Questions from a Provocateur

January 10, 2006

Somehow I missed the meeting where the nation decided to exit public higher education. I was, after all, chief financial officer of a public university.

This is no fantasy. This drama is under way across the nation.

The story line so far is that healthcare and public safety costs finally have squeezed out higher education. Institutions will always find ways to survive. The casualties are the poor students, with the ability but neither the money nor the savvy to navigate falling student aid and rising tuition.  

The meeting we need, which no one has called, has this agenda: Why aren’t we discussing the fact that scrambled state and federal priorities are shutting down public higher education and strangling access? And preventing creation of a decent work force? 

Some of the leading scholars of higher education – people like Mike McPherson, Morton Owen Schapiro, and Tom Kane, participants in the Forum for the Future of Higher Education -- have clearly shown how soaring costs of Medicaid and infrastructure are pushing higher education out of the food chain of state general funds. Those forces are colliding to shut down the public university system in this nation, preventing thousands and thousands from leading self-supporting lives. We all know this and yet no one has a plan to respond.  

I learned this the hard way when I was CFO of the University of Hawaii system, an $800 million, 45,000-student, 10-campus public system for a few years, during a notorious hurricane between the president, the governor and the Board of Regents. 

The funding issues were the underlying driver of the tensions there. And all 50 states had the same issues. Yet no one state was talking to the other. Or to the federal government. Not for lack of interest. The avoidance arose from fatigue, from lack of skill and, to a large degree, lack of courage.  

No one seems to be focusing on this crisis or crafting a plan to deal with it. The higher education associations are busy fighting for every dollar in current reauthorization bills. Although this is a national problem, it plays itself out most intensely in individual states, And the tension involving Medicaid and state general funds and tuition becomes another zero-sum games at the state houses, where there is no more money.  

My goal is to pose a few irreverent questions to  shake loose better thinking. Here goes.  

Point: Who among us is accountable for those who are not now in college but who ought to be? Those who have the ability but not the money or the savvy to navigate the system? No one. Why not? In education discussions, a balanced institutional budget, public or private, is the operating metric. If the institutions are operating and solvent, no one asks who is not enrolled. As a society, shouldn’t a measure include those able students who are shut out?  

Point:  Some say, looking to the Founding Fathers who left education out of the Constitution, that the U.S. shouldn’t have a national higher education policy. I’d say we already do. 

I’ll illustrate by picking on Williams College and on Yale. My schools. I know they can take it. The implied federal subsidy per student at Williams and Yale is somewhere between $25,000 and $35,000 per year. I get that figure from conservative estimates of the tax-exempt endowment returns and of the tax-deductible donations each year. I am a CFO. Those are the numbers. This is at least twice the cost for a student at any community college.

Our national policy, then, is that the indoor golf-driving nets at Williams, built by tax-deducted dollars, are more important than Pell Grants for community college students working a night shift and going to school. No one has changed the federal tax policy here lately. In federal debate, Pell Grants are always at risk and eligibility changes often.  

Point: Commercial-bank interest subsidies for student loans are also more important than Pell Grants for those community college students. That’s our current national policy.  

Point: Our national policy is that we can’t find more money for student aid. Yet billions appear for Katrina overnight. This may be deficit spending and raises all sorts of questions to debate. It is our policy that Katrina is more important than creating a work force to sustain the nation.

Point: What about indirect-cost reimbursement for federal research?  This varies from 36.5 percent at the University of Hawaii to 60 percent at many fancier schools. This means that the MIT Stata Center, designed by Frank Gehry at who knows what per square foot, is more important than a Pell Grant for community college student. Why not a more modest building in exchange for a few more $350 single-mother childcare Pell Grant payments? So the single mother can stay in school.
I wish I were making this up.  

Next point: This is about money. The debate within higher education is to justify the costs, not to examine the cost fundamentals.  

The drivers, higher education leaders say, are health insurance, wireless Internet fees, premium dining plans. While funding drops, the argument goes, costs have to rise. What, though, is the fundamental cost driver of higher education? Isn’t that the unexamined assumption that a degree must be four years worth of credits? Which most students cannot complete even in five years? Why must a college degree be four academic years and 32 credits, one semester at a time? That model is from the 14th century at the University of Bologna. The pedagogical design constraint in that era was the shortage of books. Would we send an injured or sick child today to a 14th century hospital? Is that what we are doing in higher education?  

Point: The past 50 years have produced what scientists and educators call the cognitive revolution. We know so much more about learning. How could we use that knowledge to show young people all that excites our best scientists and scholars in their research every day? Why do we ignore what we know about knowing?  

Point. Politics. I’ve yet to meet a college president with a plan to improve national funding for higher education. Meetings in Washington are often about specific earmarks (read: pork) for one institution. Higher education leaders, I believe, underestimate what they can accomplish to the good, for everyone. I can cite no better example than from conversations that I’ve had as part of a Federal Reserve of Chicago project. Many of the Midwest’s leaders have expressed concern that there is nothing they can do. The problems are just too huge. I disagree, I’ve said. Look at their Congressional delegation: Michigan. Illinois. Wisconsin.  Indiana. Iowa. Even presidential hopefuls among your senators. 

Good ideas count. Help these senators and members of Congress. Give them something to propose. Other states are missing the same chance to lead.  

Point: As a society, we know how to educate people. But we don’t need a Manhattan Project or all sorts of high-risk research to start. We know what to do. Why not take a swing at it?  

Point -- or question. Have university CFOs, myself included, failed? Miserably so, I’d say. It’s our job to attract sufficient capital to the work. That’s not happening. Operating or long-term. 

Why can’t we CFOs demonstrate the value of higher education in a way that leads to investment? Isn’t this our job? I’ve never met a finer group than those CFO colleagues. As a profession, we have let the job become budget triage, not capital formation. I don’t know why, but I can’t interest the National Association of College and University Business Officers in a talk on why we’ve failed. As a profession, we have to face down this failure. These funding issues are our problem.  

Point: Do we know our customer? If there are any Gallup-type surveys on what students want in education, I haven’t seen them.  I do not mean dropping standards or giving away the store. How can providers, colleges and universities, help? Why do we know more about how much caffeine students want in what form each day than we do about learning preferences? Look at what this young population has done to the music industry. No more albums. They want the music song by song.  

Point: What about innovation? Strong economies need innovators. Educators must set the example. I don’t mean to replace faculty. Again, what’s the opportunity here? Look at the iPod and education. My daughter carries her language lab for Arabic with her. Look at the new short books, No-Nonsense Guides or The Oxford series A Very Short Introduction to dozens of topics, from A -- Ancient Philosophy to W – Wittgenstein, with stops at Darwin, Descartes, Design, Intelligence, Music, Shakespeare and Socrates. What about the Quick Study Bar Charts? At least the new dean of my Yale School of Management ought to be alarmed at how good that $4.95 Management guide is. Why does so much curriculum restate what’s available elsewhere? What about all the new skills we need?  

These tools are not a substitute for a degree. They are not the quality of a seminar with a great teacher. These tools are excellent sources to topics once available by the semester only.  What is the opportunity for liberating faculty here?  

Point:  Where are the students? They don’t seem even to vote.  To every student who came to my office with a complaint, always justified, I asked, “Are you registered to vote?” Never. Puzzled looks at what difference that made. No one has greater direct, immediate interest in voting than a public college and university student, I would explain. A few hundred postcards to the statehouse can get the money for repairs. A few thousand would change the world. Whatever I said was wrong. Only one listened.  And he did, after a year, end up with a million dollar earmark from the governor for dormitory work.

Point: And this one troubles me most of all. Are we talking about education or about politics? Do we really want everyone to have a great education? Cynics might say that as a society we’d rather pay welfare and Medicaid than for an education. This is less competition for the rest of us. Is that where we are? Even a cynic would have to admit that education is cheaper (read: lower taxes) than social services. 

We are stuck. I can’t describe the U.S. higher ed situation better than my colleague Adam Kahane, in his excellent, slim and readable book Solving Tough Problems – An Open Way of Talking, Listening, and Creating New Realities (Berrett-Koehler Publishers, Inc., 2004). 

Problems are tough because they are complex in three ways.  They are dynamically complex, which means that cause and effect are far apart in space and time, and so are hard to grasp from firsthand experience. They are generatively complex, which means they are unfolding in unfamiliar and unpredictable ways.  And they are socially complex, which means that the people, and so the problems, become polarized and stuck.

Point: Last one. So what? Why does it matter if we support national policies that shut out poor students? How can we not support the typical student at a state college and community college? We all know these students. They are 25. They have families. They work the night shift at McDonald's to contribute to the rent for their parents and grandparents. And then still, these students get to school. Every day they display motivation beyond the imagination of anyone at any of my schools. How can we hold them back?  

I know well that my passion can run ahead of the data. I test myself wherever I go. I’ve found that the person serving coffee or pumping gas or bagging groceries is usually a student, regardless of their age. I mean the airport van driver who wants to go to school but hasn’t heard of a Pell Grant. Ask these people. That’s why we have to do better.


Wick Sloane is Chief Operating Officer of Generon Consulting in Massachusetts and a visiting fellow on higher education finance at the Federal Reserve Bank of Chicago. This essay is adapted from a speech he gave at a meeting sponsored by the bank in November. The views expressed here are his own.  

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