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Tuesday, July 9, 2013

Merritt: Implications of the ABA's Decision to Stop Collecting Law School Expenditure Data

US News (2014)Following up on yesterday's post, Law School Rankings Bombshell: ABA to Stop Collecting Expenditure Data:  Deborah Jones Merritt (Ohio State), Notable Change in the ABA Questionnaire:

What does the change [in the ABA Annual Questionnaire] mean for ABA data collection, legal education, and the US News rankings? ... The revised instrument still asks about two specific expenditures: money spent on library operations and money spent for student scholarships, grants, or loans. It does not, however, require schools to report other expenditures–such as money spent on salaries, conferences, coffee, and all of the other matters that make up a law school budget.

Going Forward: Data, the ABA, and Legal Education

I’m puzzled that the ABA has chosen to eliminate expenditures from the annual questionnaire, especially given the contemporary budget crunch at many law schools. ... I understand that many educators are celebrating elimination of the expenditures section, largely because of the US News effect discussed below. I assume, however, that the questionnaire once served purposes other than generating data for US News. Are we sure that we want to reduce our information about the financial health of legal education? Now?

Going Forward: US News

Against all reason, US News has long used expenditures as a significant component of its law school rankings. Expenditures currently account for 11.25% of the ranking formula. This component of the rankings has rightly provoked criticism from dozens, if not hundreds, of legal educators. The ABA’s elimination of expenditures from its annual questionnaire might be an attempt to discourage US News from incorporating this information.

If that’s the ABA’s motive, will the gambit work? It seems to me that US News has at least four options:

  1. Continue to ask law schools to supply expenditure data. ...
  2. Reconfigure the ranking formula to include just library and student aid expenditures. ...
  3. Replace expenditures with revenues. ...
  4. Eliminate money as a factor. This is my preferred outcome, and I assume that it is the one most educators would prefer. Expenditures don’t have a role in judging the quality of a law school, and they’re a source of endless manipulation. Both law schools and their consumers would be better off if we rid the rankings of the expenditures factor.

Conclusion

US News will do whatever it chooses to do. Years of entreaties, rants, and denunciation haven’t stopped it from incorporating expenditures into its law school ranking. I’m doubtful that the ABA’s change will suddenly bring US News to its senses. Meanwhile, I’m very worried about how we’re going to inform legal educators, regulators, and potential students about the financial health of law schools. Revenues are fun to count, but running a law school requires expenditures as well.

Update: Matt Bodie (St. Louis), Expenditures, Tuition, and U.S. News:

If U.S. News follows the ABA's lead and takes out expenditures, it needs to add in a factor for tuition.  It could choose either list price or "real" tuition (as discounted by scholarships); both have their pros and cons.  But adding in tuition is necessary to keep the rankings's consumer-protection focus.  If U.S. News wants to encourage schools to trim back or even eviscerate their educational spending, then eliminating expenditures would be sufficient.  But I don't see how that alone would help students.

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