Published on 2014/11/10

Going Private: Why Public Institutions Are Considering Crossing Over (Part 2)

Going Private: Why Public Institutions Are Considering Crossing Over (Part 2)
Private institutions have the capacity to respond quickly to market demands, create programs that will meet student needs regardless of competing institutions, and ultimately serve more students.
This is the conclusion of John Ebersole’s two-part series discussing some of the challenges public institutions face and reflecting on his own institution’s experience of crossing over from a public to a private not-for-profit institution. The series is a response to UMUC’s recent announcement that they are considering such a move, discussed by UMUC President Javier Miyares in this exclusive EvoLLLution Q&A. In the first installment, Ebersole outlined some of the significant pressures facing administrators at public institutions today. In this conclusion, he discusses his own experience and Excelsior’s move to the new model.

Today, I have the distinction of leading one of the few institutions to have successfully made the transition from public to private. While never tax-supported, Regents College (Excelsior’s prior name) existed as a “non-appropriated fund activity” within the New York Department of Education. It was created by grant funding from the Carnegie and Ford foundations in 1971 and, unlike Empire State, which was launched at the same time, Regents was placed under the direct control of the State’s Board of Regents (Empire State, on the other hand, was and is administered by the SUNY System).

Thanks to public criticism of an apparent conflict of interest (in that the Regents both oversaw all of New York education and simultaneously operated an institution in their own name), my predecessor was able to negotiate a separation from the Regents and the Department of Education. The college was issued an independent charter as a private not-for-profit in 1998 with the stipulation that its name would be changed by 2001 (there was to be no future confusion as to its independent status).

At the time of its divorce from the Regents, the college had enrollment of just over 12,000 part-time students and revenues of $16 million. Today, those numbers are nearing 40,000 in head count, and $90 million in revenue.

While still subject to the general oversight of the Regents and the Department of Education, as are all New York schools, colleges and universities, Excelsior now has the ability to set and change its tuition and fee structure, serve students anywhere in the State, or around the world, and engage in enrollment and business development activities without second-guessing or prior approval by external bodies, regardless of what others may be doing.

In addition to greater freedom of decision-making, the college is also able to respond quickly to such needs as the growing demand for educated cyber-security professionals, nuclear technicians and next-generation public sector employees. It is also able to hire and compensate talent—faculty and staff—in ways not possible as a public institution.

Finally, as we face growing concern around the cost of degree completion and higher education generally, we have found that we can contain costs and increase service levels when we have predictable control over expenses, sources of revenue and use of reserves. As a result, Excelsior has kept its average annual per-student revenue (total revenue divided by number of students served) under $2,200 per year (See IPEDS data for 2013), while adding to reserves.

Critics will argue that in making the leap from public to private, an institution is no longer as accountable as when overseen by the state. Yet, close examination does not support such a view. While UMUC may be meeting a higher level of accountability in its current status, its future is being endangered by bureaucracy.  Who is served if the end result is an inability to compete? And why is there an assumption that public universities, receiving less and less public support, require more oversight, regulation and control?

As we see in other sectors of our society—with freedom comes prosperity. By this, I do not mean freedom from all regulation or oversight. No one familiar with New York’s regulatory environment would ever suggest that it is laissez-faire. Nonetheless, its private colleges and universities (not its overly-regulated public ones) are among the best in the world. It is possible to have a greater level of autonomy and an expectation of institutional responsibility and accountability. The time has come, however, when we need to re-balance the scale.

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Readers Comments

Adam Wilson 2014/11/10 at 9:16 am

Bureaucracy has always been a hobble to institutional efficiency, and this just goes to show that there are many practical reasons to do whatever it takes to cut through that bureaucracy. The end result is better education and better accessibility, which should be two of any institution’s top priorities.

Mike H 2014/11/10 at 12:55 pm

I think there’s a bit of an obsession with the idea of public accountability without a comprehensive understanding of what that means. If all of the so-called oversight is just impeding an institution’s ability to do it’s job properly, then it’s certainly time to rethink what kind of oversight and regulation is actually going to be beneficial.

Alison King 2014/11/11 at 10:56 am

I see some good points, but I don’t think it’s time to give up on the public education model just yet. If public institutions are feeling a need to go private just so they get the flexibility they need to serve students and keep costs down, then perhaps that should form the starting point of the conversation on how to reform public oversight so that it fulfills its mandate of holding schools accountable without directly impeding them from doing their jobs.

Xavier Fleming 2014/11/11 at 11:59 am

It’s really interesting to think about competition from the perspective of official limitations.

I’ve heard about similar situations to what you discussed in your first post – not being able to run programs in different cities because it creates competition for a sister school. It’s absurd and it breeds complacency.

D. Terry Rawls 2015/01/06 at 11:37 am

You’ve done some remarkable things with Excelsior John. Thank you for a very interesting and informative pair of articles!

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