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In an essay in Bloomberg, Adrian Wooldridge, best known as the a defender of meritocracy, argues that today’s colleges and universities “look a lot like 1970s Detroit”: unfocused, bloated and characterized by complacency, declining quality and a sluggish response to a rapidly shifting environment.

Like the Detroit auto industry half a century ago, college campuses face competition from various disrupters—from mega online providers like Southern New Hampshire and Western Governors Universities; from short-term training programs, boot camps, skills academies and apprenticeships; and from more aggressive two- and four-year institutions that have moved aggressively into online instruction, whether at the undergraduate or professional master’s levels and established various branch campuses.

Many institutions also must face a broken business model, as costs continue to rise while revenue stagnates. Overall enrollment, which underwent a decade-long decline, now faces a demographic cliff not far in the future.

Even relatively well-funded institutions like my own find it difficult to balance their books. My own department’s tenure-stream faculty has shrunk by about a quarter in less than a decade accompanied by no decline in overall enrollment (though the number of majors fell by half), resulting in larger classes without breakout sections.

To address its challenges, Wooldridge argues, institutions have engaged in what he calls “marketization.” This is a concerted effort to increase revenue and control costs by:

  • Becoming more entrepreneurial.
  • Increasing grants, research and patents.
  • Taking steps to enhance their visibility, reputation and appeal in a bid to appeal to full-pay students.
  • Restricting the growth of tenured faculty.

The alternative to marketization, he argues, will require campuses to refocus, rebalance and re-engineer. That means that colleges and universities need to:

  • Refocus on their core competencies, of which teaching is the most important.
  • Rethink, rebalance and reset their priorities and responsibilities.
  • Re-engineer their administrative processes with an eye to cutting administrative overhead.

I certainly agree with this call to arms. I wholehearted support his contention that “Education is a quintessentially human process that ideally centers on the same thing as it did in Socrates’ day—the spark of inspiration leaping from one mind to another.” I would also echo his assertion that “Technology can help but it can never replace the human touch.”

Like Wooldridge, I believe that this country has, at great cost, neglected noncollege paths to success. And I share his view that colleges should attack the true sources of waste: grossly excessive senior administrator and athletic coaches’ salaries and exorbitantly expensive sports complexes.

But I vehemently disagree with some of Wooldridge’s other prescriptions. I think his article grossly exaggerates the tension between merit against diversity and the threat that diversity, equity and inclusion pose to academic freedom, free speech and heterodox viewpoints.

My own view is that colleges need to:

  • Place a much greater emphasis on outcomes, learning outcomes, degree attainment and postgraduation outcomes.
  • Create degree pathways that are more coherent and integrated and consist of more synergistic courses.
  • Offer broader, more interdisciplinary courses at the lower-division level that address topics that speak to enduring and existential issues and to the pressing economic, environmental, ethical and political problems of today. 
  • Provide more high impact learning opportunities that involve active, experiential and project-based learning.
  • Do much more to ensure that the new student majority—of commuting students, part-time students, first-generation students, transfer students, international students, students with disabilities and working adults, family caregivers and veterans—develop the sense of belonging and connection that comes from participation in a learning community, a research cohort or other interest group that involves a dedicated mentor and advising.

You might well ask, how is this vision possible given cost constraints and the many barriers to achieving consensus around virtually any innovation?

That’s a topic taken up in a new book by Sandy Baum, a senior fellow at the Urban Institute and previous a professor of economics at GW and Skidmore, and Michael McPherson, who is also an Urban Institute senior fellow and past president of the Spencer Foundation. Their goal in Campus Economics is to cultivate a common vocabulary and encourage shared modes of thinking to help various stakeholders “better see other viewpoints and grapple with the trade-offs involved in making sound decisions.”

Their argument is that many campus issues—involving subsidies to departments with low or declining enrollments, awards of “merit” aid, the hiring of contingent faculty, institutional salary structures and decisions about pursuing new curricular areas or launching new online master’s programs—would benefit from rigorous economic analysis. The goal is not to focus on the bottom line, but to better frame discussions about resources, priorities and outcomes.

One example the authors discuss is the City University of New York’s ASAP academic support program to help community college students earn an associate degree in three years. CUNY spends about $16,300 more on each ASAP student than on those students who receive standard services. But the program’s summer orientation program, block scheduling, structured curriculum and intensive financial, academic, career, transportation and personal support has produced graduation rates more than twice as high as comparison groups (53.4 percent versus 24.6 percent).

Any serious evaluation of the program must involve budgeting, cost analysis and scalability.

The authors acknowledge that the language of business “seems discordant on a college campus. But using such language need not denigrate the [institution’s] educational and intellectual mission.” Without a common vocabulary, data transparency and economic literate stakeholders, shared governance is doomed to failure.

In certain respects, the authors’ emphasis on the application of economic thinking and data-informed decision-making resembles the argument summed up in the title of microeconomist and management scientist William F. Massy’s 2016 classic, Reengineering the University: How to Be Mission Centered, Market Smart and Margin Conscious.

A challenge facing all institutions except perhaps the wealthiest and most selective is to balance academic values with costs (including opportunity costs) and market forces and to improve efficiency and cost-effectiveness while preserving or enhancing academic quality, student learning, completion rates and postgraduation employment outcomes.

Given colleges’ unique governance structure, organizational complexity, distinctive mission and idiosyncratic culture, virtually every decision about resource allocation, innovation or organizational transformation is inevitably fraught. As Baum and McPherson observe, “To a far greater extent than in most other organizations, everybody expects to be heard and decision-making authority is dispersed, with broad consultation critical to outcomes being accepted.”

Cost and revenue, Baum and McPherson insist, should not dictate decisions. But for constructive campus conversation to take place, costs need to be acknowledged and sources of funding need to be identified.

Universities are “loosely coupled organizations,” without the strong centralized authority and coordination found in many corporations. For universities to function effectively, there must be a shared vision, mission, norms and expectations and an acceptance of the principle of shared governance.

Campus Economics is filled with valuable, up-to-date information about college endowments, trends in enrollment, instructional and administrative staffing and personnel compensation, tuition pricing strategies, financial aid allocation and state and local funding of public higher education.

Applying economic concepts needn’t detract attention from higher education’s special mission. But it does serve to remind us of the lesson all students in Econ 101 are supposed to learn: every decision involves difficult trade-offs. Should an institution promote enrollment in graduate programs with limited career prospects if the cost will be largely defrayed by taxpayers? Should it hire more instructors or more nonteaching professionals, including advisers, instructional designers, IT staff, mental health counselors or writing specialists?

Economics may be the dismal science, but it provides essential language and concepts as we strive to balance needs, wants and resources.

Steven Mintz is professor of history at the University of Texas at Austin.

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