Published on 2014/10/09
AUDIO | Culture and Past Success Blocking Efficiency-Minded Changes
It’s critical that higher education leaders recognize the shifting dynamics of today’s postsecondary marketplace and begin to focus on reducing operating costs without impacting quality.
The following interview is with Joni Finney, director of the Institute for Research on Higher Education at the University of Pennsylvania. A former vice president of the National Center for Public Policy and Higher Education, Finney is an expert on the rapidly changing postsecondary space. She recently shared her thoughts on the importance of developing a long-term solution to the significant challenges facing higher education institutions today, rather than relying on short-term fixes such as tuition freezes and temporary funding boosts. In this interview, she expands on those comments and shares her thoughts on how focusing on efficiency could be the silver bullet postsecondary leaders are seeking.

Click here to read key takeaways.

1. How do efficiency gaps impact the capacity for higher education institutions to serve their students?

First of all, less efficient systems will result in unmet demand for higher education. That in turn contributes to a globally competitive workforce that is not ready to enter and be productive. We’ve already seen these trends in terms of the United States flipping down the international rankings to about 12 in terms of the production of the associate baccalaureate degrees versus other developed countries.

2. What will it take for higher education leaders to seriously consider implementing efficiency-creating changes?

We need very strong fiscal incentives and accountability mechanisms at both the state and federal levels. Right now, we’re working with a 20th-century model of finance to address 21st-century needs. In order to get the attention of college leaders, we need to set up a public policy infrastructure that encourages them to do business differently.

3. What are a few of the biggest roadblocks that typically stand in the way of an institution successfully implementing efficiency-creating changes?

To a certain degree we’re victims of our own success. We’ve been so successful in solving problems on the revenue side of the ledger — almost exclusively, we’ve been able to raise tuition, raise additional funds, somehow — as state appropriations decline.

Now we really need to look at the expenditure side of the ledger and see how that aligns with the public priorities that states and the federal government have. Another big block we have is a generation of college presidents and board members who grew up in a time of great expansion of higher education. It was ‘raise more money’ and ‘spend more money.’ Now the agenda is to change and meet public demand and use the existing resources we have much more efficiently. Quite frankly, the leaders we have in place were not trained to do this job.

4. Is there a need for state and federal governments to play a role in pushing institutions to become more efficient, especially when both bodies — through appropriations for public institutions and financial aid money — have so much invested in higher education?

There is no one else, there’s no other entity, that can articulate the public interest like either a state government or the federal government can. We too often assume the sum total of individual institutional interest equals the public interest. That’s not the case. Institutional priorities may be very different from public priorities and they may, in fact, work at cross purposes. For instance, the federal government plays a big role in financial aid but they have limited knowledge of how that aid, particularly student loans, impacts student progress and degree completion. The federal government doesn’t work very well with states to incentivize state investment in need-based financial aid. In some cases, states invest heavily in merit-based programs, working at cross purposes with a federal student financial aid program that’s primarily need-based.

The other area where we need to really focus (at least federal efforts) on is around research. We need more federal targets, federal funds, to leading universities. Everyone wants in the research game because there’s more prestige, there’s more money, there’s more recognition. For instance, the state of Texas hopes to encourage seven new competitive research universities. This is at a time of significant educational need in the US. These public policy goals can work at cross purposes so that we need not give up research excellence in order to educate more people; we just have to make sure we keep it focused and maintain the quality, and then focus state dollars on developing the talent of the people.

5. Is there anything you’d like to add about the importance of operational efficiency and streamlining internal processes to the success and long-term viability of higher education institutions?

We can realize a great deal of efficiency in the academic production side of the house. We have realized some efficiencies on the administrative side through technology, but on the academic side, technology has been used primarily as an add-on. We need to rethink how we use technology to not only reduce the cost of education but [to] improve [its] quality.

That’s quite a challenge. We tend to come out with silver-bullet kinds of ideas. MOOCs [Massive Open Online Courses] were all the rage last year; now everybody’s skeptical of MOOCs. We know technology’s going to play an important role and we need to focus very seriously on the role of technology and how it can help us deliver more education to the students we need to serve.

This interview has been edited for length.

– – – –

Key Takeaways

  • Institutions have relied on changes to the revenue side of the ledger to make up for declining public appropriations, but now they need to reconsider the expenditure side.

  • Federal and state government bodies need to play a role in supporting efficiency changes within higher education institutions.
Print Friendly
CRM-V

Readers Comments

Alice H. 2014/10/09 at 1:42 pm

As education affordability becomes a bigger concern, I believe institutions will necessarily undergo that culture change to start looking at ways to decrease expenditures. The current model is simply unsustainable, and many will be priced out of postsecondary education if institutions continue to deny the need for change.

Jessica Monohan 2014/10/09 at 3:20 pm

I wouldn’t make a blanket statement that only the expenditure side needs to be focused on right now. I think there are issues on both the revenue and expenditure sides that need addressing. It’s true that it’s no longer a simple formula of raising tuition to cover operating expenses; like Finney says, this is unsustainable. However, I think a very real concern on the revenue side is that public funding has decreased and even endowments are in trouble following the 2008 financial crisis. Changes do need to be made here, although I won’t venture to guess what they might be. Now, on the expenditure side, there’s certainly a need to identify efficiencies and reduce services/programs for which there’s little demand. But I wonder if changes to the expenditure side would be enough to offset the challenges of the revenue side. Something worth considering.

Leave a Reply

Your email address will not be published. Required fields are marked *

[if lte IE 8]
[if lte IE 8]