Function Lust

Big Question #4

Function Lust

Lloyd Smith

           

(The most intriguing issue on the Unit 4 assignment was function lust. It should be most obvious of those who know me and how “disturbed” I am, why I chose this issue in higher education.)

            To my dismay, “function lust” is yet another symptom in costs disease. Function lust deals with performance based funding, and all the hissy-fits that go along with it. From policy-makers, legislators, college/university executive administration, boards of trustees, department chairs, and faculty, function lust is alive and doing quite well in higher education. Working at Dyersburg State Community College, I see “function lust” every day. This lust causes politicizing and back-stabbing at its best; the games at the Coliseum in Rome would be “pea-green with envy” (as quoted Scarlett O’Hara, Gone With the Wind). Every department and faculty member is vying for dollars. Their programs are the “BEST” and deserve funding. But, there is only so much to go around, and administration, staff, and all other high-rollers in higher education would come close to prostitution to procure these limited funds. There was a courtesan in Venice in the 16^th century named Veronica Franco, who to some peoples surprise was the first woman to publish her own book of poetry, could not do what I have seen done for the finances to initiate or continue programs they believe in.

            Performance based budgeting and funding is a serious and often heated issue in higher education (Herbst, 2007). Thus the term “function lust” was born. I believe Peter Senge summed-up “function lust” better than all the reading I have done on any of my blog posts. He said, “Ironically, by focusing on performing for someone else’s approval, corporations create the very conditions that predestine them to mediocre performance” (Senge, 2007). So much energy is focused in fighting for every centime doled out by foundations and government (state and federal) that the business of increasing efficiency and productivity in higher education is lost. Costs disease gone to seed: function lust.

References:

Herbst, M., (2007). Financing public universities: chapter 4 performance based budgeting and funding. Higher Education Dynamics, vol. 18, pgs. 65-94, DOI: 10.1007/978-1-4020-9503-0_4

Senge, P., (2006). The fifth discipline: the art and practice of learning organizations. New York,

            NY. Doubleday Publishers.

              

Destructuralizing the Curriculum Internationally

Big Question #4

Destructing the Curriculum

Lloyd Smith

            Emerging governments around the world are taking a more liberal, democratically based approach to procurement of higher education (Singh and Han, 2005). Citizens of countries are hungry for social equity and security college and university degrees can bring, which is creating a vast market for higher education globally (Singh and Han, 2005). These international students seeking an advanced degree are representing every age group, and the adult life-long learners are growing exponentially (Singh and Han, 2005). Thus the ever growing need for online and distance learning within post-secondary education. The demand is out pacing the technological availability of these degrees from established colleges and universities in developed countries. Exporting degrees globally through technology and the virtual classroom has negatives as well. One of these negatives is the high demand for college degrees internationally are causing a displacement of faculty labor toward technology (Singh and Han, 2005). These new “labor displacing technologies” are racing to catch up to the international demand, but whom or what is at stake (Singh and Han, 2005)?

            The answer to this question is multifaceted; there are many stakeholders at risk. Faculty is one of the first areas to see this displacement. The fallout of labor displacement is that colleges and universities are seeking more and adjunct faculty for online instruction as a cost saving measure. It is expensive at this point to develop an online degree program, which raises the costs of higher education (Archibald and Feldman, 2011). Full time and tenured faculty are expensive as well, so any cost saving measure to thwart funds into the stream of technological advancement and distance learning online. This is evident in the rising costs disease suffered in higher education today (Archibald and Feldman, 2005). Distructuring the curriculum in higher education is an effect of this facet of cost disease.

            Singh and Han, researchers in technology and globalization of higher education from Australia, posit the issue by stating, “Universities are being driven by neo-liberal policies which are promoting their economic destructuring and recurrent organizational restructuring” (Singh and Han, 2005). This international destructuring of higher education curriculum to be restructured into an online, distant degree exporting phenomenon, causing the globalization of higher education (Singh and Han, 2005). Another facet to this dilemma is the expectation that universities and colleges in developed countries who grant accredited degrees are now being expected to destructuralize and restructure into transnational businesses (Singh and Han, 2005). This raises questions across higher education internationally, but it is inevitable. As technology continues to improve, access continues to be demanded, and higher education is the vehicle being pushed to accommodate this destruturalization.

References:

Archibald, W. and Feldman, R., (2011). Why does college cost so much? New York, NY,

            Oxford University Press.

Singh, M. and Han, J., (2005). Globalizing flexible work in universities: socio-technical

            dilemmas in internationalizing education. The International Review of Research

            in Open and Distance Learning, vol. 6(1). Retrieved from:

            http://www.irrodl.org/index.php/irrodl/article/view/218/301  

Productivity and "Output Creep"

Big Question #4

Output Creep and Productivity
Lloyd Smith

            Another plague on higher education productivity is “output creep”. Productivity as defined by the Consortium for Policy Research in Education (CPRE) is “the ratio of output to input in an organization” (http://www.cpre.org/images/stories/cpre_pdfs/fb01.pdf). Productivity issues in higher education are lagging. One of these issues affecting productivity is “output creep”, which describes the process of the slow change in the input to output mix with faculty (http://www.cpre.org/images/stories/cpre_pdfs/fb01.pdf). Post-WWII, higher education and faculty have steered farther away from teaching (output) and increased their energies on research (input). In a research article in Factors that influence costs in higher education by Paul Brickman “output creep” is one of the leading causes in increasing costs in higher education (1992). These costs are being pushing up the sticker price of college tuition of college students (Archibald and Feldman, 2011).

             How can this costs disease factor of “output creep” be alleviated? One proposal is to stitch the rupturing wound in higher education costs and better manage productivity and efficiency in administration costs and faculty product mix (Massey and Zemsky, 1997). Administration delegates teaching load requirements to the subject specific departments, which in turn value research and publication of faculty for tenure or to keep tenure lessening their ability to teach more classes (Massey and Zemsky, 1997). The cost is suffered by the student by paying a higher price for their education, as well as the state’s funding allocations in covering institutional costs. “Output creep” is costs disease in one of the most overt means.

References:

CPRE information and article retrieved from: http://www.cpre.org/images/stories/cpre_pdfs/fb01.pdf

Paul T. Brinkman, (1992). Factors that influence costs in higher education. New Directions for Institutional Research, Volume 1992, Issue 75, pages 23–34. Retrieved from:

http://onlinelibrary.wiley.com/doi/10.1002/ir.37019927504

Massey, William and Zemsky, Robert, (1997). A utility model for teaching load decisions in academic departments. Economics of Education Review, vol. 16 (4), pgs. 349-355. Retrieved from: http://nersp.nerdc.ufl.edu/~lombardi/edudocs/masseyZemsky.pdf

Cutting costs by utilizing Alternative Dispute Resolution instead of Courts

Cutting costs by utilizing Alternative Dispute Resolution instead of Courts

As an operational entity, no institution is immune from legal issues. From employee spats, land ownership/property disputes, student affairs issues, and so on; one way to reduce the institution’s legal fees is to implement a form of alternative dispute resolution, instead of turning to the courts. 

Alternative Dispute Resolution (ADR), is more commonly know as mediation or arbitration.  Although there are a number ways to reduce costs through these measures, ADR allows both parties to remove their dispute from the public eyes.  The reason for such is ADR are private party disputes, compared to the court system, which is a public forum opened to all. With this type of benefit, businesses are turning to ADR to help reduce their legal costs and maintain privacy issues. 

There are a number of entities that operate ADR alternatives, as well as, private professionals such as judges, lawyers, corporate business retirees, and professors who act in these capacities.  Their purpose is not to take one side or the other, but to help resolve the issue at hand. In some cases, there is more than one person assisting in the decision. 

To better understand ADR, I have posted some topic items below from Judicial Arbitration and Mediation Services, Inc. (JAMS).  JAMS is one of the largest providers of ADR services to public and private entities.  JAMS’ actions help institutions save money and keep issues private in nature.

“Mediation: If internal preventative measures fail, another technique to avoid litigation is mediation. An impartial third party confidentially helps disputants negotiate a mutually satisfactory resolution. Mediation clauses can be included in vendor contracts, executive compensation agreements, personnel policies and even customer bills of rights. Mediation is especially useful in exploring creative ways to achieve beneficial results (including preserving future business opportunities and developing improved quality control methods) and in avoiding the win/lose bilateralism of adjudication. Mediation fees are often split between parties but can be assumed by one side. To ensure the mediator’s impartiality, the fee should be channeled through an administrative entity so the mediator is unaware of payment arrangements”

“Arbitration: Arbitration – confidential adjudication before a neutral arbitrator chosen by the parties – is another effective alternative to the public drama of the courtroom. An arbitrator should be hired for special expertise in impartial fact-finding, legal analysis and decision-making. Arbitration clauses can be included in purchase orders, leases, license agreements, construction contracts and insurance policies. Parties can agree to special procedures such as videoconference testimony by distant witnesses, relaxed evidentiary rules and a schedule that isn’t subject to unforeseen interruption by other judicial priorities. Parties can even control the potential risk of an award by negotiating minimum and maximum amounts that are not disclosed to the arbitrator. Agreements to arbitrate are enforceable in court. Because of its flexibility and privacy, arbitration now occurs more frequently in complex, high-stakes cases when speed and simplicity may not be primary goals. As a result, the cost of commercial arbitration is increasing. Careful prearbitration planning by corporate counsel is critical to control litigation costs. Specifically, arbitration agreements should define as many of the arbitration parameters – including discovery, scheduling and appeal procedures – as practical. Counsel who invest time negotiating these subjects before arbitration will minimize costly disputes during the process”

“Discovery and Scheduling: Unlike traditional litigation, which is guided by statutory procedural rules, arbitration clauses can limit the number and length of depositions, interrogatories or document requests, as well as the scope of expert testimony. Parties can even substitute other discovery methods, including meetings between key executives to directly discuss disputed issues. Consider letting the parties’ expert witnesses testify in the presence of each other, with time to comment on the opponent’s testimony” 

“Arbitration allows flexible scheduling. Parties can agree to work late one day to finish an expert’s testimony, use video conferencing for a remote witness, or interrupt one witness to accommodate another. Unlike most jurors, arbitrators are experienced factfinders who can be trusted to overlook the order of presentation and stay focused on the separate evidence offered by each party” 

“Single Arbitrator v. Panel: Arbitrated disputes can be decided either by a single arbitrator or by a panel of arbitrators. Generally, if a commercial dispute can be tried in less than two weeks, involves fewer than 10 witnesses and requires just one area of specialized expertise, a single arbitrator can handle the matter. On the other hand, a panel of three impartial decision-makers is preferred when the factual complexity, legal novelty or public significance may challenge the memory, acumen or courage of a lone arbitrator. The breadth of expertise and expanded ability to attend to details can justify the cost of a panel. Alternatively, to supplement a single arbitrator’s expertise, the parties can authorize the single arbitrator to consult an impartial expert approved by all parties” 

“Partisan Panel: Party-representative a/k/a "partisan" panels can be effective when the panelists are not arbitrators but party executives. True party representatives such as chief financial officers or product managers can provide value not only to the analysis of the case, but also to the design of a resolution, producing a commercially sensible remedy. In cases involving ongoing business relations, participation of executives as arbitrators can promote a vision past the immediate dispute to more profitable future opportunities”

“Appeals Panels: Companies can specify an appeal procedure in arbitration clauses. Three-member appellate arbitration panels can review the decision of a single arbitrator. The arbitration agreement should define the standard of review, the briefing schedule and decision deadline. The appellate panel can be less expensive than a panel at trial and provide a comforting safety net to litigants who are concerned about the finality of a single arbitrator’s decision”

“The Upshot: For in-house lawyers looking for swift and cost-effective means to end conflicts, alternative dispute resolution offers distinct advantages over traditional litigation. Counsels control of the process from the outset will ensure that cost-savings is one advantage” 

Walsh, M. (2005). ADR avoids court, saves money.  Judicial Arbitration and Mediation Services. Retrieved from, http://www.jamsadr.com/news/xpqPublicationDetail.aspx?xpST=PubDetail&pub=524

Academic Ratchet

Big Question #4:

“Academic Ratchet”

Lloyd Smith

Higher education has come under intense criticism for what is perceived to be a lack of fiscal discipline that has resulted in immense growth of higher education costs. Robert Zemsky and William Massy, in developing the notion of the “academic ratchet,” argued in 1990 that the academic ratchet is a term to describe the steady, irreversible shift of faculty allegiance away from the goals of a given institution, toward those of an academic specialty. The ratchet signifies the advance of an independent, entrepreneurial spirit among faculty nationwide, leading to increased emphasis on research and publication, and less on teaching in their field. This ratchet of increased costs and a decreased focus on faculty teaching is at the expense of student, who will pay more for their education.  Institutions seeking to enhance their own prestige may contribute to the ratchet effect by reducing faculty teaching and advising responsibilities across the board, thus enabling faculty to pursue their individual research and publication with fewer distractions, again at the expense of the students’ education.

The academic ratchet raises an institution’s costs, and it results in students paying more to attend institutions in which they receive less faculty attention than in previous decades. (Zemsky and Massy 1990, p. 22) This position was reinforced in 1998 by the Boyer Commission on Educating Undergraduates in the Research University said, “To an overwhelming degree, they American research universities have furnished the cultural, intellectual, economic, and political leadership of the nation. Nevertheless, the research universities have too often failed, and continue to fail, their undergraduate populations. Again and again, universities are guilty of an advertising practice they would condemn in the commercial world. Recruitment materials display proudly the world-famous professors, the splendid facilities and the ground-breaking research that goes on within them, but thousands of students graduate without ever seeing the world-famous professors or tasting genuine research. Some of their instructors are likely to be badly trained or untrained teaching assistants who are groping their way toward a teaching technique; some others may be tenured drones who deliver set lectures from yellowed notes, making no effort to engage the bored minds of the students in front of them” (Boyer Commission on Educating Undergraduates in the Research University 1998, pp. 5–6).

 The term “cost” is being used to reflect both what students and their families pay for a college degree (price) and what a higher education institution spends to deliver that degree (cost) Archibald and Feldman, 2011). It is important to understand that both price and cost, and the relationship between the two, are inherent in the “academic ratchet. The “academic ratchet” is best defined as a steadfast rise in the college/university costs  of delivering higher education, which results is an increased price-tag for the students to pay (Archibald and Feldman, 2011). This ratchet offers another blow to the student and the institution as stated before, faculty allegiance. Faculty being pushed to do more research and spend less time in the classroom affects students as well as the institution, and helps to increase costs thus ratcheting up the price.

Regferences:

Archibald, R.B. & Feldman, David H. (2011). Why does college cost so much? New York, NY. Oxford University Press.

Boyer Commission on Educating Undergraduates in the Research University 1998, pp. 5–6.

William F. Massy, Robert Zemsky , (1994). Faculty discretionary time: departments and the "Academic Ratchet." Journal of Higher Education, Vol. 65, 1994

Productivity and cost disease

Big Question #4:

“How do institutions and students contribute to the cost disease and how can they contain costs?”

Lloyd Smith

Productivity and Cost Disease:

            The productivity of American colleges and universities, in terms of academic degrees granted, is declining. Since the early 1990s, real expenditures on higher education have grown by more than 25 percent, now amounting to 2.9 percent of the gross domestic product, greater than the percentage of GDP spent on higher education in any of the other countries, which is blatant costs disease (Clotfelter, 1996; Hauptman & Kim, 2009). While the proportion of high school graduates matriculating to college has risen dramatically, the percent of entering college students finishing a bachelor’s degree has stagnated. A comparison of the class of 1972 and class of 1992 high school cohorts indicates that eight-year college completion rates declined by 4.6 percentage points during that time (Bound, Lovenheim, & Turner, 2009).

Finding ways to improve the efficiency and productivity of the American higher education system is a top priority. What accounts for declining productivity in this sector? Theorists say it could stem from increases in the quality of higher education, but there is little evidence to suggest that is the case (Archibald & Feldman, 2008). The economic returns to education have been rising, but this is more likely due to shifts in the demand for skilled labor (Goldin & Katz, 2008) rather than changes in the quality of degrees. A number of other explanations have been given for this trend. The most commonly cited is cost disease (Baumol & Bowen 1966). This theory say that productivity gains are more difficult to achieve in service sector, especially where the quantity of the service is defined in terms of the amount of time spent with customers.

 In American higher education, degrees are granted based on credit requirements, and credits are based on seat-time, or time spent in class. Although, manufacturing enterprises can increase productivity by reducing the amount of labor hours spent in the production process; these productivity increases in turn lead to wage increases in non-service sectors, which the service sector, including universities, have to compete with by raising salaries for faculty and other staff. With the amount of time in the classroom fixed, and wages increasing, costs continue to rise while output remains unchanged; making it appear that productivity is constantly on the decline. This is why productivity declines are much smaller after taking into account the gradually increasing wages and productivity in the economy as a whole. This problem is not limited to higher education—for example, legal services have seen larger cost increases than higher education while physician costs have risen at about the same rate (Archibald & Feldman, 2008). Some argue that cost disease is due to the increases in the accessibility to higher education by enrollment of less-qualified and less-motivated students (Bound et al., 2009). This may reduce graduation rates, but there is little evidence to support this argument (Bound et al., 2009). Cost disease has become a plague in higher education, which if left uncontrolled, or contained, will have lasting results in our society.

References:

Archibald, R.B. & Feldman, David H. (2008b). Why do higher education costs rise more rapidly than  prices in general? Change, May/June, 25-31.

Archibald, R.B. & Feldman, David H. (2008a). Explaining Increases in Higher Education Costs. The Journal of Higher Education, 79 (3), 268-295.

Baumol, W. J., & Bowen, W. G. (1966). Performing arts: The economic dilemma. New York: Twentieth Century Fund.

Bound, J., Lovenheim, M. & Turner, S. (2009). Why Have College Completion Rates Declined? NBER Working Paper No. 15566.

Clotfelter, Charles T. (1996). Buying the Best: Cost Escalation in Elite Higher Education. Princeton: Princeton University Press.

Goldin, C. & Katz, L. (2008). The Race Between Education and Technology. Cambridge: Harvard University Press.

Hauptman, Arthur & Young Kim (2009). Cost, Commitment, and Attainment in Higher Education: An International Comparison. Lumina Foundation and Jobs for the Future: Boston, MA.

Student Housing Outsourcing for Community Colleges

           As the community college population increases because of the recent decades’ trend toward greater higher education access, the increasing student population demands effective and efficient services on campus, such as food services, the bookstore, vending, laundry, etc. (Bekurs, 2007).  Given that the primary function of higher education is student instruction, institutions are certainly not experts at these services.  Given this fact, institutions often outsource these services (Bekurs, 2007).  Similarly, another growing campus trend is the outsourcing of housing services. 

            In the 1960s and 1970s, public funding provided matching grants for campus housing projects, but throughout the 1980s and 1990s, colleges struggled to meet the housing needs of students (Bekurs, 2007).  Rent increases and cost reductions were their primary methods of funding new housing projects, and even if they could raise enough funding this way, the methods were detrimental to students’ pocketbooks.  Therefore, many institutions began outsourcing new housing projects to 501(c)(3) corporations in order to retain their tax-exempt and debt financing status and to improve efficiency (Bekurs, 2007).   

            According to Bekurs (2007), 94% of community college administrators who had campus housing cite housing as a major factor in increasing full-time enrollment, and 91% said that housing is important to provide access to long distance students.  Therefore, given the fast paced increase of community college enrollment over the past two decades, the emphasis of the Obama administration and public opinion on attaining a college degree, and the obvious need for housing at these institutions, community colleges should consider outsourcing their housing needs in order to lower housing costs.

Bekurs, G. (2007). Outsourcing student housing in American community colleges: Problems and prospects. Community College Journal of Research and Practice, 31(8), 621-636.

The Costs of Remediation

            About 66% of high school graduates enter college each year, though many of these students are unprepared for the academic challenges of college (Bettinger & Long, 2009).  In fact, often unpreparedness is so severe that schools expel students.  In 2001, the California State University system let more than 2,200 members of the freshman class (almost 7%) go for failing at basic English and math skills (Bettinger & Long, 2009).  However, the more common solution for U.S. higher education institutions is to place the lagging first year students (nearly 33% in 2001) in remedial courses in reading, writing, and mathematics (Bettinger & Long, 2009).  A few different studies from the late 1990s found that the expenditure on remedial education for the 33% of freshmen who required it ranged from $250 million to just over $1 billion out $87.1 billion spent on higher education instruction (Saxon & Boylan, 2001).  Whether it is quarter of a billion or over a billion dollars, this money is being spent on instruction that should have taken place in secondary school.  The studies do not indicate how much of this money comes from each student’s pocket (from cash, loans) or from government subsidies and grants, but it does not really matter.  The cost to the greater economy and the individual student remains the same.  The economy and student suffer the additional cost of “re-paying” for an educational service, and both suffer from the opportunity cost of the student using the time spent in class and studying for a remedial course instead of doing something else that is more productive for society.

            The solution to this problem seems simple.  Society needs to ensure that students who enter college are prepared for the coursework.  However simple this sounds, the reality is that there needs to be better communication between primary/secondary schools and institutes of higher education.  The most conceivable way to this is to begin on a local level.  Particularly, in addition to being prepared for college beginning in middle school, students should be continually reminded of what to expect after high school.  They should be encouraged to take more challenging courses and told that “barely getting by” will not prepare them for the next level.  In addition, prospective college students should be counseled by educators and older peers about not entering college unprepared.  For example, it would probably behoove many students to wait a year to enroll in college in order to remediate themselves.  Also, parents to be educated about the possible prudence of a decision like this.  I think that many parents force the issue of immediate enrollment because they are ready for their kids to leave or they want to make sure that they evolve socially with the peer group (age group) that they always have. 

Bettinger & Long. (2009). Addressing the needs of underprepared students in higher education: Does college remediation work? The Journal of Human Resources, 44(3), 736-771.

Saxon & Boylan. (2001). The cost of remedial education in higher education. Journal of Developmental Education, 25(2), 1-8. Retrieved from http://www.ncde.appstate.edu/resources/reports/documents/Outstanding_JDE_V25-2.pdf

Rising Health Care Costs in Higher Education

            From 2002-2003 to 2003-2004, the average health care premiums paid by colleges rose 11.9% (Glenn, 2005).  And from January of 2009 to January of 2010, the cost of providing health care to employees at institutions of higher education increased by almost 7% (Kirch, 2011).  This is more than 2.5 times the rate of inflation in the United States over the same period (Kirch, 2011).  And this fact remains even though the institutions are paying an increasingly smaller share of employee premiums (Kirch, 2011).  In fact, many of these employees who are now burdened with paying higher premiums may have never even had to pay premiums in the past (Glenn, 2005).  Therefore, there are a couple of different problems inherent here.  First, institutions and employees (and students) are paying more for health care, while not actually receiving additional care.  Second, institutions run the risk of not being able to recruit and retain employees (and students) because of poor perceptions about their fringe benefits (Kirch, 2011). 

            Kirch (2011) offers a few ideas for reducing health care costs for higher education institutions, the first and foremost being educating and involving its employees (and students) about prevention and healthy behaviors for lifetime wellness.  The author mentions that some colleges have begun programs that offer employees incentives, like lower premiums or vacation time, for exercising a prescribed number of times per week.  Kirch (2011) proposes that these efforts will benefit the institution through long term health care cost savings by creating a healthier student body and academic workforce, as well as a more satisfied workforce.  The author also mentions unique opportunities that institutions who act as insurer and provider have (Kirch, 2011).  He cited Penn State Milton S. Hershey Medical Center as an example.  Leaders at their medical center not only instituted a system of health care and wellness education, but they also tiered employee contributions based on income (Kirch, 2011). 

            Given the rising health care costs across the nation, and the ever-decreasing government subsidies to higher education (ironically, in many cases due to Medicare and Medicaid spending on the national and state levels), it is paramount that higher education institutions take a critical look at their insurance plans and the activities of their providers to find ways to reduce spending in this area.

Glenn, D. (2005). The health-care tussle. The Chronicle of Higher Education, 51(20), 21-22. Retrieved from http://vnweb.hwwilsonweb.com.ezproxy.memphis.edu/hww/results/getResults.jhtml?_DARGS=/hww/results/results_common.jhtml.35

Kirch, D.G. (2011). Higher education and health care at a crossroads. Trusteeship, 2(19). Retrieved from http://agb.org/trusteeship/2011/3/higher-education-and-health-care-crossroads

Students Receive Less Bang for Their Buck: Instruction Spending Down, Tuition Up

            From 1989 to 1999, student enrollment in degree-granting postsecondary institutions rose 9%, and from 1999 to 2009 enrollment rose 38%, from 14.8 million to 20.4 million (IES, 2011).  Given these trends, there has been an obvious need for increased student support services and administration across most institutions, both public and private, to accommodate the needs of a growing student population.  However, to what extent should the growth of these services outpace spending on instructional activities, and given the incremental increases in tuition, is the individual student gaining less value for his educational buck?

            Based on a study by the Delta Cost Project (DCP) and the American Institutes for Research (AIR) (Wellman et al., 2009), the percentage of overall institutional spending on student services and administrative support/maintenance has increased at a faster rate than instructional spending from 1995 to 2006, thus decreasing the overall share of instructional spending.  In fact, from 1993 to 2007, the number of full-time administrators per 100 students grew by 39%, but the number of instructional employees grew only 18% (Greene, Kisida, & Mills, 2010).  Again, since enrollment has increased so much, this statistic is justifiable.  However, over this time period the increase in tuition prices outpaced that of education and general spending per student , which suggests that institutions are not only spending less per student on instructional activities as compared to administrative services and student support, but they are also making students pay a larger amount toward the per student spending (Wellman et al., 2009).  Thus, ostensibly for less instruction, they pay a greater amount.  Of course, one could argue that capital spending on technology may have helped to reduce the per student dollars needed to give comparable instruction, but one could also argue that with increased enrollment institutions would achieve economies in both administration and student services.  That is, administrative staff, for instance, should be able to work closer to their potential as they serve more and more students.  For example, one bursar’s office employee may have handled 10 students per hour in 1995, although he could have handled 25.  Perhaps he was just doing crossword puzzles in his unused time.  So, instead of hiring two more staffers to meet the demands of 25 students, the institution can pay the one staffer based on cost of living increases over the years and save money on training and retaining two additional staffers. 

            One of the big problems with this “administrative bloat” (Greene, Kisida, & Mills, 2010, p. 1) is that traditionally students have paid only a small portion of these increasing administrative costs.  Federal and state subsidies, in addition to private donations, have largely insulated students from these costs.  However, as government subsidy decreases, students will bear more of the financial burden.  Therefore, higher education institutions need to focus more on cutting the costs of administration and student services by increasing efficiencies. 

Greene, J.P., Kisida, B., & Mills, J. (2010). Administrative bloat at American universities: The real reason for high costs in higher education (Report No. 239). Phoenix, AZ: Goldwater Institute. Retrieved from http://www.goldwaterinstitute.org/article/4941

Institute of Education Statistics (IES) website. (2011). “Fast facts: Information on postsecondary enrollment rates. Retrieved from http://nces.ed.gov/fastfacts/display.asp?id=98

Wellman, J.V., Desrochers, D.M., Lenihan, C.M., Kirshstein, R.J., Hurlburt, S., & Honegger, S. (2009). Trends in college spending: Where does the money come from? Where does it go? Washington, D.C.: Delta Cost Project. Retrieved from  http://www.deltacostproject.org/resources/pdf/trends_in_spending-report.pdf

Net Price Calculator

Baum, S., McPherson, M. (2011). Net-price calculators: A good first step. Retrieved from http://chronicle.com/blogs/innovations/net-price-calculators-a-good-first-step/28968.
On October 29, 2011, all colleges and universities, who participate in Title IV federal student aid, are mandated by the federal government to have a Net Price Calculator on their college website. The calculators use institutional data such as budgets (tuition, room/board, books, personal expenses) and award amounts to provide an estimated "net" cost to current and prospective students (Baum & McPherson, 2011).
The purpose of the net price calculators is to help parents and students make better informed decisions about where to go to school. The calculators allow for prediction in costs before enrolling in a college (Baum & McPherson, 2011). The success of the calculators have yet to be seen but will likely depend on the design utilized by each institution. The federal government template allows only for grant programs (i.e. Pell grant). Other templates allow for customization in which schools can ask specific questions related to a specific question. While the calculators will provide initial information, it will be important for the student and parent to go above and beyond to talk to the institution of choice before making any final decisions. Better decisions and guidance can lead to a better college experience (Baum & McPherson, 2011).

Financial Aid Fraud

In 2009, Trenda Halton was arrested for financial aid fraud that involved as many as 136 individuals posing as online students. Halton stole taxpayer funds by creating false documents and helped people take out Pell grants and Staffard loans. The so called “students” were scammers that pretending to be “online students” at Rio Salado Community College in Tempe, Arizona. Halton falsified documents such as social security numbers, drivers license numbers, tax returns and high school diplomas. Halton made between $500-$1500 for each “student” in the scheme. The grand jury indicted 64 people, 55 of them sentenced to time in prison and ordered to pay restitution. In 2010, Halton was sentenced to prison and ordered to pay $581,060. Trenda Lynn Halton recruited close to 136 individuals as part of a financial aid scam. She lead a financial aid fraud conspiracy in 2009.

Federal aid funds are limited so financial aid fraud limits availability of money for students that really need the funds. Money intended for real students was stolen from taxpayer funds. The sentencing and indictment of these individuals should serve as a deterrent to other people that may try to scam the financial aid system. In addition to the legal prosecution in the aftermath of an event such as this, college or universities should prepare beforehand. In order to avoid schemes like this the United States Department of Education and colleges and schools should require that financial aid administrators receive in-depth training on identifying fraud scams. Any individual participating in unlawful actions as it relates to financial aid should be prosecuted.

United States Department of Education (2010). Ringleader of $500,000 Financial Aid Fraud Scheme Sentenced to Prison 55 of 64 Defendants have been Sentenced to Date. Retrieved October 28, 2011 from http://ed.gov/about/offices/list/oig/invtreports/az052010.html

Unknown (2009). Grand Jury Indicts 65 in Arizona Student Aid Fraud Scheme. Fox News Online. Retrieved October 28,2011 from http://www.foxnews.com/story/0,2933,529000,00.html

Winner Take All

Selective higher education institutions strive to be the best in every area of the institution. These institutions fundraise aggressively and use the money to improve the institutions. Funds are generally used to enhance technology, construct or renovate buildings, increase research, and to recruit top students. This gives the institutions an advantage over other institutions that may not be able to allocate a lot of resources. Since these institutions have so many upgrades and enhancements they become more attractive to parents and students. Therefore, selective private institutions can drive up the price tag on higher education in order to set themselves apart from the competition.

Colleges or universities that have limited resources should consider ways in which they can control costs without raising tuition through the roof. The system of shared governance should come into play when evaluating the spending at the institution. Academic deans should be responsible for helping to control costs campus wide, not just at the department level. Also, trustees and alumni should be key players in backing the efforts of top administrators in controlling costs. Lastly, institutions should work with their competitors to share academic and administrative resources in order to decrease spending.

Ehrenberg, R. (n.d.). Tuition Rising: Why College Costs so Much. Retrieved October 29, 2011 from http://net.educause.edu/ir/library/pdf/ffp0005s.pdf

Change our expense habits.

Colleges and students allow money to walk out the door by making uneducated decisions on managing the campus’ facilities. There are a number of ways to improve efficiency and save both parties money, but these items are normally the last items of concern for either party during a hectic semester. However, that lack of focus needs to change.

Articles by The Best Colleges Online and Time Magazine highlight a number of improvements that numerous colleges have made in order to save money. From saving money on electricity, water, storage, waste, and many other ideas, these colleges have been able to save thousands of dollars annually. You will find some of these ideas below:

“Cutting Phone Lines: At the University of Washington, they’re cutting their land lines. The school discovered that landlines just weren’t necessary for the communications department (an appropriate department for the cut, we think). Although they kept common area land lines as well as lines for staff, department faculty no longer have their own phones, saving about $1,100 each month, and eliminating the department’s biggest line item.” (Best Colleges Online, 2011).

“Going Trayless: Cafeteria trays lend a festive, institutional flair to school eateries, but many campuses are ditching them altogether and seeing a huge savings. Williams College has cut trays, and estimates a water savings of 14,000 gallons. And although food costs are rising, Rochester Institute of Technology has a 10% lower food bill, attributed to reduced food waste since eliminating trays. An added bonus of going trayless? Students are less likely to pack on the "freshman 15" once they have to choose food carefully instead of loading up” (Best Colleges Online, 2011).

“Retrofitting lighting: At Arizona State University, the school took on a major project to retrofit interior and exterior lighting, improving lighting quality and reducing the energy demand of the lighting fixtures. There were 10,214 fixtures retrofitted over six months and 300 acres. Although an involved undertaking, it proved to be useful. The effort saved more than 1 million kilowatt hours, with a savings of $100,000 each year for the school” (Best Colleges Online, 2011).

“Rhodes hires students for professional staff positions: College jobs are great for students, and can provide excellent experience that will serve them when it’s time to graduate and move out into the career field. Colleges can also benefit from student work, and Rhodes College has created a program that serves both student and college by hiring students to work in professional staff positions. In addition to improving the resumes of the 25 students in staff positions, the college has saved $725,000 per year by hiring them” (Best Colleges Online, 2011).

“Dirty windows, dingy sidewalks: Power washing eats up a huge amount of money at Pitzer College. The college used to power wash its sidewalks and windows two times a year, but now does it just once, saving the college $80,000 annually. We’re betting that no one even picked up on the difference of a little bit more dirt on the sidewalks, but $80,000 is certainly worth noticing” (Best Colleges Online, 2011).

“Bryn Mawr College: Saved $900 when its women's swim team held a virtual meet against nearby Dickinson; each team's swimmers raced in their home pool, and then they compared times to declare winners” (Yan, 2009).

“Rochester Institute of Technology: Netted $10,000 by going digital, moving some athletics publications online” (Yan, 2009).

Considering that these steps are small in many ways, yet they add up in the long run. So much so, that tuition costs and other expenses, which are budgeted to these areas, could be used in more constructive means. Sometimes it takes a collective action to make a dent in the cost disease.


References:

Best Colleges Online. (2011). 20 innovative ways colleges are saving money. Retrieved from, http://www.bestcollegesonline.com/blog/2011/08/09/20-innovative-ways-colleges-are-saving-money/

Yan, S. (2009). Colleges find creative ways to cut back. Time Magazine. Retrieved from, http://www.time.com/time/magazine/article/0,9171,1921613,00.html

Improving data to tackle the higher education "cost disease"

Wellman, J. (2010). Improving data to tackle the higher education "cost disease." Retrieved from http://periodicals.faqs.org/201004/1980865751.html.

In order to tackle the cost disease issue, one must understand what has contributed to defining cost disease. Over the past few years, there has been a renewed focus on degree attainment and access. President Obama made it clear during the presidential elections, that he wanted to have so many degrees by the year 2020. The United States is straggling behind other countries in relation to degree attainment (Wellman, 2010). Rising tuition is the clearest of the diseases. Students, parents and institutions feel the pressure of rising tuition costs. Cost of tuition has been on a continuous upswing since 1988. Another issue relates to spending. While college costs are on the rise, institutions are not spending on the student (Wellman, 2010). State funding is decreasing each year knowing the gap can be filled by students through increased tuition. Public opinion strongly supports public education but is highly critical of spending and cost management (Wellman, 2010).
Wellman argues that data can impact the cost disease dilemma (2010). Partnered with the Lumina Foundation, the Delta Cost Project is providing important information related to cost spending and educational access and performance (Wellman, 2010). Such data include:
• Revenues by major source, per FTE and adjusted for inflation
• Spending by major function
• Relationship between spending and tuition increases
• Patterns of cost, price and subsidy over time
• Costs of degree and certificate completion
• Measures of average education and related spending per student (Wellman, 2010).

American Graduation Initiative

The issue of performance based funding is coming to light at both the federal and state levels. President Obama introduced a student aid bill in 2009, that would provide over nine billion dollars to community colleges. The goal of the increased funding is to increase the number of students who graduate. Obama wants America to lead the world in college degrees by 2020 and the administration realizes that community colleges will play a major role in achieving this goal (White House, 2009; AACC, n.d.).

The American Graduation Initiative will assist community colleges in creating new innovation and reforms. The administration understands that community colleges are often underfunded and lack the basis resources needed for instruction, and creation of reforms (White House, 2009; AACC, n.d.). The Community College Challenge Fund will allow community colleges to compete for grants that will help establish new reforms and innovative ideas. Colleges that receive the grants will have demonstrated improved educational and employment outcomes by building more relationships with business and community leaders, by expanding course offerings, and by improving remedial adult education programs (2009; n.d.).

The idea of research at the community college level is a fairly new concept. Typically, research has been the primary focus of universities. However, the initiative will support research centers whose mission will be to create, pilot and implement new measures of success so that students will have a clear picture of the effectiveness of the community college (White House, 2009; AACC, n.d.). In addition, the funds will help to close the achievement gap within community colleges by helping colleges to adopt new approaches to performance based scholarships, funding based on student progress and learning communities of students (2009, n.d.). Funding will also go towards the improvement of community college campuses. Many campuses were built many years ago and do not have the funds for upgrades or improvements therefore creating inefficient space for an ever growing population. Under the new plan, Obama would allot dollars towards community college facility investments that will expand the college's ability to serve the student and the community (2009, n.d.). Lastly, the plan will cover online or distance education. More and more students are looking for less intrusive and more convenient courses. The funds will help community colleges create more interactive software and will expand learning opportunities to rural areas or to working adults who have jobs and families (2009, 2010).

White House. (2009). Excerpts of the president's remarks in Warren, Michigan and fact sheet on the american graduation initiative. Retrieved from on June 27, 2010.
AACC. (n.d.). Background information and fact sheet. Retrieved from on June 27, 2010.

What board are doing and not doing in reviewing institutional costs

Wellman, J. (2007). What board are doing and not doing in reviewing institutional costs. Retrieved from http://www.nacubo.org/documents/research/WellmanWhatBoardsWeb.pdf.

Higher education finance topics tend to focus on rising tuition cost, decreased funding in financial aid and decreased funding in state appropriations (Wellman, 2007). While these issues are relative and important, a more important topic is how colleges and universities are spending their money. Cost management without comprising quality and access is just as important as rising tuition rates. Cost management can mean making informed decisions about spending based on data (Wellman, 2007). While governing boards play a primary role in strategic planning and oversight, it is unknown how they oversee actual costs, whether they are playing an effective role and how their effectiveness can be improved.  

The College Project conducted a study using focus groups and interviews with board members and college president's about the role of the board in relation to cost oversight (Wellman, 2007). The study revealed that college presidents and board members are highly concerned with funding trends and with more board involvement will strengthen accountability for cost management (Wellman, 2007). Although the presidents want to see more involvement, they do not the board consumed by the accounting side of spending.

It is important for colleges, universities and boards to take a closer look at spending. With appropriations being cut every year, they need to look at better business practices and doing more with less. Cutting costs does not mean cutting quality. There are ways to maintain quality while still cutting costs. Such ways include being transparent, identifying tradeoffs, being open and patient in analyzing costs and spending, developing benchmark data and involving every stakeholder involved in the decision making process (Wellman, 2007).

Funding Models for Community Colleges

In the study, Kenton focused on 12 funds revenue sources between 1990 and 2000 for community colleges in 10 Midwest states. Data was provided by NCES and IPEDS. Based on the study, four models of funding were identified and the models generated revenue over the HEPI. Primary funding for colleges comes from a variety of sources including tuition and fees, local taxes, state aid, and federal aid. Tuition has increased over the years while subsidies steadily decline. Funding sources vary by state. Some states rely mostly on tuition and fees whereas other states rely on state appropriations. Funding models are of importance to college administrators and some models yield more revenue than others. Funding sources are key for an organizational structure to survive. The resource dependency model attempts to explain organizational and interorganizational behavior in terms of what resources the organization needs to survive. Based on the study, the funding patterns for the colleges fell in line with the premise of the resource dependency model. When more funds are raised, the rate of spending increases or exceeds inflation. When funds are low, colleges look to other sources. If an open access policy is in place, less emphasis is placed on tuition and fees. If the primary focus is serving the local community, more emphasis is placed on local appropriations.

Kenton, C. (2004). Funding models of community colleges in 10 midwest states. Community College Review, Winter 2004.

Managing costs through wise practices so productivity increases

The challenge for institutions is to help more people achieve higher levels of education and to use resources and funding wisely in the process. The National Center for Higher Education Management Systems report offers policymakers, state leaders, and institutions new strategies for fostering improvement in cost-effective ways. It also provides a set of policy levers that can help spur change (NCHEMS, 2007 #04-7).

           

For those states that do not perform well in increasing the educational level of their population, the results show that the economic outcome will be seriously negative. If current trends continue, the proportion of workers with high school diplomas and college degrees will decrease, and the average personal income of Americans will decline over the next few years.

There are several areas that can assist the universities in their goal of improving the quality of education.  One of those that I personally work in is the adult education programs.

It is important to improve the preparation of traditional college-age students,  but states can also improve the preparation of adults for continuing their education or training. For example, this can include encouraging adults to complete a high school-level education, usually through a GED, and offering a specialized postsecondary curriculum targeted to those who have not participated in an educational program recently.  One example is the program called KYAE, the Kentucky Adult Education program, that works with universities to assist the over one million adults needing an education.

Several pages of examples of ways to increase productivity were outlined in the report.  Some of those included: “improving productivity encompassing a range of actions, including conducting system and institutional audits, redesigning courses to introduce more technology, developing incentives and better aligning course offerings with student demand, and shortening time-to-degree from five or six years to three or four."  I know that several universities are offering shortened degree completion programs for non-traditional students.

There are no magical cures for all issues related to cost.  Every strategy for raising productivity, improving quality, and containing costs should be examined closely, and then adapted to the conditions of particular states or institutions. This report states that "most strategies, including our examples, can have a major impact on educational productivity only if implemented on a large scale, across many institutions or entire states."

                                              Reference

Callan, P., Ewell, P., Finney, J. & Jones, D.   (2007).  Good policy, good practice. Retrieved October 29, 2011 from http://www.highereducation.org/reports/Policy_Practice/GPGP.pdf

Effects of Student Retention and Graduation on Cost Disease

           A major contributor to both higher costs for institutions, students, and taxpayers and lower productivity is the relative low graduation rates of degree-seeking students.  A study by the American Institutes of Research (AIR) estimated the costs f full-time degree-seeking students who began college in the fall of 2002 (Schneider & Yin, 2011).  Those who did not complete a degree within six years cost an estimated  $3.8 billion in income to themselves, $566 million in lost federal income taxes, and $164 in lost state income taxes (Schneider & Yin, 2011).  These estimates were made based on US Census Bureau data that show that graduates between the ages of 25 and 34 earn about 40 % more than their non-graduate counterparts (Schneider & Yin, 2011).  Although the AIR’s estimates excluded the effects of part time student dropouts and the successful graduation of transfer students, the effect of dropping out is still evident, lost revenue.  This study also does not account for the wasted spending, in tax dollars, by federal, state, and local governments in subsidizing the educations of those students who do not complete their degrees.

            However, another study conducted by the AIR estimates the wasted government spending on community college dropouts.  The study estimates the amount of money spent on first year community college students who do not return for a second  year over the 2004/2005 to 2008/2009 academic years.  They find that $3.85 billion in federal, state, and local appropriations and grants was spent over this time period (CollegeMeasures.org, 2011).

            These data show evidence that institutions, students, and taxpayers are wasting both money and time on students who do not complete their degrees.  To what extent these dropouts effect the greater economy is arguable, and needs more compelling evidence, but these studies provide evidence that time and money are spent to help students earn a degree that they do not complete.  A possible solution for this problem is to delay acceptance into an institution by a year so that students could prepare for the challenges that lay ahead.  Some people view college as a time period to postpone an adult life style or an attempt to “figure things out.”  Higher education should not be viewed as a “time out” period. but as a means to achieve one’s professional goals.  In actuality, the demands of balancing education, work, and family provide more conflicts and dilemmas.  Universities and colleges could accept students and provide an orientation a year in advance as an attempt to allow the student to consider lifestyles changes.  This time period would allow for reflection and rededication of their educational and professional goals. 

CollegeMeasures.org website. (2011). Community college dropouts cost taxpayers nearly $4 billion. Retrieved from http://collegemeasures.org/post/2011/10/Community-College-Dropouts-Cost-Taxpayers-Nearly-244-Billion.aspx

Schnedier & Lin. (2011). The high cost of low graduation rates: How much does dropping out of college rally cost? Retrieved from http://www.air.org/files/AIR_High_Cost_of_Low_Graduation_Aug2011.pdf