Business issues

Academic Finance Demystified

Better understanding of how the money flows can help professors navigate their campuses' budget processes. Elizabeth H. Simmons offers a primer.

Dealing With Fine Print

Smart Title: 
Auxiliary service agreements tying vendor spending on facilities to contract renewals raise conflict-of-interest questions -- and may be quite common.

Safer Bets

Smart Title: 
Despite holding the same risky assets that led to losses in 2008, universities have learned from experience and have less to fear in current volatility, experts say.

Fixing Debt

Smart Title: 
In the face of economic and political uncertainty, colleges are working to convert potentially volatile debt to a more stable form, but peace of mind comes at a cost.

The Inevitable Change Ahead

In most industries, technology-enabled competition is deemed healthy and vital. Accustomed to a hyper-competitive modern world, we expect even the largest and most prestigious companies to be continually challenged by nimbler, more creative upstarts. Economists teach that disruptive innovation by newcomers and creative destruction of entrenched incumbents leads to better products and services. When a century-old auto company, airline, investment bank, or newspaper files for bankruptcy or disappears altogether, we regret the attendant human suffering but count the loss as the price of progress, knowing that without competitive innovation and destruction we would enjoy a standard of living no better than our great-grandparents did.

Higher education, though, has been different. Large universities rarely cease to operate. Nor are the prestigious ones quickly overtaken. Part of the reason is a dearth of disruptive competition. The most innovative would-be competitors, for-profit education companies, find great success among working adults, many of whom care more about the content and convenience of their education than the label on it.

But many young college students still seek the assurance of traditional university names and the benefits of campus life. Because of loyal support from this large group of higher education customers, the incumbents have felt little pressure from the for-profits’ use of potentially disruptive online technology.

Meanwhile, the terms of competition among traditional institutions, the public and private not-for-profit universities, have been set primarily by those at the top. The strategy of most schools is one of imitation, not innovation. Little-known and smaller institutions try to move up in the ranks by adding students, majors, and graduate programs, so as to look more like the large universities. They also task their faculty with research responsibilities. In the process the emulators incur new costs and thus must raise tuition. This blunts the price advantage that they began with. They are stuck in a dangerous competitive middle ground, neither highest in quality nor lowest in cost. The great schools, rather than being discomfited by the imitation, seem all the more desirable because of it.

In their defense, the institutions that emulate Harvard and strive to climb the Carnegie ladder are doing just as conventional business logic dictates -- trying to give customers what they want. The great universities such as Harvard inspire not just administrators, faculty, and alumni at other schools. They also excite the most elite prospective students, who want to win admission to the most Harvard-like institution they can. Thus, less prestigious schools emulate Harvard’s essential features, such as graduate programs and expert faculty researchers and research facilities. They also give students costly non-educational amenities such as intercollegiate athletic teams, which Harvard no longer supports at the level of the most competitive schools.

The result of this competition-by-imitation is to solidify past educational practice among traditional universities, making them increasingly more expensive but not fundamentally better from a learning standpoint. The great-grandparents of today’s students would easily recognize the essential elements of modern higher education. Though the students are more diverse, the shape of classrooms, the style of instruction, and the subjects of study are all remarkably true to their century-old antecedents.

Great-Grandpa and Grandma would likewise recognize the three schools atop U.S. News’s 2010 college rankings: Harvard, Princeton, and Yale. In fact, asked to guess, they’d probably have picked just those three.

Only the costs of a higher education, one can argue, have kept pace with the times. In the 10 years after 1997, the inflation-adjusted price of a year of college at the average public university rose by 30 percent, while the earning power of a bachelor’s degree remained roughly the same. Cost increases derive partly from higher faculty salaries, but more from activities unrelated to classroom instruction. Scientific research, competitive athletics, and student amenities require both large operating outlays and the construction of high-tech laboratories, football stadiums, and activity centers. As a result, the cost of higher education grows faster than faculty salaries or other instruction-related costs.

The problem is not unique to higher education. In fact, in products ranging from computers to breakfast cereals, history reveals a pattern of innovation that ultimately exceeds customers’ needs. Hoping to get an edge on their competitors, companies offer new features, such as faster processing speeds in a computer or increased vitamin fortification in cereals. These enhancements are sustaining innovations rather than reinventions: the product becomes better while its basic design and uses remain the same.

The catch, as Clayton Christensen has shown in The Innovator’s Dilemma, is that these performance enhancements at some point exceed even the most demanding customers’ performance needs. The producer is incurring greater costs and thus must raise prices. That leaves the typical purchaser of a $5,000 laptop or a $5 box of cereal paying more than they want to, given what they actually need.

Much of what universities are doing is standard management practice: improve the product; give customers more of what they want; watch the competition. But it leads even great enterprises to fail, as detailed in The Innovator’s Dilemma. Inevitably, while the industry leaders focus on better serving their most prized customers and matching their toughest competitors, they overlook what is happening beneath them. Two things are likely to be occurring there. One is growth in the number of would-be consumers -- students, in the case of higher education -- who cannot afford the continuously enhanced offerings and thus become non-consumers. The other is the emergence of technologies that will, in the right hands, allow new competitors to serve this disenfranchised group of non-consumers.

Until the relatively recent emergence of the Internet and online learning, the higher education industry enjoyed an anomalously long run of disruption-free growth. In times of economic downturn, there were cries of alarm and calls for reform. But for the elite, well-endowed private schools, a bit of budget tightening sufficed until the financial markets recovered. The demand for the elite schools confer far exceeds the supply, allowing them to cover rising costs with tuition increases and fund-raising campaigns.

Even many less-prestigious universities benefit from accreditation, which has elevated them over unaccredited institutions. Public universities also enjoy the long-term commitment of taxpayers. In the absence of a disruptive new technology, the combination of prestige and loyal support from donors and legislators has allowed traditional universities to weather occasional storms. Fundamental change has been unnecessary.

That is no longer true, though, for any but a relative handful of institutions. Costs have risen to unprecedented heights, and new competitors are emerging. A disruptive technology, online learning, is at work in higher education, allowing both for-profit and traditional not-for-profit institutions to rethink the entire traditional higher education model. Private universities without national recognition and large endowments are at great financial risk. So are public universities, even prestigious ones such as the University of California at Berkeley.

Price-sensitive students and fiscally beleaguered legislatures have begun to resist costs that consistently rise faster than those of other goods and services. With the advent of high-quality online learning, there are new, less expensive institutional alternatives to traditional universities, their standing enhanced by changes in accreditation standards that play to their strengths in demonstrating student learning outcomes. These institutions are poised to respond cost-effectively to the national need for increased college participation and completion.

For the vast majority of universities change is inevitable. The main questions are when it will occur and what forces will bring it about.

Author/s: 
Clayton M. Christensen and Henry J. Eyring
Author's email: 
info@insidehighered.com

Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School. Henry Eyring is advancement vice president at Brigham Young University-Idaho. Reprinted by permission of the publisher, John Wiley & Sons, Inc., adapted from The Innovative University: Changing the DNA of Higher Education from the Inside Out, Copyright © 2011 by Clayton M. Christensen and Henry J. Eyring.

Let Professors Choose

Endowments have plummeted, alumni will donate less, and students won’t be willing to pay as much. Because of all this financial trauma, colleges will inevitably expect more from their faculties. But I urge college presidents and trustees, in responding to this situation, not to make inflexible demands of professors, but to rather empower us to decide which sacrifices we shall bear.

Colleges need to reduce costs, and one way could be to cut professors’ salaries. But some professors would do a lot to maintain their incomes, so why not give us the option of keeping our salaries as long as we agree to teach an extra class or take on significantly more administrative responsibilities? After all, if some professors did more work, a college or university could postpone when it needed to hire new employees.

To make up for a hiring freeze, some colleges might be tempted to force all professors to teach additional classes. But some professors live frugally, have lots of family income, or would do most anything to preserve research time. Why not let these instructors take, say, a 10 percent pay cut in return for not having extra teaching responsibilities?

A hiring freeze might also necessitate some professors taking on more administrative duties. But no school should push all professors into doing what college administrators do. If, for example, one instructor hates meetings while another dreams of being a dean, let the former teach one of the latter’s classes, thereby freeing up the latter’s time for paperwork.

Colleges should present professors with a menu of sacrifices they must pick from. Of course, there will have to be some planning so that not too many professors pick the same option. Perhaps the most senior faculty members would get their first choice from the menu, and less senior members would get to choose only among sacrifices consistent with their institution’s needs.

But a better way to allocate sacrifices would be to have professors bid for what they want. For example, a college could declare that all but 100 members of the faculty must teach an extra course each year. Professors could then bid with their salaries for one of the 100 slots, with some kind of limitations built in so that not too many professors from the same department win the auction. The auction winners would be the professors who value money over time, and the “losers” those who value time over money. Each professor would be making the choice that best suits his or her needs. True, affluent professors might seem to have an advantage in such an auction, but it would be the least affluent who would most benefit if the auction’s revenue prevented the college from cutting everyone’s salary.

Departments, too, should be given choices over how to share their college’s financial hardships. A department, for example, might be told to either postpone its next hire by a few years or give up half of its administrative budget. Each department would use its knowledge of its own needs to make the decision that would best serve it and would probably best serve the college.

Professors care about many aspects of their jobs, including salaries, teaching loads, administrative work, sabbatical opportunities, travel money, office space, research expectations, and grants. Most professors accept that, because of the financial crisis, our terms of trade with employers will become less favorable to us.

By giving professors options over how these terms will change, schools can potentially get more out of their professors while inflicting less harm on them (and so encountering less resistance). And this most holds true if different professors can make different choices, rather than the college negotiating with the faculty as a whole for all professors to make the same sacrifice.

Author/s: 
James D. Miller
Author's email: 
newsroom@insidehighered.com

James D. Miller is an associate professor of economics at Smith College.

From Survival to Sustainability

You may think things are bad now -- and you’re right, they are. But today’s economic concerns are obscuring what may prove to be even bigger strategic challenges ahead for higher education.

Everyone knows that we’ve entered a period of profound anxiety and uncertainty. Everywhere we look -- from this publication’s own headlines, to university cabinets’ strategy sessions, to our now more thinly attended professional association meetings -- we see people devoting tremendous amounts of energy to the work of decoding the economic predicament in which we find ourselves. We’re working feverishly to understand what this economic downturn will portend for everything from bond financing to financial aid to endowment management to enrollment performance, and much else besides. In many respects, our key focus right now is survival. We are striving to protect the core of our colleges and universities. And we are hoping that higher education may yet again prove to be counter-cyclical to prevailing market conditions – a rare winner in the economic lottery.

Beyond survival, however, higher education has to be thinking about its own sustainability. Even as we struggle with present conditions, a number of farsighted universities are working hard at decoding the future, too -- because change is certainly coming. Demographics are shifting. Competition for talent is global. And the very financial structures that have supported higher education for the past 40-plus years may now be at risk.

In our current circumstances, these forward-looking universities read signs that the old ways of doing things may be approaching obsolescence. As a senior executive at one large, private university recently said to me, “We’re not persuaded that the business model or the economics of higher education are sustainable. We’re asking the question, ‘What if we were to start from scratch?’ ”

In short, now more than ever, we in higher education need to rethink our place in the economy and how we deliver value. What markets will we serve? What programs and credentials should we offer? How will they be delivered? How should we define success?

Faced with these questions, many of us will retreat to our intellectual comfort zones -- those familiar ideas supported by anecdote as often as by evidence. “Why should higher education change?” some of us will ask. “We’re doing just fine.” Others will be certain that we should follow this or that path -- stick to our knitting, or reinvent ourselves completely. But it pays to spend some time with these questions before rushing off to whatever answers may be nearest at hand. As former Secretary of the Treasury Robert Rubin once observed, “Some people are more certain of everything than I am of anything.” In transitional and uncertain times such as these, we should be cautious of following the lead of those who peddle certainty, those who know exactly what they think.

“It’s much harder psychologically to be unsure than it is to be sure,” wrote the investment guru Seth Klarman recently. “But uncertainty also motivates diligence, as one pursues the unattainable goal of eliminating all doubt.”

Diligence is critical to evaluating not only the challenges that higher education faces today, but also the opportunities. In a number of respects, this is a best-of-times/worst-of-times moment in higher education. For example, President Obama has asked “every American to commit to at least one year or more of higher education or career training.” The Lumina Foundation and others have called upon the higher education community to produce 16 million additional degrees by 2025. And old industries -- energy among them -- are about to become new again.

At the same time, we may at last be reaching the tuition ceiling for many parents, and there is the very real prospect of enrollments drifting toward less expensive institutions. Shrinking endowments are creating significant challenges for managing university operations. And a business model based on exclusivity does not scale; it limits the potential for impact -- whether intellectual or economic.

Growing numbers of universities see this special moment as a unique opportunity to reassess their business strategies. Developing a strategy, of course, involves not only deciding what you will offer and how you will serve the market, but also -- and just as importantly -- what you will not do. Many higher education institutions suffer from trying to be too many things to too many people -- a very risky strategy for any enterprise. If we are going to successfully protect the core, and also plan for the new realities awaiting us in the future, then we are going to have to focus our investments of time, money, and human capital.

Because higher education in the U.S. involves so many diverse types of institutions serving so many diverse markets, the choices we face as a system of higher education are myriad. But among the choices that college and university leaders must face are these: by what means can a quality institution be simultaneously selective and open? Should the institution strive to be “global” in reach or regional? Will it continue to prioritize so-called “traditional” students or adjust its operations to better serve working adults and employers? Will it emphasize a unique, place-bound experience at a single campus or the delivery education services through multiple and widely dispersed sites and online? Will it prioritize research or teaching? Will it be a leader in emerging industries? Fundamentally, what form of value will the institution create?

In conversation with university presidents, provosts, and other academic leaders over the last six months, I’ve often asked what higher education can do to avoid the classic investor error of buying high and selling low. Jack Wilson, the president of the University of Massachusetts, responded to this question by saying that he anticipated a return to “value investing” in higher education -- something akin to the longstanding investor practice of buying stocks in companies that are trading below their intrinsic value. “The last few decades, people have not thought about higher education as a place to look for value,” Jack said. “But now, they’re going to be looking for quality institutions that offer a great experience, and a great value at a great price. There’s going to be a lot of pressure on higher education institutions to get their value propositions in place.”

This is what’s coming down the track at us. We have to protect core. We have to survive. We have to stay in business. And yet at the same time, we have to create more value and become more competitive. We have to develop a focused strategy and choose from among numerous competing opportunities. And if that weren’t enough, we have to achieve all of this in a period of tremendous demographic transition.
According to the National Center for Education Statistics, in 2007, 37 percent of the U.S. population over the age of 25 had earned an associate degree or higher. That doesn’t sound altogether bad, but degree attainment rates within the U.S. have been relatively flat for decades while countries such as Canada, Japan, and Korea have advanced beyond 50 percent of their adult populations earning the equivalent of an associate degree or higher. Reading the economic tea leaves and sensing where this growing asymmetry may leave us, the Lumina Foundation has set out what it characterizes as an “audacious” goal of ensuring that 60 percent of the adult U.S. population possesses an associate degree or higher by 2025.

There are numerous challenges associated with meeting this very laudable goal. First, it represents a roughly 50 percent increase in our annual degree productivity on an annual basis for the next 16 years, and would require an effort several times the scale of the post-WWII G.I. Bill. Second, if we were to achieve it, we would have to accomplish it under circumstances in which the demography of the college age population is shifting dramatically.

Today, 29 percent of U.S. adults aged 25 to 29 possesses a bachelor’s degree or higher, according to the National Center for Education Statistics. If we disaggregate this figure by race/ethnicity, however, we see that 32 percent of whites, 19 percent of blacks, and 13 percent of Hispanics in this age group has a bachelor’s degree or higher. What makes this especially significant is that Hispanics and blacks are among the fastest growing populations within the U.S.

According to the National Center for Public Policy and Higher Education, in 1980, whites accounted for 82 percent of our population. In 2020, this figure is projected to be 63 percent. Over the same 40 year period, the proportion of Hispanics in our population is projected to have increased from 6 percent to 17 percent, and the proportion of blacks is projected to have increased from 10 percent to 13 percent. In a paper published in 2005, the National Center for Public Policy and Higher Education goes on to argue that if current racial and ethnic enrollment gaps remain, the net result would be a projected 2 percent decline in per capita income over the period from 2000 to 2020. That may not sound like much, but consider that per capita income grew by 41 percent from 1980 to 2000. If higher education leaders don’t attend to these challenges now, the result in another 10 years’ time may well be a shrinking tax base and a weakened competitive position on the global stage.

Such an outcome would represent a more subtle but potentially longer-lasting economic downturn -- a quieter crisis, but perhaps more profound.

Changing markets call for a change in strategy. Even if it doesn’t prove necessary for most colleges and universities to “start from scratch” to respond effectively to our changing demographic profile or to global competition for the best students, it will be vital for us to move beyond our comfort zones and question some of our basic assumptions about how higher education is financed and managed -- and fundamentally reexamine which challenges and opportunities each of our thousands of colleges and universities is best positioned to address.

Now is the time to reflect on our strategic objectives, our missions, and our success measures. The institutions that are among the future leaders of U.S. higher education are likely to be those who embrace these challenges and reflect upon these questions most seriously. It may well be that we need to do something truly audacious to generate lasting value – for our institutions, our students, and our economic health.

Think about it.

Author/s: 
Peter Stokes
Author's email: 
newsroom@insidehighered.com

Peter J. Stokes, is executive vice president and chief research officer at Eduventures, Inc., a higher education research and consulting firm.

Harvard Isn't Poor

It’s a dramatic tale: The story of the once-wealthy institution that houses America’s smartest -- our leading university, perhaps the world’s -- now just scraping by. Searches frozen and secretaries dismissed, hot breakfasts suspended, trash piled high: Harvard is “poor,” its endowment “collapsed,” according to Vanity Fair magazine.

Harvard isn’t taking issue with this impoverished profile. In fact, the stream of leaked letters and memos pouring out of this typically proud and stoic institution seem to suggest it is unopposed to its characterization as strapped. But is it true? Is Harvard really poor?

The university has lost a lot. The precise numbers will be in soon, but Harvard’s endowment appears to have lost about a quarter to a third of its value, or at least $8 billion.

Yet this massive loss has not made Harvard poor by any measure. At over $28 billion its endowment continues to tower over that of any other university, museum or private foundation aside from the Bill & Melinda Gates Foundation, which has a couple more billion in the bank. Today, Harvard has more than $4 million in its endowment for every undergraduate it enrolls. It has not lost generations of wealth, as reports imply, but merely returned to around its 2005-2006 value. Harvard remains the richest school in our nation’s history.

So why the firings and belt tightening? Because Harvard, like many universities, is committed to spending only meagerly from its endowment. In 2008, before the present economic disaster, Harvard spent just 3.25 percent of its endowment to support its operations. While the absolute amount may be large, this is a miserly level of spending.

Now, with the value of its endowment plummeting, Harvard appears unwilling to break this habit, even at the cost of imposing a hardship on education and research. This is stunning given that, even with Harvard’s shrunken endowment, just increasing spending to slightly more than 4 percent would maintain support to the institution’s operating budget.

News reports, again unopposed by Harvard, would have us believe that donor restrictions prohibit a higher rate of spending. But in 2008, 46 percent of funds in billion-dollar-plus endowments at independent colleges and universities were completely unrestricted, according to the data in a table produced by the National Association of College and University Business Officers. And Harvard hasn’t released any information to suggest that its endowment is more restricted than most.

Harvard's funds may be restricted in this peculiar sense: The institution appears, in effect, to have restricted its endowment itself by tying up huge portions of it in long-term investments that are costly to pull out of. Yet those costs should be paid if they are necessary to maintain the operating budget. After all, that's the “rainy day” purpose for which endowments were created. But even cutbacks and widespread talk of Harvard's demise don’t appear to be enough to get the institution to alter its assumptions about endowment spending. Harvard refuses to spend from its rainy day fund even when it is pouring.

That Harvard’s endowment exists to advance education and research is not what an observer would infer from the institution's behavior. Instead, Harvard appears to have decided to put financial dominance ahead of the current needs of students, families, and citizens -- even while the institution remains almost unfathomably wealthy. Taxpayers, who help to support this nonprofit, have reason to ask whether this is the best choice.

Harvard has options, even if its financial gurus find many of them unattractive. The institution’s academic leaders need to remind them that endowment investment and spending decisions must be guided by the twin goals of furthering education and research, not winning the hedge fund Olympics.

And if Harvard’s gurus found it acceptable to follow an investment strategy that could, and did, lose close to 25 percent in a year, then they should certainly deem spending a few tenths of a percent more to hold harmless the operating budget acceptable, too.

More than a decade ago, the Yale University law professor Henry Hansmann said that “a stranger from Mars who looks at private universities would probably say they are institutions whose business is to manage large pools of investment assets and that they run educational institutions on the side… to act as buffers for the investment pools.”

These words have only become more true with time.

Author/s: 
Lynne Munson and Donald Frey
Author's email: 
info@insidehighered.com

Lynne Munson researches college and university endowments for the Institute for Jewish and Community Research. She has testified on endowment spending before the Finance Committee of the U. S. Senate. Donald Frey is professor of economics at Wake Forest University.

Sleepless in Academic Affairs

Some fellow deans and I have noticed that when faculty conversations turn to administrative travel, there’s a curious split. A good number of our faculty colleagues suspect that we go jetting off to Cabo San Lucas, to luxuriate in radiant warmth amidst drained snifters of cognac and the fragrant waft of smuggled cigars.

By and large, those are the ones who like us.

Others suspect a furtive rendezvous with Lord Vader and Emperor Palpatine arranged so as to advance our plans to crush the rebel departments and rule unchallenged.

Those are the ones who think like us.

I jest. Alas, the reality of my own conference travel is, by contrast, so dull as to explain the persistent rumor that deans suffer disproportionately from narcolepsy. The average experience comes down to a January day in Calgary, where I'm left to choose between such enriching topics as “Formative Assessment as Instructional Practice” and “Meeting the Challenge of Deferred Maintenance in a Constrained-Endowment Environment” (here I have to say that only a career change to administrative work could have made me pine for an MLA panel on, say, poststructural critiques of the Victorian nautical drama).

But there are some payoffs. It was at just such a gathering a few months back that I joined a troubling discussion on a simple question:

“Amid international economic collapse, what keeps you up at night?”

The room -- packed with we former starry eyed types who had entered academic administration to pursue the dream of strengthening the academy -- reported on the nightmare of slashing budgets (sometimes by a third), layoffs (sometimes by the dozen) and closing academic departments (sometimes their own). But of all the answers, the hardest to hear was one of the last:

“I don’t think we’ve seen the worst yet.”

Thoughts about that possibility kept me up nights all summer.

In the end, though, it isn't the prospect that we might fail to make conventional changes in response to new economic realities that worries me.

My real concern is that we will cling to the status quo rather than bring the creative energy of our talented faculty to re-imagine our goals for student learning and the nature of faculty work. That conversation is one we in academe must have -- apart from the present crisis -- if we are to serve the nation and the world in ways that will meet present needs. It may be that we in academe are collectively whistling past the graveyard in the hope that this crisis will pass in time for us to avoid transformative change.

Of course we must do the things we’ve always done to address financial exigency: trim budgets, cut expenses, pull back on maintenance, and the like. These conventional responses won’t guarantee that we will thrive, but they can buy us time to take the next step: trying initiatives that we’ve never tried before.

These new initiatives will bring no guarantees, either, but they can buy us time to take the critical step: we need to imagine a college that we’ve never been before and work to embody it.

We've taken the painful and practical steps to bring our budgets back into balance.

The challenge for deans in a budget crisis such as colleges across the country are facing now is clear: how to reduce the budget by five or ten percent while maintaining the elusive "excellence" that so often finds its way into presidential rhetoric? In the absence of genuine conversation across the campus, the conventional choices are clear enough. For our part at Augustana, even as we have completed two record years for the college, we are nonetheless cutting back on administrative costs, reducing funds for travel, and curtailing reassigned time.

But such measures won't create a sustainable college. Such actions, for campuses across the country, are a way station, not a destination. They’re unpleasant; they're occasionally productive; and they are merely expedients, buying us time.

But time for what?

At Augustana, we're using this time to try initiatives we’ve never tried before, and the early conversation is promising: amid demographic decline across our Middle West, we're seeking students through all manner of new partnerships -- with high schools, junior colleges, and peer colleges alike -- that we expect to improve student learning and reduce costs. We’re exploring opportunities, for example, to offer liberal education to local high school students who may not have encountered the kind of pedagogy we value most; we hope such outreach will result in more students for our college.

We're building revenue by developing a 12-month academic program through expanded summer offerings linked to our admissions effort. And we're offering majors that affirm our identity as a liberal arts college even as they speak to new areas of interest for today's high school students, such as environmental studies.

Ultimately, I've come to believe that these initiatives, valuable as they may be, still will not help us to create the model that will enable our college to thrive for the next century. The fundamental flaw in the budget cutting/revenue expansion model is that it remains grounded in a series of assumptions bequeathed to us by the academy of the 19th century. Those assumptions reflect the pedagogies and institutional expectations of another age. They constrain, rather than support, those of our own. And so we need to take a further step: to re-imagine what our college might be for students of the decades to come.

At Augustana, we're engaging faculty deeply in that conversation, asking colleagues to think creatively about how we will change in response to the challenges before us. For deans, this is the opportunity of a career: we now know we must reframe the work that we do in order to create a new model that will better serve our students and our communities alike even as it will sustain our institutions.

We might, for instance, seek to learn from years of assessment data that tell us that traditional classroom learning contributes only a fraction to student growth and learning in college. One result might be that we further our efforts to build connections between the traditional curriculum and the co-curriculum. We might imagine new partnerships with our community that will form a central place in our students' experience and that might help to revive struggling neighborhoods; at Augustana, we have forged a relationship with an elementary school in our neighborhood with just such a goal in mind.

I believe the answers to these questions will best come by engaging the faculty. The challenge for academic administrators these days ought to be how we might better utilize the creativity and imagination of our faculty so as to avoid these conventional approaches.

How can we enable faculty to take on an entrepreneurial approach to their work, such that the resources of the college are not seen as a bank account from which one draws funds but rather as an investment into which all must contribute for the greater good?

How can we bring the intellectual creativity of faculty to the hard questions that are before us?

Can we change the question from “How can we best manage budget cuts?” to “How can we make it again possible for bright students of moderate means to attend the college?”

I am hoping to start with some stakes in the ground:

Focus on student learning. The point seems obvious, but once the specter of budget cuts is raised, it will be difficult to focus on anything but finance. Deans and faculty alike need to focus first on the primary question of what our students are learning and how we know.

Take into account the ways new pedagogies affect faculty work. Over the last two decades, the faculty's work at liberal arts colleges has grown infinitely more complex. With the addition of undergraduate research, investigative labs, process writing assignments, intensive mentoring and advising, service learning, and a host of other pedagogical reforms, we are asking faculty to do more than ever. Often, such reforms have been added on to a curriculum that has remained essentially unchanged, so that demands on faculty have increased substantially.

Work as a team. The adage that curriculum is determined by faculty and finances by administrators is laughably false. It rests on the absurd premise that curriculum and budget can somehow be separated (if they could, I would advocate for Oxbridge style mentoring for each and every student, from freshman year on!).

Commit to completing the conversation. Too many dialogues are shut down every year on campuses because of the threat of divisiveness. If administrators want faculty to bring all of their creative energy to the table, they have to be prepared to arrive at answers they might not have expected. If faculty want to guide decisions about resources, they can't throw up their hands and suggest that they won't have a role in decisions that lead to actual reductions.

What would transformative change look like? Every college and university will have a different answer. At Augustana, we hope to find ways to deepen student learning through the experiential pedagogies that the faculty have made a priority over the past two decades while easing the burden of the new methods on faculty. We hope to build on our efforts to connect a traditional liberal arts curriculum with vibrant and exciting careers, while helping students to see that a vocation -- or calling, in Martin Luther's sense of the word -- is considerably more vast than career. We hope to find ways to extend their learning in blended learning environments that have just begun to take shape on the horizon for academe.

Of course we can't be sure that our approach to the conversation will yield the sort of transformative change we seek. At Augustana, we are just starting to ask hard questions about how we will sustain our strength for the years ahead. I do know that 180 of the brightest people I know are turning back to the foundations of our community to study what we do best, what we know deeply about ourselves, and what we might be in the years to come.

Once we get that figured out, I'll return to the underrated charms of subzero Calgary for a good night's sleep.

Author/s: 
Jeff Abernathy
Author's email: 
doug.lederman@insidehighered.com

Jeff Abernathy is dean of the college at Augustana College, in Illinois.

Brandeis Wasn't Wrong

In 2001 I donated my collection of prints by sculptors to the Block Museum of Art at Northwestern, though some of the prints still adorn the walls of my house and won’t get to Evanston until after my death. You can assume -- and you would be right -- that a collector of such works has been a lifetime “consumer” and supporter of the arts.

And yet, I said to myself “good for them” when reports first surfaced last winter that Brandeis intended to sell its collection of modern art, so that the considerable (envisaged) proceeds could support functions closer to the central goals of the university.

Understand that my print collection went to Northwestern because I had been dean of arts and sciences there for thirteen years. Understand also that regarding this issue, my experience as dean trumps my love of art and that is why I disagree with the views expressed in numerous articles in The New York Times and one this month in Inside Higher Ed called “Avoiding the Next Brandeis."

I see a significant role for art museums on higher education campuses. But, with quite special exceptions, I see a very small pedagogic function for colleges and universities to own works of art, especially given the current cost and value of so many of them. I’d rather those museums were reclassified as galleries. To be sure, the provisions of deeds of gift must be scrupulously observed; but assuming that to be the case, let them sell their works of art if the funds thus gained will better serve the institutions’ educational mission.

The premise here is that the roles of museums on campuses are not like those of museums downtown, since the former exist to serve the specific needs and interests of a campus’s students and faculty.

This month’s article in Inside Higher Ed quotes a task force formed by arts groups to figure out ways to avoid the next Brandeis as saying that campus museums should be regarded as “essential to the academic experience and to the entire educational enterprise.”

But why should they be so regarded when, by my admittedly not systematic observations, most of those museums do nothing or very little to deserve to be so regarded? As dean, I had to bludgeon the Block Gallery to present an exhibit of the work of Northwestern’s prize painters, William Conger, Ed Paschke and James Valerio. (This was before the Gallery was transformed into a Museum and long before its current director, David Robertson, came to Northwestern.) Art history departments are mostly held at arm's length by campus museums who prize their (inappropriate) autonomy. Mostly, the museums don’t even know how to communicate with other than art faculty on campus.

It is excellent, therefore, that this cluster of issues is being looked at. In my view, however, the goals sought by the task force for campus art museums are not likely to be realized by means of works of arts owned by museums, but rather by means of exhibits brought in and often locally curated for specific pedagogic purposes.

Members of the task force, make sure, therefore, that you are not just talking to yourselves. You are looking for ways to relate A to B; there must thus be strong representation from both poles. As announced, the organizations participating in the task force are mostly from the Category A: the art museum community.

I strongly recommend that it also include not only representation from the art history and studio art departments, but knowledgeable people who have thoughts about how to involve art museums in educating students who are not primarily concerned with the arts. Indeed, given the way in which so many campus museums lead existences so separate from their campus surroundings, it might even be necessary to initiate reflection about about their possible wider functions. The task force might want to consider forming a committee consisting of a couple of department chairperson, a couple of deans or associate deans, perhaps some interested students assigning them the task of reporting to the museum-powers-that-be how those museums might serve a broad campus constituency.

Accordingly, if the just-formed task force keeps its eye on the ball (as I see it), that Brandeis bomb will have very positive, if unintended, consequences.

Author/s: 
Rudolph H. Weingartner
Author's email: 
newsroom@insidehighered.com

Rudolph H. Weingartner is former dean of arts and sciences at Northwestern University.

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