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The Daily Signal
Leading Through the Crisis: How College Regents and Trustees Can Steady the Fiscal Ship
Heidi Ganahl & Lindsey Burke
June 09, 2020
College administrators have two things on their minds right now: how to
reopen their campuses safely, and what steps they need to take to
survive financially.
The answer to the first question depends in part on the second.
The business shutdowns precipitated by the coronavirus have eroded—and
will continue to erode—nearly every source of university revenue:
endowment funds, tuition, charitable contributions, and state
appropriations. But the pandemic has simply exacerbated—rather than
created—this fiscal peril.
Colleges have needed a fiscal course correction for decades. Having
failed to rectify years of mismanagement, they should not expect
Washington to bail them out now.
Consider, for example, the growth in nonteaching staffing over the
decades. As the National Association of Scholars points out,
noninstructional staff and administrative positions now account for
more than half of university payroll costs.
University of Arkansas professor Jay Greene has tracked this bloat for
two decades now, reporting on higher education’s “diseconomies of
scale.”
Greene and his research team found that from 1993 to 2007, real
per-student spending on administration increased 61%, driven by a
nearly 40% increase in the number of administrators per 100 students.
Between 2001 and 2011, the number of college administrators and
nonteaching employees increased 50% faster than the number of teaching
faculty.
That administrative bloat, coupled with virtually open-ended access to
federal subsidies, has created much of the financial hazard with which
universities must now wrestle. The coronavirus didn’t create this
challenge, but it has exposed it starkly.
What’s needed is leadership. College regents and boards of trustees
should work closely with administrators to right the budgetary ship.
And they should be diligent, probing, and bold in their approach.
For starters, they must analyze information about revenue and spending
at a more granular level than in the past. You can’t manage what you
don’t measure, and to measure you need good data.
As fiduciaries, regents and trustees have a right to get this
information; it’s critical to making good decisions, and their
universities’ future depends on it. Intense ideological differences on
where to cut are to be expected, so leaders must be thoughtful and
prepared to hash things out rationally.
To address administrative bloat, a good first step is to ask for a
formal review of administrative and nonteaching positions. At public
universities those findings should be public: states should evaluate
reductions in administrative overhead when they consider their support.
Schools should not balance the books on the backs of their students.
They should direct resources where they will make the most impact: to
teaching and learning.
To evaluate productivity, colleges should assess and prioritize
academic programs according to how critical they are to the school’s
fundamental mission and to the future of our workforce.
A recent study commissioned by the Association of American Colleges and
Universities found that fewer than 3 in 10 employers think that recent
college graduates are well prepared for work, particularly when it
comes to written and oral communication skills and critical thinking.
To bridge this gap, academic offerings and teaching strategies need to
respond to critical input from employers, who can help schools stay
abreast of the rapidly changing job market.
It’s in the best interest of both universities and employers to
collaborate and help prepare students for life beyond college. Program
prioritization can help achieve this and allocate precious resources
effectively.
Third, to improve engagement and reduce costs, leadership should
rethink how their universities deliver instruction, and how students
learn.
Our future will be built around intelligence. Four decades ago,
virtually no one owned a computer. Two and a half decades ago,
smartphones didn’t exist. Colleges can leverage technology to enhance
faculty and student engagement, provide access to more students, and
reduce the cost of delivering quality education. They should
incentivize staff and faculty to embrace this change.
These are immediate first steps. If trustees and regents help lead on
this important review, state and local policymakers will follow their
lead in long-overdue reform.
Reform, not federal bailouts, is what colleges and universities truly
need. Higher education already received nearly $14 billion in new
funding through the Higher Education Emergency Relief Fund passed as
part of the CARES Act.
Nearly all sectors of society are hurting financially right now, not
just colleges. Additional bailouts would add to the deficit, burdening
future generations of Americans while insulating universities from
making necessary changes.
Congress should instead provide breathing room to universities to
innovate and pursue necessary changes. Reforming accreditation to
provide regulatory relief would be a most positive step in that
direction.
No longer should accreditors obstruct the inter-institutional
partnerships that increase efficiency and lower costs. Congress should
move accreditation to its original function—as a mechanism for quality
assurance and improvement—removing the monopoly currently granted to
regional accreditors.
Guarding the status quo may seem comforting to tenured faculty, highly
paid administrators, and, sadly, some politicians. America’s higher
education was once the indisputable envy of the world. With a
willingness to look inward and pursue a course correction, we can
emerge from this crisis and regain the excellence we have lost through
wasteful mismanagement.
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