0 The Unintended Consequences of Ending Shared Governance

As I wrote in my last post, efficiency-minded legislators are raising questions about the role faculty play in decision-making on campuses across the University of Wisconsin System, and whether shared governance represents an expensive and wasteful practice.

I understand where these folks are coming from. Involving more people in decision-making is costly, in terms of time in particular.   But attending only to those costs without considering the benefits is short-sighted and will generate unintended consequences.  This is because economic evidence indicates that the costly process of shared governance generates cost-savings as well.  It seems that without the cost-savings generated by shared governance, college would be even more expensive for Wisconsin families.

Professor emeritus Robert Martin of Centre College explains this counter-intuitive process in a set of papers written over the last 15 years, and most recently summarizes his conclusions in a paper written for the American Enterprise Institute, titled "Higher education governance: a barrier to cost containment." That paper examines the hypothesis that former student Regent and current Representative Robin Vos expressed at the recent Regents meeting: that "facets of the governance structure push higher education toward higher costs, minimal transparency about outcomes, and a low level of quality control."

Martin finds that Vos is right in one sense-- the governance structure matters for college costs.  But his evidence points to the opposite conclusion that Vos and his colleagues reached-- the answer is increasing the faculty role in governance, not decreasing it. He describes this finding using clear and accessible prose in a piece authored for the Chronicle of Higher Education, "College costs too much because faculty lack power."  In it, he explains that "it is not the "shared" part of "shared governance" that has failed; quite the opposite. The fault lies in the withering away of the shared part. Reason and data alike suggest that the largest part of the problem is that it is administrators and members of governing boards who have too much influence over how resources are used."

In a recent email to me, Martin provided an analysis of the University of Wisconsin-Madison, where the trends mirror those described in his national work. In his words,

 I attach a Word file that contains a summary statistical table for University of Wisconsin-Madison (see below) that corresponds to Table 1 in my SSRN article with Carter Hill on "Measuring Baumol and Bowen Effects in Public Research Universities." There are several things to note. 

1) The dramatic increase in reported spending for instruction, research, and public service after 2008 [which supposedly] came out of overhead and into academics. See my SSRN article on "management" of financial reporting in higher education -- that article will be published this month in Challenge. [Note to readers: this paper concludes that while this apparent resource reallocation might be legitimate, they may also be indicative of a new "management" of financial reporting that simply reclassifies expenses, as frequently done by corporations.]

2) If you look at the pre- and post-2008 staffing patterns for academics versus administrative staffing you will see reductions in academic staffing and increases in administrative staffing after 2008. So, it is hard to explain where the supposed increases in academic spending and reductions in overhead spending could have come from.

3) Throughout the 1987 to 2008 period the university economized on the use of tenure track faculty while rapidly expanding the number of nonacademic professional employees.  If tenure track faculty are the primary cause of higher cost, it is clear they are not very good at looking after their own interest.  Clearly, tenure track faculty would want more of their own and fewer contract and part time faculty and would not prefer more administrative staff.

 
 
































While I appreciate Robin Vos's attention to college costs, on behalf of Wisconsin families I do hope he will take this information into account when deciding how to work on lowering them.  Relying on instinct rather than evidence could have disastrous consequences for the state's future workforce.

0 What We Need to Hear from the President

Reviewing the range of responses to President Obama's plan to reduce college costs, and the questions that are being raised on Twitter, it seems important that the Administration clarify a few things sooner rather than later.

1. This effort to reduce college costs is a first step and thus it is not intended to solve all problems.  The President should say something more specific about the ultimate goal and what it would look like in practice. Are we working towards a free community college education? Are we trying to close achievement gaps?  What is the intended outcome down the road?

2. This is not NCLB for higher education.  The President needs to assure the public that he is not calling for standardized testing, the end of professorial tenure, or a focus on specific fields or majors.  He is trying to help more Americans access the quality post secondary education they seek, not water down quality or redefine what matters.

3. This is an effort to protect public higher education, not destroy it.  This needs to be said loud and clear, and the President's commitment to community colleges in particular must be emphasized.  Too many community college leaders are distressed at the roll-out of these plans, and I did not think that was intended.

4. This is also not an attempt to end for-profit or private higher education.  The purpose is to ensure that Title IV is spent in ways that support national needs, not to define the entire range of opportunities that can exist.  It is certainly possible to support private and for-profit educational providers without insisting that the federal government should also subsidize them.

5.  The President is not insisting that everyone must go to college-- he is  trying to help make the American Dream a reality by decoupling family income from educational opportunities.

Now, if I'm correct that these are all statements the President and his Administration can agree with, let's move on to figuring out how to take aim at the underlying inefficiencies in the current financial aid system using institutional accountability.

I think it would be a mistake to subject all institutions to metrics anytime in the near future. Most colleges and universities are good actors, keeping college costs down as long as states do their part. What we need to do as a starting point is to get a handle on (a) the bad actors and (b) federal investments that are ineffective and unnecessary.

Which schools fall into those categories? Here's a start.

BAD ACTORS

1. Institutions whose primary revenue source is Title IV.  Let's say those who get at least 75% of funding from Pell and/or student loans, for example.  These schools aren't operating based on market demand but rather are propped up by federal aid.

2. Institutions with selective admissions (say less than 75% admitted) and low average graduation rates (less than 50% over 5 years).

INEFFECTIVE, UNNECESSARY INVESTMENTS

1. Institutions with large endowments per student.

2. Institutions serving very few Pell recipients (regardless of whether this is due to admissions practices, costs, or a decision to simply be small).


If we could ensure that federal student aid no longer supported these schools, we would see fewer students attend these schools, their prices would likely fall (or they would close), and/or at minimum we'd save money that could be spent elsewhere.

If that were the first stage, then the Department of Education could begin by publishing these lists of problematic schools, issuing a warning that they have three years to get off the list or lose Title IV.


The other big issue is how to get states back to the table.  There could be a separate list of states that are put on probation based on a failure to match federal investments in higher education with state investments.  All colleges and universities in those states should be put at risk of losing Title IV-- including the privates and for-profits-- and given 5 years to address the problems.

None of this is perfect, of course, but they get us thinking about a more targeted, incremental approach to reform.  What do you think? What would you include?

0 Mr. President: Don’t Cave to the Higher-Education Lobby

Cross-posted from the Chronicle of Higher Ed.
 
Over all, I’m a fan of President Obama’s proposal to rate colleges and link the results to financial aid. The plan is to give students attending institutions rated high—on such measures as tuition and graduation rates, debt and earnings of graduates, and the percentage of low-income students enrolled—larger grants, as well as lower-interest loans. The proposal ends the “tinkering” that most higher-education reform has pursued; it aims squarely at the main drivers of college costs: private and for-profit institutions (and their happy followers, the elite public flagships) and states.

That is the approach my colleagues and I argued for in a recent paper for the American Enterprise Institute. “Recent national opinion polls indicate that 74 percent of Americans believe that higher education is unaffordable, and 92 percent of college presidents agree,” we noted. “While analysts have offered several potential explanations for this perception, one has not garnered much attention: The lack of perceived affordability may stem from the financial aid system’s strong focus on the behaviors of ‘student-consumers’ rather than education providers.” Several recent policy papers from HCM Strategists, Education Trust, New America, and others have taken a similar line.

Instead of merely tying accountability to campus aid (a paltry sum), this time Obama seems to be talking about all of the programs authorized under Title IV of the Higher Education Act of 1965, such as Pell Grants, federal Supplemental Educational Grants, Perkins Loans, and Federal Subsidized and Unsubsidized Direct Loans. He’d better be, since if he simply aims at the Pell Grant, he’ll be taking on the only need-based entitlement program that does heavy lifting. Colleges that won’t commit to providing accessible, affordable, high-quality postsecondary education should not be receiving federal Title IV funds, period.

The devil, as always, is in the details. I’m very, very wary of poorly designed accountability metrics. In elementary and secondary education, these have been a disaster, because they aim at teachers (whose performance is as much a symptom of context as a cause of outcomes), they focus on standardized tests associated with a narrow set of educational intentions, and they are focused only on public schools. That’s absurd. In contrast, higher-education accountability should be aimed at decision makers (administrators and states); and measures like how many students complete programs and degrees should be directed at all institutions receiving Title IV via their students. Don’t forget that American higher education is dominated in its rhetoric and the “standards” it sets by private institutions, which have knowingly helped the public false equate cost with quality and selectivity with “good schooling.” Clearly a different metric is required.

Obama needs to unmask the devil here, ripping off the shield behind which institutions hide. If expensive schools are so “worthwhile,” then they should be able to admit the kinds of students that public universities admit, rather than creaming off the top. If their expenses are so merited, we should see bigger gains at private elites than at we do at less-expensive institutions, not just higher graduation rates. None of that is happening now.

Obama needs to call out the bad actors in public higher education too—those institutions that fancy themselves private and, in doing so, discourage social mobility for those who need it most. His decision to stand at a New York State public institution today rather than at the quasi-private University of Michigan at Ann Arbor is a good one. He is standing to protect those comprehensive state public universities and their students.

Now, what I’m unimpressed by is that Obama felt the need to take a sideswipe at Pell recipients when releasing his plans. Why is he suggesting that we need to stretch out the disbursement of Pell Grants across the semester when there is not a shred of evidence to suggest that this is necessary, effective, or even possible for colleges to do without raising costs? I can think of just one source of this idea, a project dubbed “Aid Like a Paycheck” from the Institute for College Access and Success and MDRC, a research group. It’s really sad if Obama has been pitched this idea based on two small case studies at two exceptional California community colleges.

Look at Twitter today. Students are desperate for their “FAFSA dollars” to arrive so they can pay their bills. College costs must be paid upfront, so aid must be awarded that way too. Financial-aid officers have enough on their plates already; they don’t need to deal with multiple payments. And, most important, the mythical Pell recipients who supposedly take their aid and transfer only to get a second Pell are about as real as President Reagan’s  welfare queens in limos. You don’t need to drink that Kool-Aid and attack poor students, Mr. President: Take on the hard work of getting American higher education focused on the needs of students rather than the needs of institutions.

You can do it, and we Americans will back you every step of the way, as long as you do not cave to the private higher-education lobby. Do that, and this was all for nothing.