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Balancing Cost-Savings and Outcomes
January 22, 2012 - 8:08pm

The University System of Georgia which governs 35 public colleges and universities recently announced its plan to consolidate eight institutions into four in order to better serve students. Many stakeholders were disappointed by the clandestine nature and pace with which these decisions were made and are concerned about the possible consequences, many of which are yet unknown. Still, no one should be surprised when a group of smart lawyers and business leaders conclude that the best way to improve public systems of higher education is by consolidation.  Of the seventeen members that constitute the system board, two are attorneys and fifteen represent a mix of Presidents, CEOs or Vice Presidents from private industries ranging from banking to railroads who might be more inclined to prescribe a business treatment to solve educational issues.

To be clear, no sector of higher education is exempt from conversations about cost efficiency.

I actually encourage boards to be more aware of institutional cost structures and how universities might produce more with less.  In the very next breath, I typically offer a few cautions about context and process.

In the University System of Georgia’s case, what is clear is interest in streamlining, cost savings and economies of scale.  Less clear are the academic benefits for students or residents in the state of Georgia. The System’s website lists guiding principles used for decision making but there is virtually no evidence of how such a consolidation will “increase opportunities to raise education attainment levels” or “improve accessibility or regional identity.” Collateral damage, job loss, and confusion, on this scale, is a tough sale without sufficient, if not overwhelming, evidence of the benefits.  Improving access to affordable high quality degree programs that ultimately contribute to the civic and economic wellbeing of the state should be the only headline. Well, a headline would be shorter but you get my point.

Universities should not be thought of as businesses. Aside from all of the deep philosophical reasons I normally offer to make this point, there is also the pragmatic issue of governance — shared governance.  Yes colleges and universities operate with real dollars and function with budgets and bottom lines.  At the same time, the governance structure is anatomically different than a business. When the CEO of General Motors decides that economy cars will be red and luxury cars will be black, employees in the manufacturing plants (wherever they are) have no say.  In colleges and universities, however, decision making happens vertically and horizontally across various units that can sometimes operate autonomously.  For instance, decisions about course requirements for degree programs, which academic programs are closed, or how courses should be delivered traditionally has been the domain of faculty.  Overlooking the culture of university governance and decision making will likely spoil any chance of implementing a plan that resembles a success. 

Finally, there is very little experience in the four-year sector of higher education with modern-day consolidations.  Strong positive correlations between this kind of consolidation and educational outcomes do not exist. In fact, the potential for negative outcomes must be considered.  In other words, it is possible to achieve cost savings at the expense of institutional effectiveness, the student experience or their chances of earning a degree in some cases.  Creating economies of scale with a population of students who typically require more support to complete college does not necessarily equal better outcomes.  Understanding the educational trade-offs on the front-end is important rather than experiencing them haphazardly.

The process of transforming eight public institutions into four will offer an interesting experiment to be observed by the higher education community.  If students represent the subjects, I hope the outcomes and profit margins are worthwhile.


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