Prioritizing Academic Programs and Services E-Book

Robert C. Dickeson

• Herausgeber: John Wiley & Sons
• Kategorie: Bildung
• Sprache: Englisch

Seitenzahl: 287

Veröffentlichungsjahr: 2009

Beschreibung

Prioritizing Academic Programs and Services REVISED AND UPDATED Increasing economic concerns make the new edition of this best-selling classic an invaluable resource for those who want and need to implement a proven step-by-step approach to reallocating resources in tough times. Thoroughly revised and updated, Prioritizing Academic Programs and Services includes new recommendations from the field, communication strategies for more successful campus implementation, a new section on the sources of hidden costs, and a Prioritization Process and Implementation workbook designed to help administrators avoid costly mistakes. This book includes access to additional content online, including models for prioritization from a variety of campuses. Based on the author's extensive consulting experience, this necessary and timely resource offers the best advice for addressing the current economic concerns affecting most colleges and universities. Praise for Prioritizing Academic Programs and Services "For more than a decade, higher education leaders have turned to Dickeson's practical guide to academic program assessment. These newly expanded approaches are just in time for today's competitive environment." --SUZANNE SHIPLEY, president, Shepherd University "Dickeson provides a compelling rationale for program prioritization as well as a practical planning structure that promotes alignment between programs, resources, and university mission. Presidents and provosts can use his approach to frame campus discussions around the future of the institution and away from legacy programs whose time has passed." --KYLE R. CARTER, provost and senior vice chancellor, Western Carolina University "Dickeson's approach ensures that critical decisions regarding academic programs and resource allocation are aligned with strategic goals and institutional mission. As one of the early adopters of the process that he proposes, I am convinced that it is a powerful and practical tool for any college or university committed to remaining focused, resilient, vital, and relevant in a dynamic and increasingly challenging environment." --DAVID MAXWELL, president, Drake University

Leseprobe

Table of Contents

Title Page

Copyright Page

Preface to the Revised Edition

Foreword

Preface to the First Edition

Overview of the Contents

Audience

Acknowledgments

Dedication

About the Author

Chapter 1 - RECOGNIZING THE NEED FOR REFORM

Internal Pressures

External Pressures

Heightened Government Expectations

The Case for Reform

Reconciling Competing Demands

Chapter 2 - IDENTIFYING RESPONSIBLE LEADERSHIP

Sources of Reform

Leadership and Courage

The Value of Alignment

Key Questions to Ask

Chapter 3 - REAFFIRMING INSTITUTIONAL MISSION

Seeking Clarity

Unique Role and Scope

Fundamental Tensions

New Ways to Look at Mission

The Need for Reaffirmation

“Operating” Mission Statements

Chapter 4 - DEFINING WHAT CONSTITUTES A PROGRAM

What Constitutes a Program?

Multiple Expectations of Programs

Distinguishing Prioritization from Review

Nonacademic Programs

Benefits of Program Analysis

Chapter 5 - SELECTING APPROPRIATE CRITERIA

Getting Started

Applying the Criteria

Chapter 6 - MEASURING, ANALYZING, PRIORITIZING

Preparation

Process Design and Management

Data Collection

The Rating System

Levels of Judgment

Ranking by Categories

Decisions

Chapter 7 - ANTICIPATING PROCESS ISSUES

“Shouldn’t the administration have to prioritize its programs as well?”

“Let us keep this program. It doesn’t really take any resources.”

“This process can’t be done on top of everything else we have to do.”

“We’ve done this kind of thing before, but nobody paid attention. There were no results.”

“How deep do we have to cut?”

“If you haven’t heard a rumor by 10:00 A.M., start one.”

“What’s to become of the affected students?”

“How does this process relate to our governance process?”

Practical Suggestions from the Field

Chapter 8 - IMPLEMENTING PROGRAM DECISIONS

Decisions

Legal and Policy Implications

Accreditation

Humane Dimensions of Reallocation

Maintenance of the Database for the Future

Chapter 9 - ACHIEVING STRATEGIC BALANCE

Equilibrium

Unique Institutions

Strategic Balance

Conclusion

Resource A: Outsourcing Practices in Higher Education

Resource B: Sample Process Agenda Adopted by a Land-Grant University

Resource C: Criteria for Measuring Administrative Programs

Resource D: Case Studies

Resource E: Sources of Hidden Costs

Resource F: Model Communication Plan

Resource G: Prioritization Process and Implementation

References

Index

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Library of Congress Cataloging-in-Publication Data

Dickeson, Robert C.

Prioritizing academic programs and services : reallocating resources to achieve strategic balance / Robert C. Dickeson, foreword by Stanley O. Ikenberry.—Rev. and updated.

p. cm.—(The Jossey-Bass higher and adult education series)

Includes bibliographical references and index.

eISBN : 978-0-470-58810-9

1. Universities and colleges—United States—Administration. 2. Educational leadership—United States. 3. Educational change—United States. 4. Universities and colleges—United States—Sociological aspects. 5. Universities and colleges—United States—Administration—Case studies. 6. Educational leadership—United States—Case studies. 7. Educational change—United States—Case studies. I. Title.

LB2341.D523 2010

378.1’07—dc22

2009038837

HB Printing

The Jossey-Bass Higher and Adult Education Series

Preface to the Revised Edition

The impetus for this second edition comes from two sources: the extraordinarily challenging times, as colleges and universities face heightened expectations during fiscal crisis; and the need to share accumulated wisdom gained from institutions that followed the principles of the first edition. In short, the second edition provides a proven approach to reallocating resources in tough times.

This book has operated like an interactive laboratory in higher education. As campuses are informed by its precepts, so they feed back to the author many suggestions and nuances for its improvement. This second edition is a distillation of that interaction. As such, it contains new research results that buttress its essential premise, new campus-based examples and practical suggestions, and new calls to action that impel higher education to confront the need to re-prioritize and reallocate.

What’s new in the second edition?

• New research and analysis on the escalating demands being made on higher education

• Updated materials to strengthen every chapter

• Campus-based suggestions on tactics that work and pitfalls to avoid

• New resource sections on “Sources of Hidden Costs,” “Model Communication Plan,” and “Prioritization Process and Implementation”

• Other tangible, pragmatic material to guide institutions as they rethink their purposes, their strategies, and their programs.

In addition, this edition makes available premium content that should benefit readers. Three institutions have shared valuable templates that they used in analyzing relative program strengths. The University of Saint Francis developed what I call a “Criteria Indicator Approach” that identifies criteria, indicators of evidence, and data sources. Drake University inaugurated a “Decision Tree Approach” to assist on-campus evaluators in arriving at recommendations. Finally, Seattle Central Community College has disaggregated its program analysis formats into four institutional sections—administration, administrative services, instructional programs and student services—as components in its “Program Analysis and Viability Study Review.” Readers will find this online material extraordinarily helpful.

I am gratified by the positive reception of the first edition and thank the many colleges and universities that used the book and shared their experiences about its principles and practices.

I’m especially grateful to the higher education associations that conducted workshops, Webcasts, and institutes for their members and used the book as the text for those programs: Association of Governing Boards, Council of Independent Colleges, National Association of College and University Business Officers, Society for College and University Planning, and the ACE Fellows Program.

This new edition has benefited from Gary Quehl and Robert C. Shirley, who included the book in their repertoire of consulting expertise and fed valuable insights from the field back to me about their campus experiences. I am also indebted to Geri Malandra for her helpful suggestions and to David E. Maxwell for providing a premier laboratory of planning and implementation excellence at Drake University.

I also thank those entities that have translated the book into other languages so that its impact might have a broader audience.

Finally, my sincere thanks to David Brightman, senior editor for Higher and Adult Education Series, and Aneesa Davenport, editorial program coordinator at Jossey-Bass, for their consistent, effective, and valuable assistance.

Estes Park, Colorado Robert C. Dickeson

Foreword to the First Edition

The crucial challenge facing American higher education today is that of defining a sense of self. Each of the thirty-six hundred or so colleges and universities in the United States has a unique heritage. Each vision, each purpose, each institutional character is distinctive. The special strengths and the comparative advantages of the campuses differ, one from another. Defining a sense of self is a complex task.

Bob Dickeson offers a sound conceptual framework and a set of processes for clarifying institutional purpose and setting academic priorities. There is no job more difficult—or more important. When priorities are on the table, academic lives and careers are at risk. Trustees face the challenge of weighing priorities at virtually every meeting and, more intensely, in times of crisis. Faculty members help shape the academic ethos and bring it to life. Alumni, legislators, governors, the media, campus communities, special interest groups—all play a role in shaping or ignoring academic program priorities.

Ultimately, the success of the academic presidency can be measured by how creatively presidents and other academic leaders engage the academic community in choosing among the ubiquitous and competing demands for financial and physical resources. In most instances, all demands and all programs are important. But in the end, some are crucial; if ignored, they may well imperil the institution, its quality, its character, and in some instances, its very survival. The future of American higher education—our quality and our capacity to serve society and fulfill our promise—rests in no small part on stronger presidential-trustee-faculty leadership in clarifying our sense of purpose and the priorities that follow.

Why does setting academic priorities matter? If resources to fund academic progress were inexhaustible, then perhaps setting priorities might be less important. However, although American higher education, unlike its counterpart institutions in almost every other nation, is fortunate to be able to draw on multiple sources of financial support—student tuition and fees, endowment earnings, direct and indirect support from federal and state governments, corporate support, and gifts from alumni and friends—in reality each of these sources has an ultimate limit, and many campuses are presently testing those limits. Even at the strongest, best-supported campuses, leaders face the struggle of maintaining quality, staying at the cutting edge, and responding to demands for additional resources. Indeed, it is at the nation’s greatest centers of academic talent and strength that the struggle over academic priorities can be most intense. Creative ideas, compelling opportunities, and talented people combine to intensify the pressure to gain some sense of priorities.

The relationship between academic quality and financial resources has always been apparent; an institution’s financial health is crucial to its academic quality. The paradigm has shifted, however, or at least it has expanded, to recognize that academic quality also is linked to purposeful and efficient utilization of resources. Monies wasted or underutilized mean fewer dollars for the academic priorities of greatest urgency. Using financial resources in purposeful, efficient ways is precisely what one seeks to do in the prioritization of academic programs.

Bob Dickeson is uniquely equipped to offer a road map for setting and shaping academic priorities. He has been there: as a faculty member, as an academic administrator, as president, and as one who has been at the interface of higher education and state government. He understands and articulates the crucial role played by boards of trustees. He has seen us from the perspective of the private sector, including that of USA Group, where he now resides. Through it all, Dickeson has gained an appreciation for the vast diversity of American higher education and the almost impossible job of shaping and setting academic priorities. Nonetheless, in this book, he makes the complex simple, the abstract concrete.

All members of the academic community should read this book: presidents and provosts most of all, but trustees and faculty members, deans and department chairs, prospective donors, and higher education policymakers as well. There is a valuable message for all audiences: as difficult as it is, the campuses of this country must do a better job of setting academic priorities and managing costs.

The forces that frustrate the prioritization of academic needs are legion. Vested interests on campus and pressure groups off campus emerge from nowhere. Try to close an academic program, no matter how humble, and suddenly you will find it is among the top ten in the nation and at the very center of the institution’s mission. Beyond the vested interests, however, institutional governance mechanisms work too slowly, and sometimes not at all, as the desire to expand or change the academic program confronts the desire to preserve and sustain it.

Making judgments about academic quality and the centrality of academic programs to the campus character and mission is, by its very nature, an ambiguous assignment. Such judgments are always open to challenge. Bob Dickeson, however, makes a compelling case for setting academic priorities; issues a call for leadership to trustees, presidents, and faculty members; and suggests an orderly process supported by a sound conceptual framework. In short, he helps make the impossible achievable.

Prioritizing academic programs will not happen, he counsels, in the absence of informed and courageous leadership from the president, the provost, the faculty, and the trustees. It is to the empowerment of those academic leaders that this book speaks. Although simply doing a better job of shaping and setting academic program priorities will not alone assure the quality and access in higher education that is essential to 21st century America, failure to set priorities more effectively will almost certainly place academic quality and access at risk.

February 1999

Stanley O. Ikenberry President American Council on Education

Preface to the First Edition

The initial idea for this book emerged from my experience as a rookie university president trying to cut costs in a turbulent time. The institution I inherited had already taken the “fortuitous cuts” that were available, chopped administrative units, and tried the politically expedient but academically unsound approach of across-the-board cuts for several years. As I pieced together a plan to reallocate resources among the academic programs of the university, from the weakest to the strongest, I was struck by the dearth of helpful literature in the field about how to prioritize in a responsible way. I vowed that if I survived the process, I would make available to other institutions the lessons I had learned.

Over the next decade, about fifty other colleges and universities solicited copies of our process and the plan that resulted from it because they too confronted the reality that they could not be all things to all people. In the drive to downsize (or, as one colleague euphemistically called it, “rightsize”) an institution, there is precious little in the way of effective guidance. Most institutions confronting the issue of reallocating program resources are meandering into an academic minefield, often without a detector.

As president of a consulting firm for the next six years, my colleagues and I worked with hundreds of colleges and universities, all trying to accomplish the impossible: to achieve higher levels of excellence in more and more academic programs with scarcer resources. What these institutions needed was a tighter focus. The application of my system, tailored to and enhanced by many of these institutions, has been strengthened to the point where I now want to share it with all higher education leaders—faculty, administrators, board members, public policy shapers—who care about the appropriate balance between quality and quantity in American higher education.

The need for tighter focus is critical in higher education. So is the need to restore public trust about costs. Indeed the public policy debate is shifting markedly from questions about access to those of affordability. It has been my experience that higher education leaders are quite willing to respond to national calls for controlling costs and to make change happen to increase their credibility when convinced it is in the best interest of their institutions to do so. But they lack the proper tools. It is one thing to call for reform; it is another to guide the way toward achieving it. This book is designed to serve as that guide.

The ideas here are not mine alone. My initial plan has been reshaped by thousands of faculty members, department chairs, deans, vice presidents, presidents, and board members at private and public colleges and universities across the country who have applied these principles to their unique situations. The ideas have been honed by my campus, consulting, corporate, government, and foundation colleagues over the years and refined by practice and implementation in multiple settings. These suggestions are stronger for having been tempered by experience, exposure to criticism, the fires of campus debate and action, and the courage of leaders willing to act on them to improve their institutions.

Throughout the book I make numerous references to the experiences and actions of the colleges and universities that undertook this kind of academic reform. Their telling adds a believable, personal dimension to otherwise cold recommendations. The relationship between an institution and a consultant must revere confidentiality, however, and thus the examples I cite, which represent real-life people, places, and situations, are disguised so as to honor that relationship. I hope readers will bear with my descriptors, such as “small private college” and “land grant university,” and in any quest to figure out who will not miss the intended lesson about why.

Overview of the Contents

One can infer from the contents of this book an agenda for colleges and universities. In its essence, the first chapter seeks to make the case for real academic reform. Portions of it may prove useful in building awareness for campus constituencies that are somehow sheltered from the external clamor for reform or the internal reality of underfunded visions. At a time when even the richest, best-endowed universities in the land are admitting to insufficient resources to retain their program offerings with quality, it is no wonder that the other thirty-five hundred institutions must confess to proportionate inadequacies. Many institutions can probably survive by maintaining the status quo, but only by reallocating resources will they flourish. And reallocation, to be done well, requires appropriate prioritization.

The finest, most sophisticated system for analyzing academic programs will absolutely fail unless it is championed by strong leaders armed with a clarified mission. Thus Chapters Two and Three focus on what steps the campus must undertake to reaffirm its mission and what leadership it can count on (including from its board) to complete prioritization successfully.

The balance of the book provides a step-by-step guide for confronting the many dimensions of academic program prioritization. Programs, after all, constitute the intellectual and service drivers of institutional life, and they consume valuable resources. Chapters Four through Eight set out specific, campus-based suggestions and lessons learned from the academic trenches. These chapters also answer a lot of practical questions. What constitutes an academic program? What are the most valid criteria to use in measuring programs? How should measurement and analysis be undertaken? What issues and questions can be anticipated throughout the process? Once decisions are made, how are they to be implemented?

The final chapter presents the entire process within a systematic context. Academic prioritization (or any other academic process, for that matter) operates at the confluence of multiple forces. Understanding the nature and relative impact of these forces will permit the many stakeholders in American higher education to make more informed judgments about how a specific institution is reconciling its competing internal and external demands.

Specific campus-based case studies are excerpted in the resources at the end of the book. They are not intended as models of ideal solutions (each institution must arrive at its own conclusion about its future), but they are meant to reveal the specifics of how some colleges and universities are coping with the realities of resource reallocation at the same time they are reclaiming public credibility about their accountability.

Audience

This book is written for all those who practice and who care about higher education. Reallocation of resources requires careful priority setting. “What to keep?” “What to abandon?” What to reduce?” What to strengthen?” are perplexing questions that should confront all academic leaders. Presidents, chief academic officers, and deans will want to use the materials provided here to help build awareness, craft their own change methodology, make the tough but necessary decisions, and thereby improve their institutions. Leaders of nonacademic programs in student services, academic support, administrative operations, and institutional advancement can readily adapt these processes and criteria to their reallocation imperatives as well.

“Academic leadership” also includes faculty, particularly faculty members serving in administrative or campus governance roles. The wisest department chairs, for example, can prepare for a pending reallocation by anticipating the 150 questions relevant to the program prioritization criteria and assembling plans and documentation that cast their department’s programs in the best possible light. (There is nothing like going into a test knowing the questions in advance.) Even if a program reallocation is not likely, forthrightly addressing the criteria outlined in Chapter Five will help reveal an academic blueprint for departmental accreditation, self-study, or continuous quality improvement purposes.

Members of institutional governing boards, who alone exercise the final authority for program additions and deletions, should use this book as a continuing reference to gauge the breadth and depth of the thinking behind the recommendations brought to them. Although board members will not want to micromanage, they require the knowledge this book offers them to ask hard questions about program costs, quality, coherence, and centrality. The judicious use of the book’s lessons should permit a college or university to save time and money, reduce agony, and enhance quality.

Finally, public policymakers are an intended audience. At federal and state levels, policy and allocation leaders want colleges to contain spiraling costs, improve student learning (particularly for undergraduates), foster stronger college-community connections, and adapt to the changing demands of the new information technology. This book offers productive alternatives to mindless cutting or faculty bashing. The real culprit is the needless proliferation of programs. Policymakers can become better equipped to understand the complex dynamics of administering universities and push for rationality and accountability at the same time that they honor institutional values and autonomy.

I sincerely hope the book enables all readers to understand the scope of the reallocation problem, believe in the effectiveness of the prioritization solution, and summon the requisite courage to strengthen their institutions.

Acknowledgments

Although I am solely responsible for this book, its evolution has been directly and indirectly fostered by many others. I am indebted to USA Group, Inc., of Indiana, its board of directors, and its president and CEO, James C. Lintzenich, for their steadfast and generous support of the USA Group Foundation. This work is made possible because of the foundation’s sponsorship. Martha D. Lamkin, executive vice president for corporate advancement of USA Group, and co-instigator of the foundation, was an invaluable partner in this work. Martha insisted I write the book, encouraged me each step of the way, and used her considerable writing talent to provide valuable editing in the final stages.

The original program prioritization I undertook during 1981-1982 would not have succeeded without the creative talents and academic judgments of Charles W. Manning, Robert L. Heiny, Joan Richardson, John L. Burke, David J. Figuli, and Robert B. Stein. Nor would the results have been implemented without the courageous and dependable commitment to quality by board members Thomas C. Stokes, Gail Schoettler, Betsy B. Karowsky, Beverly L. Biffle, Richard G. Trahan, and Shari Williams and state officials Richard D. Lamm and Lee R. Kerschner. Subsequent iterations and improvements in the prioritization process were measurably assisted by the faculty, staff, and board members at the scores of institutions that undertook reallocation. These academic pioneers must remain anonymous, of course, but I am deeply indebted to them.

Through the years, my administrative understanding has been shaped and challenged by strong mentors and professional colleagues in numerous education, government, business, and consultative settings. I particularly acknowledge Elmer Ellis, Thomas A. Brady, Robert Callis, A. T. “Jack” Matthews, J. Lawrence Walkup, Virgil W. Gillenwater, Governor Bruce Babbitt, Lee R. Kerschner, Robert C. Albrecht, James E. Walker, Jessica S. Kozloff, W. Clark Hendley, Nancy A. Scott, Governor Richard D. Lamm, Governor Roy Romer, Gary H. Quehl, Lee R. Noel, Randi S. Levitz, Stanley J. Spanbauer, and Thomas E. Williams. I have also been influenced by the teaching and examples set by Lloyd M. Wells, Richard S. Kirkendall, Glen T. Nygreen, Ernest L. Boyer, Frank Newman, and Harold Enarson.

I was fortunate to have secured the insights and penetrating criticism of outstanding readers who took time from their active schedules to raise questions, point out flaws, and suggest parts of the manuscript that needed elaboration: Russell Edgerton, Jessica S. Kozloff, Robert L. Heiny, James E. Walker, Lee R. Noel, Gary H. Quehl, John L. Nies, Tracy L. Wolff, and Martha D. Lamkin. This book is stronger for their shared wisdom.

Thanks go to Jean Rose for her editorial expertise; Lisa Cole, Mary Wright, and Natasha Swingley for their technical assistance; Sara Murray-Plumer and Susan O. Conner for their valuable advice; and the qualified staff of the Indiana University-Purdue University Indianapolis Library for their help.

I am grateful to Gale Erlandson, senior editor for the Higher and Adult Education Series, and David Brightman, editorial assistant, both at Jossey-Bass Publishers, for their encouragement and capable assistance. Jossey-Bass also provided additional, anonymous readers whose insightful ideas proved valuable.

I am indebted to Stan Ikenberry for his thought-provoking and generous foreword.

Ludmila Weir Dickeson deserves special recognition for making important suggestions to clarify key points in the manuscript, for supporting this effort with warmth, love, and encouragement, and for putting up with me for thirty-five years.

IndianapolisRobert C. Dickeson

February 1999

To the four extraordinary women in my life: Ludie, Betsy, Cindy, and Whitley

About the Author

Robert C. Dickeson is a higher education consultant, president emeritus of the University of Northern Colorado, and former senior vice president of Lumina Foundation for Education.

His career has included service in higher education, government, business, and philanthropy. Dickeson has taught at the University of Missouri, Northern Arizona University, Arizona State University, the University of Northern Colorado, and the University of Colorado-Denver. He served as dean, vice provost, and vice president at Northern Arizona University (1969-1979) and as president of the University of Northern Colorado (1981-1991). He served as director of the Department of Administration and chair of the governor’s cabinet in Arizona (1979-1981) and chief of staff, chair of the governor’s cabinet and executive director of the Colorado Office of State Planning and Budget (1987).

From 1991 to 1997 he was president and CEO of Noel-Levitz Centers, Inc., the higher education consulting and services firm. From 1995 to 1997 he was division president of Management Services for USA Enterprises, Inc. While serving as senior vice president for corporate advancement of USA Group, Inc. (1997-2000), he headed the USA Group Foundation which, in 2000, became Lumina Foundation for Education. Dickeson retired from Lumina in 2005 after having served as senior vice president for policy, research, and evaluation. In 2006 he was a policy adviser to the Spellings Commission on the Future of Higher Education.

Dickeson has chaired blue-ribbon commissions appointed by three governors in two states; has been an officer of forty corporate, government, foundation, or public affairs organizations; and has served in various roles with the American Council on Education, the American Association of State Colleges and Universities, and the Education Commission of the States. He was a charter member of the President’s Forum on Teaching as a Profession and a cofounder of the Renaissance Group of Universities. His numerous awards include recognition from the American Council on Education, American Association of Colleges of Teacher Education, the American Association of State Colleges and Universities, the North Central Intercollegiate Athletic Conference, and Women in Government.

The author of numerous publications in the fields of higher education leadership and policy and public administration, Dickeson has extensive consulting experiences with private and public two- and four-year colleges and universities and for-profit and nonprofit organizations throughout the United States. He has served on numerous editorial boards, is a member of the Research Advisory Group of the Association of Governing Boards, and is senior counsel, Widmeyer Communications.

1

RECOGNIZING THE NEED FOR REFORM

The most likely source for needed resources is reallocation of existing resources.

American higher education has been regarded universally as the best in the world. Yet American higher education institutions are overwhelmed by competing demands, internal and external, that threaten the capacity of higher education to meet ever increasing expectations, including those of retaining global leadership. The contrast between internal and external pressures could not be more illustrative of the need for reform.

Internal Pressures

Internally colleges and universities are under increasing pressure to accomplish four things: increase revenues, decrease expenses, improve quality, and strengthen reputation. They have been particularly successful at raising revenues. Revenues required to fuel the collegiate enterprise have risen dramatically as campuses have tried to cover increases in enrollments, inflation, faculty salaries, additional programs and services, shrinking state budget support (in the case of public institutions), and institutional student financial aid to improve access (in the case of private institutions).

Increasing Revenues

Nearly thirty years ago, Howard Bowen observed that revenues were the economic drivers for higher education and that colleges and universities raised all the money they could and spent all the money they raised (Bowen, 1980). Nothing in the past three decades has operated to refute his observation. Higher education revenues have increased from all sources: tuition, federal, state, and local appropriations; private gifts, investment returns, and endowment income; and restricted revenues, including auxiliaries and hospitals.

But increases in tuition revenues have been the major source of additional funding for both public and private institutions. These increases have consistently exceeded the pace of inflation, a fact that rankles students, families, and policymakers alike. Colleges and universities argue that it is inappropriate to use standard measures of inflation to evaluate the growth of tuition and fees. The Consumer Price Index (CPI) is based on the proverbial “market basket” of goods and services used by consumers. It is composed of housing, transportation, food and beverages, apparel and upkeep, medical care, entertainment, and other goods and services. Institutions of higher education, of course, buy different things. The market basket does not contain faculty members or library books or laboratory equipment, for example.

To rectify this situation, the Higher Education Price Index (HEPI) was created. HEPI tries to approximate the market basket for what colleges buy. It includes an analysis of faculty salaries, based on data from the American Association of University Professors (AAUP) and a representation of several price indexes for other commodities that institutions purchase. The HEPI has lost favor recently, primarily because the salary portion—the AAUP survey—was self-referential. A new index was introduced in 2004 by the State Higher Education Executive Officers to correct past deficiencies and to offer a more valid tool for measuring higher education inflation: the Higher Education Cost Adjustment (HECA). HECA is composed of 75 percent salary data, generated by the federal Employment Cost Index and 25 percent from the federal Gross Domestic Price Deflator that reflects general inflation in the U.S. economy. HECA will probably emerge as the tool-of-art in the future.

Despite the increasing sophistication of the measures, the fact remains that tuition and fees have far exceeded all three of the indexes for the past twenty years (Dickeson, 2006).

Revenue is also increasing through substantial and successful efforts to tap the generosity of donors. Donations to educational institutions, including colleges and universities, have increased continually, although year-to-year percentages will vary, depending upon economic conditions and donor behavior (Giving USA, 2008). Many institutions are undertaking capital campaigns with goals in the multiples of millions of dollars. A few high-profile campaigns now exceed a billion dollars. The development office is one of the fastest-growing departments at many institutions as the thirst for revenue continues unslaked.

Decreasing Expenses

The institutional quest to cut expenses has been less dramatic. Institutions typically attempt to make budget ends meet on the expense side by not filling positions, curtailing or deferring certain expenditures, and implementing across-the-board cuts in operating budgets for departments. These efforts are traditionally short term in nature and are designed to “get through another budget year.”

Further, recent institutional spending behavior would indicate that, while students are picking up an increasing share of the cost of their education, institutions are spending less on instruction. At most types of institutions (private research universities are the exception) an increasing share of “education and related” expenses are directed toward administrative support and student services, according to the 2009 report of the Delta Project (Wellman, Desrochers, and Lenihan, 2009). This finding would suggest that institutions have not made the tough decisions about adapting to lower subsidies from traditional sources but instead are using tuition increases primarily to shift revenues.

By contrast, several current practices have made some inroads into needed collegiate cost containment. Benchmarking—the practice of comparing best practices in management with one’s own—has been the subject of creative effort by the National Association of College and University Business Officers (NACUBO). Working with Coopers & Lybrand, NACUBO has developed since 1991 a process of sharing information among several hundred participating institutions. A database of institutional practice permits measurement and comparison of work processes in several internal functions, activities, or operations. Such administrative activities as processing an application for admission or processing a purchase order have received sophisticated analysis for “business process reengineering” (NACUBO, 1994; Douglas, Shaw, and Shepko, 1997).

Another promising area for cost containment is privatizing, or outsourcing non-mission-critical functions of the institution, presumably at a savings. The growth of outsourcing in higher education, although it does not parallel the practice in other organizations (notably business and government), is significant. My own review of this subject revealed some twenty-three different functions that colleges and universities have outsourced to noncollegiate providers. A list of these functions, together with critical questions that institutions should answer before proceeding with outsourcing, is contained in Resource A. The extent of the privatization trend has gone beyond outsourcing and now includes both tactical and strategic alliances that hold great promise (Dickeson and Figuli, 2007).