THERE ARE MARKET TESTS. Doug at Inside Higher Education comments on a set of "Frequently Asked Questions about College Costs" written by Robert C. Dickeson of the Spellings Commission. The set is less internally consistent than the Baltimore Catechism.

Imagine, universities actually have to compete for professors.
Faculty salaries are especially expensive, particularly in high-demand subject matter areas, like business and engineering.
The nerve of those students, enrolling in business and engineering. Why don't more of them enroll in communications and literature, where there's a nice reserve army of potential teachers happy to be hired away from Starbucks.
Colleges compete with each other (and sometimes with the private sector) for "top" faculty, and occasionally make financial commitments to faculty beyond salary: for time off from teaching to conduct research; for graduate assistants to help with research; and for laboratories or other expensive equipment to facilitate research.
Imagine the outcry when the Midland hires William Stanier away from the Great Western and provides him with time to talk with apprentices on the shop floor and technicians at the test plant rather than spend his entire day at the draughting board.

The report continues in a somewhat disjointed fashion. The comments section at Inside Higher Ed is a joint fisking effort. Let me direct the reader's attention to a few of my pet themes.
Colleges maintain large physical infrastructures that often include libraries, computing centers, academic and student-oriented buildings, power plants, research facilities, theatres and stadiums.
Gasp! You mean bookish people might want to read books? Run simulations? Memorize a few lines of Shakespeare and perform them?
This infrastructure is rarely used to capacity.
One of the hardest concepts to measure accurately is capacity utilization. Distinguish a nuclear-steam power plant from a combined-cycle gas-turbine generating unit. That the former is powering my computer while the latter took the day off tells you -- what? -- about idle generating capacity. A university's theaters are probably in use more frequently than the CIVIC OPERA HOVSE. Ho-jo-to-ho, cast the Lyric into the magic fire!
Typically facilities are used only eight-to-twelve hours a day, five days a week, for less than 52 weeks per year.
By that standard, the Interstate Highway System is underemployed, and the farm-to-market roads a scandal of idleness.
The necessary repairs and maintenance costs to keep the infrastructure sound is usually deferred as too costly for current-year budgets, and the resulting cumulative impact across [c.q.] all institutions of higher education nationally is in the multiple-billions of dollars.
Potentially a non-sequitur. I did a stint on Faculty Senate a few years ago, at which time the accumulated backlog of deferred maintenance was so large some despaired of ever working it off. There's lots of blame to go around. But like the railroads, the universities are learning it's difficult to defer your way to prosperity.

There's a long paragraph suggesting faculty governance gets in the way of inspired managers seeking to make "needed" reforms. Maybe in 3000 years of developing young minds we got a few things right.

Next up, a real howler.
It is typical for colleges to add new programs -- academic, administrative, and student -- without corresponding cuts in existing programs.
The nerve of Wal-Mart adding an entire grocery store without getting rid of the garden shop. For all this report's worship of "business model," the author confuses an adaptive enterprise with a homeowner busting clutter.

And maybe the academy's current business model, such as it is, isn't that bad.
Students are seeking degree programs that are costlier than ever before (engineering costs more as a major field of study than speech, for example, and incoming students are 83 times more likely to prefer engineering to speech.)
I'd like to see the source of that number. But perhaps an outgoing student is 83 times less likely to be pullin' lattes at Starbucks with that engineering degree.
Students demand more services and amenities (parking garages, computer network access, e.g.) and colleges respond by offering them.
Diners demand varietal wines and vegan main courses and eateries respond by offering them. I'm prepared to talk about the climbing walls over a cup of coffee.

The report goes on to other topics, and ultimately recognizes that yes, there might be tradeoffs. We'll be more effective at making those tradeoffs if we understand what the incentives are, and how the market tests work. Hype about "idle capacity" and "avoiding teaching" does not impress.

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