Back when I was in graduate school, my grandfather revealed to me that he decided to become an accountant in the midst of the Great Depression. One day, he said, when he was sitting in the New York Public Library, reading to forget his lack of food and employment, he gave up his dream of becoming an intellectual. He assured me that he was fine with his choice of a different profession than academia -- you can’t eat books, after all -- but confessed his deep satisfaction that his sons had become a philosophy professor and a doctor. I understood at the time that sharing this story was his way of supporting my own decision to pursue a Ph.D. in English and encouraging me to persevere, whatever the obstacles or difficulties. Later, I suspected it to be a cover story, but that’s neither here nor there.
My grandfather’s possibly apocryphal origin story has been on my mind since the Friday before our spring break, when a senior colleague joked about how much time we had spent in our monthly department meeting that week on money matters, of all things. “I wonder what my grandfather would have made of it,” I replied, going on to out myself as the grandson of an accountant. “It” was our 45-minute discussion of the proposal our Development and Awards Committee had taken the semester to formulate on the future of our department endowment, the Mary Louise White Fund -- a proposal my co-chair had actually drafted the week before she gave birth, I had edited, and the committee had examined, revised, and polished in a two-hour meeting that Monday. At the time, I took the fact that my colleague and I were joking about the departmental discussion as a sign that we had turned a corner on some of the issues that had arisen as the DAC clarified how the MLW Fund worked and began floating proposals on how and where to spend more of it. But since then, I’ve been wondering whether he also might have been alluding to my recent writing on the funding of public higher education over at my blog, Citizen of Somewhere Else.
The pseudonym I blog under is less than paper-thin -- I link to my professional web site on CitizenSE’s profile page -- so it’s entirely possible he was aware I’ve started a series of posts this semester that pick up where one of the first I ever wrote, a debate with a libertarian colleague on the wisdom of privatizing the State University of New York, left off more than two years ago. So far, I’ve contrasted the fortunes of the 76 colleges and universities in what I’ve come to call the Billion Dollar Endowment Club (BDEC) with my own university’s roughly $80M operating budget and $20M endowment, commented on the calls to hold the BDEC and other 4000+ colleges and universities in the United States accountable for spending 5 percent of their endowments annually, and made a few modest proposals to the BDEC itself:
- Support your graduate students and adjuncts better.
- Hire more full-time, tenure-track faculty members, not enough just to do most of the teaching the non-tenurable are now doing, but enough to reduce class sizes significantly.
- Put aside 1 percent of your capital gains each year to be gifted to the endowments of colleges and universities your institution thinks deserve the funding. (For your reference, Harvard’s endowment grew almost 20 percent from roughly $29 billion in 2006 to roughly $35 billion in 2007, while the 76th place institution, Tulane University, saw its endowment grow nearly 18 percent from $860 million to just over $1billion in the same time period. While the actual rates of return for an institution’s investments are not publicized, for the sake of easy math, let’s say that capital gains were responsible for $1 billion of Harvard’s and $100 million of Tulane’s growth. The two of them together would have $11,000,000 to disburse. Pretty soon we’re talking about real money.)
In calling on my colleagues in the BDEC to target investments in U.S. higher education where they believe they would have the most significant influence, I attempted to shift the national discussion on higher ed endowments from the relatively narrow (if symbolic and trend-setting) issues of access to and affordability of the upper reaches of the BDEC to the broader (and more difficult) question of what the colleges and universities in it could do to help the U.S. realize the democratic ideal that quality education ought not to be a class privilege.
My own institution, SUNY Fredonia, like many public regional universities around the nation, is perceived as being akin to a Wal-Mart, but is actually more like a Costco, and aspires to become something like a Target. (Or, if you prefer car metaphors, try Kia-Civic-Corolla.) But with fluctuating and largely declining state support, tuition policy firmly in the hands of the Legislature, and a multi-billion dollar state budget deficit looming, faculty here have become accustomed to doing more with less for quite a bit longer than my 10 years on the job.
This helps explain why it’s been so difficult for my departmental colleagues and I to wrap our collective heads around the concept that we should be spending more from a small-cap endowment like the Mary Louise White Fund (on things other than salaries and new lines, that is, in accordance with the donor’s wishes). Wrestling along with my colleagues over how to go about raising our spending rate from roughly $18,000 per year to $25,000 or more (thanks to a combination of capital gains and a lift in our allocation rate from the foundation that manages our endowment) brought home to me that what would be a rounding error for Harvard’s endowment managers would be a major investment in my own university. But it also made me realize just how difficult it is to balance competing goods and invest wiselyand creatively in one’s own students, department, and faculty. Even so, I can barely imagine the pressures for fiscal conservatism on those in the BDEC charged with budgeting and spending the unimaginable allocations from their endowments. So it occurs to me that as we all wait to see what results from the Higher Education Act reauthorization process in Congress this spring, I ought to supplement my bloggy exhortations to the BDEC to turn philanthropist with some specific proposals on how to go about spending 1 percent of investment earnings each year on colleges and universities outside the club:
- Decentralize the fact-gathering and recommendation process: Empower departments to research what colleagues in their fields in colleges and universities outside the BDEC are doing, issue calls for investment proposals, and make recommendations as to where their institution should target investments. While the ultimate recommendations ought to be decided upon through the governance process, going beyond the limitations of existing national ranking systems is too much work for any single university subcommittee.
Rationale: Faculty in the BDEC often have very little experience learning or teaching outside it. Putting the responsibility on them to map the big world outside their bubble would be an education in itself. Although some Ph.D. programs have taken baby steps over the past decade toward preparing their graduates to teach in the vast majority of colleges and universities in the U.S., researching the conditions of teaching and learning in them, along with the initiatives faculty there have taken to improve them, could have significant repercussions on the next steps in reforming the Ph.D. Moreover, with friends and former students scattered across the country, faculty can make use of their own social networks for information-gathering purposes, rather than relying only on reputations and rankings.
- Engage professional associations: To be sure, the research challenges facing any university subcommittee are only slightly mitigated by shifting the work to a department committee. That’s why professional associations should begin debating what criteria and data ought to be used to identify quality departments not by research productivity but by innovations in missions, goals, and requirements, by effectiveness of teaching and learning, and by the differences they make in their students’ lives and careers. Professional associations should identify best practices in the discipline, collect and disseminate data, and consult with BDEC departments in their own research and decision-making processes.
Rationale: Existing measures -- like the National Survey of Student Engagement and the results of the work the Modern Language Association does to track the average number of graduates per institution per year in English and other modern languages and literatures -- are a decent start, but more needs to be developed and done. Discipline-specific centralization is a necessary counterpart to institution-specific decentralization. The potential benefits of such conversations in the disciplines are incalculable, but at the very least they will provoke debates over and clarifications of the underlying issues in a range of important and understudied areas, open up a new kind of work professional associations can do and new roles they can play, and help formulate fundamental principles and practices for colleges and universities that decide to spread their wealth. Further, such a shift could help transform the discourse of accountability and practice of assessment and accreditation by encouraging faculty in the BDEC to critically examine and engage them in an ongoing, focused manner, not to mention contribute toward building positive incentives for risk-taking into these systems.
- Think nationally, act locally: As workers within tax-exempt institutions located in specific states and cities, faculty in the BDEC should pay particular attention to their locales and regions when considering how to differentiate their institution’s philanthropical mission from those of their peers. Right now, probably fewer than 30 institutions can afford to invest on a national scale, but everyone in the BDEC can begin comparing nearby colleges and universities to the best ones further away, department by department.
Rationale: Given how successful many in the BDEC -- whether private college or university or public flagship -- have been at siphoning state and federal support from the rest of the higher education system in the U.S, these institutions have an obligation to give back to the local and regional institutions most directly affected by their success. Of course they can attach strings to such investments so they’re not empowering rivals at their own expense -- for instance, mandating that donated funds go not to the general endowment or student aid but are used only for reducing class sizes, hiring more tenurable faculty, or investing in educational technology -- but they should still make it a priority to improve the quality of post-secondary education in their county, state, and region.
- Strike a balance between merit and need, focus and dispersion: Institutional flexibility and mission differentiation is a necessity when it comes to weighing these competing goods. Some colleges may decide they can make the biggest impact by lending their prestige and giving their money to a small number of under-recognized institutions each year; others may decide a micro-grant strategy brings more bang for the buck.
Rationale: Since there is no obvious right strategy here, each BDEC member should make its own call on how to target its philanthropy after consulting the relevant research on these matters.
One of the things my grandfather impressed upon me from a very young age is how easy it is for the wealthy to avoid paying taxes. That’s why I’m not confident that government mandates on endowment spending -- “prove you’re spending 5 percent or more each year or lose your tax-exempt status” -- would work the way they are intended. By the same token, the bipartisan approach to controlling costs and improving access and affordability in the current reauthorization of the Higher Education Act passed by the House and being considered by the Senate runs the risk of putting into place perverse incentives for colleges and universities to rely even further on nontenurable teaching faculty. The system I am proposing would not only work better than any endowment-revenue-sharing plan modeled after professional sports leagues or NCAA-ratified agreements, but it could also be put into motion immediately, without years of complex and contentious high-level negotiations.
As more and more colleges and universities join the BDEC and target investments of 1 percent of their endowments’ capital gains each year across the country, as more and more of those outside it reimagine and transform themselves to compete for this new opportunity for endowment growth, and as more and more students, parents, taxpayers, journalists, and politicians pay attention to this positive feedback loop, the system of higher education in the U.S. and the students and communities it serves can only benefit. The BDEC should follow my grandfather’s example. There’s nothing wrong with intellectuals spending time on money management, much less wealthy institutions taking concrete steps to help others realize their dreams.
Bruce Simon is an associate professor of English at the State University of New York at Fredonia, a former chair of the university's Planning and Budget Committee, and a former vice president for academics in the Fredonia chapter of United University Professions, SUNY's faculty union.
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