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The Land-Grant Landscape

November 15, 2010

DALLAS -- Leaders of land-grant universities see a slight brightening in their institutions' immediate economic situations -- but increasingly recognize that they must make structural changes to accommodate fundamental, long-term shifts in their funding models.

Those are the key (if preliminary) findings of a survey discussed here Sunday at the annual meeting of the Association of Public and Land-Grant Universities, which represents 186 of the country's largest state-affiliated institutions. The survey, supplemented by a series of interviews with provosts at eight universities, shows that while the short-term impact of the Great Recession has eased slightly, campus leaders fully expect that the financial landscape has changed irrevocably -- and are starting to change their behavior (if slowly) in response.

The tendency to view the financial situation less as something to get through by any means necessary right now than as an imperative to make more fundamental, strategic structural changes is a recent development, said Christine Keller, director of research at the land-grant association. "In last year's survey, people talked about doing strategic planning, but at the same time, they were doing many of the things they've always done: freezing travel and salaries, putting off facilities maintenance, etc.," Keller said. "This year they're still taking some of those steps, but a lot of the provosts seem to be recognizing that they're going to have to handle things differently in the future."

The basic outlines of the data reported by the 74 public university campuses are unlikely to surprise most people who've been paying attention to the financial situation in higher education. Sixty percent of those surveyed reported declines in state appropriations in 2010 (down from 78 percent in 2009), and those dips were smaller on average than they were in 2009: 6.7 percent vs. 11.4 percent. (Of the rest, 20 percent of institutions received an increase, and funding for the rest was flat.) The vast majority of institutions sought to make up for those lost revenues by raising tuition and fees for in-state and out-of-state students alike (3-6 percent on average) and by increasing the number of students they enrolled (nearly two-thirds had planned to increase the size of their freshman classes and of their graduate student bodies).

Keller cited the gradual shift from state to tuition revenues as one of the overpowering "new" realities evidenced by the survey. But given the downward pressure that politicians and others are putting on public institutions not to raise their tuitions too quickly, the increased tuition revenue the universities in the APLU survey generated did not make up for what they lost in state funds. That reality has both short-term and long-term implications for land-grant and other public institutions.

In the short term, the survey found, most institutions turned in 2010 to many of the same strategies they have been accustomed to using: cutting costs through smarter (and often more centralized) purchasing arrangements, delaying facilities investments, and the like.

But compared to previous years, Keller said, the survey (and the interviews that APLU conducted with individual provosts) suggested that more universities are instituting, or at least considering, the more difficult sorts of longer-term approaches and structural changes that they would normally avoid if they thought a rebound was imminent. (The anticipated disappearance in most states of the federal stimulus funds worsens the outlook.)

All survey respondents reported engaging in strategic reviews (typically in administrative areas and academic programs, generally avoiding academic support services), and many were looking at deriving significant energy savings, developing new, high-demand academic programs and focusing more intently than before on retaining their current students.

Some also reported anticipating "permanent changes to staffing levels" -- reductions, Keller said. "It still appears that cuts in faculty are being avoided at almost every institution," she said. "Support and professional staff both seem to be areas that are getting hit the hardest."

Keller said that this year's iteration of the survey suggests that major public universities appear to be recognizing that the traditional ways of dealing with economic distress -- across the board cuts, deferring painful decisions -- will not suffice going forward. "The institutions appeared to be thinking very strategically about the cuts they were making, and about the areas they were targeting for growth," she said.

Among the examples of atypical thinking highlighted in the session here Sunday at which Keller presented the survey's findings was a move by Virginia Tech to take an unorthodox approach to raising (and distributing) new revenue. This fall, the university undertook "strategic enrollment growth" in which it admitted several hundred (it exceeded its original goal of 400) additional students to its engineering college. Rather than do what it would do under its normal method of budgeting and sharing revenues -- put the additional money into its central pool of funds -- Virginia Tech committed to "reinvesting the money directly back into the education of those students," said Mark McNamee, the provost.

The enrollment growth is designed to allow the engineering college to hire enough additional faculty and staff so that its existing employees will not add to their workload -- the college "should end up whole," he said -- while also spilling some funds off to the sciences and liberal arts programs that also deliver courses to those additional students. All told, the expansion will allow for the addition of 41 new faculty positions "that you would not have had without" the additional students, McNamee said. The innovation could produce as much as $8 million in revenue for Virginia Tech, he added -- but it is not a well from which the university is likely to be able to draw again. "This is a one-time thing we could do," he said, in a successful and highly competitive academic program, "but we couldn't do this with another 400" students.

The question of sustainability arose about several of the innovations discussed during Sunday's session, including those at institutions that had altered their normal financial aid and recruitment practices to try to increase the number of higher-paying out-of-state students.

But many of those practices raised concerns about how sustainable they were, especially if lots of institutions adopt them. "If we all start doing that," one audience member said, of the practice of stepping up the recruitment of high-achieving out-of-state students, "we're on kind of a collision course, aren't we?"

 

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