AVERAGING ONE HORSE AND ONE RABBIT.  Charlotte Allen of Minding the Campus attempts to make sense of Texas's faculty productivity measures, already crunched rather imprecisely by Richard Vedder.  (Tellingly, Professor Vedder is seeking funding to crunch the somewhat more precise figures the state is now releasing more precisely).  The Minding the Campus column focuses on interpreting the numbers, but the market tests probably matter more.
According to UT-Austin’s own website, UT-Austin’s annual budget has increased nearly fivefold during the past 25 years, from $503 million in 1985 to $2.26 billion in 2010, far outstripping the effects of inflation. It has also become more tuition-dependent. In 1985 tuition and student fees ($27 million) accounted for only 5 percent of UT-Austin’s total revenues, but by 2010 that number had jumped to 24 percent, or $544 million. It is common to blame UT-Austin’s increased tuition-dependency on a stingy legislature that has gradually withdrawn state support — except that state allocations to support the Austin campus have actually increased by about 40 percent over the years, from $237 million in 1985 to $318 million in 2010 — and it may be unfair to ask Texas taxpayers to cover every new budget-boosting expense that the university chooses to incur.
That's the tension between private benefits and appropriable externalities at the heart of state funding for higher education: done properly, it equips graduates to live more productive lives and get richer, but that's a regressive transfer.  Read on, though, and contemplate the various market tests.
In Texas’s sprawling system of public universities and community colleges, only UT-Austin and Texas A&M possess the prestigious "R1" ("Research University 1") classification conferred by the Carnegie Foundation for the Advancement of Teaching (the Carnegie Foundation has recently revised its classification system, but the "R1" nomenclature persists). And both belong to the 111-year-old Association of American Universities (AAU), whose 60-odd members include the crème de la crème of elite, massively endowed private universities, such as Harvard and Stanford, and also such highly regarded, academically selective public institutions as the University of Michigan and the University of California-Berkeley. The AAU, whose criteria for membership include an emphasis on scholarly research and a large number of doctoral degrees awarded annually, operates as the unofficial keeper of R1 status, and it appears willing to eject members who no longer meet its standards, one of which is the attraction of a certain level of federal research dollars, which usually fund scientific projects. (Syracuse University voluntarily withdrew from the AAU in May in the face of certain ejection because its federal research funding had fallen off.)

Virtually all R1 universities afford tenured and tenure-track professors relatively light teaching loads — two classes per semester (one of which may be a small graduate seminar) is the norm to allow them ample time for scholarly pursuits. That means, however, that someone must pay those professors not to teach. The maintenance of R1 status (and AAU membership) is highly competitive. R1 status is roughly coterminous with the "Tier One" designation in the U.S. News annual ranking of national universities. A Tier One classification virtually guarantees an institution’s "selectivity’ (the ratio of number of acceptances to number of applicants), which in turn helps secure its Tier One ranking in the future.

Perhaps even more significantly, university administrators insist that offering a light teaching load of one or two classes per semester is a non-negotiable precondition for wooing accomplished scholars away from other prestigious universities that also offer light teaching loads. Many scholars with distinguished reputations in their fields are also skilled teachers who love to teach--but it is safe to say that most of them would rather not have to demonstrate their love by presiding over four packed undergraduate classrooms per semester as their colleagues at lower-ranked public universities often do. "We view ourselves as competing for the top talent, the top Ph.D.s that Harvard and Berkeley are also competing for," said Randy Diehl, dean of UT-Austin’s College of Liberal Arts, in a telephone interview. Diehl added that the top academic names also tend to attract the best students, who in turn become prominent scholars: "Nobel laureates, for example, tend to form chains. They produce faculty who are also Nobel laureates." Although the 2,500 or so tenured and tenure-track professors at UT-Austin are theoretically supposed to have "3-3" teaching loads (three classes per semester), the standard load at smaller colleges where research is not such a high priority, tenure-line professors who are "engaged in research" at UT-Austin — which effectively means nearly all of them — get a release from that third course, Diehl explained. A small number of faculty members at UT-Austin are designated as "research professors" and do no teaching at all, but their research is funded by outside grants, so they essentially pay for themselves.
Let me see if I understand this. Good students pay attention to the academic standing of the institutions they apply to.  Good students follow good professors.  Good professors can prepare the next cohort of researchers.  And good universities compete for good professors.

Sounds to me like a game any university could play, if it wanted to be good.

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