The unusually large reductions in state appropriations to higher education in many states and the impact of the current record setting economic decline on other sources of university funding has pushed institutional responses into high visibility. We usually interpret America’s never ending economic crisis in higher education as instances of unique phenomena, each one requiring new dramatic response. We react with surprise, alarm, and exceptional rhetoric to the cyclical downturns in public funding or private support. We dramatize the dire consequences that reduced funding will cause. We project an imminent decline in the international standing of American higher education as a result.

Yet, we weather these storms. Our traditional response is to lay off some people, cut back a few programs, delay some maintenance, and pull down our reserves. At the end of the cycle, we may be poorer, but we are not much different. Major research universities in particular are remarkably resilient enterprises. Constructed for the most part in cellular fashion, with each department, college, school, and unit operating almost independently within a national context rather than fully integrated into an institutional construct, the difficulties of one cell have attenuated impacts on others. Research universities generally protect core tenured faculty no matter what the fiscal circumstances, although they may reduce contingent faculty and dismiss staff in less critical areas. Universities have many open positions at any one time, and by delaying replacements, closing peripheral enterprises, and using reserves and other funds to buffer short-term losses, most institutions can find their way through a fiscal crisis without major structural changes to their operations, even when confronted with the dramatic reductions currently anticipated by many institutions.

Often, too, legislators and reform-minded politicians look to financial crises, especially ones as severe as this one, as devices for refashioning public colleges and universities in their own image. They want them smaller, less focused on research, more concerned with delivering job-related degrees to as many students as possible at unrealistically low costs. They imagine they can refashion the educational landscape using economic hardship as a primary tool. This effort generates much rhetoric from all affected parties, everyone seeking to highlight the benefit or damage such reforms might bring, and everyone being right to some degree.

This ritual cycle has its real victims in faculty careers delayed, employee jobs lost, and opportunities for students curtailed. Once the cycle of crises passes, however, the universities, like hardy boats in a storm-tossed sea, right themselves and continue sailing on in the same direction, restoring their damaged equipment as best they can while maintaining their course.

Dramatic realignments and restructuring of higher education only rarely result from the downturns of American economic life, but beneath this cycle of crisis, complaint, response, damage, and repair another less visible but nonetheless significant realignment takes place. The intense competition in American higher education, especially among the top 200 or so American public and private research universities, turns always on the fulcrum of money. Research university competition runs on human talent, whether students, faculty, or staff. The quality and productivity of people determines the winners in this competition. These quality people have the common characteristic of mobility: They can go wherever they believe their talent will find the most support and reward. The money determines which institutions can purchase the largest number of productive high talent people.

The economic cycles of American university life substantially affect the ability of institutions to sustain their competition for the best people: the more severe a financial crisis, the more significant the impact. The consequences of poor institutional response to a crisis tend to erode competitiveness over time rather than generate a dramatic crash. If a university focuses on its competitive context as it adapts to a financial crisis, it will make adjustments that enhance its ability to beat the competition when the crisis recedes. If the institution seeks to minimize internal conflict and maximize stability and continuity, it will almost surely weaken its competitive strength as it emerges from crisis mode.

University competitiveness is a function of how much money the university can spend on quality after it has paid for its sustaining operations. The critical issue in a crisis, especially a severe reduction in revenue, is preserving that margin for competition rather than spending the margin to sustain the status quo. Indeed, a truly competitive institution will reduce its expenses MORE than required; recognizing that as everyone recovers from the financial storm, the institution with money to spend on new people and their programs will have a relatively short period to outbid everyone else for talent, and at lower cost. Institutions that spent their margin sustaining what they had before, and often borrowing into the future to maintain the past, will find the improved economic benefits, when they come, already committed to the deferred costs of the crisis decisions made earlier. By the time they recover and begin to build a margin, they will find themselves behind in the competition for the best people.

This formula is simple and everyone should understand it, but acting on it is quite difficult. Universities are collaborative enterprises, they always seek to minimize conflict and maximize agreement, they have multiple constituencies that fight amongst themselves over declining resources, and they often have leadership concerned with maintaining the collegiality that builds career advancement. In public universities, governing and coordinating boards may be highly political and responsive to the short-term interests of the institution’s many clients and supporters. Legislators may demand quick-fix solutions, and the public may find higher education’s lament only semi persuasive. Private universities, already more coherently managed and with the ability to act in real time with a clear focus on institutional self interest, generally although not always respond better. In the constantly recurring cycle of financial crisis and university response, the benefit of private focused governance gives these universities an edge, especially during severe reductions in state revenue that limit the advantage of public university tax-based subsidies. Over time, and sequential budget crises, that edge helps explain the ability of private research universities to pull ahead of their public competitors in many areas.

Dramatic, revolutionary change does not readjust the competitive hierarchy of American research universities as much as the consistent pursuit of high quality, supported by a financial model that produces a consistent marginal surplus for investment in competitive people. That marginal surplus need not be large, but the university must deliver it consistently and invest it effectively. When that happens, it produces an institution whose competitive quality increases steadily and inexorably over time.

University competition is a game played on the leading edge of institutional behavior, not at the center. The optimal strategy is to move money from the less productive trailing edge to the more productive leading edge. Executed consistently over time, this strategy delivers an ever-increasing leading edge of highly competitive quality that pulls the center of the university’s operations relentlessly forward towards higher standards of performance. The financial crisis cycle provides periodic opportunities to move more money from the trailing edge for investment in the leading edge. Those institutions that take advantage of these crises benefit greatly.

A theme in budget reduction processes in some states is an enthusiasm for cannibalizing some institutions in the hopes of keeping others from suffering the effects of a state revenue reduction. This is of course a highly political issue, not easily resolved by rational discussions because the number and type of public universities and community colleges in a state reflects the accumulation over a long time of decisions by elected political representatives.

In some states, systems of higher education responded to historical circumstances such as the creation of Land Grant universities or court ordered desegregation that drove investment in large research campuses and Historically Black Colleges and Universities. In many states, large community and technical college systems have emerged to provide job related training and college transfer programs. Population growth, political commitments, and economic development considerations, led many states to create four-year-and-beyond higher education systems that include campuses of every type from four-year liberal arts institutions to major public research universities.

The possibly wasteful use of tax dollars to support too many institutions is a popular theme, yet the definition of waste is often relative to the self-interest of the observer. It is a waste to spend money on a community college or a small liberal arts college from the perspective of the research-intensive university because flagship institutions may see their mission as more important to the state than the missions of other institutions. However, from the perspective of the students and communities where these other institutions operate, flagship universities are a wasteful luxury that exist to support major entertainment industries like football and coddle research professors who teach very little and whose discoveries end up nurturing the industries of the Northeast, the West Coast, or boom states of the Southwest.

These charges and counter charges often occur in whispers because the political sensitivity of targeting any particular institution is great. If the HBCU's are untouchable for a host of historical and equity reasons, or if small rural institutions are protected by political influence, then an assault on other institutions elsewhere in the state will not be seen as fair. In addition, the issue of cost is more complicated that it might appear. If the state closes a relatively small institution in a semi-rural area and fires the faculty and staff, we can indeed save money.

This saving is not without another cost. The money saved can make the budget reduction of flagship and other institutions less painful, but the loss of the small semi-rural locations will also ensure that the students who formerly attended these institutions will no longer have an easily accessible college. They may now have to drive two hours a day or more to commute to and from another college. In the effort to keep themselves afloat financially, these students may find it impossible to hold down two jobs, care for a family, and make the commute. This may not concern the institutions that benefit from cannibalizing the budgets of the smaller colleges, for they will have more money and will not have to work as hard to be more efficient, thanks to the loss of services to citizens in other parts of the state.

Whether the smaller institutions are less cost effective than the big research institutions in a state is a complicated and not easily resolved issue. Many flagships have a much higher cost of instruction than do smaller undergraduate-only institutions, and they often have higher tuition and state support per student. At the same time, public research-intensive university are critical elements in any state’s ability to compete for high wage-rate jobs, a good industrial base, and a vibrant economy. No state can afford to export high value jobs and industries to other states (that do have first rank public research universities), and rely solely on low wage rate blue-collar jobs to drive their economies. The real issue is whether the state is paying a reasonable amount to educate each student that attends a public institution and effectively supporting a first rank public research institution. It is not the number of institutions that matters as much as the cost per student educated, since we should measure the purpose of public higher education not by the number of institutions but by success in educating students and driving the public research university performance that enhances the economic competitiveness of the state.

Institutional cannibalism is probably the least attractive of the devices proposed by some as the way public systems should respond to the challenges of declining state revenue. Individual campus advocates who seek to extract efficiencies from other campuses reducing student opportunities elsewhere in their state, rather than look within their own institution for the savings and adjustments required to deal with state revenue loss, do a disservice to everyone. Perhaps they should turn to scripture and answer the question:

"And why beholdest thou the mote that is in thy brother's eye,
but considerest not the beam that is in thine own eye?"

The best policy perspective is to pay attention to the cost of delivering a college degree and the required investment in nationally competitive public research university performance. Public higher education institutions at all levels require clear measurements of performance relative to cost, compared to other competitive institutions of their type across the country. Whether we educate physicians or welders, promote science or technology, or create high value jobs, the competitive performance of institutions matters, not the number of institutions in the mix. We should not waste any state money, but neither should we assume that prestige, snobbery, or rhetoric are substitutes for effective, measurable, and cost-effective performance as the guide for investing in the future of all the citizens of the state.

Our fable begins with the recognition that everyone is in favor of change, that magic word for all of higher education. Few things in college and university life capture such universal admiration as the prospect of change. If we become tired of such an ordinary word, we can prefix it with other magical words with high value like transformational and accountable. We know that the good change for universities involves more money to do the things that we want to do. Bad change involves less money. We know we usually do not like change that makes us work harder.

Budget reduction processes offer special opportunities for change. In public universities, these moments of fiscal challenge prompt government representatives, coordinating boards, and other responsible observers to tell us to take advantage of the crisis to restructure the university and achieve better efficiency and accountability. The state may give us a mid-year budget cut and ask for a strategic realignment of our work, as if the university operated on a week by week cycle.

Most of us respond politely, even though we know nothing of the kind is possible. By December, every university has already spent about half of its budget and it has made commitments for much of the rest. If it is to give money back to the state, it must find it by scrounging around in supplies and expenses, canceling travel, postponing purchases of new computers, and perhaps not hiring some adjuncts and increasing class sizes. But strategic realignments? Not a chance.

This time, however, we are told to expect that the mid-year crisis will morph into a major budget reduction for the coming year, so we must engage our strategic thinking to improve the university. This, in a budget reduction mode, should involve getting rid of things we no longer need that cost money and employ people.

Our university president says, "Well, we're going to be efficient and eliminate the program in Sanskrit which has a low enrollment and costs us $300K a year." She immediately learns that there is a major Sanskrit-speaking community in our state (which we had failed to notice) and its lobby in our legislature is very strong. We receive a memo from the state budget office that says: "Please make strategic accountable reductions in the university budget, but leave Sanskrit alone."

She turns next to student social services, for which we pay $3M a year. She says, "Well, between teaching English and sustaining full student social services, we should reduce student social services by half, a $1.5M budget reduction." All hell breaks loose. The student lobby, the social services professionals in the state and their lobby, and various parent groups all point out the outrageously insensitive behavior of an administration that would cut student social services by any amount. The president receives another memo from the state budget office that says, "Please make strategic accountable budget reductions in the university but exempt Sanskrit and Student Social Services."

"OK," she says, "we got it." She then turns to our intercollegiate athletic program, which receives a $5M subsidy from the general budget every year. She tells the athletic department, "We're taking $2.5M from the athletic budget in order to sustain the humanities departments." All hell breaks loose. While the English, comparative literature, and history professors recognize the wisdom of this decision, the sports lobby of alumni, donors, and legislators goes crazy. Blogs fire up, talk radio goes volcanic, and famous former athletes speak out. The president receives an informal but clear message from the chair of the state legislative budget committee, a former football star at the university. The message: "Please make strategic accountable budget reductions, but if sports are on the list we will cut your budget worse than it is now."

"OK," she says, "let's save money by consolidating departments and programs." This is a favorite of budget reduction gurus. Everyone on campus cheers until she identifies the departments and programs. Then, everyone except the people in those programs cheers. The affected faculty and students organize a guerrilla movement on campus to undermine this decision. The faculty in the affected programs call on the university senate for support since the administration, in a misguided effort to be effective and efficient, failed to consult adequately (adequately being about at least a year of study). Someone in the business school calculates that the savings from consolidating programs without firing faculty and staff will be minimal. Indeed, after the new combined program has to reprint all the letterhead stationery and redo the catalog, the analysis shows that consolidation will actually cost the university more than leaving the programs alone. The best faculty in the proposed consolidated programs immediately polish their resumes and threaten to leave (although few actually get offers to leave). Students mobilize, unions mobilize, and soon the university recognizes the folly of its ways and sends the proposal to a university senate study committee, removing this option from the current budget process and effectively killing the idea.

The president, in a fit of desperation, looks outside her campus for better targets and identifies a small public college in the next county that has low enrollment and poor graduation and retention. She recommends a strategic realignment that would absorb the small college's programs into the state university, and achieve major savings. Although the state has frequently claimed that it has more state funded colleges than it can afford, the public regards this aggressive move against a sister campus as ruthless bad form. The mayor and the legislators from that district immediately mobilize to block any such move. Once mobilized, they succeed in getting the legislature to upgrade the state college to a university and authorize three new masters and two new doctoral programs to symbolize the importance of the campus to the economic development of the region.

Finally, the president creates a strategic and accountable realignment for the institution by cutting a little here and a little there, abolishing a program that has no supporters in the legislature and ready-to-retire tenured faculty, and eliminating building maintenance funds to avoid laying off any faculty.
The public relations office describes these moves as creative and visionary change, and the press hails the president as a wise and profound academic leader who has accomplished these fine things in an effective and accountable way without damaging important academic functions of the institution. Although the president knows that the campus' deteriorating physical plant will become a major issue for the future, she also knows that she will be somewhere else when that happens.

And so ends the fable with a budget crisis averted, and a change process achieved.

In the endless Sisyphean task of explaining university finances to many audiences, we often encounter considerable skepticism about our permanent need for more money. No university worth its diplomas will argue that it has enough money to do its job. Not even the richest among us.

Instead, we seek continuously increasing revenue from our states, the federal government, our students, corporate sponsors, and of course our donors. We have a wide range of creative stories we tell about the wonderful things the money brings: more and better students, services, economic development, and significant research. It is all true, as we know, but nonetheless, we can see the skepticism in the eyes of our legislators, some of our donors, many of our students’ parents, and the army of reformers who imagine high quality education should be a free good.

Sometimes we despair, but then again, the job is to preach the gospel of higher education to the unbelievers whether conversion takes place or not. There is a story we can tell, however, that sometimes reaches difficult audiences, especially those made up of business people.

Universities are indeed business enterprises, we can explain. They earn and spend money, they produce and sell a wide array of products, and they compete for student customers and high quality faculty employees. They produce teaching and research, they require students and faculty, and they judge their performance on the quality work both perform. Most people in our audiences will recognize all this as more or less appropriate and right. Then we come to the money.

Universities, we can tell them, are revenue engines with a business model fundamentally different from our corporate colleagues. The business world constructs enterprises to produce and sell products or services with the goal of making money. A successful business earns a profit that it distributes to its owners. The business measures its success by the amount of money (or value) created for its stockholders or owners. This is simple. If the business cannot make the product and sell it for a profit, it stops making that product and makes a different one that it can sell at a profit, because the point of the exercise is the profit not the product.

In the university however, we do something different. We engage in an intense and focused search for money so we can produce teaching and research (with all of its associated benefits). The more money we can generate the more and the better teaching and research we can do. The purpose of the money is to purchase quality teaching and quality research and support a quality university environment. We compete with each other not to make a profit but to acquire quality. We define the successful university by the total amount of quality it can accumulate (demonstrated by its products) within its boundaries.

Quality is rare and expensive because the best students and the best faculty can choose where to go and participate in the creation of quality. To get the best, we have to provide them with an ideal environment for realizing their dreams and aspirations. The people whose work we enable through the environment, the facilities, the support, and the opportunities we create using the revenue acquired from all those difficult sources generate the quality products. The point of the university is the quality product, not the money. For us, the money makes the quality product possible. For the business, the quality product makes the money possible.

The business model produces quality at a cost below what the market will pay for the product. The university model spends its revenue to produce the highest quality its money can buy, and then pursues additional money to buy more quality. We spend in a competition to acquire quality for our institutions where our business counterparts spend in a competition to produce higher profit margins for its owners. In the university, there are no owners; there are only quality producers. We compete to buy the highest quality producers our resources and the efficiency and effectiveness of our institutional systems permit.

In the business world, the one with the most profit taken out of the enterprise wins.

In the university world, the one with the most money invested into the creation of quality products wins.

Our business colleagues are not sure this is rational, but once they see the rules of university competition, they understand better how we play the game.

Nothing is more central to the enterprise of intercollegiate athletics than the commitment to amateurism. Everyone, whether bitter critic of NCAA sports or ardent defender, acknowledges this requirement. College sports depends on the definition and defense of amateurism for its survival, but the tremendous popularity and financial requirements of the college sports enterprise threatens and has threatened this quality since the early 20th century. The core feature of amateurism is the concept of the student-athlete (a compound noun invented to recognize that we could not just have students who played sports but must have regulated students who played a special type of sports). The student-athlete is an individual who, while maintaining a bureaucratically defined status as student also maintains an equally bureaucratically defined condition of amateur sports performer. The line we draw to separate amateur from non-amateur is exceedingly thin and often follows a rather convoluted path that reflects the creativity of those who seek to provide commercial benefit to themselves and to the student-athletes.

Because college sports are hugely popular, everyone wants to buy a piece of the action. The universities and their agency, the NCAA, sells pieces of the action, but in ways that struggle to distinguish between the sports programs and the students who play the sports. In simple terms, we think it OK to sell the program, the team, the game, and the season, but not OK to sell the individual student-athlete in any forum outside the context of the university, NCAA, or conference sponsored context. Our game-day programs feature individual student-athletes without challenging their amateur status, but we consider a student-athlete who sells her own athletic accomplishments to promote an outside commercial as having given up amateur status. The rules that clarify the differences in these circumstances are numbingly complex, but the principle is easy. If we sell student performances as part of the university based and sanctioned package of college sports, it is OK. If the student sells her athletic abilities outside of university based and sanctioned packages, it is not OK.

Our rules create an elegant rococo disputation among those who believe we should pay students to be athletes and those who think we have already over commercialized students who are athletes within the NCAA context. Both positions have merit, but actually, they are beside the point. The point of the exercise is somewhat different.

College sports MUST be conducted with the talent of amateurs who do not receive direct individual payment for their services beyond what is appropriate for school expenses. If they receive more, then they become employees of the university, playing not for the team but for the money. Even if the money is, at the beginning, relatively minor in character, it is the principle that matters. We succeed with intercollegiate sports because we work hard to put only amateur students on the field, we construct restrictions to keep our student-athletes as continuing members of our university, and we rigorously exclude those who step over the line into the professional world or fail to maintain some minimum standard of student status.

This is the product, the amateur, enrolled, student-athlete competing on behalf of the team for the college. Are the Division I and IA basketball and football enterprises all but professional in every other way? They certainly are. Production values, quality of facilities, quality of coaching, quality of support, all of these are at professional levels and beyond, but the key talent, the athletes themselves, are a special breed. They must be very good at their sport, they must follow exceptional structured training regimes, they must follow complex rules and regulations, but they must also remain students and play for only the canonical college career (four years of play).

Throughout the history of intercollegiate sports in America, nothing has caused college sports more trouble than maintaining this construct of the amateur student-athlete. Payments under the table, bribes for recruiting, gambling schemes, secret professional contracts, payments from agents, and an endless litany of other abuses have nibbled at the edges of the amateur student-athlete, each effort captured in some form of NCAA legislation or definition to hold off the contamination of professionalism. Why not, we might ask, just give up this nonsense and let students who are athletes sell their talents outside the university to the highest bidder? We could do it, of course, it would be easy, but in losing control of the student-athlete, the university loses control of the uniform context of the games we play.

We want college athletics to be a seamless web of competition between teams of athletically talented students who compete against each other on a common basis, the legendary level playing field. We want the games to be fair, uniformly conducted, a competition that demonstrates the best college team. We structure our competitions in conferences and tournaments and bowl games and playoffs all to complete an endlessly renewing cycle that creates the illusion and some of the reality of an ideal type of commitment to institution, team, colleagues, and alumni. We take money to create the facilities, the circumstances, and the quality of the enterprise, but we place a barrier around those who make all this possible, the student-athlete, and hold them, for a short time, isolated from direct involvement with professional choices.

The latest flurry around the expansion of fantasy sports to feature individual student names as well as statistics provides an illustrative example of the tremendous pressure to professionalize the college game. Although the CBS version does not appear to buy or sell individual students, it does create a corporate enterprise that exploits an individual student’s athletic performance as it promotes its own profit-making image and activities. The NCAA will find it difficult to resist the use of student names, which exist in the public domain anyway since newspapers, magazines, and news shows on television or the Internet routinely use student names and images to sell the content of their programs that exists to sell the products advertised. The NCAA’s current rules to do not easily accommodate the fantasy football enterprise, and even though student-athletes do not receive a financial benefit directly from the use of their names in this context, the pressure to connect a prize or benefit to the student-athlete whose name is most valuable in the fantasy league will surely be strong.

And so, the cycle of commercial threat to intercollegiate amateurism will take another turn, and the NCAA and its universities will struggle for yet another definitional determination that allows what must be permitted under the law but sustains the essential non-professional nature of its essential amateur student-athletes.

This battle in its many forms has been in process a long time, about a century perhaps, and it will surely continue. We will learn how to accommodate this latest threat, but our line separating the amateur college student and the professional athlete will grow thinner still, and surely acquire another convoluted twist in our rulebook.

Periodically, universities and their friends engage in a flurry of conversations about naming things on campus, usually triggered by a high profile naming that some find inappropriate, interesting, or otherwise noteworthy. Most of us have experience in these conversations, having engaged in them time-and-again, in different contexts over the years. We know we will touch on the ten standard naming rules:

1. Only name buildings for dead people,

2. Only use the names of admirable people,

3. Recognize substantial individual contributions,

4. Ensure a gift large enough to justify the recognition by name,

5. Avoid changing the name already on a building,

6. Avoid using corporate names for permanent recognition,

7. Use more relaxed rules for naming exterior spaces,

8. Allow flexibility in naming interior spaces,

9. Avoid naming things for departing administrators, however beloved

10. Be prepared for controversy over naming choices.

Most universities have variations on these ten commandments for naming, but many styles, traditions, and practices modify their implementation. In principle, these things are not very complicated, but in practice, they can provoke discussion and sometimes outrage.

1. We like to name buildings after dead people for several reasons. These individuals will do nothing to embarrass the university in the future. We can be reasonably sure that their accomplishments are truly significant and praiseworthy. Any controversy will be somewhat muted (but not necessarily eliminated) by the reluctance to appear churlish towards a recently deceased individual, although, being deceased is not a guarantee of universal approbation. In any academic setting, there will be those who do not believe an individual so recognized appropriately represents the values of the institution. However, in most cases, we can withstand the controversy.

2. We certainly like to name buildings for admirable people, but the definition of admirable is often quite flexible. We can admire great accomplishment of scientific, humanistic, or artistic character; we can honor exceptional public service; or we can recognize the admirable motives that prompt an individual to contribute a significant sum towards the academic goals of the institution. Some individuals honored in a naming may have academic or public service distinction AND provide an exceptional financial contribution. More and more, of course, our institutions see a financial contribution as the primary motivation for admired behavior, and we anoint fewer and fewer buildings with the names of distinguished but impecunious academics, artists, or public servants.

3. With but few exceptions, universities and colleges, public and private, are in desperate need of funding to support the quality that all of our constituents want. Quality is expensive, tuition and fees are high, public support declines, and so we turn again and again to our financial benefactors for help. In return, we must recognize their essential contributions, and so we name things in their honor, both to recognize the gift and to signal to others that we can be grateful for their help as well.

4. However, while most of us find such recognition appropriate, we often have difficulty setting the right price. How much of a contribution is required for a building recognition? Half the replacement cost of the facility, sixty percent of the cost of a new facility? If our state has a matching program, do we count the state match as part of the gift? And, if the name is for a major unit, a college for example, do we calculate a percentage of the annual budget as the appropriate reference for a naming? These calculations may appear crass, but in fact, they are essential because we must be fair. Whatever is worthy of recognizing one donor must be good for another. If, however, we are a poor college just beginning our fund raising, we may have lower thresholds for naming than if we are a rich college. As a result, we often have lower standards for our first campaign and higher standards for our fourth campaign.

5. Often interesting old buildings already have a name, and frequently the name dates from a period when donations were not relevant to naming choices. When we receive a gift to renovate an old building or otherwise support an important activity in that building, and the donor expresses an interest in renaming the building, we run into our fifth rule. Renaming buildings is always problem. While we make today’s donor happy by doing it, we may well send a signal to future donors that our assertions about the permanence of building names are suspect. If the old name did not acknowledge a gift, the conversation is easier than if the old name recognized a previous gift. Sometimes we finesse this by hyphenating the building name: The Sam George—Susan Peters building. These conversations can sometimes produce volatile responses from alumni with emotional attachments to old buildings, or friends and relatives of the original honoree. Still, we need the gift, and most universities know that if the gift is substantial and the institutional need great, careful consultation and preparation will help smooth over any potential issues, and the next generation of students who will become alumni will have no vested interest in the old name.

5. Corporations often like to see their names in highly visible places, but these names have their own problems. Usually, it is best to put corporate names on things with a finite life span. The Fancy Chemical Laboratory named for a five-year period in exchange for enough money to outfit the lab. Often the corporations find athletic facilities the best naming opportunities because these high visibility nameplates usually sell for a fixed amount per year. When the company disappears or no longer sees value in the venue, or the university has reason to disengage, the end comes without much emotional angst. Public universities often have difficulty naming anything for corporations other than some programs or athletic advertisement opportunities. Private universities have more leeway, but good policy encourages caution in any permanent naming for a corporation that may not last forever, and one never knows when a corporation will be found to have engaged in some behavior that might embarrass the institution.

6. Rules for naming exterior spaces are often much less formal. Courtyards and patios, streets and walkways offer opportunities to recognize living people. We can name a patio, and should the name become a problem, we can change a patio name. We can name a space but with the proviso that the name lasts only as long as the space remains open, which may not be forever.

7. We can also name interior spaces, again with much more flexibility. We can use classrooms, conference rooms, and auditoriums to recognize short term or permanent gifts. We can limit the duration of the naming for the term of the program or for the expected life of the renovation funded by the gift. These interior spaces can also serve to recognize distinguished individuals even without large gifts.

8. There is some difference of opinion about naming things for departing administrators. Often such individuals accumulate constituencies and on the administrator’s retirement, a movement will emerge to name this or that building, space, or program. This can be a difficult conversation. If someone says, “Well, José is a fine fellow, but after all, we paid him good money to do good work, and he did good work, so we should say thanks and move on.” Naming anything significant for a departing administrator can create an entitlement for subsequent administrators. The exiting president is told, “We named the science building for your predecessor, what building do you want?” The wise president will say, “Thanks, but we shouldn’t name anything significant without a donation because the institution is in desperate need of additional funds.” We’d prefer not to be ungracious, saying to the long-serving and well-regarded departing hero, “We love you, but we don’t want to waste a naming opportunity that could recognize a significant gift.”

Whatever we do with a naming, however wise our choices, however clear our rules, we always know that naming things can provoke controversy. Any time we decide to do a naming, we should be prepared for controversy and have our explanations ready. Good rules help, consistency and clarity help even more.

The act of matching donor wishes to institutional needs through philanthropic gift agreements is something of an art. Donors usually have specific goals in mind for their gifts, and because colleges and universities have tremendous financial needs, the enthusiasm to consummate a donation can lead both parties to imagine that everyone has the same expectations. Unless the gift document is clear, however, we often find that the meaning of vague language and expectations in the gift agreement drifts over time.

The rate of drift varies, sometimes divergence between expectations and performance occurs rapidly as the first activities financed under the gift begin to take place. In other instances, the divergence may occur many years later when circumstances or changing priorities cause an institution to change direction in ways that the descendants of the donors do not believe appropriate. These instances are often resolved in more or less amicable fashion within the institution, but occasionally some appear in court and gain attention on the national stage.

The challenge of writing precise gift agreements has become increasingly difficult as more and more donors seek unreasonable specificity in the purposes of endowment gifts whose lifetime is presumably forever. Although we may imagine we can predict the future, in most cases what seems central to our academic and institutional concerns today may well be irrelevant tomorrow, and the more narrowly drawn the gift agreement, the less likely it will stand the test of time. An endowment to support the study of romance language and literature will have a much longer useful life than an endowment to support research on the poetry of 16th century Andalucía.

Good gift agreements always include an escape clause that provides a mechanism for the university to ensure that it can meet an endowment’s purpose throughout all time. Moreover, even if an institution and a donor have a full understanding of the gift and its purpose, the donor’s descendants, many generations hence, may have their own goals and purposes, their own interpretations of an ancestor’s intent, which they project onto the gift. They may lay claim to monitor and control the use of a gift made generations ago, and when the original intent is not completely clear, such discussions can become quite contentious and end up in court (the worst place for the resolution of a philanthropic issue).

When constructing an endowment, the donor and the university often glide over an important part of the process. Most endowments pays for only part of full cost of the activities supported. An endowment for the study of Spanish history will support a program in the university that also receives funding from a wide variety of other sources, whether tuition and fees or state appropriations. Those additional resources make the value of the endowment much greater because on the margin of a substantial university investment, an endowment can raise an ordinary program into an exceptional one, an argument often used to motivate gifts.

If the base support from tuition and fees and state appropriations disappears, the endowment income will not be sufficient to sustain the program. This reality can lead clever faculty, department chairs, and deans to work with their donors to leverage additional money from the larger institution to support an endowment gift or to rest a case for continued funding of an obsolete program on the presumed wises of a previous generation’s donor. When the university, or one of its units, can no longer support the larger activity for which the endowment was an enhancement, and reorganizes or otherwise changes the institution’s structure, the issue then becomes whether the university can find an appropriate and related use for that endowment income.

This is when we curse or praise our predecessors. If the gift agreement is clear, anticipates the possibility of a change in purpose over time, and provides for a method to determine an alternative use, then the institution’s need and the donor’s intent can be accommodated reasonably, and we praise our predecessors.

If, however, in the enthusiasm for the gift, the university promised to do something very specific forever, it may find itself in conflict with the donor or the donor’s heirs, in which circumstances we curse our predecessors. Universities and their fund raising organizations suffer intense pressure to capture private gifts and deliver ever-larger campaign totals, and their long-term success rests on educating their donors about the variability of the academic environment and the essential need for gift agreements that capture both the specific intent of the donor and the inevitability of change. While the best solution for the university is an unrestricted gift, most donors want specific programs to benefit from their legacy.

Sometimes, the university’s need to preserve flexibility and the donor’s desire for specificity can be met by designing a process for managing change into the gift agreement. The donor’s gift might well specify an initial focus that is relatively precise -- the study of Miguel Cervantes’ masterwork, Don Quixote -- but recognize that the institution will fulfill the terms of the gift by creating successive five year plans for the use of the endowment proceeds, and that over time, as the field of Hispanic literary studies changes, the endowment may be redirected within the larger field of Spanish and Spanish American literary studies.

We might prefer an agreement that offered the opportunity to address all of the Romance languages; but this mechanism will at least not fix the endowment income on studies of Don Quixote for all time. As another example, an endowment provided generations ago to study the improvement of sailing ships for commercial transport in the Atlantic is of much less value today than an endowment for research on the economics of trade, beginning with a focus on the improvement of sailing ships.

The hard part of this is the conversation with the donor. Donors have many suitors, and in the competition for their gifts, some institutions will promise more than others. To lose a gift because the university would not meet the donor’s specific expectations is a difficult outcome, and few presidents or fund raising professionals want to find themselves in this position. The incentive structure for university gift acquisition is usually short term. The reward goes to the administrators and development professionals who close the gift today, even though the obligations of the university will extend forever. We have campaign totals to meet, the press follows our announcements of fund raising success as if they reflected sports scores, and our associations develop elaborate methodologies to ensure comparable gift accounting standards so we can compete on our annual score.

It takes significant restraint, supported by wise governing boards, to insist on producing good gift agreements with clear, effective, and realistic language that protects both donor and university interests in an endowment that lasts forever. While the conversations that do it right may sometimes be less elegant than anticipated, the institutional benefit will be as long lasting as the endowment itself.

A recent Inside HigherEd (May 27, 2008), and elsewhere in the media, reflects much excitement about the decision by various highly selective institutions to stop requiring the SAT or ACT for admission to their colleges or universities. This is surely an interesting phenomenon, but whether it is good news or not depends on your perspective.

For those who dislike standardized tests because they measure a specific set of skills that correlate highly with income and the better schooling that income provides, the egalitarian presumption prevails and they celebrate the elimination of the test requirement. Eliminating standardized tests is a good thing in this view because it allows elite colleges to admit student who score badly on these tests either because they take tests poorly or because they have suffered various levels of disadvantage in their K-12 schooling that leave them less prepared for such tests.

For those who like standardized tests because they set a national norm for some forms of academic achievement, the decline of standards presumption prevails and they decry the elimination of the test requirement. Eliminating standardized tests is a bad thing in this view because it allows poor secondary schools to produce badly prepared students who cannot score well on these tests without those students necessarily suffering a penalty when they seek collegiate acceptance. They also believe the absence of standardized tests of this kind eliminates one of the few national norms for academic performance that can compensate for the presumed rampant grade inflation of secondary schools.

All of this is good for the ideological debate about elitism in American higher education and the drive to admit more, poor test-taking students to elite institutions. Somehow, we believe, that opening up a few places for those who score badly on such tests will improve equality in America. Probably not. The elimination of these tests from the college admission process may help those less privileged, but it is also a good thing for privileged, low scoring students. Absent such tests, selective institutions have much more freedom to manage admissions to their institutions. They can follow the needs of the institution, whether it is for a higher proportion of minority or first generation or men or women or international students without regard to the relative abilities of the various applicants. If an applicant comes from a very wealthy family but has a poor SAT score and we admit that applicant, we no longer need to explain this deficit to the parents of students from less wealthy circumstances with very good SAT scores. Instead, we say, “Well, our whole file review demonstrated a profile of engagement and involvement that clearly indicates this is a promising student, and in any case we don’t require the SAT.” Similarly, if we want to exclude candidates for admission because we have too many of one kind or another of some defined group, it is much easier to do so when we no longer need reference a national standard for academic aptitude, accomplishment, or performance.

The argument that the test is not a reliable academic indicator is of course a good one, except that elsewhere in the current media we read enthusiastic discussions of national entrance and exit testing to determine whether the students we admit into colleges and universities are learning anything. On one side, we think this sort of standardized testing may be a bad thing for evaluating students for admission but on the other side, we think this sort of standardized testing may be a good thing for evaluating students to know whether they learned anything in college. Furthermore, our colleagues in legislatures and public schools find themselves fully engaged in standardized testing to determine whether the students who graduate from high school know what they are supposed to know. Clearly, we are ambivalent about the purpose and value of testing.

To some extent, the problem also reflects our ambivalence about the notion of elitism. We do not like it in principle (although much of our effort in higher education seeks to increase the number of people who can participate in elite lifestyles). We try to create educational systems that can bypass the normally successful self-perpetuation of elites. In this, we have failed. By definition, education is about creating elites; the only question is how big that elite will be and who has a chance to participate in it. When we believed that the method for achieving the most egalitarian outcome involved a focus on merit, which is a level of performance measured without regard for the economic circumstances of the individual, we rushed to create merit-based selection systems for our elite colleges and universities, and the SAT/ACT gold standard emerged.

Although we should have known better, we soon discovered that while the SAT/ACT did indeed set a standard and did indeed provide a reference point for determining whether we were discriminating based on family heritage and income rather than on a national standard of objective merit, it also provided us with objective evidence that the students who acquired the skills to succeed on the SAT/ACT standard attended high schools and prep-schools mostly located in upper income areas or received support available only to wealthy families. It turned out that merit of the kind objectively measured by the SAT/ACT actually served as a proxy for the merit purchased by the already elite. Some smart non-elite students demonstrated an aptitude for these tests and gained access to the elite colleges, but the correlation between high performance on the SAT/ACT and reasonably prosperous economic circumstances is undeniable.

Our objective measure turned out to help perpetuate the preferential access of reasonably well off people to elite higher education. That did not seem to be an egalitarian result, especially when the distribution of wealth in America often reflected other divisions in society related to ethnicity.

Struggling with this, we turned first to quota-based systems to guarantee a proportion of our stock of elite admissions to groups deemed to be disadvantaged under the merit system driven by the SAT/ACT. If specific ethnic, gender, or economic groups appeared underrepresented for whatever reason, we discounted the SAT/ACT standard for members of these groups to guarantee a particular proportion of spaces that would provide a more egalitarian profile in our elite institutions. This straightforward approach, however, failed legal review, which usually determined that such quotas, when based on race or gender, were not constitutional, or political review in various referenda and legislative actions.

In pursuit of acceptable methods of achieving this desired proportionality, we sought out other techniques. Some states enacted plans that guaranteed, for public universities, admission into the elite public institutions to the top 10% of the graduates of each high school, a device that leveraged the de facto ethnic or income segregation of many American public high schools to achieve an egalitarian objective without specifying ethnicity. We also invented the notion of first-generation admissions, defining a child of parents who had never attended college as more meritorious than a child of parents who had attended. This first-generation notion again offered an opportunity to leverage the economic disadvantage of specific groups to create a preference that, while not defined in terms of ethnicity, permits an improvement in the proportion of desired groups within the admitted student population.

Finally, we have come to the realization that equality of opportunity to attend a prestigious elite college of university requires us to eliminate any specific standards of admission in favor of simply looking at all the applicants as individuals and admitting those we think will create the right profile of undergraduates for our institution. This, in the end of course, is what we used to do before we worried about equality of opportunity. In those days, elite colleges had no nationally referenced standards and admitted or excluded students to create the “right” profile to match the ideal expectations of those colleges’ elite constituencies. While we imagine that the flexibility of admissions will produce a readjustment in favor of disadvantaged groups, it is entirely possible that it will also facilitate readjustment in favor of low achieving but highly advantaged groups.

What does this all mean? It means that universities and colleges respond to the pressures of their time, as do all major social and cultural institutions. It means that if academic practices, such as tests in this case, interfere with the need to meet important social and cultural expectations of our society, we will eliminate or modify those practices. It also means, however, that the elite institutions will remain elite, and they will always find ways to use the tools at their disposal to construct student bodies that reflect the expectations of their elite constituencies. The solution to the dramatic problems of inadequate K-12 preparation of large proportions of our young people for serious college academic performance is not likely to come from manipulation of the entrance protocols to elite colleges and universities.

One of the more interesting features of the current enthusiasm for discussing college costs and the elaborate mechanisms to discount tuition and fees for various classes of students at elite institutions is confusion about the process. Some approach this conversation as if it were about dramatic changes in the opportunities for poor but smart high school graduates to attend elite institutions, previously out of reach. Although this may end up as a result for some, the manipulations of the financial aid process are actually about how to buy student talent more competitively.

The process of discounting tuition for desirable students is a well-understood and longstanding practice of most institutions, elite and non-elite. Sometimes the process involves what we call merit aid, used to buy desirable students without regard to their personal or family financial circumstances. In other circumstances we use need-based aid to buy desirable students at prices scaled to match their financial capacity. While the mechanisms differ in terms of how we calculate the price we will pay for a desirable student, the purpose of the exercise is much the same in both circumstances.

To entice the student to enroll, we offer to pay a stipend based on need or merit which the student can apply to the cost of attendance. If we are indifferent about getting a student to enroll, we do not provide any kind of stipend. We also calculate the amount of merit or need-based aid that will prove sufficient to entice desirable students to enroll in our institution rather than in another. We need to engage in this competitive practice because the number of truly desirable students is limited and the demand for their participation in our institutions is strong.

The virtue of need-based financial aid as a mechanism for buying students is that we can calibrate the amount we have to pay to get the student based on a standard methodology for determining need. Then we offer the exact amount of need-based aid that will permit and encourage the student to attend. However, need-based aid only serves to buy talent from a pool of students who have financial need. Another pool of desirable students may not have any financial need, but nonetheless we want to buy their talent for our university. So we use merit aid. We will often find that success in purchasing the attendance of first rank students requires a combination of need-based and merit aid. By manipulating the amount we pay, we can buy just the right combination of student talent for our ideal student body profile.

If we need women, we can use our aid funds to buy more talented women; if we need football players, we can buy those; if we need minority students, we can buy the mix we want; if we need a number of less wealthy students, we can buy just the number desired; or if we need engineering students, we can pay just enough to attract them. For small private elite institutions, this process is a highly specific activity because the number of students each college enrolls each year is quite small. For an elite college of 2000 students, perhaps 600 new students are needed each year. If we want to have 30% of them defined as “needy” and the definitions used can be quite generous, then we need to find 180 students from families with incomes under the definition (maybe 120K annual income) who also have exceptional qualifications and talent, and then using various forms of financial aid buy them for our student body.

Although there are surely noble motives involved in opening access to elite expensive institutions to individuals of great talent who might otherwise not have been able to afford the price of attendance, there is also a clear competitive advantage to doing so. If we have a large endowment made possible by our not-for-profit status and the quality of our institutional offerings and the generosity of our alumni and friends, we may find it effective to spend some portion of the endowment earnings to subsidize the acquisition of highly talented individuals who come from an economic status that is less than substantially well off, if not actually dramatically poor.

The competition among elite institutions for individuals of talent and for the public prestige associated with doing good while doing well requires institutions to emulate and publicize their programs for subsidizing on a need basis the purchase of students. This publicity generates a great deal of discussion, but actually changes the competitive landscape little. A few students who might otherwise not have been able to afford an expensive elite education can now do so without incurring debt. But these students are almost always talented students, and since the definition of “needy” for many elite institutions includes much of the middle class, they are not necessarily from financially challenged circumstances.

In all of these discussions, whether conducted in the rarefied atmosphere of billion-dollar endowed private colleges and universities or among selective public institutions, we must continually remind ourselves that none of this is about the cost of higher education, only about the price to the student. Indeed, as we expand the support for need-based or merit financial aid we do not reduce the cost of higher education, we increase it because the funds used to discount the price paid by desirable students must be added to the basic cost of running the college or university. As a result, the competition to provide more and better aid to some students is yet another example of the increasing cost of competition among selective institutions of higher education in America. It may be good thing, but it isn’t free.

If we are focused on improvement, we have to design a strategy for improvement. Although it is possible to have grand ideas and elaborate discussions about the importance of this or that within the university's portfolio of activities, the critical issue is to know what defines competitive achievement and what drives success in this competition.
We will have a big fight about the definitions, but after we have had the fight, and we then say to our colleagues inside and outside the university, "tell me the five universities of our type that you admire most," we will not necessarily pick the same five, but the five each of us picks will have these characteristics: they will have high quality students and they will have high quality research faculty. The quality of their students will be defined by their SAT/ACT scores and their high school grade point averages on admission to the university and the quality of their faculty will be defined by the publication and research records they have achieved in competition against the best in the nation. The institutions may have other characteristics as well: championship sports, elegant facilities, elaborate programs for student engagement, powerful outreach programs, and so on. But the defining characteristics are always competitive students and competitive faculty.
When we want to improve our performance, we have to focus on getting the best students and the best faculty. We have to focus on doing what it takes to enhance the students’ academic and personal experience, not because it's the right thing to do (although it is) but because a very good academic and personal experience is what attracts the best students, and the more best students you get, the more additional best students you can attract. Similarly we have to focus on what it takes to recruit the best faculty, keep the best faculty, and create the support for their research that allows them to be increasingly productive at high levels of competitive quality.
How do we get there? First, we have to have the measurements that focus our attention on the achievement of these things. Second, we have to understand who is responsible for achieving improvement. These two decisions are by far the most important in the process of managing improvement: What we watch, and who is responsible for making what we watch get better.
Universities for many reasons have a great enthusiasm for distributing responsibility widely and thinly. So in the university, everyone is responsible for everything. The faculty think they are responsible for making decisions about the budget, physical plant, parking, student life, fundraising, and in general about everything. They are happy to share this responsibility with many other groups: administrators, students, alumni, political actors, donors, and anyone else with an opinion. We confuse the right to have an opinion with the responsibility for doing something and taking responsibility for the consequences. In universities we tend to give everyone the authority to speak and be heard and be accommodated, but we are not entirely sure who has the responsibility to see that what needs to be done gets done. We are even less clear how we will insist on connecting this authority and responsibility to some form of consequence. (Accountability is the buzz word for this but its meaning is so diluted by the political controversies surrounding the use of accountability in coercive state and national regulations that I avoid it in most cases when talking about real issues.)
The mechanisms that produce improvement involve three things, two of which we've discussed here in many previous posts to our course list. The first is specifying what matters: teaching and research-- students and faculty. The second is deciding how to measure these elements of performance: competitive student quality--competitive faculty research quality. The third is constructing a mechanism for connecting what matters and our measurement of what matters to the budget on an annual basis. When we construct a system that addresses these three elements we will have achieved the core components of the improving university because we will have recognized that Money Matters, Performance Counts, and Time Is the Enemy.
The structure for measuring university performance requires a simple-to-describe but difficult-to-implement system. This system has two components: a mechanism for measuring a unit's improvement relative to its past performance, and a mechanism for measuring a unit's improvement relative to its national competitive marketplace. The first component is easy to do because it only requires us to collect the appropriate measurement of performance using our own data, to which we have easy access. We can do this every year. The second component is more difficult because we have to collect the appropriate measurements of performance using data collected from other institutions, some of which data may be readily available, but most of which is not. In this case we may well have to reference our external market place on a longer cycle, say once every three years or so.
The measurement system also requires us to decide where the authority and responsibility for delivering performance lies. In a university this is almost always the department/program. This is the unit that owns quality control because it owns the content represented by the department or unit. If a chemistry department is going to be good and get better, it is the chemistry department that must know what good means and can ensure that improvement takes place. So the primary responsibility and authority for delivering improvement rests with the department. If the department hires good faculty and motivates them to perform high levels of research and teaching, then the department will improve. If the department hires and tenures ordinary faculty who only perform at acceptable levels, then the department will not improve. While the dean can use the measurement system to see if the department is actually improving, the dean is almost never able to actually improve the department, only the department itself can do this. As a result, the structure for improvement has to focus its measurement system on the department.

However, from the perspective of the institution, the unit responsible for seeing that departments improve is the college or school. The dean is the university official who must operate the system that tracks the performance of the departments to ensure that they are improving. In theory the president/chancellor/provost could run this system directly on behalf of the departments, but in practice this span of control is far too great, and in the university, colleges and schools exist to manage the departments effectively.
Given this structure, what do we measure? Whatever the measures, the university seeks improvement in productivity and quality. One super professor in a department of fifty is not equivalent to 50 highly competitive and productive professors who may not all be at the super professor level. The goal is to do a lot and to do it well. We measure research productivity and quality and we measure teaching productivity and quality. We may find that our metrics for measuring some things are better than for others. So we will surely do better measuring teaching productivity than we will measuring teaching quality, but that does not relieve us of the obligation to produce whatever evidence we have on teaching quality. We will do well measuring both the quality and productivity of research because research is nationally referenced in most cases.

The departments must design the measures of quality and productivity in their respective fields, but the measures they pick must be nationally referenced and approved by the Dean and the Provost to ensure that we create reference points that speak to the national competition. For research we may count publications in high quality journals, peer reviewed grants and contracts, exhibits in nationally significant galleries, performances in nationally significant venues, books published by reputable refereed presses, and so on. These will be different by field, but every department or field in the university will have its nationally established reference points for productivity and quality of research or creative activity.
In addition, we have another element that we always include in these metrics: money. Money matters. Some money is not within a department's ability to manage, but much money is. So for each department we count annual giving, we count grant and contract revenue spent, we count indirect cost collected, and we count other sources (which may be from distance education, executive programs, or sales of goods and services). Similarly, we count credit hours as if they were money. In all universities, credit hours are simply a proxy for the funding that comes from many sources to support teaching and students. Every university pays for credit hours with money derived from the state, tuition and fees, and perhaps other sources such as endowments. Credit hours are also the accounting mechanism we use to describe student work and the work to teach students. Credit hours are another measure of performance, and those units (departments/programs) that teach many students require more support than those departments that teach fewer students, because students generate revenue and require expenses.
Once we have our metrics established, a process that takes a lot of time and conversation and often controversy, we can then track our performance from where we were to where we are and see how much we improved. We can then go outside the university to see how well we can benchmark our internal data against external data related to performance. We may not be able to match everything, but we'll almost always find that we can match much of our data against some relatively small group of significant external reference units.
Identifying these external references to departmental counterparts is a critical process. The department proposes its counterparts to the dean who will approve their suitability and pass this on to the Provost for review to ensure that the reference points for one set of departments in a college match in significance those from other departments and colleges. The counterparts should be no less than three. They should be from institutions that are better than we are and that are major competitors in our field. Our goal is not to show that there are institutions like ours or that there are institutions less effective than ours. The goal is to measure our improvement against the institutions that compete within the top category of institutions like us. We have to get better not only measured against our prior performance but against the improved performance of our competitors. Much discussion is required to settle on these comparators.
Once we have the data, we then have to connect these data to the budget process of the university so we can make the appropriate adjustments to funding that establish the institutional investment that follows successful improvement.

This last element is perhaps the most important one of all in the process of developing a system for institutional improvement. The only way to get consistent, sustained, and relatively rapid improvement is to ensure that the budget follows the improvement criteria. If we fund units and departments that do not improve, because we feel sorry for them, they have powerful political supporters, or they are traditionally protected within the university organization, we will create a set of incentives unrelated to improvement. In all universities, and perhaps elsewhere in society, behavior follows the money. If we fund those units that do well, improve, increase their teaching and research productivity and quality relative to past performance and relative to outside comparisons, then we will see everyone focused on this kind of improvement. If we fund political positions, personal influence, external threats and coercion, or careerism by faculty and administrators, then we will see everyone focused on developing good political networks, excellent personal relationships, external pressure groups, and careerist back scratching among ambitious faculty or staff or administrators. By linking the budget to performance, by systematically, openly, and visibly investing in improvement, and by doing this consistently over some reasonable period of years (usually five to eight), the institution will get better fast, it will learn how to focus, and the system will likely become institutionalized and sustain itself for some time.

This process works, but it is anything except easy.