Over the past week, a number of research reports, responses, and presentations have reinforced several intersecting themes:
• America needs to reach its targets for raising educational attainment and economic competitiveness if we are to thrive as a nation and a civil society;
• These rising expectations collide with the reality of diminished resource capacity from state and federal governments, learners and their families, and many corporate and philanthropic sources;
• In order to achieve its attainment goals within the resources likely to be available, higher education will find it necessary not just to pursue efficiencies and new sources of revenues but to reimagine its offerings and to reinvent policies, processes, and practices..
• Enhancing learner access, affordability, and success, combined with reimagination and reinvention, can establish a new plane of financial sustainability for American higher education.
Reimagining higher education is an imperative. Moreover, the timeframe to begin strategic action is narrow – and the clock is ticking.
The Delta Projects: Troubling Trends in College Spending
The Delta Project released its latest report, “Trends in College Spending, 1998-2008, which answers the three questions: 1) Where does the money come from? 2) Where does it go? and 3) What does it buy? The report is a treasure trove for readers wishing to crawl over data addressing these issues. Throughout, interesting and troubling insights emerge. Several conclusions emerged from the report and are paraphrased below:
• Sharp increases in spending between 1998 and 2003 by a handful of colleges and universities, creating competitive pressures on spending everywhere.
• Regular cycles in funding for both public and private non-profit institutions: up in good times, down in bad. The one constant is growing dependence on tuition revenues, now the most stable and predictable source of revenues in higher education.
• The share of spending going to pay for instruction has consistently declined when revenues decline, relative to growth in spending in academic and student support and administration. This erosion persists even when revenues rebound, meaning that over time there has been a gradual shift of resources away from instruction and towards general administrative and academic infrastructure.
• Except for private research universities, tuitions are not increasing because spending is going up. They are going up because of cost-shifting—meaning that instead of cutting spending in the face of revenue declines, institutions consistently shift to higher tuitions.
• There are wide variations between states in the ways they invest in higher education. A few states have actually increased spending for higher education over this decade, although many did not. There has also been a slight shift in state subsidy patterns, away from public research universities and toward masters’ and community colleges.
Jane Wellman, Director of the Delta Project concludes, “The depth of the funding crisis is such that more than ever before in our history, there is widespread consensus that the “cost model” for higher education is broken.”
She goes on to say, “The current prolonged recession means that we can no longer expect new revenue to pay for increasing attainment in higher education. In the next decade, we are going to be lucky to hold onto the resources we have. That means that all institutions – from the Ivies to the community colleges –are going to have to develop investment strategies that support goals for attainment. That will require new habits: looking at spending, and promoting the values of efficiency and cost effectiveness as co-partners to the never-ending search for new revenues.”
Troubling Inequalities in Resource Distribution. Probing into the details of these findings is troubling to anyone concerned about the patterns of resource distribution among the different types of institutions in American higher education and the rising cost of education to learners and their families. The compounded impacts of the patterns described by the Delta Report suggest how difficult it is going to be to raise educational attainment, the responsibility for which will largely fall to institutions such as community colleges and public universities that are resource strapped.
The insights from the Project Delta Report reveal why thoughtful educational leaders feel a state of cognitive dissonance. At the very time when many elite private American universities place near the very top of the international league tables on reputation, public universities and community colleges find their resources constrained, dangerously.
Taking Actions a Step Farther – Richard Vedder
In a July 9 posting in The Chronicle of Higher Education titled “The Delta Cost Project Report and True Reform,” Richard Vedder, Director of the Center for College Affordability and Productivity, extends this argument a step farther. While he supports the basic foundation of the Delta Project Report, he believes their conclusions do not go far enough.
“All the talk about increased access, greater affordability and enhanced accountability is just that: talk. The three "A's make for good rhetorical flourishes, but what is needed for real transformation and rising productivity is attention to the three "I"s—information, incentives, and innovation…..In short, part of the problem is that colleges fail to collect or disclose key information needed in assessing programmatic performance—you cannot solve a problem if you don't know what it is. Are students learning much? How do they fare after graduation relative to those attending other schools? Do anthropology majors fare better than those in physics? etc. etc. Who knows? For a sector that worships research, the amount of money devoted to R and D towards improving higher education performance is pathetic……Paying attention to the first two "I"s will lead to the third I—innovation—new uses of cheap capital (e.g. computers) as substitutes for expensive capital (e.g., faculty), etc.”
Vedder has long been on record in support of technology in education, Open Educational Resources (OER), less expensive educational options, leveraging innovation, and challenging existing practices. In order to achieve the enhancements that are the mission of the Center for College Affordability and Productivity, higher education will need to embrace action-oriented analytics and leverage those analytics to achieve reimagination and reinvention.
SCUP Highlights the Reimagination of Higher Education, Post Recession
The reimagination imperative was taken to an even higher plane at this week’s annual conference of Society for College and University Planning (SCUP). At SCUP 45, a number of speakers at plenary sessions and workshops discussed the need for higher education to leverage technology as an instrument of transformation.
Linda Baer, Program Officer at the Bill & Melinda Gates Foundation, and Donald Norris of Strategic Initiatives staged a workshop specifically on the topic of “Reimaging Higher Education, Post Recession.” Baer and Norris stated the following basic premise:
“In order to lift out of recession, higher education needs to leverage its use of technology-enabled process reinvention and analytics, focusing on performance and value. Institutions must discover, demonstrate, and deploy operational efficiencies, innovations, reimagined processes and practices, and fresh sources of revenue – all at once.”
A Narrow Window of Opportunity. This message captures the spirit of both the Project Delta Report and the Center for College Affordability and Productivity. But there is another element to this message: time. American Higher Education is in the midst of recession-driven budget adjustments, which in the past have predominantly resulted in cost shifting to tuition revenue rather than the preferred package of: 1) strategic budget cuts, 2) innovation-led transformation, and 3) reinvention of processes and practices. .We are already two to three years into such adjustments and are facing at least three more years of recessionary-based woe. Unless institutions react quickly to “put a strategic face” on their reactions, we will miss a signal opportunity. So far, we have ignored the admonition that “a crisis is a terrible thing to waste.”
Smart Leadership to Shift from “Muddling Through” to Strategic Innovation and Tranformation. Linda Baer, Anne Hill Duin of the University of Minnesota, and Judith Ramaley of Winona State University presented a paper at SCUP 45 on “Smart Change: Tools for Strategic Planning and Adaptive Change.” This presentation continues a string of papers and publications on smart change from these authors. In their work, they suggest the parameters of the kinds of leadership and processes needed to promote institutional smart change that engages the future strategically, not incrementally – or decrementally.
The following timeframe emerges when we apply the principles of smart leadership to the imperative reimagination of higher education.
2008-2010 Campus leaders have been “staunching the flow” and muddling through, leveraging stimulus money, raising tuition revenue, and making short-term adjustments, and hoping for the best.
2010-2013 Cutbacks will continue, especially as the impact of the stimulus wears out. Most institutions will continue to muddle through. They will lose the chance to act strategically. Five or six years of muddling through will consume all remaining organizational slack and capacity to scale innovations.
On the other hand, smart leadership at particular institutions will use this period to craft new strategies and reimagine practices to enhance performance and value for “the New Normal” of diminished resources and enhanced new demands for greater student access, affordability, and success.
2013-2020 State revenues and funding will not rebound as they have after past recessions. Even when revenues do recover, there will be other demands on the public purse and Federal Budget Reduction Initiatives. At the same time, the capacity of learners and their families to pay for education will continue to erode and they will seek greater “value” from learning providers. They will be more discriminating and imaginative in seeking solutions. to their learning needs (See July 10 blog “The Changing Meaning of Value for Tomorrow’s College Students)
Smart leadership will use this period to strategically realign institutional practices to the New Normal,” reinventing processes and developing organizational capacity in tandem, responding to changing learner value propositions, improving student success, and rediscovering financial sustainability..
2020 By 2020. strategically realigned institutions will have achieved a new plane of financial sustainability, with significant changes in capacity, policies, and practices. Their vision and offerings will be responsive to the changing value propositions desired by students in 2020.
Reimagining Higher Education and Planning from the Future Backward. So how should institutions engage in two concurrent tasks:
1) Reimagine themselves in a condition of financial sustainability for 2020? and
2) Identify and launch a combinations of actions to achieve financial sustainability – efficiencies,; scalable innovations; reinventions in policies, processes, practices, and partnerships; and new revenues (with raising tuition increasingly difficult) – starting immediately.
These topics shall be the focus of the next blog in this series: “It’s Time to Reimagine Higher Education (II) – Planning from the Future Backward. .