Self-inflicted Problems of Higher Education: Part 3

In parts 1 and 2 of this series of columns, I presented data on the long-term rapidly rising costs of tuition and fees at U.S. public colleges and universities: 225 percent increases in real terms from 1984 to 2014, versus 25 percent in median family income, which measures folks’ ability to pay.

These increases have led to average student debt of $29,900 for 69 percent of graduates and parental debt of $37,200 for 14 percent.  As federal student aid rises, colleges raise their charges to absorb the new money available.  Student debt now totals $1.67-trillion, a large part of our total public and private national debt, which long ago passed sustainable levels.

I explained the money is going to administrative bloat, emphasis on research over teaching, and paying excessive compensation all across campus.  Aggregate numbers of administrators rose by 2012 to almost one per university faculty member.  But no one seems to know in the aggregate who these people are or what they do.  Yet, they are paid better than folks in comparable positions outside academe.

For faculty, research tends to crowd out excellence in teaching.  And university professors’ pay is as bloated as for administrators.  Compensation bloat is not a problem in our community colleges, nor among graduate teaching, grading and research assistants and adjunct faculty.  They are part-time and poorly paid.  As a Nevada Regent, I observed all these phenomena.

The key problem of higher education is the same as for K-12 public education and the rest of the public sector: The enterprise is run for the benefit of the employees, not for the benefit of students, other clientele, taxpayers and families paying the bills, nor for the public interest.

Twelve years ago, in a major article for the Chronicle of Higher Education, I pointed out that higher education – and all education, health care and the whole public sector – suffer from “cost disease”.  That is the problem of showing no gains in productivity over long periods of time and little business model innovation because they do not really embrace opportunities made possible by technological progress.  Competitive sectors of the economy necessarily embrace all this.

In that article, I attributed the problem to the cost-plus budgeting methods used in higher ed and the public sector in general.  That is, they start with the previous year’s budget and plug in increases for “maintenance” (inflation and scheduled cost increases), “head counts” (more students) and “enhancements” (often noneducational mandates of dubious merit), while ignoring needs for real gains in productivity (more output for fixed or reduced total inputs).

I noted: “The rest of the world doesn’t work that way.  It works by continuously doing more with less [or the same amount] – not just more with more.”

Having served six more years as a Regent since I wrote that and four years as Nevada Controller, I now recognize that attributing the problem to a budgeting structure was too kind.  In fact, it’s the people in higher ed and politics that are responsible.

Begin with faculty, administrators and Regents – the vested interests.  They actively embrace the cost-disease-causing budget model and mentality.  Search their proposed budgets in vain for incorporation of productivity gains and business model innovation.  When I wrote the article, those groups were beginning to discuss online and other new educational delivery methods.  But the Chancellor and administrators assured us those methods would yield cost increases, not savings.

When the Governor’s proposed budget goes to the legislature, higher ed sends more people to influence legislators than does any other part of state government I’ve observed.  This reflects the administrative bloat discussed above.

Instead of suggesting that such a turn-out means higher ed’s administrative budget should be cut, legislators are overwhelmed.  In recent years, due to budget constraints, they have cut state funds and maneuvered higher ed into increasing the tuition, fees and “self-supporting” funds charged to students.  Robbing Peter to pay Paul.

The Coronavirus recession is already causing businesses to more aggressively embrace new technology and business models to cut costs – and even some of the public sector to do the same.

Next time: How new bypass institutions and methods fostered by the recession will force public education to adapt or die.