Understanding time as a strategic variable

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Prediction Number Two

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Last December I went out on a limb and suggested ten predictions that would change the game in higher education in the United States. I always thought that people who made predictions (“especially about the future”) lacked a certain humility.

But, as a blogger I must have opinions and so I made a few predictions. Prediction Number One, to my chagrin, began to unfold during the first few days of the year. Since then it has caught the political winds and is moving at a much faster clip than I had predicted. Sorry about that.

Now, only three months into the year, we began to see Prediction Number Two come to fruition.  The prediction says in part:

Number Two: In 2011, the Feds will continue their attempt to push the Capitalized Universities (CUs) further away from the educational trough.

And concluded that:

The Feds will hurt CUs in the short-term with lower sales and lower profits, but this will only serve to make the CUs a stronger competitor and cause it to move into more of the Traditional Universities’ (TUs) traditional areas. The CUs will successfully adapt, the TUs will need another strategy.”

One of those “let’s go get them policies” dealt with the Department of Education’s Rule Section 600.9. This policy would have forced institutions of higher education to first apply and then be approved to conduct business in all states in which they currently enroll students (including those state where students are taking courses via distance learning).

The policy’s objective was to complicate how CUs conduct their business. No longer will CUs be able to accept students from every state without first being authorized to do business in that state. This is analogous to a book store in Alabama with an internet presence, being forced to register (and pay taxes) in each state where their consumers reside. Seems Un-american.

This is a very puzzling policy. Most targeted changes in policies hide their purposes while taking away the bacon. This one while transparent in its aim to harm CUs, misses the target in a way that it actually favors the CUs. If I were to be running a CU I would not mind this gift from Regulatory Heaven.

The reason is that CU’s resources being far superior to the TUs resources would enable them to task a team of executives and attorneys to file the necessary papers and be approved to do business in 50 states within a month.

TUs would have a much more complicated path. TUs would have to be organized as a non-profit corporation in each state, which would make them subject to another more complicated set of regulations, with no assurances that students would materialize. TUs will be better served to become CUs but, oh my heavens, the shame of becoming what you for so long fought against!

What’s more, CUs already have students in most states and most CUs are licensed to conduct business in those states, (any business including education). This means that the policy designed to slow down the progress of CUs, will paradoxically speed it up.

Representatives of the TUs are up in arms as they should be. The American Council on Education, in a letter dated March 2, 2011, addressed to Secretary Duncan and signed by Molly Corbett, Board President of ACE, made my prediction come true. She wrote:

Dear Secretary Duncan:

On behalf of the 60 higher education associations and accrediting organizations listed below, I write to express our serious concerns regarding the state authorization regulations in Section 600.9 of the Oct. 29, 2010, final program integrity rule. These final regulations significantly expand and complicate the existing federal requirements for institutions to be “legally authorized” in a state. While the final rule reflects changes from the draft proposal, these changes do not address the concerns we raised during the rulemaking process. In addition, the final rule includes an entirely new and problematic provision regulating distance education programs.

And concluded as follows:

We believe the best course of action would be to rescind the new state authorization regulation in its entirety. This is a conclusion we have not reached lightly and only after determining that our concerns cannot be addressed through modification. As finalized, the regulation creates serious concerns for our private, non-profit institutions—in particular for religiously affiliated and other mission-based institutions— and threatens the ability of both public and private institutions to serve students through effective distance education programs.

This will not mark the end of the Feds (and State Regulators and Regional Accreditators) attacks on CUs.

There’s a new regulatory move targeting at the CUs (but not so obviously) to limit the CU student’s access to Federal loans and guarantees, by eliminating the student’s ability to borrow for a second loan, usually applied for to do summer study. Congressional Republicans want to go even deeper. House Resolution 1 calls for a 24 percent reduction in the Pell Grant program, which is primarily dedicated to low-income students. The Senate has yet to act on a twin measure.

So far TUs have only whispered dissent but are probably undecided about what to do.  The reason given for the new regulations, is that the Pell fund is going broke due to the expanded demand caused largely by the CUs ability to recruit students. CUs more than TUs use this provision.

However, the new limitations on the Pell grant will result in an increase in the average “time to completion” for undergraduate students (i.e., the amount of time it takes a student to get a baccalaureate).

American students’ time to completion of a baccalaureate is horrendous. This is partly due to the Feds definition of full-time student as one taking 12 units per semester. Do the math. Most baccalaureate degrees are 120 units, if the student is only taking 12 units per semester, it will take 10 semesters (or 5 years since summer school is used by only 9% of the students), and thus by Fed feat, the 4-year degree becomes the 5-year degree.

This expanding effect (in the years the 12-unit full-time definition has been in place), is confirmed by the most accurate data available, which calculates that the average student in a 4-year program already takes 4 years and 9 months (or 5 years) to complete it.

Currently, only 30-35% of the students who enroll in a 4-year program actually graduate in 4 years, another 10-15% graduate in 5 years and the rest (approximately 10-15%) graduate in six. But you would observe quite correctly, that even the highest percentage (35+15+15) only adds up to 65%. What happened to the other 35% that enrolled?

Those students never made it. They were interrupted by a “life event” –got married, got pregnant, moved out-of-town, lost the job that allowed them to attend school—or were simply not able to do the work. Some of them will never return to school and some of them will go to join the ranks of what we euphemistically refer to as the “underserved.”

These “underserved” are the CUs market because the CU offers a second chance on the student’s terms. Although the CU costs more and is less prestigious, eventually half of those “underserved” graduate. Next time you hear that CUs only graduate 30% of its enrollment, remember, half of those had already failed once before.

Using the new phrase of the moment, the 12-unit full-time rule and now the second loan rule will amount to “kicking the can down the road”. It will not result in any reduction in the total amount of money the Feds spend on students (assuming they finish in seven or eight years as most of them will) but it will create an inferior productivity (output) rate in comparison with our global competitors. This will cost us income (tax dollars) and will push us down the slippery slope which has ranked the US 12th in the world in the number of citizens with a baccalaureate.

So what now? If we move ahead with the changed Pell rule, let’s change it in a way that would aid productivity, let’s raise the minimum to 15 units per semester. If we continue with the proposed Pell policy as it is, we will increase the time to completion (a cost burden to students, universities and society).

Here’s the 11th prediction, we will soon rank 15th in the world and deliver  just the opposite of what President Obama’s State of the Union “Winning the Future” promised.

Meandering to failure

Failure is seldom a preferred outcome or a selected destination. When someone tells you to “go straight to hell” they may be hoping you follow, but if you have any brains about you, you never will. Failure is a place to which you get only by mistake and usually not along a straight line. You get there by meandering. By not having a direction you could follow which would lead to success.

In the early 80’s a colleague and I conducted a study of “failed school districts”, most of them large and urban, to help the Department of Education understand how they got that way. We came up with four things all districts engaged in and which formed part of their organizational culture. I was thinking recently how timely these elements of failure remain and how much they apply to post-secondary education today.

Fear of innovation was number one. In a field (K-12 education) where most new things are adopted with little evidence that they work, these districts not only did not take innovation beyond “pilot program” levels, but were actually afraid of the consequences of failing at doing something new and different.

This fear was coupled with an inflated administrative (or leadership) self-concept which reflected itself in the organization’s confidence in their past.  Typically these were long standing administrations, which had experienced little change over decades and looked back to times of trouble in which they did nothing and the problem went away and were confident that this too would pass.

Third was what we called the singularity principle. Organizations like to say that “this is not for us, we are different” and they are not and it is. They say “this approach might work in small organizations but we are the (first, second, third or fourth) largest school district in the nation, it wouldn’t work here.” This singularity is a myth, a powerful one, to which the corporate family subscribes. This denial was the most populated of all administrative views, that is more people in the culture would be willing to say “we are different” than feared innovation or expressed confidence in their past.

And finally, the fourth element of failure comes up when you have already failed or are about to fail but someone gives you financial support to keep going. We called that subsidy of operating losses. The new money is supposed to be used to fix the problem, place the organization in a new direction but it seldom does, once the fiscal imperative is removed, people go back to business as usual. A good number of dead organizations are still moving around because someone is paying for it.

This last element of failure is also present in Capitalized Universities (CU’s). With so much capital available to operate, they very often throw good money after bad. Their reasons are different but the outcome is the same. The failed practice stays alive, on life support and then stops when the life support is removed.

The same year that we completed our study of failure (1982) Peters and Waterman published a book about corporate success (the opposite of my study) and they called it “In Search of Excellence.” It sold millions of copies. My own study of failure was presented to the Department of Education and no one paid any attention to it and no one offered to have us write a book, or deliver a lecture. Most people we told what we had done would say, “but why study failure?”

The answer is, of course, because we learn nothing from success, we only learn from failure. But failure, it turns out, is not sexy and it is even slightly un-American. In the culture of organizations, executives like doctors have for centuries, bury their failures.

It is curious that within a decade of the publication of In Search of Excellence, by 1992, only one fifth of the companies remained “excellent” and four fifths had badly underperformed. This outcome had nothing to do with the authors quality of data or analyses. It had to do with the assumption that the reasons for success can be measured, explained and duplicated. That, in my experience is a false assumption. Success happens as a system, interacting with other systems, known and unknown and even unknowable. But failure leaves a trace, the footprints of those who meander to it.

Papa Hosni… the kids are all grown up

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Last December The Economist of London published the “World in 2011.” This excellent preview of the New Year’s economic and political trends contained this prophetic statement: Egyptians “won’t be prevented from taking to the streets to protest low wages and poor living standards.” No one could have anticipated that the predicted protests would result in complete and total defeat over the reign of Hosni Mubarak. I was in Egypt this last July and in the midst of the heat, the crowded streets, the polluted air and the extraordinary diversity of the people in Cairo, there was one consistent theme, which even as a tourist I could feel. Present at every turn was the feel and smell of tyranny.

Whether my hosts and I wanted to enter a mosque, or park outside the National Museum, or walk too slowly down the avenue in front of the Presidential Palace, Egyptian authority, armed, sometimes uniformed and sometimes in civilian clothes, pushed us around. Long arguments ensued between my hosts and the authorities and in these the only word I understood was Harem “prohibited”, “forbidden”, “not allowed.” My hosts were embarrassed by the unnecessary and dominating attitude of authority. But no apology was needed I knew something about what the Cuban poet had called “the sad coloring of submission.”

It is really hard to find sadness in an Egyptian. The sadness of submission I witnessed was anathema to my personal treatment by my hosts.  Great big smiles and warm hugs greeted us everywhere we went, their great generosity present in every man and woman we met and after ten days I had gained 20 pounds, unable to say no –for it would insult—to the people who offered us their homes and brought us to their table with more food than a person could consume.

During that trip I had met with an official of Al-Ahzar, the oldest university in the world and as such the great survivor of invading armies, despotic leaders, changing monarchs, communists and army-supported governments. He confided to me the unpopularity of the regime, how much it damaged the culture and spirit of the Egyptian people and how it had succeeded in bringing Al-Azhar under its control. Of all of the people I met during this trip, only he had been open when talking to a stranger like me about the tyranny.

My other colleagues and friends were very cautious. As I would inquire about the politics in Egypt, invariably my hosts would execute the usual maneuver of people living under political repression…they would look both ways to see who was listing, lower their voice and carefully, very carefully, choose their words. “Mubarak is like your Papa, very strict.” When I countered, “But surely fathers should also be loving” a repeat of the both ways looks and lower voice would occur before my hosts replied, “Not so much that.”

The image of an “almost smiling” benign-looking Papa was everywhere. Over the cash register at the restaurant, from a 30-foot portrait at the public square, on the side of trucks, highways and every public building. The personality cult of the despotic leader is not unusual but the presence of Papa’s image was so ubiquitous it went far beyond my experience. Occasionally, the young people who accompanied us to some places would be more courageous. “He is old, I know my children will not see his face as I have all my life.” I would ask tentatively “Would they see his son’s face instead?” (look both ways, lower voice) “ I hope not, Allah is great, he will see us through.”

As we drove by on the elevated highway we could see the ancient cementery where squatters had built their shelter from discarded wood and corrugated tin. I asked my surprised hosts if we could drive through it so I could see up close how people lived. In between ancient musolems there were narrow spaces crowded with people, their meager possessions in plastic bags. The poverty in corrupt tyrannies seems to be worse, more numerous and pronounced, than the poverty in democratic systems.

What galvanizes this city populated by seemingly every nation and culture in the Middle East, their religious faith  –whether Islam or not– is paramount. The people suspended our meetings when the call to prayer was heard.  As we talked to university officials about future programs they punctuated each wishful thought with Insha-Allah (God willing).

The homes, offices and public spaces, displayed a variation on a painting containing the 99 names of Allah.

The academic offices I visited had a TV set in the corner, tuned to the Islamic channel, playing the Adhan (Islam call to prayer) or repeating the sermon from last Friday’s Call to Prayer or singing the Quran. Islam was a daily, hourly presence in the life of the secular Egyptians and what brought them together in a powerful union.

This Islam I saw in Egypt was not a state policy or a political movement, it was a deeply held faith in the way of Mohamed and it is the opposite of the Islam of Al-Qaeda.

As we all saw on television, the revolutionaries who crowded the streets of Tahrir square, brought their Islamic faith with them, the Islam of peace and non-violence, of praying, begging, resisting, inspiring and protecting. At the same time that Islam was present at every turn even the traditions of Islam were set-aside at this historic time.

CNN broadcasted the pictures of a middle-aged woman removing her hijab in public to wipe the blood from the brow of a protester injured by a rock. When she finished, she kissed the forehead of the stranger she had nursed.

But it was all about kids who had grown up. Since the beginning of the uprising in January 25th, my Facebook page became a communications central for the young men and women I had met at the Suez Canal University in July who subsequently had made me their Facebook friend. At the beginning of the conflict, one of them sent me a message, asking me to pass it along to the White House. It said. “President Obama, please stay out of this.” I did as I was asked and surprisingly, the White House responded. “We hope the Egyptian government listens to the wish of its people and takes action to address their grievances.” I sent back the message to the young girl who had asked and she answered. “No, tell them stay out of it, not a word, not a word, this is our fight.”

The Egyptians are proud people. Seven thousand years of evolving culture and history burdens one with the weight of the past and enables one to see life in a different way. While I was there I was told a joke making its way among the young. “Did you know” the joke went “that Egypt has the fastest computer in the world?” I said no, I didn’t know that. “I’ll prove it to you. In the United States you have a computer so fast that within minutes of closing the electoral polls, you know who won. In Egypt, we know who won two years before the election!” Proud and funny too.

Dr. Mohamed Sywelem my former student, now an Assistant Professor at Suez Canal University wrote in his Facebook page: “Today you can Ride Suez Canal and smell the freedom and the Democracy, thanks to Allah we kick the dictator out.”

May this freedom bring you the Democracy you are beginning to smell. Insha-Allah

Institute Efficiencies

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My previous post “Prediction One elicited a comment from Dr. Alfredo Cuellar who is Dean of a community college in the Imperial Valley of California. He wrote:

We at Imperial Valley College, are facing draconian cuts. We are supposed to leave almost 2,000 students without classes. The community is urging us for creative solutions. Can you suggest some alternatives? What about a “Charter College”? How this “charter” new college should function? What linking should it has to the community college (IVC)?

If public community colleges, which are a form of the Traditional University (TUs), were funded (by the state) in the same way as the privately owned 2-year colleges (by student credit hour) then TUs could serve the needs of their constituents. Even when the state has a limited budget and thus the amount of their share (per student credit hour) would decrease, under a demand-driven system TUs could still welcome more students. All you would have to do is create some efficiencies by pursuing market-driven strategies.

I think the main difference between a Charter school and a public school in California is that the first is a demand-driven system and the second is a supply-driven system. If that’s the case in California, being a Charter would give you flexibility.

Community Colleges in California are in a “supply” budgeting system, i.e., additional enrollment is not subsidized by the state. Without sufficient funding, administrators are forced to reduce services, e.g., accept fewer students, dismiss youngest faculty, and eliminate some programs, “the usual suspects”. This is utterly ridiculous. Here you have potential students who want to go to college and you would have to say no to 2,000 of them, imagine taking that position inside a CU. Never happen.

You also have the responsibility for economic development in your region through education, turning down 2,000 students is the last thing you want to do in a place like Imperial Valley which must undergo a technological transformation in order to survive and develop. If you were a CU you would look at the student’s needs and satisfy those using their money, either up front or though loans, and scholarship support from potential employers

One of the crucial differences between TUs and CUs is that the later are cognizant of their costs and assess their productivity regularly. When I began my career as an assistant professor, I used to be in a budget committee where we never asked the question, “Is this an efficient way to spend our money?” After about a year of self-enforced silence I spoke up and said. “I think there are more efficient ways to do this…” The senior member of the committee looked at me quizzically and said “In here we leave efficiency to IBM, don’t you know.”

We still think of “efficiency” as a bad word, an accountant’s view of the magic; if one is efficient how can one be humane? We fail to consider the inhumanity of not being able to serve the students who have prepared themselves to go to college and are indeed the future of this nation. College students may only be 5 percent of this nation, but they are 100 percent of its future.

We must come to understand that efficient, entrepreneurial, strategic ways to spend money will keep TUs open and thriving and serving the needs of those in whose future the U.S. will depend.

In an earlier blog (moving in) I discussed the next strategic step for community college improvement of service to survive competition. I see two main areas of economic efficiency community colleges can perform.

First they can partner with K-12 systems to provide on campus programs for students who are bored and unchallenged by their high schools. AP programs are not new but they must become the norm. These programs bring HS students to your campus where, after HS, they would seamlessly transfer to the community college. Next, community colleges need to partner with 4-year institutions. The 4-year institution would establish their programs on the community college campus and without leaving your campus, eventually transition these student to the 4-year institution. If you let high schools and colleges “move in” the community college becomes an essential link in the chain, which is itself more efficient at producing baccalaureates.

At the same time, community colleges need to pay attention to new and emerging employment opportunities for students who will not continue on to a baccalaureate. If Charter College also means less regulation, training programs in partnership with employers, should lead to new, more effective, less costly training programs. Community colleges must not limit these training programs to “local” employers. These partnerships should be developed with employers who are in need of a steady supply of business-ready technical workers you can provide.

I don’t know your campus but in my experience most community colleges are not equipped to do what I just suggested. Fear of failure, lack of entrepreneurial experience, lack of management information systems and the rigidity of budget allocation processes, will all stymie these partnerships. To compound the problem, private sector providers have already occupied many of the niches that community colleges could target.

It may also be the case that the successive rounds of cuts have not been well executed. Perhaps some muscle and brains were cut along with the fat. If that’s the case then it is time to reconfigure the organization in response to the goal of meeting the educational objectives faster, cheaper and better.

In a supply-driven system, colleges are at the mercy of political forces that determines how much the school has to spend. In a leap of faith we can assume that the California economy is likely to be performing well by the 2012 election and your college may have by then recuperated much of what was cut. Be careful.

Where public institutions usually go wrong is that they fail to invest their the new money in a dynamic market-oriented strategic plan. For me the best plan for you would be one that builds upon the concept of creating a “chain” of services in which your institution is an essential link (If you succeed at doing that), then you will have placed your school in a more “market-driven” path, not without problems and bumps on the road, but more dependent on your individual effort and skill than on political forces.

In a market driven system, these partnerships will drive the creation of new academic programs and courses, new technological delivery systems, new web-based communication and production systems that would lower your cost per unit and limit your overhead costs. Partnerships are also the kind of programs foundations and donors finance –new academic programs, partnerships, equipment, and systems technology.

Although you would be performing like a private school, you are still a public charity. Since you are doing something important, that is becoming a “bridge over troubled waters”, Oprah will give you some money and before then, Gates and Lumina would like to help you build these bridges based on comprehensive partnership planning.

My British colleague likes to say “easier envisioned than enacted” easier said than done.

Prediction One

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You may recall my number one U.S. higher education prediction (see The Year of the Rabbit) for 2011 was, “Early in 2011 cities and states that are broke now, operating with deficits, and projecting deficits through 2012, will begin to either default or furiously renegotiate their outstanding bonds.” I did not anticipate this prediction would begin to materialize on the fourth day of this year.

January 4 2011 Harrisburg, Pa. CNN Business Pennsylvania’s capital (city) owes $68 million in bond interest payments this year — $3 million or so more than its entire annual budget. The Harrisburg Authority, the governing body that issued the bonds to construct a state-of-the-art trash incinerator, has already been unable to make several payments, and now the county government, which footed the bill last year for a $775,000 swap fee, is suing for the funds. A combination of increasing bond rates and bad management led to this situation which is estimated to afflict over 400 tax-free bond borrowers nationwide.

And then just three days later…

January 07, 2011| Los Angeles Times The San Joaquin Valley town of Chowchilla — known for its dairy farms and prisons has defaulted on a municipal revenue bond, underscoring the tight times and drastic choices faced by struggling California cities.

If there are two economic activities that would tend to remain steady or increase no matter what economic conditions surround, are milk production and locking people up. What happened here?

I also projected that “At the same time, state’s contribution to higher education is expected to decline, precisely when demand from 18-24 year olds is projected to grow sharply (fueled in part by the nature of this recovery).”

So, three days after that…

January 10th SACRAMENTO UCNewsroom— Gov. Jerry Brown proposed a balanced, deficit-closing 2011-12 state budget today that relies on painful cuts in state services including a $500 million reduction in support for the University of California.

The 16.4 percent drop in state general fund support for UC would result in a historic shift in how California’s public research university is funded: For the first time in UC’s 143-year history, student tuition revenue will surpass what the state contributes to the university’s core operating budget. (Italics added)

California’s Governor Brown proposed state general fund budget that will return the UC system to the 1998 funding level when the system was 31% smaller (i.e., 161,400 students compared to today’s enrollment of 235,000 students or a difference 0f 73,600 students).

My prediction one continued…“This will exacerbate the financial issues already being faced by the whole of higher education, from decreased state contributions for public universities, to tapped-out Federal pools for loans and new requirements for additional reserves for private universities.”

The fiscal crisis in higher education did not begin with the mortgage securities crisis of 2008. Before then (much before then), Traditional Universities (TUs) failed to consider hidden operating cost and growing overhead costs as crucial fiscal factors.

Beginning in the 60’s, TUs administrative costs as percentage of all costs, began to take off. This rise in administrative costs were due to the following, (a) external reporting requirements newly imposed by the Feds and legislative demand for additional controls and (b) security, legal and compliance costs, born of the student protests of that era. These administrative costs were soon beyond budgetary control. One administrator begets staff to help her do her job and these make demands on budget.

The expansion of these costs continue today and little if any of it contributes to the productivity of the system, instead, even when the new administrative role is to create new sources of income, their contribution comes mostly from standardizing and controlling and is seldom developmental or entrepreneurial. This is where the hidden costs lie, in the organizational tradition of TUs that new things are addressed by minimizing the risk they might bring.  Most often this risk is imagined.

During good economic times, legislatures all over the United States signed blank checks to TUs, both in their direct contributions and in permission to raise tuitions. However, during bad economic times legislatures rescinded their financial support. Regardless of economic times, tuition always rose.

In my years of experience with TUs in fiscal crisis, I have encountered first-hand the difficulty in teaching TUs that operating costs matter. I don’t mean that TU’s do not care about costs, they do and they have been cutting budgets by eliminating costs as States cut back. But the costs ingrained in the inefficiency of their operating system is much less evident (and harder to see) than the budget adjustment. Ironically, the School of Business faculties with their experts in cost reduction and containment would unlikely advocate the TUs current financial policies. But more than likely, these Business School faculties have never been asked by their TUs to apply their skills to their own institution’s survival.

Commenting on my blog in November 2010 a former faculty member at UC Berkeley wrote:

A competent Chancellor would have been on top of identifying inefficiencies in the system and then crafting a plan to fix them. Competent oversight by the Board of Regents and the legislature would have required him to provide data on problems and on what steps he was taking to solve them. Instead, every year (Chancellor) Birgeneau would request a budget increase, the regents would agree to it, and the legislature would provide. The hard questions were avoided by all concerned, and the problems just piled up to $150 million of inefficiencies….until there was no money left.

Inefficiency (a) prevents the TUs from taking advantage of opportunities, (b) diverts money away from strategic purposes, and (c) frustrates staff and faculty who desire to accomplish more. Inefficiency also (a) featherbeds those staff and faculty looking for comfort, (b) maintains the status quo, and (c) provides a shelter for those administrators who prefer not to “make waves”. The commenter continued:

It’s not that (Chancellor) Birgeneau was unaware that there were, in fact, waste and inefficiencies in the system. Faculty and staff have raised issues with senior management, but when they failed to see relevant action taken, they stopped. Finally, Birgeneau engaged some expensive ($3 million) consultants, Bain & Company, to tell him what he should have been able to find out from the bright, engaged people in his own organization.

Change will come to TUs regardless of the institutions’ unwillingness or inability to cope with their financial crisis. But they won’t like it. For example, Governor Jindal of Louisiana proposed a study last week on merging Southern University at New Orleans with the University of New Orleans and then admitting both into the state system.  This will be the first of many forced mergers that the fiscal crisis and years of bad management has wrought. But that’s another prediction.

Tigers, Eagles and Ducks

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I used to live in Ann Arbor, Michigan, a football crazy town if there’s ever been one. I now live in Auburn, Alabama and I have not seen anything like it, not even in Michigan that would compare.

This coming Monday the Auburn Tigers, #1 in the nation, will meet the Oregon Ducks, #14 in the nation. Looking at it entirely objectively, Jimmy the Greek style, a team named the Tigers against a team named the Ducks; do I have to say anything more? Tigers have Ducks for breakfast!

OK, if you don’t buy that how about this, #1 versus #14? Isn’t that obvious. Give me a break. All this hype about the challenge of the game. This should be a cakewalk. “Shhh!” Says my colleague down the hall, “Don’t say that, you are going to jinx them.” A jinxed Tiger is not a pretty sight.

Walking down the hall we see ducks facing all manner of injury along the way. This one paid the ultimate price in front of Colleen Trent’s office.

They say it will snow in Auburn Sunday night and Monday, not just the usual winter dusting, but plenty of snow, enough to close the campus, they forecast. You wouldn’t know it for the fans. While the game will take place in Glendale, Arizona, thousands of Tiger fans are already convening on campus at Auburn. They will tailgate, just as if the game was going to be held at Jordan-Hare Stadium across the parking lot. They will pull the LCD screens from the side of the RVs with the satellite dish on top, or go into the Alumni Center and watch it on a big screen, or the Student Center where every monitor will be tuned to the game, which is being held two thousand miles away. Here’s today’s pep rally for Auburn in Arizona.

A friend who is a frustrated pro-football player just bought two tickets for Monday, $2,300.00 a piece. Add airfare, hotels, special events connected with the game and it’s about five grand per head. “Cheap at twice the price.” Says my friend, who also placed a large bet on the side.

Hope the Tigers win; otherwise it will be a sad day around here. Probably the campus has never seen a sadder day if we lose. “Shhhh!” Says my colleague, “you are definitely going to jinx them.” I decided to shut up just in case somebody blamed me for the loss.

The University owns a very nice hotel on campus where its academic Hospitality Program gives their students valuable practice and for this “day of the game” you can come by the bar and enjoy a full duck menu. There will be duck canapés, duck sandwiches, duck entrees. There will be Tiger fans, symbolically devouring the competition all day and night.  I’m glad we are not facing the Bulldogs.

The irony that the BCS Championship game of January 10th 2011 is that it will be held at the University of Phoenix Stadium. The University of Phoenix of course has no football team, just a stadium. Some will question the reason why UoP, the largest Capitalized University in the world, would name a stadium where its students will never play. Not me, I find it perfectly reasonable.

It seems every conversation on campus this week began with a mention of the game, the players, gossip about the sports staff, predictions based on logic drawn from what seems to me intimate knowledge of every aspect of each team’s capabilities. I’ve been very impressed. I like football but I don’t know enough about it to enter the conversation productively, so I’m silently in awe. After all my sport at the university was Billiards.

My senior colleagues have much experience with championship games that the Tigers have not won. But today they contribute profound comments that discuss the ethos and philosophy of the game, similar to what one typically hears when discussing research findings, not a game…A GAME! “Shhh! You are going to jinx them.”

I am a fan of the Tigers and I really like my colleagues and this university is a good place to practice the crafts of teaching and research. I own Tigers monogrammed socks, slippers, ties, vests, caps, umbrellas and other “spirit” merchandise which I hope will show that I’m a faithful Tiger.  I cancelled my class on Monday and postponed it to Thursday, primarily because by co-instructor is in Glendale. (Here’s an interview with him from Arizona).  I’ll be watching too from the comfort of my home. For me it is an unusual event, to see that the kid usually running down the hall lugging a backpack full of books, is the same kid that brings art to carrying a ball across the field.

Oh, about the eagle in the title of this post… Before each home football game, the battle cry Warrrr Eagle can be heard in the stadium as War Eagle VII, Auburn’s golden eagle, gracefully circles the stadium and lands flawlessly at midfield.  Say hi to Nova.

The Year of the Rabbit

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One of the pleasures of the winter holidays is the time it affords to read materials other than the obligatory academic journals and students’ term papers. This year, like every year, most major magazines I caught up with published a review of 2010. I avoid reading those reviews because I already experienced those events (I did not like them much then!).

The major magazines also attempt to forecast the more salient issues of 2011 and some of their guesses are pretty good while others are pretty ridiculous. If they can do that, fearing no shame, why can’t I?

So what is the Tao of 2011? Chinese astrology tells us that on February 3, 2011 the Year of the Rabbit will begin. The I Ching says that in “the year of the Rabbit without concentration you will fail.” So watch what you are doing, focus on your intent, don’t go looking both ways, except when crossing a street.

Heeding the rabbit’s caution and remembering Yogi Berra’s uncertainty about predictions and, because my business is higher education, I thought I would suggest ten events that are likely to have a significant effect upon higher education in the United States in 2011. Here it goes.

Number One: Early in 2011 cities and states that are broke now, operating with deficits, and projecting deficits through 2012, will begin to either default or furiously renegotiate their outstanding bonds. Because colleges and universities that borrow do so with tax-free bonds under the authority of their state, their bonds’ perceived risk will be lumped with the “municipals” and it will cost substantially more to borrow money for anything. At the same time, state’s contribution to higher education is expected to decline, precisely when demand from 18-24 year olds is projected to grow sharply (fueled in part by the nature of this recovery). This will exacerbate the financial issues already being faced by the whole of higher education, from decreased state contributions for public universities, to tapped-out Federal pools for loans and new requirements for additional reserves for private universities. This will lead to a new musical hit, maybe a country western or blues or more rightly a rap, on how being a CFO of a college or university in 2011 “ain’t nothing but pain.”

Number Two: In 2011, the Feds will continue their attempt to push the Capitalized Universities (CUs) further away from the educational trough. The Federal case has been weakened by the revelations that the GAO study which gave it impetus did not live up to its title: “FOR-PROFIT COLLEGES Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices.” The GAO was forced to send corrections on critical data presented to Congress. Nonetheless, a series of changes in government regulations applying mainly or only to CUs and new legislation now in Congress, will move forward to limit the use of CUs business model for attracting students. The Feds will hurt CUs in the short term with lower sales and lower profits, but this will only serve to make the CUs a stronger competitor and cause it to move into more of the Traditional Universities’ (TUs) traditional areas. The CUs will successfully adapt, the TUs will need another strategy.

Number Three: Some universities will have no choice but to raise tuition and students will respond adversely to those attempts. For universities, the cost of tuition has been a proxy for quality, i. e., the higher the tuition the better the college is perceived. This has worked to their advantage as they tried to maintain services while costs rose and state contributions declined. But for students and other payers, higher tuition means higher debt burdens. I predict that this year students will react like their European counterparts and provide political pushback. (See Hell No We Won’t Go and Off with their heads.)

Number Five: An aging faculty and administrative staff will bring about a wave of retirements this year. Most of us are running on super lean staffs so the retirements will require new hires (projected at 15-18 percent) however budgets will constrain replacing all vacancies. Will universities know how to reallocate funds for new hires so as to reflect their strategic objectives? I don’t think most will or can. Lack of a robust faculty pipeline, particularly in areas of high need, such as health professions, engineering, basic sciences, will push starting salaries up? 15-20 percent for faculty and 20-25 percent for administrative roles. This will be partially ameliorated by a willingness for faculty who could retire, to remain on the job

Number Six: Some major universities will begin to use Bologna processes successfully. The Tuning Process will expand and be supported by regional accreditation agencies. The 3-year baccalaureate will be proposed and will become available from traditional state universities, just to overcome increases in “time to completion” which has the average student taking 5-plus years to complete a baccalaureate in the U.S. today. (See here)

Number Seven: While somewhat attenuated by the tight financial picture, this will be the year for venturing abroad.  A campus abroad will be initiated by dozens of universities and expanded for those already present.. Data will drive the movement. India will require an additional 5 million professional degreed people in 2012. China will add 7 million to the demand by 2013. But here at home, by the year 2020, President Obama wants us to produce 23 million more graduates than we are producing now. Most attempts will not succeed and will distract from the main business of a TU in the United States. Heed the caution of the rabbit and remember that “without concentration you will fail” (Look up my thoughts on global strategy, part 1, 2 and 3)

Number Eight: We will require a massive improvement in productivity, in order to meet our own need in the U.S., and this is not likely to happen this year. When budgets go south, CU’s cut back and get more done with fewer people. TUs can do that only to a very limited extent. They can restructure programs, close some, open others, make them leaner, faster, delivered through media. Nearly all universities will attempt to increase productivity, but their level will remain stubbornly at that of the 1950’s when no one had ever heard of a computer.

Number Nine: Regional accrediting bodies and other regulators will tighten their reviews to meet social pressure to show outcomes. “Quality”, now a noun, will become a verb. As it was in the 70’s that the noun “impact” became the verb[1] “impacting.” talking about quality in higher education will become so commonplace that “quality” the noun will metamorphise. But what will the new word be? Quality-ing?

Number ten: Seven of the ten predictions above will unfold just as I predict. Three will not. At this time, I can’t tell which will be which, but a predicted .700 batting average ain’t bad.


[1] Technically a Gerund (Verbal Noun)

Off with their heads!

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The British students, parents and others who marched in opposition to the substantial increase in college tuition went from “Hell No, We Won’t Go” to “Off with their heads”  in a matter of a few days.

The demonstration began as a march then evolved into a rally. The police tried to contain the protesters, which unleashed the crowds’ anger. The demonstrators had a right to be angry. These were the ones whose futures may be in the balance now that they are to fund their own further education. This protest was nothing but democratic and genuine.

Andrew Sparrow (from inside the Parliament Building) recorded a running commentary on the events in Parliament for the Guardian of London. Below are excerpts from his account.

8.41am: For the Liberal Democrats, the day of agony has finally arrived. MPs are voting on the government’s plans to allow universities to raise tuition fees to up to £9,000, a huge public spending reform that will in effect privatise arts and humanities teaching at university (because they will lose all government subsidy) and affect anyone planning to go to university in the future.

Meanwhile, Nick Glegg, who is the Liberal Democrat Deputy Prime Minister, was interviewed on the topic. The man with the most to lose was struggling to “put lipstick on the pig.”

My message to the students who are protesting is to ask them, one final time, to look at what we’re actually proposing rather than what they are alleging we are proposing. Actually under our system they will all, all the demonstrators, will pay out less per month than they do at the moment. All the part-time students who are demonstrators wouldn’t pay any upfront fees whatsoever. Many of them would never pay the full value of their loan whatsoever. (Press Association)

The government’s message appeared too convoluted to be credible. If one is to understand what Clegg meant, one would have to look deeply into the proposal at the projections for repayment. The government’s implausible assumption is the following: The graduates higher salary would off-set the higher incurred loan. Glegg was talking about the people unable to earn higher salaries; they could never repay their loan. Nobody supported Clegg’s idea, except those inside Parliament, to whom he quickly turned.

9:47 AM In one email to the department’s officials, [Aaron Porter, the NUS president] suggested a compromise, allowing that £800m could be “deducted from the grants pot” over four years. That would cut total spending on grants by 61%. Mr Porter also proposed the “introduction of a real rate of interest” for student loans.”

We spoke to Mr. Porter last week and he was quite concerned about the demonstrations getting out of control and the “hooligans” who show up everywhere there is a protest. There were to be thousands of high school students, most of them accompanied by their parents and he was concerned that the hooligans “who love fire and gunpowder” don’t create casualties.  It would be tragic and the end of our credibility. I think this will be a close vote and if so, then we can re-group after the Holidays and do more targeted protests, while offering to negotiate.

10:45 PM Jessica Shepherd, the Guardian’s education correspondent, interviewed those who had studied the government proposals.

The Higher Education Policy Institute (Hepi) thinktank has pointed out that students who drop out of university have been “airbrushed” out of the argument. In a report, published last month on the government’s proposals, the thinktank states that ministers refer to “graduates”, but do they mean “former students” too? The reality is that there will be large numbers of former students without any higher education qualifications with large loans,” Hepi says. “The number of people in this position is likely to increase, firstly because loans will in future be provided to part-time students, where non-completion rates are much higher, and, secondly, because the financial incentives for institutions to ensure that students complete their year of study will be reduced. Under the current arrangements, students who do not complete their year of study are not included when calculating a university’s grant. With fees, universities will retain a part or the whole of the fee that replaces the grant. The penalty that a university suffers if a student drops out will be reduced, if not removed.

Academics are all but absent from the London-based demonstrations. Very few faculty and none of the university administrators interviewed in the press joined the students. The Vice Rector of Oxford Andrew Hamilton expressed regret that the students were being made to carry the brunt of the cost of higher education, when higher education benefits the whole of society, and universities’ grants are being cut by draconian amounts.  Every other vice-rector, rector, principal or president who spoke simply expressed similar regrets. The institutions themselves see ways to benefit from this, as the government withdraws support from areas universities have been accused of wanting to cut-away themselves.

Michael Gove a Conservative MP and former journalist who became the Secretary of State for Education in May of this year, wrote as a journalist in 2003 in favor of the argument that the “private good” is enough to motivate people to pay for their own education.

The first point that needs to be made about the so-called deterrent effect of a £21,000 loan is that anyone put off from attending a good university by fear of that debt, doesn’t deserve to be at any university in the first place. Incurring such a relatively small debt to pay for the huge economic benefit conferred by proper higher education is a fantastic deal. Over a lifetime, the direct financial benefit in higher earnings is around £400,000. Those who attend our best universities can expect to earn even more. Borrowing £21,000, at preferential rates, to secure twenty times that sum, is an offer you’d have to be a fool to turn down. And if you’re such a fool that you don’t want to accept that deal, then you’re too big a fool to benefit from the university education I’m currently subsidising for you. I accept that some graduates will take up jobs, which do not command handsome salaries. Individuals may pursue admirable work for which there is no great monetary reward, in the Church, the arts or public service. In these cases there is a strong case for the taxpayer bearing the cost of their degree. But why should the vast majority, who go on to benefit financially from their degree, be subsidised by me.

Now Secretary Gove was lobbying his colleagues in Parliament to vote for the bill and he was succeeding. He kept on repeating the talking points from Primer Minister Cameron’s speech the day before which went in part something like this:

Today I want to talk about the future of universities in this country. We’ve seen the protests. We’ve seen the marches. We’ve seen how passionate many of our students are about this issue. Well let me tell you this. I am just as passionate. Just as passionate that young people should have the chance to go to university, whatever their background or family income. Just as passionate that they should be able to leave university without an unfair burden of debt. Just as passionate that our universities should be among the best in the world. The debate going on today is about the best way of achieving these things. But if I’m honest, the passion in this debate is drowning out some of the truth.

It is difficult for an American like me to detect when a Britton is scared. However, from the tapes I have reviewed, the Labour and Liberal Members of Parliament appear honestly scared of their respective constituency’s passion described by Cameron. Eighty six percent of those polled are against the proposal. The Labour and Liberals opposition to the bill is being undermined as amendments are rejected and the bill remains unaltered. Andrew Sparrow writes in his blog:

2.25pm: The debate will be starting very soon. Business questions is just wrapping up. But the Labour MP Chris Byrant made a good point about tuition fees just now. He said that if any Lib Dem MPs “abstain” by voting both for and against the rise, they should be given a chance to explain themselves in the Commons tomorrow. MPs are allowed to vote both ways in a division, and sometimes they do this if they want to make it obvious that they are abstaining.

It won’t be until 6:00 PM that a vote is taken, 323 for the government, 302 against. The vote is twittered and immediately word began to spread through the crowd outside Parliament. The climate began to change. Parliament Square was cordoned off at all exits. Police struggled with the crowds. Students used metal fencing to charge at the officers. Officers were seen using batons to hold them back. Mounted police advanced into the crowds.  Inside the square, fires were created from piles of placards, burning to the accompaniment of loud rap music played to the crowd. Fireworks shot into the sky to the sound of loud cheers. ‘Tory Scum’ seemed to be the favorite slogan. A lone protester wore a hood with the slogan: ‘Off with their heads’.

Suddenly Prince Charles’ Rolls Royce came down the street, straight into the demonstration. At first the Prince and Camilla, began to wave at the demonstrators through an open window in the car. But as the crowds discovered their presence they began to toss stones and paint balls into the car. The police recovered control and ushered the Rolls out of the way.

A twenty something, holding a spray paint can in one hand and a sign in the other commented. “I bet he never had to pay for all the education we gave him!”

Personal Note: I am taking three weeks off to celebrate Christmas with my family.  I hope you have a similar opportunity. If this year was hard for universities next year offers to be harder still, so you better take this opportunity to relax and prepare. Since we began to write this blog in May, over 167,000 people have come to read it. I thank y’all for your support. Have a Happy New Year!

Hell No, We Won’t Go

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It was a crisp Fall day in San Francisco when I found myself driving on 19th Avenue while a large crowd blocked traffic in front of the campus of San Francisco State University. The crowd carried signs and some covered their faces with handkerchiefs and they chanted in unison the mantra of the anti-Vietnam War protesters –“Hell No, We Won’t Go.”

But this had very little to do with the Vietnam War. The Black Student Union and a coalition of other student groups known as the Third World Liberation Front (TWLF) led the strike, which began in November 1968 and ended in March 1969. I was present at the birth of academic multiculturalism, totally unaware of its significance, just unhappy that I would be late to work.

In what became known as “the strike”, students, some faculty and community activists demanded equal access to public higher education, –including financial assistance– more senior faculty of color and a new curriculum that would embrace the history and culture of all people including ethnic minorities. As a result, the College of Ethnic Studies was instituted in 1969 and by 1978, 439 colleges in the country offered a total of 8,805 courses on ethnic minorities.

In a television broadcast from the BBC last week, I saw a sign being carried by a protesting student in London which contained the “Hell No” message and when I finally reached Aaron Porter, the President of the National Student’s Union of England about the protest, he had not heard about the pedigree.

The NSU-sponsored protest which saw 50,000 students (his estimate) take to the streets, surrounding government buildings, crashing inside the Conservative Party’s building and occupying it for several hours, was all about access to higher education. The “Hell No” message was about leaving the building they had taken over.

We want only peaceful demonstrations, this incident was not part of our planning. We are retreating for a new (this time) peaceful demonstration next week all over England. This is about an entire generation opting out of higher education. He explained. Their parents may have just lost their child benefit for these very same children (our dependent tax deduction) and this generation will now be asked to start their adult life already owing as much as £40k?

I told Mr. Porter about our situation in the United States where the average student has a college debt of $38,000.00. What’s wrong with our leaders, have they forgotten how they got here? He wondered.

Think about it –he urged me–
at a time when graduate employment is so bleak, what does this mean for the generation currently in school and perhaps starting to think about going to university? The prospects now are of starting their adult life already owing as much as £40k, struggling to get onto the housing ladder, getting married, having children and possibly working into their seventies with little prospect of a state pension. They can’t see spending five years getting a worthless degree, and this is the beginning of the end of our society as we know it.

Is Mr. Porter overstating his case? Hardly. A growing number of studies suggest that education has a direct effect on social outcomes.[1] These include batteries of indicators such as income, life expectancy, mortality, obesity, depression, smoking, work-related sickness, as well as voting, political interest, trust, volunteering, donating and crime. The empirical analyses presented in these studies mostly use micro-data for a particular country, and many use data from the United Kingdom and the United States, but the results generally hold even after controlling for individual demographic and socioeconomic differences. [2]

In a previous post (Can the middle class afford higher education?) I argued that the state gets a better return than the individual from the knowledge and capability a degree brings and the decline in support of higher education will have a detrimental impact on the state’s income as well as on the individual income as his quality of life.

Perhaps we should “listen to the children” one more time.


[1] See, for example IMPROVING HEALTH AND SOCIAL COHESION THROUGH EDUCATION – OECD 2010 in particular Chapters 3 and 4 discuss the literature that sheds light on the causal relationships between education and social outcomes. However, it is important to note that there are also studies that find no statistically significant effects from education.

[2] Groot, W. and H. Maassen van den Brink (2007), “The health effects of education”, Economics of Education Review, Vol. 26, Elsevier, Amsterdam.

Grossman, M. (2006), “Education and Nonmarket Outcomes”, in E. Hanushek and F. Welch (eds.), Handbook of the Economics of Education, North-Holland, Amsterdam.