Chronicle of Higher Education op-ed: How to Address the Elephant in the Room: Academic Costs, by Paul N. Friga (University of North Carolina, Kenan-Flagler Business School):
American higher education is widely regarded as the best in the world. At the same time, critics have suggested that it is slow to change, unresponsive to student demands, bloated, and expensive. With Covid-19, higher education is now facing its most significant challenge. We have an opportunity to do everything we can to make strategic shifts not only to survive but also to thrive through this crisis. It won’t be easy. ...
In early March, I predicted scenarios with damage up to 50 percent to universities’ operating expenses. Other surveys, including one just completed in late April of chief financial officers, suggest potential negative impacts closer to 10 to 15 percent of revenues, as shown below.
I believe that the time has come to discuss the elephant in the room. No doubt this will be a delicate subject on many campuses. Even with the recognition that we are facing dire financial situations, the initial reaction often is that academic spending is “core to our mission and must be maintained.” My recommendation is to approach this conversation carefully, strategically, and inclusively, with three key steps — organize, analyze, and prioritize. ...
However you look at it, academic spending continues to rise, even after our last recession, as shown below. In most industries, spending per output declines over time given learning curves and continuous improvement. Not in higher ed. Spending per student over the past decade has also increased, especially at private universities. I attribute some of this to the reputational ranking programs where more spending and lower student-to-faculty ratios are rewarded. Additionally, it is fair to assume that more spending and smaller classes can lead to better outcomes. This crisis may change the paradigm, at least at some universities, where everything needs to be on the table — including reversing spend trends.
So what can be done to increase productivity? The starting point, surprise, surprise, is data. Every university’s expectations for faculty members are different, as are different schools within a university. Core data are typically monitored well — teaching evaluations and number of classes taught. An increasing number of third parties also provide data on faculty research productivity, such as Academic Analytics, as well as about teaching and service, such as the National Study of Instructional Costs and Productivity (Delaware Cost Study).
The goal is to identify faculty members who have become less engaged, and thereby less productive, in research, teaching, or service. For example, Gallup has estimated that, at any point in time, there could be 67 percent of tenured faculty who are either “actively disengaged” or “not engaged,” which translates to actual cost to universities.
Loads, releases, sabbaticals, and stipends are less closely monitored and vary considerably as determined by deans. This may be a time for an audit of these arrangements, including a full inventory by professor and a reconciliation to the faculty handbook or other contracts. After such an effort, Drinan at Simmons found close to $6 million in spending related to course release over a benchmark average.
These audits can result in fewer courses, larger class sizes, and potentially heavier teaching loads and will only lead to efficiencies or lower costs if fewer faculty members teach in these programs. In the past, that has proven to be a serious sticking point, given the collegial nature of university culture, tenure, and union considerations. Once full data are available on all faculty expectations, load capacity, and performance, tough decisions will have to be made. Common approaches include early retirement packages, voluntary separation, or decreases to pay or increases to teaching loads. It is important to remember that this should be a portfolio discussion, with cuts in faculty and programs feeding investment in more promising growth-oriented areas.
The last question in this analysis stage is this: How much should we pay our faculty?
Most universities are already planning for pay and, in some cases, hiring freezes. We are seeing more leaders pursuing furloughs, which allow for a decrease in pay while maintaining benefits and the option of bringing the employees back at a future date. Less prevalent are discussions about pay cuts, although in industry, those are more common, especially at the executive level. Will we see this higher ed?
My biggest fear is across-the-board cuts, such as a set percentage across schools or pay cuts for all faculty members. Many leaders opt for such strategies as they are easier and faster to accomplish and they appear to be fair. But they aren’t strategic, as they may reward people or areas that should be cut more and punish those who may warrant additional investment.
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