Business issues

The key trends for all institutions embedded in the Purdue-Kaplan acquisition (essay)

In April Purdue University announced its acquisition of the for-profit Kaplan University -- a bold move, made bolder still by the partnership’s “Morrill Project” moniker. However, the frenzy over what’s most remarkable about the deal -- how much of Purdue will now be “online,” the fate of one of proprietary education’s biggest players, the odd coupling -- has distracted many people in higher education from the more important lessons embedded in the Purdue/Kaplan story. Even those colleges and universities without massive online ambitions should pay heed to five larger higher education trends represented by the Purdue/Kaplan acquisition, trends that are relevant to all institutions.

Trend No. 1: Traditional colleges and universities are renewing their interest in the bachelor’s degree completion market, but the market is not as large as many estimates indicate. The majority of Kaplan’s (now Purdue’s) students are bachelor’s degree completion students, a technical term that refers to adult students who have attained some college but not earned a bachelor’s degree. Unlike direct community college transfers, these students may have been away from higher education for years, earning a potpourri of credits on and off over many years and from a number of disparate institutions. Earlier this year, 80 percent of the continuing, professional and online education members of EAB, where I serve as an executive director, noted a high desire to learn new strategies for success in the degree completion market.

EAB, which works with more than 1,200 college and university members, has some words of caution for any institutions that believe the size of the market is such that degree completion will be the panacea to their revenue woes. Yes, there are 31 million people in America who have some college and no degree -- a number often cited to reflect the impressive size of the market. But the National Student Clearinghouse report (where the number comes from) actually sizes the population of “potential completers” -- or those who have at least two years’ worth of progress toward a degree -- as four million people, a far cry from 31 million.

To be sure, bachelor’s degree completion programs will be vital for achieving state and national access goals, and many institutions will see the financial benefit of increased enrollments. But colleges and universities will need to examine their regional markets and competitive environments, as well as whether they have or can build the recruiting and student success infrastructures needed -- and all those elements will differ from those for traditional students.

Trend No. 2: Different capabilities are increasingly needed to recruit and serve all alternative student segments. Those segments include degree completion students, international, fully online and working adults pursuing professional master’s and postbaccalaureate certificates.

For instance, a desire to meet the needs of adult degree completion students, and a realization that they could not easily build the infrastructure themselves, drove Purdue’s decision to acquire Kaplan. While not every college or university wants to expand in the bachelor’s degree completion market, almost all of them are turning to some alternative segment -- in other words, not first-time, full-time freshmen -- to boost enrollments.

Most prominent is the intensified focus EAB sees across our membership to double down on master’s and postbaccalaureate programs (i.e., certificates) to target working professionals looking to advance or change their careers. Yet many institutions have learned the hard way -- as their programs have missed enrollments or profitability targets -- that their undergraduate enrollment processes simply don’t work for a completely different audience. Since such markets require capabilities that are expensive and time-consuming to build, institutions often turn to external partners.

Purdue’s acquisition of Kaplan may have been headline grabbing, but the financial elements of the deal are similar to what many universities have found in working with online program management (OPM) vendors, such as 2U, that receive a revenue share for helping colleges and universities migrate traditional programs (typically master’s degrees) online. Under the conditions of Purdue’s deal, the Graham Holdings Company, parent of Kaplan Inc. and Kaplan University, will yield 12.5 percent of the new venture’s revenue, but only after the university has covered its operating costs and received $10 million in each of the first five years. It is a more favorable deal for Purdue certainly than many OPMs have historically offered their traditional higher education partners (up to 60 to 70 percent). But most OPM deals don’t include 32,000-plus students from the start, so the reduced percentage share doesn’t seem surprising.

The OPM market is predicted to become a $1.4 billion industry by 2020, and new players are emerging every day. Historically, OPMs have provided full turnkey service to traditional colleges and universities, including everything from up-front capital to marketing/recruiting to instructional design to student services. That is starting to change, as institutions demand unbundled services. For example, our recent national survey of deans of continuing, professional and online education found that institutions are much more interested in outsourcing marketing and market research than instructional design or academic advising.

What will be interesting to watch at Purdue is how the Kaplan capabilities end up being used not only for the traditional adult degree completion programs but also to support other programs at Purdue (such as their existing online master’s programs) that are outside the scope of the Kaplan deal but could probably benefit from certain unbundled elements of Kaplan’s infrastructure.

Trend No. 3: Colleges and universities are turning to creative models outside traditional governance structures in order to meet market needs more nimbly. Currently, higher ed institutions are often hampered in reaching new markets due to not only organizational and operational challenges but also the slow process of shared governance. Besides acquiring a new online and adult-serving infrastructure in Kaplan, Purdue also has created a separate governance structure in the “New U” represented by the partnership, with the New U’s chancellor reporting directly to Purdue’s president, Mitch Daniels. The time span between the initial conceptualization of this idea and trustee approval was five and a half months.

By contrast, under traditional university governance, single-degree programs can take years to gain approval. Given that many new professional master’s and certificate programs are designed to meet fast-changing work force needs, that long time frame can lead to severe competitive disadvantages.

Many colleges and universities have found ways of creating nimbler governance structures without an acquisition. That can include creating a separate for-profit subsidiary or 501(c)(3) to meet corporate education needs, as Cornell University and the University of Maryland Baltimore County did, respectively. Or they can spin off a separately accredited institution to meet military and adult learners, as Chapman University did with the creation of Brandman University.

Most commonly, institutions develop more agile approval, planning and pricing processes for market-oriented programs, often housed within a dedicated continuing, professional, online or extended education unit. These new types of organizational models and processes can be crucial for stimulating and supporting innovation.

Trend No. 4: Colleges and universities need to be ready as new competitors enter their markets -- whether through mergers and acquisitions, online ventures, or other methods of expansion. The number of college and university mergers and acquisitions in the United States that occurred from 2010 to 2015 was more than double those that took place during the prior five years -- jumping from around 15 to 20 deals to between 40 and 50, according to our preliminary research. Many of those deals represented rescues of institutions that could no longer survive on their own.

The number may seem relatively small, but institutions should pay heed even if they’re not buying, selling or being merged. For research universities, a competitor’s strategic acquisition of a graduate or professional school can boost its prestige and ranking. When Rutgers University acquired the University of Medicine and Dentistry of New Jersey in 2012, for example, it increased its total research spending to surpass Harvard, Northwestern and Yale Universities. And in states with performance-based funding, the best-positioned institutions might acquire the students they need to satisfy requirements for the largest possible appropriations.

Purdue’s acquisition of Kaplan includes 15 campuses and learning centers. How Purdue chooses to use them may have competitive implications for nearby colleges and universities, even those that may never have considered Purdue a direct competitor.

The larger takeaway for all institutions is that what defines each college or university’s “competitive set” has been expanding over time, as more institutions grow their offerings and brand presence in secondary or tertiary locations. Other colleges and universities need to respond by firming up their ties to local employers and organizations in their region, carefully considering whether secondary locations make sense for them, and adapting marketing and recruiting techniques to reach a savvier student customer with more options.

Trend No. 5: Many of the lessons learned from failed mergers and acquisitions are relevant as colleges and universities expand intra- and inter-institutional partnerships more broadly. The conventional wisdom is that at least 50 percent of M&A partnerships across industries fail. Deals that appear to be no-brainers on paper flounder due to poor integration processes.

One example in higher education is DePaul University’s acquisition of Barat College for $6 million in 2001, with additional investments of about $18 million in upgrades. Enrollments never met their intended targets, ultimately leading to Barat’s closure. Marie Cini at University of Maryland University College has written a smart analysis of the different questions Purdue will need to consider in the integration process.

Most higher education institutions will never live through an M&A deal, but all are looking for more partnerships: state system collaboration and consolidation; self-organized consortia; multi-institutional combined bachelor’s and master’s programs (for example, 3+2s or 4+1s) and the like; and better articulation more broadly. Perhaps such agreements won’t require the kind of dramatic change in management as an acquisition. But, in all cases, the vision and strategy on paper often don’t take into account the complexities that come when trying to integrate different day-to-day systems, competing policies and conflicting cultures. Even with interdisciplinary degree programs within a university, students complain about the multiple processes, systems and policies crossing departments, schools or colleges on a single campus.

In short, partnerships -- within campuses, across campuses -- will be increasingly common. For all the time spent designing a strategy and forging the initial relationship, even more time (and probably dollars) will need to be invested in getting the integration right.

It goes without saying that few colleges and universities will pursue partnerships as large scale as Purdue and Kaplan’s. But as traditional demographics shift, financial pressures mount and funding needs for strategic ambitions continue to rise, few institutions will be able to afford not to pursue a new-to-them market in some way. In this increasingly competitive environment, they must take seriously Purdue’s lesson to determine the new -- and often less familiar -- capabilities, organizational structures and strategic partners required to succeed.

Melanie Ho is executive director of research and strategy at EAB, a research and technology company that serves more than 1,200 educational institutions.

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How cabinets can avoid common shortcomings (essay)

Peter Eckel describes the often typical shortcomings of cabinets -- and how to avoid them.

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Signs that an institution is on the path toward unrecoverable failure (essay)

In February, Saint Joseph’s College in Rensselaer, Ind., announced that it would suspend operations in May. Although it had an annual operating deficit between $4 million and $5 million, and was heavily in debt and on probation from its accreditor, many of its faculty members expressed surprise at the announcement that it was closing its doors. They had not given sufficient attention to evidence that their employer was in imminent danger of shutting down.

Many small to midsize colleges or universities in America show the same signs of being on a path toward unrecoverable failure. Here are a few of those signs.

An inability or unwillingness to develop academic programs that provide a competitive advantage. Because of biases toward optimism and inertia, people tend to make the same decisions that they’ve made before, but with the expectation of a different outcome. In higher education, that takes the form of refusing to acknowledge sunk costs and relying on traditional revenue streams regardless of market demand. Academic programs that could strategically position an institution in niche markets are perpetually starved of resources, while faculty lines in areas of the curriculum that attract only a handful of students are always filled.

Ask yourself how distinctive your institution’s academic programs really are. Do prospective students perceive sufficient value added when universities like Arizona State, Southern New Hampshire and Troy are offering complete degree programs online for $350 to $650 per credit hour? What’s the plan for when a majority of your university’s undergraduate applicants have already completed a full set of general education requirements elsewhere?

Even when a college or university significantly alters its educational product line, the economics of the market can render those changes irrelevant. Marian Court College, in Swampscott, Mass., added a select number of bachelor’s degrees to its traditional menu of associate’s degree programs in 2011. As a commuter college without the overhead costs of residence halls and co-curricular activities, it was able to price its annual full-time day student tuition at only $16,500. But four community colleges were located within 15 miles, with in-state resident tuition of approximately $6,000 per year. Salem State University, less than four miles away, offered a wide range of two- and four-year degrees, plus dormitories, intercollegiate athletics and the other aspects of college that come with an undergraduate enrollment of around 7,500 students. Salem State’s tuition was about $10,000 per year. Marian Court College couldn’t compete on price, and nothing else distinguished it from its nearby competitors. It closed in 2015.

A penchant for mistaking information for communication. If students are going to enroll at a college or university, they have to know it exists. Once they know it exists, they look for a clear, consistent, easily accessible message about the outcomes they can achieve if they attend.

Does your institution effectively advertise the accomplishments of recent alumni, the career-applicable experiences of current students and the ways in which faculty members make these outcomes possible? Or are its webpages and social media streams filled with a confusing jumble of updates on cafeteria operating hours, vapid mission statements and tedious academic jargon? Dysfunctional external communications are a self-inflicted wound: the more money that gets spent to annoy more people more quickly, the greater the damage done.

The academics webpage of Saint Joseph’s College lists four reasons “why our education is different.” Though clearly written, the text could just as aptly describe dozens, if not hundreds, of other small colleges and universities across the country. Maybe current or past students did great things at Saint Joseph’s, but its website didn’t communicate that to the market.

A focus on short-term comparisons instead of long-term trends. Faculty members and administrators often gauge current performance against figures from the previous one to three years. That practice leads to shifting baseline syndrome, in which benchmarks wander instead of being fixed against standards from the more distant past. No need to worry if the current year is just a little bit worse than the year before, because next year will be measured against what’s happening now. And a spate of faculty hires or a raise might make it seem like your institution has finally turned the corner, when in reality it’s a brief hiccup in the downward slide.

We knew in 1999 how many 18-year-olds there would be today, just as we know today roughly how many 18-year-olds there will be in 2035. Did your institution adequately plan 15, 10 or even five years ago for the number and type of high school graduates that currently exist? Are decisions about academic operations driven by the market demographics that will be in place 10 or 20 years from now?

To avoid being the complacent frog in the pot of warming water, look at how your employer’s tuition discount rate and its percentage of Pell Grant recipients have changed over time. The higher an independent college or university’s average tuition discount and the greater the proportion of Pell Grant recipients in undergraduate enrollment, the weaker the relationship between its advertised cost of attendance, the size of its enrollment and its financial well-being. Any independent institution with an endowment of less than $100 million and fewer than 2,000 full-time undergraduates that continues to increase its average tuition discount over the long run is heading for financial difficulties, if not ruin.

Plans for transformation in which illiquid and encumbered assets play an essential role. Most small colleges and universities are heavily tuition dependent, with tiny endowments and narrow operating margins. Yet those same colleges too frequently adopt a “build it and they will come” strategy that ends up being a financial time bomb with a short fuse.

In 2010, Burlington College’s president spearheaded a $10 million debt-financed purchase of lakefront property, as part of a plan to build out a new campus large enough for hundreds of additional students. The problem? The plan to pay off the debt by doubling Burlington’s enrollment in only a few years never materialized. Burlington College couldn’t meet its loan payments, and it closed last year.

Also in 2010, Saint Joseph’s received a donation of 7,600 acres of farmland and later tried to sell off its rights to income from the parcel in exchange for $40 million. But it was only offered $15 million -- not enough to keep the college operating.

What low-overhead but badly managed academic programs can your institution improve with minimal investment? Are the right people in positions of responsibility, are they provided with the information they need to do their jobs well and are they held accountable for their performance? These organizational problems may seem like inconsequential nuisances, but cumulatively they are disabling. Fixing them will return dividends more reliably than speculating on huge capital investments.

Frequently a college or university will exhibit a combination of these signs for several years in a row. Missed enrollment targets, budget cuts and needless inefficiencies become background noise, ignored by administrators and faculty members. Until one day, when they no longer have jobs.

Higher education is changing, and for much of the professoriate, retirement after a comfortable academic career gets less likely every year. Learn about the true condition of your employer, challenge assumptions and plan for the worst. Forewarned is forearmed.

Chad Raymond is chair of the department of cultural, environmental and global studies at Salve Regina University and the managing editor of the blog Active Learning in Political Science.

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Presidential contracts are becoming more complex and corporate (essay)

Employment agreements for presidents are becoming increasingly complex and bear little resemblance to the typical appointment letters for faculty leaders or other senior administrators, write James Finkelstein and Judith Wilde.

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University System of Georgia announces new administrative review

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As consolidation efforts continue, the public university system sets its sights on assessing campus and systemwide administrative costs and performance.

How universities have gotten caught in a privatization trap (essay)

This country’s public universities face the Trump administration in a weakened condition. That is partly because they have suffered years of state funding cuts and still aren’t back to pre-2008 levels. But it’s also because they have long embraced a private-funding model that doesn’t work and whose weaknesses Trump and his people can exploit.

A painful example is the proposed 18 percent cut to the National Institutes of Health, which Health and Human Services Secretary Tom Price has contended would not hurt research, as it would mostly focus on cutting back on overhead expenses to universities. An 18 percent budget slash sounds catastrophic -- until you remember that companies take these kinds of hits and survive. So do American families, where illness or job loss lead to cuts far greater than that.

The same goes for public universities: few have not had a cut on that scale sometime in the past 25 years, and still fewer have admitted that such losses hurt educational quality. Since universities survived the financial crisis with little damage -- that they have disclosed -- what would keep the citizenry awake at night about an 18 percent cut for medical research?

Research directors reply that it would be terrible indeed: National Science Foundation Director France Cordova, for example, has said the proposed cuts endanger the economy, since “half of our present GDP is due to investments in science and technology.” Researchers have noted that the current funding austerity already appears in the form of the declining average success rate for grant applications, which has been cut nearly in half since 2001, from 27 percent to 16 percent. Four in five applications go unfunded, with presumably valuable results to medical knowledge possibly lost.

Such arguments might work if voters thought science needed public funding to get to the public. But the unfortunate fact is that they have been taught otherwise for many years. Universities have taught politicians and the voters at large that they can and will deal with 5 percent, 10 percent or 20 percent public-funding cuts by finding alternative revenue streams, nearly all of which are private. Universities have asked people to marvel at their entrepreneurial prowess: they have raised tuition beyond inflation for decades, sought private donations, formed research partnerships, subsidized tech start-ups, outsourced room and board, built new buildings with promises of future lease revenue from private firms, and so on. Yes, cuts are a shame, universities seem to say, but we have liberated our inner Zuckerberg, and the public cuts haven’t hurt our excellence at all!

To take one example, Mark Yudof, a former president of the University of California, said during the financial crisis that while they struggled to pay salaries in English and sociology, the “medical business” was doing just fine. Such statements told the world that the public-good educational core lost money while edu-business meant profits. This undermined the voters’ understanding of the special role that public funding plays in public-good activities like teaching and research, in which few of the benefits can be captured as profits by the institution. Adding to the confusion, university officials insisted that their public mission remained as healthy as ever.

Universities thus arrive at the Mar-a-Lago policy house with a confusing mixed message: we do the public good with private money. This confusion is now haunting NIH research. Since medicine is the icon of knowledge transformed into business, why shouldn’t we cut NIH tax support and make big pharma -- that is, its long-suffering customers -- pay for research? If your arthritis meds cost you $3,000 per month, why should you pay taxes on top for research?

In short, the public university’s first private-sector lesson is that private funding serves the public interest as well as public funding. And the logical response is, great, let the public interest be defined by what the private consumer is willing to pay.

The second post-public principle is that the value of knowledge is its market value and can be measured as a return on investment. Although most academics would deny this in theory, universities adhere to it as a theory in use. Higher education institutions have become reliant on return-on-investment arguments to recruit students, and the science establishment, though aware that fundamental science takes decades to pay off economically, constantly dangles large gross research revenues, patent royalties, start-up ventures and trillion-dollar markets in front of the policy makers who allocate funds. Universities and policy officials have taught the political world that science has value because it will generate a positive market return. ROI calculations are used to cut through complicated expert beliefs in scientific use value, intellectual merit and long-term benefits to society.

This view was taken to its logical conclusion for me one day in 2004, when a young engineer at the University of California, Berkeley, announced to our statewide science policy committee, “If a project can’t get corporate sponsorship, it’s probably not good enough to be funded by a federal agency.” That statement ignored the analytical distinction between a public agency funding research for public benefit and a business funding research for its own ROI. When he collapsed public into private, the engineer claimed that, for policy purposes, all good science will have a positive ROI and quality can be measured by pecuniary returns.

Again, few people would accept such claim as economic theory, and economists like Kenneth Arrow and Richard Nelson discredited it in the 1950s. But politics yokes false yet expedient claims to powerful interests to generate practices that act as though intellectual value can be measured as market value. The prestige of market forces, working with misinformation from universities, has kept generations of political and business leaders from inquiring further. Hence, most nonacademics assume that if a university laboratory is doing good science then it is making money, and plenty of it.

The Achilles’ Heel

Enter HHS Secretary Price, who looked at medical research and asked “whether indeed we can get a larger return for the American taxpayer.” That is an entirely appropriate question within our private-sector paradigm of public knowledge, since that treats public funding like private funding and judges it by pecuniary returns.

Price went straight for the Achilles’ heel of the whole operation: “I was struck by one thing at NIH,” he said, “and that is that about 30 percent of the grant money that goes out is used for indirect expenses, which as you know means that that money goes for something other than the research that’s being done.”

On the theory that universities are grossing huge research revenues, this 30 percent spending on peripherals was like bonus pay. All the proposed cuts would mean, then, is that NIH will reduce university profits. Federal dollars will go farther, the taxpayer saves, and universities just have less NIH money to spend on their favorite stuff.

Fine, except for one thing: universities lose money on IDC payments, which don't cover costs. And universities, instead of bragging that their research losses are a donation to the welfare of humanity, have covered them up for decades.

Indirect costs are infrastructure, not gravy that gets spread around. They cover the facilities and administration that support the specific research, which could not take place without the general staff, buildings, utilities and everything else that houses the research. All this costs more than any collection of research sponsors want to pay, even over many years. So universities lose money on indirect costs paid by NIH and every other sponsor under the sun.

Universities on average pay over 20 cents of their own institutional funds to support every dollar of research. A Nature study confirmed a large gap between calculated need and actual reimbursements: “The average negotiated rate is 53 percent, and the average reimbursed rate is 34 percent” -- a difference of nearly 20 points. Two hundred million dollars of research expenditures at a good-size research university costs that university $40 million of its own money, which it mostly gets from student tuition and state funds.

Even the most successful, best-compensated universities in the country have some version of this problem. “We lose money on every piece of research that we do,” comments Maria Zuber, vice president for research at the Massachusetts Institute of Technology, which has negotiated an IDC rate of 56 percent. Were MIT to keep grossing around $500 million in federal grant income, and all federal agencies came to imitate the Price practice of zero IDC funding, MIT would need to come up with an additional $150 million of its own money (to replace the 30 percent average of cut IDC funds) -- just to keep losing what it already loses on federal research.

Price’s policy would be a financial disaster for research universities: they would need to cut the amount of research that they can support, which would wreak havoc on the production of knowledge and on scientific personnel. It would deepen the existing fear that a generation of scientists is already imperiled by inadequate funding. It would force universities to take even more money from students and from faculty in disciplines without large extramural grants. Parts of an already unstable research ecosystem could collapse.

Cutting Our Losses

Although we can and must condemn Price’s cynical, destructive proposal, we need to face the fact that universities have set themselves up. They have treated research costs as a trade secret: neither faculty members, nor well-intentioned legislators, nor the public know that science loses money for universities, or how much. The Nature study got its data only through Freedom of Information Act requests. I had the same experience while doing my own research, which is that public universities treat actual reimbursement rates and IDC spending in the same way that private businesses do -- as proprietary.

Why do universities not disclose financial information that would improve their case for stable or even increased funding? Custom and fear of backlash play their roles. But the decisive factor is the private-sector framework. University officials now treat research as a business activity that is managed as though it were commercially sensitive and should run in the black. They do not want to disclose their large and routine outlays to cover shortfalls on that research, since in a private-sector model such losses signal failure. In addition, the biggest percentage losses come from private foundations and corporate partners that often bring the most prestige. Universities are caught in a privatization trap that they built themselves, and that will be difficult to take apart.

But take it apart they must, and the good news is that research losses can be cut. A fuller program can be found in my new book, The Great Mistake, but the elements can be summarized.

First, universities must go beyond current reporting categories to analyze and disclose how they use indirect cost funds. That disclosure will fan suspicion and resentment into anger and recrimination. But that is normal when issues that have been removed from the political life of a community are reinstated, and various grievances will need to be worked through. Such a move will tax the political skills of university administrations, but until disclosure and discussion occur, most people -- from Tom Price to academic scientists -- will continue to assume that much IDC feathers nests far from the laboratory and can be cut.

Second, universities must admit that the old deal on research funding was ended by state cuts, and then ask for a new deal. They must ask for full coverage of indirect costs. That means going in the opposite direction of Secretary Price and demanding that sponsors stop expecting universities to subsidize them with less money than they used to have that they must increasingly extract from undergraduates. Universities need to start making the full ask to partners, as Price is now doing to them.

Most important, universities need to embrace the public-good definition of research and higher education that turns private losses into public gains. Universities lose money on research in order to benefit the entire society. Since the whole state gains from a great medical center and museum and sociology department’s expertise on racial stratification, the whole state is legitimately asked to pay for it through taxes.

Universities have tried the soft privatization of revenues. That has failed to stabilize university finances and miseducated people about the nonmarket and social value of the university. Universities have also squandered the philosophical and social foundation of their public benefits and lost much general goodwill. But it is not too late to get it back -- starting with the re-education of Tom Price.

Christopher Newfield teaches literature and American studies at University of California, Santa Barbara, and is the author of The Great Mistake: How We Wrecked Public Universities and How We Can Fix Them, just published by Johns Hopkins University Press.

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Barry and St. Thomas Universities explore strategic alliance amid pressures in South Florida

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Two Roman Catholic universities ask if they can do a better job of serving the Miami area together.

The downside of innovation and disruption (essay)

Everywhere one turns, the idea of disruptive innovation continues to spread, even as academics have cast doubt on the theory’s validity. Put on the agenda by scholars such as Clayton M. Christensen and Henry J. Eyring, the idea presumes that old institutions, including colleges and universities, will be hard-pressed to change fast enough to meet new external environments. Instead, new technologies and organizations will outcompete the old, even if -- and, in fact, because -- the new ones offer a subpar but cheaper product.

In time, the new institutions will cultivate demand for their products, improve quality and displace the older institutions -- which did not change fast enough. This happens in Silicon Valley, and it will soon happen to campuses across America, Christensen and Eyring warned in their 2011 book, The Innovative University: Changing the DNA of Higher Education From the Inside Out.

The rhetoric of disruptive innovation combines a theory of organizational change with a theory of time. Existing institutions find innovation difficult because their structures and norms are oriented around doing, and even improving, what they already do -- a phenomenon political scientists call path dependence. Agile new institutions can enter the market because there is demand for more suppliers and they are not beholden to the past.

But such claims have often been married to the presumption that new technologies have sped up the rate of social change, making existing institutions even more vulnerable. And it is this piece -- the narrative of speed -- that has led so many advocates of disruption to believe that we must act now or be left behind.

The narrative of speed is quickly spreading. For instance, the authors of what came to be known as the Spellings Report, issued in 2006 by a commission appointed by then U.S. Secretary of Education Margaret Spellings, concluded that higher education is a “mature enterprise.” “History is littered with examples of industries that, at their peril,” did not respond to a changing society, the report warned. New technology and global competition mandate a fundamental transformation of education institutions.

In the wake of the University of Virginia’s Board of Visitors’ decision to remove university president Teresa Sullivan in 2012, the board’s rector at the time, Helen Dragas, asserted that the institution was facing an “existential threat.” The times, Dragas claimed, call for a bold leader willing to impose “a much faster pace of change in administrative structure, in governance, in financial resource development and in resource prioritization and allocation” than was Sullivan. “The world,” Dragas proclaimed, “is simply moving too fast.”

Old-Fashioned Reforms

Policy makers and university administrators who advocate disruptive innovation are right that all institutions -- and colleges and universities are no exception -- must account for changing external environments. And no institution is ever static. But their proclamations to adapt or die ignore the fact that human environments are the products of human agency. Society is a human construct, not a natural process. Institutions can shape as well as reflect the society and culture around them. True courage is trying, even in the face of hostility and skepticism, to defend what colleges and universities do. But giving in is easier.

In fact, despite all the talk of innovation, what is perhaps most surprising is how familiar and uninteresting recent models of disruptive innovation really are. Yes, they use computers. But the structures of institutions like Western Governors University, Southern New Hampshire University’s College for America and the ever-expanding Arizona State University online programs are really premised on ideas that date back to the industrial revolution. Managers control the organization. Labor is subdivided into discrete tasks (what WGU calls the disaggregated faculty model) and alienated from the products of their work. In turn, those products -- including curriculum and assessment-- are standardized and work routinized. This is quite old-fashioned.

In contrast, forward-looking companies try to emulate traditional colleges and universities by building large, idyllic campuses where people can interact and be creative. “There is something magical about sharing meals,” said former Google CFO Patrick Pichette a few years ago on why Google discourages telecommuting. “There is something magical about spending the time together, about noodling on ideas, about asking at the computer, ‘What do you think of this?’” That sounds a lot like the traditional college experience, but, in new-model universities, fundamental aspects of traditional ones -- such as personalized teaching, green lawns, academic freedom, shared governance, meaningful exposure to liberal arts education, and time and autonomy for reflection -- are deemed irrelevant.

Take the argument that Michael Crow, president of Arizona State University, made in his co-written 2015 book, Designing the New American University. Because expanding access to college degrees requires innovation, and because they wanted to move fast, ASU embraced technology to outsource teaching through, in Crow’s words, “partnerships to expand and improve the online learning experience, utilizing over 100 third-party tools and services.” Instructional designers work with faculty to design online courses that faculty members once taught. “Coaches,” teaching assistants and adjuncts teach online to students who might have had access to professors on campuses.

Paul LeBlanc, president of Southern New Hampshire University, celebrates the same reforms at his institution’s online College for America. In a 2013 statement to the U.S. Senate Committee on Health, Education, Labor and Pensions, LeBlanc told senators that “not having traditional instructional faculty is not proving to be a problem. We use academics to construct the learning and to do the assessments, but not in any traditional instructional role. Students, working with the aid of a dedicated SNHU coach (or adviser), access rich learning content, their own resources and each other, and it is proving very effective thus far.”

What makes such reforms so hard to resist is the presumption that the world is moving too fast to take stock. All hands must be on deck. The ship is sinking. Legislators are impatient. Faculty members are complacent. But is this true? Is the world changing so fast that all the things colleges and universities are supposed to do and have done have been rendered irrelevant? Are the forces of disruption really that powerful?

The Value of Continuity

To even start answering these questions, we must examine the assumption that all of society is changing too fast for reflection. How do we know that today is moving faster than yesterday? Are we not just importing a storyline that might be true for one sphere of our lives -- technology -- into other spheres where change is slower? Does a story that emanates from Silicon Valley belong or even explain change elsewhere? And is all human activity subject to the same accelerating forces as technological innovation? Can we speed everything up? Should we?

In his 2008 essay “Social Acceleration: Ethical and Political Consequences of a Desynchronized High-Speed Society,” sociologist Hartmut Rosa raises the concern that our world is experiencing desynchronized rates of change. He argues that while technological change may be happening very fast, other realms of our shared lives cannot equally be sped up. That includes, he notes, democratic politics. Bold leaders who believe that the world is changing fast have little patience for “the political system’s fundamental inability to accelerate.” But “democratic political decision making” is always slow, Rosa writes, because “processes of deliberation and aggregation in a pluralistic democratic society inevitably take time.”

The same is true for higher education. Some parts of our world may be changing fast, but it’s not clear that one can speed up the rate of change in higher education without significant damage. Yet the narrative of speed, imported from the world of technology into the world of education, serves powerful interests. When we believe we have no time to slow down because the world is changing too fast, we prevent ourselves from asking what kinds of institutions we need. We raise our hands in surrender to what appear to be inexorable forces but are really human aspirations. To those who believe that all spheres of society are changing as fast as technology, there is no time to wait for those not already on board. The only way to stay afloat is to allow visionaries at the top to act boldly. Other people should follow along or be left behind.

Innovators dismiss those who might want to slow down and think, or who worry about what might be lost. We must not sit around and watch faculty members “deliberate while shifts in policy, culture and technology flash by at warp speed,” ASU’s Crow proclaims. There is no time for shared governance.

What these visionaries ignore is that institutions and ideas do not become outdated just like Apple computers. Moreover, disruptive innovation is a language of change but not always a description of the reality of it. As Harvard University historian Jill Lepore has written, disruptive innovation is “not a law of nature. It’s an artifact of history, an idea, forged in time; it’s the manufacture of a moment of upsetting and edgy uncertainty. Transfixed by change, it’s blind to continuity.”

But we need continuity, too. Indeed, higher education institutions’ capacity to evolve slowly may be one of their chief virtues. Yes, today’s colleges and universities are vastly different than those of centuries past. But, as disruptive innovators condescendingly remind us, much remains the same. It is this ability of institutions to create spaces insulated from fast change that enables them to maintain forms of knowing that might otherwise disappear, to invest in scholarship that takes decades to pay off, and to educate students with ideas and perspectives that are not always prevalent in public discourse.

If we truly had courage, we would not give in so fast. Colleges and universities today are changing too quickly, not too slowly. Tradition has not been strong enough to withstand external pressure.

In such a context, true courage requires saying that enough is enough. It requires defending the college or university as an academic institution. It requires making clear that some things are worth saving and even savoring -- that continuity has benefits. It requires attributing long-term trends, such as the erosion of tenure or the decline of the liberal arts and public funding, to human beings rather than to disruptive technologies.

If we had courage, we would celebrate the fact that academic life moves slowly. Research takes time. Teaching does, too. To educate a human being requires her or him to step outside of the busyness of daily life. Developing new skills and knowledge takes years. It is even harder to inculcate in students such intellectual virtues as curiosity.

Education is a slow but necessary effort to transform people. It cannot be rushed, at least if we take it seriously. As I wrote in a previous essay, “time is formative.” It harms universities’ research and teaching mission to give in to the narrative of speed, as Maggie Berg, a professor of English at Queen’s University, and Barbara K. Seeber, a professor of English at Brock University, both in Canada, also conclude in their recent book The Slow Professor.

If we had courage, we would acknowledge that education cannot be done by machines or be done too fast. We would argue, as do Daniel F. Chambliss and Christopher G. Takacs in How College Works, that true learning depends on the cultivation of personal relationships. We would conclude, based on the evidence Richard Arum and Josipa Roksa assemble in Academically Adrift, that the best way to improve student success is to put students on campuses that set high expectations and emphasize the liberal arts and sciences. Maybe we would invoke the work of cognitive scientist Daniel T. Willingham or biologist James E. Zull, who have explored why real learning is tough and takes trust and time. Perhaps we would even stand up for the humanistic and civic goals of liberal education.

In short, we would argue that all students deserve access to real campuses and professors. We would urge legislators to help all students, of any age or background, afford the time it takes to get a college education. We would note that this is particularly true for disadvantaged and first-generation students, who do not benefit from the kinds of reforms disruptors advocate, at least if we want to offer access to a meaningful education and not just to degrees.

Instead of making the case for what works, disruptors have lost faith that their colleges and universities can resist external forces of change. They thus seek to tear down the walls between the institution and the world, forgetting that those walls are not just problems but also solutions. By creating spaces for intellectual refuge and reflection, colleges and universities provide something rare and necessary for our society. Disruptors often portray themselves as heroic agents of change. In reality, they are giving in by giving up. To run from forces that seem too large to counter is human, but it should not be confused for fortitude nor moral courage.

These are hard times, no doubt, for higher education. Colleges and universities face many pressures. It will take a lot of strength to meet new needs and new environments without sacrificing the academy’s core principles and practices.

It will take some resistance, too. We must be sympathetic with administrators who are fearful of the future and feel powerless to change it. They, more than faculty members, must respond to legislators’ demands to offer more degrees cheaper and faster.

But those of us who -- as citizens, legislators, administrators, faculty members and students -- want to pass down the opportunities we have had to future students and professors, and who aspire to increase access to it for first-generation students, must have the courage of our convictions. We must remember what colleges and universities are for and ensure that those purposes are sustained, even as our institutions continue to evolve. In short, we must respond deliberatively, not out of fear that the world is moving too fast for thought.

Johann N. Neem, a senior fellow at the University of Virginia’s Institute for Advanced Studies in Culture, is a professor of history at Western Washington University. He is the author of “Experience Matters: Why Competency-Based Education Will Not Replace Seat Time.” His new book, Democracy’s Schools: The Rise of Public Education in America, will be published later this year by the Johns Hopkins University Press.

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Reflections on Inside Higher Ed's 2017 Survey of College and University Presidents (essay)

The most recent Inside Higher Ed survey of college and university presidents illustrates a disconnect between what presidents believe is occurring at their institutions and what is actually happening just below the surface among our student populations. Despite presidents’ impressions of the day-to-day experiences, all is not rosy, and student affairs administrators can provide presidents with a reality check when it comes to the good and the not-so-good circumstances and events that are transpiring.

Some of the issues that concern presidents most -- and those that we who work in student affairs believe should, in fact, concern presidents the most -- are often related to student behaviors and experiences outside of the classroom. Those are the areas of knowledge and responsibility housed in student affairs offices, and we can assist with the topics most associated with our field -- including equity and diversity initiatives, promoting anti-bias on campus, student engagement, and issues tied to student success, recruitment and retention.

The key to mining our expertise, however, is to have a realistic understanding of our areas of responsibility, and a plan for best accessing our expertise and our close connections throughout the institution. This allows presidents to make the strongest and best-informed decisions possible for their campus communities.

For example, the Inside Higher Ed survey found that “the vast majority of presidents describe the state of race relations at their college as either excellent (20 percent) or good (63 percent). More than three-fifths of presidents describe race relations at American colleges in general as fair.”

I’ve used the analogous data points from last year’s presidential survey when speaking to members of NASPA, the leading association for student affairs professionals, over the past year -- data that, the survey notes, are relatively unchanged from last year to this year. Not surprisingly, I’ve received a mix of gasps and chuckles, with many student affairs professionals hoping their presidents can realistically assess the status of race relations on their own campuses. NASPA’s survey of senior student affairs officers has consistently shown that diversity and race relations are among the top issues and concerns. It would be fascinating to see how students -- especially students from diverse backgrounds -- would rate their institutions, but I can safely bet that the “vast majority” would not rate them as “excellent” or “good.”

It is important to note that a lack of protest on a campus does not mean students and other community members are satisfied about race relations there. We shouldn’t be lulled into a false sense of security that we are meeting students’ needs solely because we haven’t faced protests. The absence of activism may simply mean those students aren’t activated yet. Student affairs administrators can help their presidents proactively engage with all students so that they have an accurate picture of the true state of the student body and its general satisfaction with the current campus climate.

The ways in which student affairs professionals can contribute counsel to a president are not limited to race relations or underlying diversity unrest. The survey shows that presidents are also worried about attracting and retaining all students, including underrepresented ones, and making dollars from tuition and state appropriations stretch farther than ever before. With only 52 percent of presidents “confident about their institution’s financial health over the next 10 years,” higher education will likely face additional cuts in the future.

If presidents are considering reducing support for student affairs functions, they do so at the potential peril of their retention efforts and to the detriment of their student satisfaction and graduation rates. When cutting costs, presidents should prioritize efficiencies and preserve the core opportunities and experiences associated with a college degree. They should turn to data to determine which experiences are contributing to students’ success and refrain from wholesale elimination of the programs and services that keep students moving toward graduation. Presidents should make changes to increase impact and maintain personal contact and engagement, which are key parts of the institutional experience.

A Gallup survey found that students were 1.6 times more likely to strongly agree their education was worth the cost if they were “extremely active in extracurricular activities and organizations,” 1.9 times more likely if they had a mentor who encouraged them to pursue their “goals and dreams” and 1.4 times more likely if they had a “leadership position in a club or organization such as student government, a fraternity or sorority, or an athletic team.” Student affairs professionals can make a difference in keeping our students on the path toward graduation and satisfied with their investment.

This weekend, the American Council on Education and NASPA kick off their respective annual meetings. With a preponderance of attendees of the ACE meeting holding the title of president or chancellor, I encourage them to think through how they can better tap the expertise housed in student affairs and make use of the experiences of their senior student affairs officer. The survey results from Inside Higher Ed aren’t surprising, but they tell me that student affairs officers need a seat at the table to provide perspective and advice as presidents tackle myriad difficult topics on behalf of today’s students.

Kevin Kruger is president of NASPA: Student Affairs Administrators in Higher Education.

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Protests (clockwise from top left) at U of Missouri, Claremont McKenna College, U of Iowa, Amherst College and Ithaca College
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Tuesday, March 14, 2017

How two Simmons College online programs became a multimillion-dollar venture

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At Simmons College, two online degree programs launched less than five years ago are about to become the greatest source of tuition revenue on the campus.

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