PUBLIC FOR-PROFIT?

This post will be a bit more free-wheeling. My thoughts have been on the for-profit higher education industry and its merits and demerits. Let’s start with the good.

The Tea Partiers should love University of Phoenix. It represents the supposed maxim that if something can be done privately than why are we doing it publicly? The for-profit model is accelerating and has been one of the few highly-valued stocks on Wall Street during the recession. These institutions privatize higher education and remove the “burden” from the public to subsidize that portion of the education. For every student who chooses to go to the private for-profit just increases the total amount of education without increasing the total cost to society.

Taken from this public benefit viewpoint, our public institutions should embrace the for-profits as partners in educating the population. They provide a valuable service in meeting the needs of students which our public institutions simply don’t have the capacity or ability to meet. They provide competition which increases efficiency and kindles innovations. Surely to meet the goals of increasing our education levels in the state, these for-profits must play a role, especially in adult education. We should all be thanking them for their service.

But, we don’t.

Unfortunately the dots just don’t line up.

First, these for-profit schools are primarily funded through federally guaranteed tuition loans. Making an average profit of 15%, these for-profits saddle associate degree students with law-school-like debt. And then they wonder why they have nearly 30% default rates. These institutions treat students like annuities not a future workforce. The curriculum is centrally developed and administered in a canned formula. Compared to the no-profit and public sector which spends roughly 2% on marketing, these media giants expended nearly a quarter of their budgets branding their image as “college” or “university” and thus attempting to incorporate the public trust by reference to age-old notions of academia. And thus the distrust.

There must be some middle-ground. The future of higher education is not solely based in either model. The state system which first figures out a way to get the two industries cooperating in a mutually beneficial manner will outpace the world in education innovation and development. Both sides must recognize that its model has weakness that the other has conquered. The next decade will see a pivotal mark for higher education. As state budgets continue to marginalize higher education, the public sector will be forced to resemble the private sector. The institutions will become “state supported” and not “state governed.” We might as well begin learning which aspects of the “business” can be incorporated into a public, mission-based model. The sooner we realize this, the better off we will be.

Not how much but simply how

There is a perception about government as insatiable. Legislatures don't even act how much money is needed because the only answer will be "more." In government, and particularly in higher education, we assume a link between resources and outcomes. More money will automatically mean better schools and better education. A study by the National Center for Higher Education Management Systems, however challenges this assumption.

The correlation between money and quality does not seem to pan out. NCHEMS compared the total revenue from state and tuition dollars and looked for correlations in educational performance. The result was a surprising disparity across the nation on what states are getting for their money. Performance was not based on quantity of funds but rather and the placement of the funds. The efficient schools spent noticeably higher proportion on academic support (e.g., faculty development, teaching and learning centers, and academic support staff such as tutors and counselors). When institutions focus on student learning they are more efficient.

What does this mean practically?

Institutions should reevaluate spending patterns and examine the level of funding going towards academic support. At the post-secondary level of education we often hire faculty not on teaching prowess but on research or other academic accomplishments. Perhaps we too often assume that someone who leaned well can also teach well? The NCHEMS findings suggests that perhaps this assumption is not as merited. Increased focus on teacher development can help professors better develop courses and strategies to assure student success. Spending in this area is more effective than other student services and perhaps ought to take greater priority.

What is a King without an Army?

I think there are many advantages to giving judges the power to declare acts of legislatures void. First, Judges (especially at the Supreme Court level) are very smart. This does not mean they do not have political or personal predilections, but generally they have to "reason" to the result the provide. As the history of the relationship between the judiciary and the legislature in the United States has unfolded, the Judiciary has taken a relatively deferential approach to legislative enactments. This is good. But beyond good, it was necessary for the courts to remain legitimate. The nine judges who make up the Supreme Court cannot "enforce" their rulings. If the Court pushes "activism" too far, it loses its legitimacy and it authority. The Court cannot enforce its ruling. They are kings and queens without armies. They must lead by reason and persuasion, not force. There is brilliance in this. It makes sense to put a "rational" check on the executive and legislative powers. This not only provides an outlet for the people to check the use of these powers, but the check is worthless if the people disagree.

Two Strategies to Change Community Colleges

An earlier paper addressed the need for increased attention on Utah’s community colleges. This paper will briefly address two strategies for increasing that attention.

Change the Lens

When President Obama announced his community college plan he did so as an economic program rather than an education program. Perhaps, community colleges have become increasingly seen as “the stepchild of the higher education system.” We tend to cobble all public higher education into one group and talk merely about education. We assume that all students, no matter which school they attend, have the same objects and goals for their education. This assumption is becoming increasing suspect as the past decade has seen a large growth in non-traditional students who may be seeking limited workforce training or personal enrichment. Community colleges have been cast as more of a “college” than an integral part of the economic “community.”

Utah should begin to change this lens on all levels of higher education, but particularly at the community college level. Efforts to spur regional economic growth and creating regional well-paying jobs should be the public focus of community colleges. Community colleges must be active players in their respective, well, communities. Listening to constituent feedback and responding to unique economic pressures. While this may add the politicization of higher education, it will help individuals realize there is much more to community college than two more years of public education.

Become More Selective

Community colleges have been the nation’s “open access” institutions. Unfortunately this has lead to a common perception that community colleges are somehow less than other institutions. The mission of “open access” speaks not to the quality of education but to the population it serves. Providing quality education to underprivileged does not make the education any less good.

Community colleges can combat this image by enhancing its mission as a community institution. The institution could provide a “preference” for students from the “community” the college serves. The preference may be superficial (merely stated in policies) or real (an actual tuition waiver or priority in registration) but it will change the perception that community colleges somehow deliver a less-good education. At the very least, the move will create movement and thoughts for further reform. It will draw attention to the institution and create an alliance between college and the community.

Conclusion

I am not convinced that these two suggestions are the solution to all problems, but pushing the line on traditional thought must be done to enact progress towards a better model.

Is remediation the responsibility of colleges?

Education is considered “remediation” if it involves re-teaching subjects to students that was originally taught in secondary education. The subjects most often taught in remediation are high school math and English. Roughly 33% of all incoming students require remediation. The burden on colleges to provide remedial education has increased with enrollments and the cost of teaching the same subject twice has some administrators wondering if colleges should even engage in remedial course work.

The debate surrounding remedial education hits on ethical and social obligations of colleges. Public colleges have a variety of constitutes and responsibilities. First, colleges have a responsibility to provide an education to the students. Second, there is also a responsibility to the public to use tax dollars effectively and to support the state’s interest in its future populace. If the declining public aid to colleges is any indication, the public wants colleges to spend less and students want them to spend more. This delicate balancing of constituencies may lead to conflicting responsibilities. Remedial education is one example.

The public pays secondary educators to teach high school-level math and English. When student enter college without having adequately grasped the concepts in high school, the college is forced to spend public dollars to teach the same subject again. The college is stuck deciding between two constituencies—preserving public dollars and providing a second chance to students.

If colleges side with public demands of more efficient use of tax funds, students are worse off. When a college refuses to provide remedial education it punishes students for attending high schools that do a poor job of preparing them for college. Additionally, studies have shown that not having remediation significantly increases the risk of dropping out of college. The public fails the student, not once, but twice, when it does not provide remediation.

The problem can be softened by removing the artificial distinction between secondary and higher education. The very question “is remediation the responsibility of colleges” implies a sharp distinction between colleges and high schools. This distinction may be rooted in American history and tradition, but it may hurt rather than help in this instance. Colleges should become more involved in helping students finish the senior year of high school and bridging the jump to college. Partnering with high schools will more efficiently use public dollars as well as meet the obligation to help student succeed. As the curriculum of high schools more closely aligns to expectations of colleges students will be better prepared to make the jump to higher education.

Remedial education is not only the responsibility of colleges, but of the entire public. The focus should not be to put students in a antithetical position to the public, but rather to collaborate together to find the best solution. Surely we must expect more of student in high school. The expectations of colleges must be clearly communicated. Students must be given the opportunity to meet those expectations. But to frame the question as a “us versus you” and trying to shirk a public responsibility because of money only side-steps the question. It’s our kids we’re talking about; it’s our future.

The Importance of Peers

Everyone seems to agree that peer pressure is real. Groups have effects on individual behavior. Sometimes this is a bad thing when it involves social vices (violence, drugs, promiscuity) but peer pressure can also promote positive outcomes (kindness, love, and compassion). But can your peers actually have a substantive effect on your intelligence? Does simply associating with smart people make you smarter? This question has received large amount of anecdotal discussion, but very little scholarly discussion (perhaps because of the difficult nature of measuring the peer effect). The question, however, is not without substantial policy implications. For instance, you agree with many scholars in asserting that peers do affect ability to learn (i.e., students learn better, faster, more deeply in the company of able students than with weak ones), than would there be an aggregate increase of learning if admissions into higher education institutions were based on random selection (rather than test scores or gpa). Or perhaps there is a proper formula for the idea classroom or freshman class. Additionally, how does the increasingly impersonal technological world of education lose as peer interaction is reduced (I think of myself as I write this essay for a course of only one). There are additional questions of who counts as a peer? clearly students, but does the age matter? class? what about teacher or volunteer, or professional? The answers to these questions could lead to monumental changes in higher education policy, but they all depend on the underlying premise that peers matter.

It seems that higher education already accepts that premise; at least it does so implicitly through the race to selectivity in admissions. Southern Utah University recently unveiled its plan to become "the states only public liberal arts university." An important aspect of the strategic plan is to significantly raise tuition and become more selective in its admissions. It seems to me that very few have even questioned the correlation between an "elite" school and "selective admissions" and "high tuition." I admit that I did not even question the proposal because it just seemed to make intuitive sense. But why? As far as I can tell the primary justification is educational quality. Somehow, we simply associate high tuition and selective admissions with high educational quality--why? is such an assumption warranted.

Arguing from the premise that "peers matter," we can assert that selective admission increases the average aptitude of the student body (assuming that SATs and GPAs actually correlate with aptitude). If the quality of one's peers influence the learning ability of the individual, the smarter peers may actually contribute to the educational quality of the school. In a way, the elite schools seek to leverage student aptitude to accelerate learning. The students come to these more selective institutions because the learning environment and association with other bright students creates an opportunity for accelerated learning not possible in other "open access" institutions.

That sounds great, but I'm not convinced; I think its just a cover. These institutions use the image of greater education returns for an excuse for exclusivity. These institutions benefit from a "brand" which alumni carry with them. The brand is benefited from a sense of exclusivity--it means something more if not everybody can get one (which also means you can charge more for it). If this were truly about education we would see less exclusivity and greater leveraging of student aptitude to benefit other students.

This race to selectivity creates silos of accelerated learning which may increase the widening income gap in the United States. The elite institutions will only augment already advanced students while leaving those who deeply need assistance are left to public and open access institutions (if that). As a policy concern, the selectivity accentuates the growing class distinctions in the United States. The middle class we birthed is dying.

If peers matter for educational quality, admissions to universities should strive to discover the proper mixing and structuring of classes to optimize this value added product. Professors should structure class activities, discussions, and seating arrangements in strategic ways to get people of different aptitudes interacting. There will be some trial and error, but the results are promising--if you believe peers matter.

The article I should write

Kkjhh

Key to competative advantage

The key to maintaining and creating a sustainable competitive advantage is inimitability. You need to do something that is not easily imitated.

Use this in strategy.

Using Data

I've noticed that it less about what the stat is you are giving, but rather the manner in which it is given. Even a bad stat stated in a positive tone can sound good.

"We are consistently ranked among the top eighty institutions in the world, in the world."

I don't even have any idea if this is good, but it sure sounded nice when he said it with such enthusiasm.

Trends in Higher Education Economics

This week I reviewed "Trends in College Spending: Where does the money come from? Where does it go?" This article used a sources of nationally reported data to construct broad conclusions about the trends in higher education finance and economics. It has six basic conclusions:

(1) Higher education is becoming more stratified. Spending is increasing, but only at the institutions which are not growing. The fastest growth in enrollment has occurred in those institutions with the least resources and with the greatest evidence of actual spending cuts in the last few years--the public community college.

(2) Tuition keeps rising. As a proportion of total revenue, tuition has continued to increase since 2002.

(3) Direct instruction expenses have dropped in proportion to total education and related spending. The deepest reductions in spending for instruction has occurred in "teaching" institutions (as opposed to research institutions).

(4) The primary reason for a rise in tuition is a drop in state appropriations. Since 2002, 92% of revenues from tuition increases were the result of "shifts" in costs (from appropriation to tuition).

(5) The student share of the cost of education has continually increased. Notedly, the share of the costs borne by students in private institutions grew more slowly.

(6) There is no good metric for measuring the how institutions do in productivity. Because it is difficult to measure quality or concrete learning outcomes, tying spending to degrees could not only be misleading but dangerous. Nevertheless, just to see out it looks, costs per degree in the public sector increased from 95 to 02 but dropped from 02 to 06.

Nothing real surprising here, but I did enjoy thinking about what metrics should be used. It gives an idea of how complicated higher ed leadership can be. No metric is perfect and only become more so the more of them you compound together.

I think sometimes we (higher ed administrators) get drowned in numbers and data. There are so many ways to say the same thing that it all becomes irrelevant. A institution should decide what it will measure. These should be no more than five general metrics. These should be meticulously tracked and strategically selected. this approach has the salutary effect of focus, but the dangerous complication of leaving out important issues. If you only focus on cost will you forget about the achievement gap? If quality is the pursuit, how will efficiency fair? Not to say anything about the differences in students, classes, and degree types. It all seems overly daunting to try and track and focus on everything; but it's equally as difficult to only focus on a few.

Perhaps a president or commissioner should have a few separate metrics for each cabinet member? This would have the benefit of covering a wide variety of issues and perhaps could provide sufficient focus where needed. A risk would be a disconnected and fractured cabinet. Each would seek to better his or her metric and perhaps even hinder the others. This perhaps, could be ameliorated by a few central metrics that hopefully could correlate across cabinet members.

I guess my bottom line is that goals are good; and for goals to be effective they must be measurable. Leaders must be able to shift through the growing collection of higher education metrics and select those which best fit their situation. They then, must track these and set goals based on them. Seems simple; why is nobody doing it?

The Rule of Diminishing Returns - Marginal Costs and Students

I recently spoke with a budget officer at a Utah university. In our discussion it became apparent that the institution viewed students as a revenue source. Each student brings a money in the form of tuition. More students generally means more money. What I could not understand, however, was how this could possibly be true in a market in which the consumer (students) pay below cost for the product. To me, educating each additional student would actually cost more than any amount of revenue it could possible bring in.

This got me thinking about my economics class, in which we had discussed the rule of diminishing returns. This rule goes something like this: Each additional unit produced costs less than the previous until a certain point. The example was that of a small hotdog stand. It costs a lot of money for a hotdog stand to put out its first hotdog. It has to buy grills, gas, electricity, cooks, etc. But the marginal cost of an additional hotdog is minimal. The same holds true in higher education: the first student costs more to educate than the second and so forth. But what happens when the hotdog stand hit capacity? Meaning, the grill is full and there is no room for more people or hotdogs. To add even one more hotdog is a significant cost. It would mean expansion, new grills, space, buildings, cooks etc. At this production level it only makes sense to add more hotdogs if the increased production can cover the extra costs. The same is true in higher education. Once a class or college hits its production limit, adding an additional student is actually a loss and not a gain. Thus the relevant question for administrators is not the average cost per student, but rather, the marginal cost per student. This is a figure that is extremely rare in analysis and needs to find a more permanent home.

Perhaps the marginal cost figure is rare because it is not easy to calculate. How can an institution predict library or computer lab usage? These factors do not correlate well with credit hours and guessing on these types of indirect costs can cause many problems. Policy makers should put more pressure on institutions to develop models for publishing and using marginal cost figures when contemplating increases in enrollment. This will help the legislature know the appropriate level of funding and the institution to know where to draw a line.