky part is what happens if we need to cancel a section right before the semester (which has happened a couple times in the last year and a half). If it's an adjunct's section that gets canceled, they teach one fewer class and get paid a lot less. If it's a full timer's section and it is too late to rearrange the whole schedule, it works on an IOU basis where they get a reduced workload for the semester and have to make it up by picking up an extra class as part of their workload in a future semester (our contract measures FT workload over six semesters to help chairs deal with cancelled classes and with workload calculations for teaching schedules where the number of hours isn't divisible by three).
I don't think anyone is denying that part of the reason why adjuncts are used so heavily is that they are cheaper than full-timers. The question is whether it's the only reason, and I don't think it is.

Really, the present arrangement is nonsensical. Generally, things are cheaper in bulk than in small pieces. Buying a whole pizza is cheaper than buying eight single slices. So it should be cheaper to hire a full-time professor to teach a full load of courses than to get an equivalent amount of instruction by part-timers. But it's not, which makes no sense. But it's hard to blame institutions for increasing instruction by adjuncts, when that is clearly where their incentives are pointing them.
Another reason for heavy reliance on adjuncts in my department is that we have a number of evening classes that full timers just don't want to teach. We also find that there are tons of high school teachers in the area who are qualified to teach these sections and want to make a little extra money. The added benefit is that high school teachers tend to have more teaching experience and a deeper understanding of pedagogy than anyone else we would hire as an adjunct, so if a high school teacher wants to adjunct for us, we'll take them.
Interesting observation, CCBioProf. I base mine on the staff phone roster plus the less formal method of how many classrooms are in use, but the big difference is that our department/division includes mathematics. Lots of attrition there. Number enrolled across the entire college (hence number of classes in the "evergreen" subjects) drop a lot in the spring. But, that said, it would be interesting to see how it works out at a different college in a different region from someone who knows ALL of the numbers!

For us, the number of physics sections is pretty stable from fall to spring. We have fewer students starting in the spring-fall pair than the fall-spring pair, but the net effect of early transfer means we actually have more students (hence more labs) in the spring semester than the fall. I think most of our majors classes have a similar pattern, but those are taught mostly (apart from labs) by t-t faculty. The big fluctuations are in gen-ed classes.
Dean Reed only mentioned some of the costs and how they change with enrollment, but he took for granted that the salary and benefit differences were clear.

There are two differences. Full-time tenure-track faculty are paid more, and they also get benefits (health insurance and retirement).

Retirement, like Social Security and Medicare, scales pretty much with salary ... but health care does not, AND health insurance costs have been growing rapidly for decades. Adjuncts do not get health benefits unless they exceed the limit set by AHCA and only full-time employees get retirement benefits. That is one factor.

The other is that the per-course cost of a full-time professor is significantly higher than that of an adjunct, even for a newly-hired instructor. (The difference is huge for senior faculty.) Part of that difference can be attributed to jobs we do in addition to teaching, such as advising and service on various committees plus training and overseeing the work of adjuncts. That is generally treated as 20% of our work load, so that alone is a 25% overhead on the cost of having full-time faculty teach a class.
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