institutionalfinance

University Research Spending Flat in 2012

Research and development spending by colleges and universities in 2012 fell for the first time since 1974 when adjusted for inflation, the National Science Foundation said last week.

Expenditures on R&D rose slightly in current dollars, to $65.8 billion from $65.3 billion in 2011; federal, state and local spending actually declined, but institutions' own research spending rose slightly, as seen in the table below.

When adjusted for inflation, though, in 2005 dollars, all research expenditures declined, driven down by a steady drop in funds from the federal stimulus legislation of 2009. The figures are in millions.

Fiscal year All R&D Spending Federal Govt. State and Local Govt. Institution Funds Business Other
2010 $61,257 $37,477 $3,853 $11,941 $3,198 $4,088
2011 65,274 40,771 3,831 12,601 3,181 4,890
2012 65,775 40,130 3,704 13,674 3,282 4,984

 

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Report Reviews Challenges Facing Higher Ed in California

California is falling behind in its ability to provide higher education to its state's citizens, particularly those who enroll outside the elite public and private universities found in the state, according to a report released Tuesday. "Boosting California's Postsecondary Education Performance," from the Committee for Economic Development, reviews the financial, economic and demographic challenges facing the state's colleges and universities and finds that much of the stress is on access institutions that most students attend. Given limited chances for significant infusions of new funds, the report suggests that new ways of providing education will be key. "Without quantum increases in educational access, productivity, and effectiveness of the state’s postsecondary institutions, particularly those with broad-access missions, there is little likelihood that California will have the human capital to compete successfully in the global economy or assure its citizens access to economic prosperity and a middle-class life."

 

Employee Stole $5 Million From Medical School Group

A former administrative employee admitted in federal court Monday that she stole more than $5 million from the Association of American Medical Colleges, The Washington Post reported. The woman was fired when the graft was discovered. Authorities said that she created bank accounts with names similar to those of groups with which the AAMC does business. She then created fake invoices for those entities, paid the funds to the accounts and had access to the money.

 

Essay on the impact of applying corporate values to higher education

America's public research universities face a challenging economic environment characterized by rising operating costs and dwindling state resources. In response, institutions across the country have looked toward the corporate sector for cost-cutting models. The hope is that implementing these “real-world” strategies will centralize redundant tasks (allowing some to be eliminated), stimulate greater efficiency, and ensure long-term fiscal solvency.

Recent events at the University of Michigan (suggest that faculty should be proactive in the face of such “corporatization” schemes, which typically are packaged and presented as necessary and consistent with a commitment to continued excellence. The wholesale application of such strategies can upend core academic values of transparency, and shared governance, and strike at the heart of workplace equity.

Early this month our university administration rolled out the “Workforce Transition” phase of its “Administrative Services Transformation” (AST) plan. From far on high, with virtually no faculty leadership input, 50 to 100 staff members in the College of Literature, Science, and the Arts (LS&A) departments were informed that their positions in HR and finances (out of an anticipated total of 325) would be eliminated by early 2014. Outside consultants, none of whom actually visited individual departments for any serious length of time, reduced these positions to what they imagined as their “basic” functions: transactional accounting and personnel paperwork.

It became clear that many of those impacted constitute a specific demographic: women, generally over 40 years of age, many of whom have served for multiple decades in low- to mid-level jobs without moving up the ranks. A university previously committed to gender equity placed the burden of job cuts on the backs of loyal and proven female employees.

These laid-off employees found little comfort in learning that they would be free to apply for one of 275 new positions in HR or finance that will be contained at an off-campus “shared services” center disconnected from the intellectually vital campus life.

The resulting plan reveals no awareness of how departments function on an everyday basis. Such “shared services” models start with the presumption that every staff member is interchangeable and every department’s needs are the same. They frame departments as “customers” of centralized services, perpetuating the illusion that the university can and should function like a market. This premise devalues the local knowledge and organic interactions that make our units thrive. Indeed, it dismisses any attribute that cannot be quantitatively measured or “benchmarked.” Faculty members who reject these models quickly become characterized as “change resisters”: backward, tradition-bound, and incapable of comprehending budgetary complexities.

The absence of consultation with regard to the plan is particularly galling given that academic departments previously have worked well with the administration to keep the university in the black. Faculty members are keenly aware of our institution’s fiscal challenges and accordingly have put in place cost-cutting and consolidating measures at the micro level for the greater good.

Worries about departmental discontentment with AST and shared services resulted in increasing secrecy around the planned layoffs. In an unprecedented move, department chairs and administrators were sworn to silence by “gag orders” prohibiting them from discussing the shared services plan even with each other. Perturbed, close to 20 department chairs wrote a joint letter to top university executives expressing their dismay. As one department chair said, "The staff don't know if they can trust the faculty, the faculty don't know if they trust the administration.”

Within a few days, at least five LS&A departments had written collective letters of protest, signed by hundreds of faculty members and graduate students.  Over the past few weeks, that chorus of opposition has only intensified as faculty members from all corners of our campus have challenged AST. Some have called for a one- to two-year moratorium and others for an outright suspension of the program.

The outcry against the planned transition itself reflects the growing rift between departmental units and the central administration at the University of Michigan. Championed as an astute financial fix by a cadre hidden away in the upper-level bureaucracy, the shared-services model is the brainchild of Accenture, an outside consulting firm which our university has also contracted for a multimillion-dollar IT rationalization project.

Caught off-guard by the strong pushback, the administration has issued several messages admitting that their communication strategies around these changes were inadequate, stating that for now layoffs will be avoided, and assuring us that there will be greater consultation and transparency going forward. 

While these definitely are hopeful signs, important questions about institutional priorities and accountability have arisen.

Initially, the university’s consultants claimed that AST would render a savings of $17 million. Over time that figure shrunk to $5 million, and by some accounts now is reputed to be as low as $2 million. Yet the university has already reportedly spent at least $3 million on this effort with even more spending on the horizon.

Where are the cost savings? How much more will the university spend on Accenture and other outside consultants? How will replacing or shifting valued employees, even at lower numbers and salaries, from their departmental homes to what essentially is a glorified offsite “call center” actually enhance efficiency? How can a university ostensibly committed to gender equity justify making long-serving and superb female employees pay the price of AST? What credible proof is there that centralized management will provide any budgetary or administrative benefits to the specialized needs of individual departments?

The implications of these questions are thrown into starker relief when considering that almost to the day of the announced layoffs, the university launched its most ambitious capital campaign, “Victors for Michigan,” with festivities costing more than $750,000 and a goal of raising $4 billion.

Whether or not the collective protest initiated by a critical mass of faculty will result in change or reversal remains to be seen. Nevertheless, the past few weeks have been a wake-up call. Faculty must educate themselves about the basic fiscal operations of the institution in these changing times and reassert their leadership. Gardens, after all, require frequent tending.

Otherwise, we remain vulnerable to opportunistic management consultants seeking to use fiscal crisis as a source of profit. Public institutions that remain under the spell of misleading corporate promises will ultimately save little and lose a great deal.

 

Anthony Mora is associate professor of American culture and history at the University of Michigan. Alexandra Minna Stern is professor of American culture and history, and a professor of obstetrics and gynecology at the University of Michigan.

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Tuition revenue not keeping pace with inflation at 4 in 10 four-year universities

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Net revenue from tuition is no longer keeping pace with inflation at about 4 in 10 American universities. Without the money, what will be lost?

President of private college in Argentina has unusual idea to finance higher education

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Argentine university president argues that Google's business model could be applied to higher education.

UDC eliminates nearly 20 academic programs

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The University of the District of Columbia cuts 20 academic programs to fix its financial problems, drawing faculty complaints about process and outcome alike.

Warning From California's Governor

California Governor Jerry Brown, a Democrat, warned the University of California Board of Regents Thursday, that the university system is going to need to look to internal savings to finance improvements, The Los Angeles Times reported. Brown spoke at a meeting at which the board approved a tuition freeze (consistent with the governor's thinking), but also a request to the state for $120 million beyond what he has proposed in his state budget plan. "The big, bad state is not going to bail you out at a rate that is different from what we are doing," Brown said. And he said that the university can't rely on its reputation for "quality and greatness" to get around budget realities.

"Remember that students, unfortunately, are the default financiers of higher education in America," he said. "We are going to have reshape the way things are done.... We are going to have to get into concrete trade-offs of how do you live within your means."

$67 Million Gift for Carnegie Mellon

Carnegie Mellon University has announced a $67 million gift from the investor David A. Tepper. The funds will be used for a quad that officials plan as an "academic hub" for the business school and other programs.

 

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Tuition Freeze Proposed for U. of California

University of California students need another tuition freeze in the coming year, and a more rational approach to tuition than the past mix of freezes and large percentage increases, Janet Napolitano said Wednesday, The Los Angeles Times reported. Napolitano -- the new president of the university system -- made the proposal to the university's Board of Regents. Over the long run, she said, the university must strive to keep costs to students and families under control. "I want tuition to be as low as possible, and I want it to be as predictable as possible," she said. Napolitano said that she wanted to work "to bring clarity to, and reduce volatility in, the tuition-setting process." She also said she wanted to increase the number of transfer students from the state's community colleges.

 

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