Cornell University to update twenty-year old purchasing system and to shop online only with preferred vendors (Kelley, 2009).
Cornell University President David Skorton gives the directive to modernize the purchasing system software, do business only with preferred vendors, and to assess spending to identify new areas of cost-containment with hopes of a potential savings of $40 million a year (Kelley, 2009).
My Opinion
This new way of thinking for purchases and a new online system for making those purchases may require some "buy-in" from the university community, but will make a "big payoff" through future savings. By shopping around only with preferred vendors, there is a built-in method of cost-containment because of previously negotiated pricing. Savings realized through renovating an outdated mode of purchasing materials could help to absorb budget cuts that would have otherwise been absorbed by university personnel staffing and salaries.
Reference
Kelley, S. (2009). Skorton announces directive to reform purchasing system; could yield savings of up to $40 million. Cornell University Cornell Chronicle Online. As retrieved on November 6, 2009, from: http://www.news.cornell.edu/stories/Oct09/Procurement.html
Friday, November 6, 2009
Cost-Saving Miseries Love Consortiums
Colgate University in New York has recently partnered with five other New York area to form a consortium.
According to O'Keefe (2009), the goals of the consortium are:
• Harnessing technology to allow for greater collaboration in all areas, with emphasis on shared human resources, high end computing collaboration and advanced computer infrastructure.
• Acquiring of goods and services, including benchmarking, joint purchasing and risk management.
• Promoting sustainable institutional environments, including recycling operations and alternative energy supplies.
• Maximizing student engagement, including wellness programming, alcohol and substance abuse intervention strategies, responses to differential learning styles, and collaboration among teaching and learning centers.
• Shaping workforces, including faculty development, staff development, and preparation of future academic leaders.
• Fostering intercultural literacy, including strategies for ensuring students are prepared to live in a global and diverse world.
By joining the other five universities, Colgate University hopes to realize cost savings by being a member of a larger organization with more leverage and buying power.
My Opinion
A consortium may hold the answer of cost-savings, but leave several questions behind: Is decision of the consortium binding for all members, if so, how is it being monitored? How long should the consortium be formed and in operation? What legal, political, and monetary issues arise from consortium membership? How does the individual member institution maintain its identity while developing a consortium identity?
Reference
O'Keefe, T. (2009). Colgate, five colleges to explore cost-saving steps. Colgate University: News and Events Blog. As retrieved on Novmber 6, 2009, from: http://blogs.colgate.edu/2009/07/colgate-five-colleges-to-explo.html
According to O'Keefe (2009), the goals of the consortium are:
• Harnessing technology to allow for greater collaboration in all areas, with emphasis on shared human resources, high end computing collaboration and advanced computer infrastructure.
• Acquiring of goods and services, including benchmarking, joint purchasing and risk management.
• Promoting sustainable institutional environments, including recycling operations and alternative energy supplies.
• Maximizing student engagement, including wellness programming, alcohol and substance abuse intervention strategies, responses to differential learning styles, and collaboration among teaching and learning centers.
• Shaping workforces, including faculty development, staff development, and preparation of future academic leaders.
• Fostering intercultural literacy, including strategies for ensuring students are prepared to live in a global and diverse world.
By joining the other five universities, Colgate University hopes to realize cost savings by being a member of a larger organization with more leverage and buying power.
My Opinion
A consortium may hold the answer of cost-savings, but leave several questions behind: Is decision of the consortium binding for all members, if so, how is it being monitored? How long should the consortium be formed and in operation? What legal, political, and monetary issues arise from consortium membership? How does the individual member institution maintain its identity while developing a consortium identity?
Reference
O'Keefe, T. (2009). Colgate, five colleges to explore cost-saving steps. Colgate University: News and Events Blog. As retrieved on Novmber 6, 2009, from: http://blogs.colgate.edu/2009/07/colgate-five-colleges-to-explo.html
Thursday, November 5, 2009
Departments and the "Academic Ratchet"
Economic troubles have hit higher education hard several times over the last few decades. This has put the higher education system on the defensive each time. Each time, colleges explain why they are “neither privileged havens of waste nor institutions so out of touch with reality that they are on the verge of losing their relevance” (Massy and Zemsky, p.1). Public funding has generally declined each year, resulting in fewer services, yet students must pay more in tuition. The result of this is that “students are being asked to pay more for less” (p. 2).
The net effect of this is that undergraduate education has “destructured”, which means that “the undergraduate curriculum over the last two decades [has been reorganized so that it has] fewer required courses, less emphasis on taking courses in an ordered sequence, and greater reliance on students to develop their own sense of how the various bits and pieces of knowledge they acquire in the classroom fit together into a coherent picture” (p. 3). Massy and Zemsky believe that destructuring “derives in part from the faculty’s own pursuit of specialized knowledge” (p. 3). The authors believe that this destructuring phenomenon has created economic consequences, such as increasing the number of courses offered by a department and the number of faculty hired.
The second effect of the economic troubles is that of the “academic ratchet”. This occurs when “faculty members increase their discretionary time (tie for pursuing professional and personal goals) largely by loosening their institutional ties and responsibilities” (p. 3). In other words, as more professors spend time on their own projects, they spend less time teaching courses. The problem with this that this does not always result in better teaching, and even if it did it wouldn’t increase someone’s salary or other compensation. There are too many other things that are high stakes, such as “research, scholarship, professional service, and similar activities, that a professor must do in order to remain employed—yet these activities aren’t as valued by those who pay for education (students, parents, government). The end result is that the professor spends more time on the high stakes activities, less time on actual teaching, thus resulting in students paying more for less all over again. This results in what the authors call “output creep”.
Source:
Massy, William F. & Zemsky, Robert. (1994). Discretionary Time: Departments and the “Academic Ratchet. The Journal of Higher Education (Vol. 65, No. 1), p1-22.
The net effect of this is that undergraduate education has “destructured”, which means that “the undergraduate curriculum over the last two decades [has been reorganized so that it has] fewer required courses, less emphasis on taking courses in an ordered sequence, and greater reliance on students to develop their own sense of how the various bits and pieces of knowledge they acquire in the classroom fit together into a coherent picture” (p. 3). Massy and Zemsky believe that destructuring “derives in part from the faculty’s own pursuit of specialized knowledge” (p. 3). The authors believe that this destructuring phenomenon has created economic consequences, such as increasing the number of courses offered by a department and the number of faculty hired.
The second effect of the economic troubles is that of the “academic ratchet”. This occurs when “faculty members increase their discretionary time (tie for pursuing professional and personal goals) largely by loosening their institutional ties and responsibilities” (p. 3). In other words, as more professors spend time on their own projects, they spend less time teaching courses. The problem with this that this does not always result in better teaching, and even if it did it wouldn’t increase someone’s salary or other compensation. There are too many other things that are high stakes, such as “research, scholarship, professional service, and similar activities, that a professor must do in order to remain employed—yet these activities aren’t as valued by those who pay for education (students, parents, government). The end result is that the professor spends more time on the high stakes activities, less time on actual teaching, thus resulting in students paying more for less all over again. This results in what the authors call “output creep”.
Source:
Massy, William F. & Zemsky, Robert. (1994). Discretionary Time: Departments and the “Academic Ratchet. The Journal of Higher Education (Vol. 65, No. 1), p1-22.
Tuesday, November 3, 2009
Cutting Costs to Raise Salaries
The University of Texas system has dealt with the budget crisis with a new approach. Instead of attempting to weather the current downturn with budget cutting, minimized layoffs, and no salary increases for any faculty the current UT President, William Powers Jr., said “tough choices are essential if the university is to make progress in its quest to compete more effectively for talent with other major U.S. research institutions”.
According an article in the Austin American-Statesman newspaper scores of jobs at the flagship campus in Austin are likely to be cut in the coming months as UT retools its budget in an effort to free up money for retaining and attracting top faculty members. And in the next few years, the job losses could run into the hundreds. Besides lecturers, some of whom are part time, the cuts are likely to affect some graduate students who draw salaries for serving as teaching assistants or assistant instructors. In addition, some university staff members already have been dismissed, and more stand to lose their jobs.
The decision was made to cut costs and use the savings to increase salaries of those faculty that are highly regarded and whose pay hasn't kept pace with the market and select female faculty members whose salaries lag behind those of men. According the American-Statesman article raises totaling $6 million will be restricted to tenured and tenure-track faculty members, who make up about two-thirds of UT's faculty. As a group, these professors are the highest-paid faculty members at the university, with full professors averaging $132,253 a year, associates $85,328 and assistants $81,800. Twenty-five to 35 percent of the tenured and tenure-track professors are expected to get raises.
Some of the cuts and proposals being made:
Dean Gregory Fenves stated that The Cockrell School of Engineering has dismissed 13 staff members, mostly in computer-related support roles. The layoffs, coupled with the elimination of 12 vacant positions, freed up $1.6 million - 8 percent of the school's $20 million operating budget - for targeted raises, new faculty members and research support.
The McCombs School of Business plans to lay off 20 people, or 5 percent of its staff, to underwrite faculty raises. The school's budget of about $90 million is projected to remain flat through 2013. But overall expenses tend to rise 2 to 3 percent annually, so additional savings will be sought by combining some billing and other back-office operations, according to Dean Tom Gilligan.
In the College of Communication lecturers and graduate assistants in will be losing their jobs. The number of lost jobs is still being determined by the departments in the college. Faculty in the department were required to submit updated resumes to be considered for salary increases.
The College of Liberal Arts, UT's biggest unit, could eliminate 78 to 300 employees, depending on whether the cuts fall mainly on higher-paid lecturers or lower-paid graduate assistants.
Kevin Hegarty, vice president and chief financial officer, stated for American-Statesman article “While you can always cut some fat, I don't believe there's that much fat to be had. You really have to rethink your core business model, and that's what we're doing."
Dean Gregory Fenves stated that The Cockrell School of Engineering has dismissed 13 staff members, mostly in computer-related support roles. The layoffs, coupled with the elimination of 12 vacant positions, freed up $1.6 million - 8 percent of the school's $20 million operating budget - for targeted raises, new faculty members and research support.
The McCombs School of Business plans to lay off 20 people, or 5 percent of its staff, to underwrite faculty raises. The school's budget of about $90 million is projected to remain flat through 2013. But overall expenses tend to rise 2 to 3 percent annually, so additional savings will be sought by combining some billing and other back-office operations, according to Dean Tom Gilligan.
In the College of Communication lecturers and graduate assistants in will be losing their jobs. The number of lost jobs is still being determined by the departments in the college. Faculty in the department were required to submit updated resumes to be considered for salary increases.
The College of Liberal Arts, UT's biggest unit, could eliminate 78 to 300 employees, depending on whether the cuts fall mainly on higher-paid lecturers or lower-paid graduate assistants.
Kevin Hegarty, vice president and chief financial officer, stated for American-Statesman article “While you can always cut some fat, I don't believe there's that much fat to be had. You really have to rethink your core business model, and that's what we're doing."
Reference
Layoffs loom amid UT belt-tightening. (Oct. 4, 2009). Austin American-Statesman. Retrieved October 30, 2009 from
http://www.statesman.com/search/content/news/stories/local/2009/10/04/1004utcuts.html
Sunday, November 1, 2009
Unit 4: Cost Problem: The Revenue-to-Cost Spiral
The revenue-to-cost spiral results in cost disease within higher education. In his article, Martin (2009) maintained that in private industry revenue-to-cost spiral occurs when "higher revenues induce higher costs and those costs are used to justify future calls for more revenue" (p. 3). Unfortunately, costs in higher education are generally capped only by the total revenues. In other words, unlike private industry, a college or university cannot spend more than it takes in - unless of course the administration wishes to appear incompetent. To make matters worse, there are generally no incentives for colleges and universities to minimize costs. Martin observed that higher education is similar to private industry in that "as revenue increases, faculty, administrators, and board members extract more surplus from the cash flows in the form of higher costs and then use those costs as justification for more revenue" (p. 12). The cycle begins again next year thus developing a never ending spiral between revenues and costs. This creates enormous pressure thus forcing colleges and universities to seek out more revenues rather than cut costs. Regrettably it is often the students who must bear the brunt of the costs through higher tuition. It is certainly easy to see how the revenue-to-cost spiral is a problem that contributes to the cost disease in higher education.
Reference
Martin, R. E. (2009). The revenue-to-cost spiral in higher education. Raleigh, NC: The John William Pope Center for Higher Education Policy.
Tecnhically speaking: A lining of silver savings in every cloud
In an October 22, 2009, commentary to the Campus Technology website, Ohio takes to the clouds, Ohio Board of Regents Chancellor Eric D. Fingerhunt outlines how the University System of Ohio has transitioned to cloud-based computing technology for its e-mail and office productivity by partnering with Microsoft.
Cloud computing (2009) is defined by Mell and Grance of the U.S. Department of Commerce, National Institute of Standards and Technology Agency, Computer Security Division, Computer Security Resource Center as:
a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.
Previously programs handling e-mail such as Microsoft Outlook and office systems package, Microsoft Office, had to be installed and supported by university computing technology staff. Now with the new partnership, those programs are hosted by Microsoft.
Microsoft will handle maintain, supporting, and updating the programs. Rather than installing those programs computer by computer, the University System of Ohio faculty/staff/student would connect to the program over the Internet.
The intended purpose of the transition to cloud-based computing is to realize cost savings from outsourcing, or as one commenter stated, "cloud-sourcing", the e-mail and office-systems programs.
My Opinion
It would be an interesting prospect to follow the University System of Ohio actual savings. In the short term, I could imagine the decreased expense of providing such services, but what happens later? In the future, would the rate to provide such service by "out-sourcing" eventually cost more than providing the service "in-house"?
References
Fingerhut, E. (2009). Ohio takes to the clouds. Campus Technology. Retrieved on November 1, 2009, from:
http://campustechnology.com/articles/2009/10/22/ohio-takes-to-the-clouds.aspx
Mell, P.; Grance, T. (2009). The NIST definition of cloud computing. U.S. Department of Commerce, National Institute of Standards and Technology Agency, Computer Security Division, Computer Security Resource Center. Retrieved on November 1, 2009, from:
http://csrc.nist.gov/groups/SNS/cloud-computing/cloud-def-v15.doc
Cloud computing (2009) is defined by Mell and Grance of the U.S. Department of Commerce, National Institute of Standards and Technology Agency, Computer Security Division, Computer Security Resource Center as:
a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.
Previously programs handling e-mail such as Microsoft Outlook and office systems package, Microsoft Office, had to be installed and supported by university computing technology staff. Now with the new partnership, those programs are hosted by Microsoft.
Microsoft will handle maintain, supporting, and updating the programs. Rather than installing those programs computer by computer, the University System of Ohio faculty/staff/student would connect to the program over the Internet.
The intended purpose of the transition to cloud-based computing is to realize cost savings from outsourcing, or as one commenter stated, "cloud-sourcing", the e-mail and office-systems programs.
My Opinion
It would be an interesting prospect to follow the University System of Ohio actual savings. In the short term, I could imagine the decreased expense of providing such services, but what happens later? In the future, would the rate to provide such service by "out-sourcing" eventually cost more than providing the service "in-house"?
References
Fingerhut, E. (2009). Ohio takes to the clouds. Campus Technology. Retrieved on November 1, 2009, from:
http://campustechnology.com/articles/2009/10/22/ohio-takes-to-the-clouds.aspx
Mell, P.; Grance, T. (2009). The NIST definition of cloud computing. U.S. Department of Commerce, National Institute of Standards and Technology Agency, Computer Security Division, Computer Security Resource Center. Retrieved on November 1, 2009, from:
http://csrc.nist.gov/groups/SNS/cloud-computing/cloud-def-v15.doc
Unit 4: Possible Solution: Private Colleges Containing Costs Through Student Employment And Other Initiatives
Public colleges and universities are not the only institutions seeking ways in which to contain costs. The National Association of Independent Colleges and Universities (2009) noted that private colleges and universities are implementing and even expanding practices that are designed to control operating costs, enhance efficiency, and give students a quality education at the lowest price possible. To accomplish such a task, several private institutions are controlling the high cost of having permanent full-time employees by replacing them with students while other schools are using more creative methods.
Rhodes College
Some private schools are using students as employees to control costs. Rhodes College in Memphis Tennessee is a good example of this approach. The institution's Student Associates program has been in place since 2004 (NAICU, 2009). After completing a rigorous selection process, students are placed in areas related to their academic field of study. The positions help solve departmental needs at a fraction of the previous cost and results in improved services, extended programming, and greater student satisfaction. Rhodes College generally pays students staff wages while reaping the savings associated with having permanent full-time employees. During the third year, Rhodes College experienced a savings of $725,000 with 60 students involved. This is a great way for students to gain valuable training and experience while helping colleges to cut costs.
Juniata College and Marquette University
Other private colleges and universities have replaced some of their full-time positions with students. The entire information tech support operation at Juniata College in Marion Alabama, for example, is run entirely by its students (NAICU, 2009). Students manage, direct budgets, and conduct research and development for new software or products. Likewise, Marquette University supplements its finance staff by hiring student accounting interns to apply classroom knowledge while providing a needed service. The data on how much these institutions saved has not yet been made available.
Unique Cost-Containing Methods
Rhodes College
Some private schools are using students as employees to control costs. Rhodes College in Memphis Tennessee is a good example of this approach. The institution's Student Associates program has been in place since 2004 (NAICU, 2009). After completing a rigorous selection process, students are placed in areas related to their academic field of study. The positions help solve departmental needs at a fraction of the previous cost and results in improved services, extended programming, and greater student satisfaction. Rhodes College generally pays students staff wages while reaping the savings associated with having permanent full-time employees. During the third year, Rhodes College experienced a savings of $725,000 with 60 students involved. This is a great way for students to gain valuable training and experience while helping colleges to cut costs.
Juniata College and Marquette University
Other private colleges and universities have replaced some of their full-time positions with students. The entire information tech support operation at Juniata College in Marion Alabama, for example, is run entirely by its students (NAICU, 2009). Students manage, direct budgets, and conduct research and development for new software or products. Likewise, Marquette University supplements its finance staff by hiring student accounting interns to apply classroom knowledge while providing a needed service. The data on how much these institutions saved has not yet been made available.
Unique Cost-Containing Methods
Other private colleges and universities are looking for creative ways in which to control costs. Adelphi University, for example, has installed a geo-thermal heating system in its residence halls (NAICU, 2009). This system has reduced the university's energy consumption by at least 30 percent. In a different situation, Clark University changed its budgeting system to one that is more enterprising. That is, certain departments are treated as self-containing business. This new budgeting approach has yielded an annual savings of 33 percent. Finally, Emory University has restructured itself by consolidating departments. In order to obtain the lowest prices and greater discounts, the institution is also combining outside contracts (for various services) when possible. Emory has just implemented this initiative and there is not data on their savings at this point.
Conclusion
By nature, the culture of higher education is not that of cost efficiency. Private non-profit and for-profit institutions are not immune to this. A recent article in the Chronicle of Higher Education, for example, reported on the high cost of attending private colleges and universities. While there is still a great deal that can be done to contain the costs, at least private colleges and universities are looking outside of the box for possible solutions.
Reference
The National Association of Independent Colleges and Universities (2009). Campus affordability and cost cutting initiatives. Retrieved October 31, 2009 from http://www.naicu.edu/special_initiatives/affordability/news
Cost Containment
In April, 2008, the American Association of State Colleges and Universities and SunGuard Higher Education published an article outlining research conducted through surveying AASCU member institutions. Over 114 AASCU institutions responded to the survey. Practices utilized to reduce cost containment are listed in the article.
Worth noting are the items listed that is keeping AASCU member institutions from containing the cost of doing business.
According to the survey:
Emerging Constraints on Cost Containment (AASCU and SunGuard Higher Education, 2008)
When asked about emerging issues in cost containment, survey participants are most likely to cite issues related to:
- Energy costs and energy management (36 percent)
- Benefits costs, especially rising health insurance costs (24 percent)
- Faculty and academic programming (22 percent)
- Staffing levels and salaries (12 percent)
Oftentimes, the discussion of finance in higher education, especially during difficult economic times is surrounded by issues involving faculty/staff employment and operating budgets. It was surprising to learn of the institutions response that "energy costs and energy management" was leading issue compared to other operational issues. Until recently, only little attention was paid to energy issues. Perhaps budgetary savings realized from operating in the "green" will keep higher education institutions out of the "red", and faculty / staff employment contracts away from slips of "pink".
Reference
American Association of State Colleges and Universities and SunGard Higher Education. (April, 2008) Cost Containment: A Survey of Current Practices at America’s State College and Universities . Washington, DC: American Association of State Colleges and Universities. Malvern, PA: SunGard Higher Education.
Unit 4: Possible Solution: Cutting Cost - What Can Students Do?
Perhaps one of the most critical issues facing higher education today is the "rising costs to attend college" (Dickeson, 2004, p. 1). Over the past several decades, tuition has continually risen faster than the rate of inflation. This has posed a serious problem for families whose incomes cannot keep pace. Much of the literature has been written on how colleges and universities can help contain costs. This posting, however, will focus on what students can do to help contain the costs at colleges and universities.
Academic Readiness
Perhaps one of the largest strains on higher education is to have students who are not adequately prepared for college work. With the assistance of their parents and guidance counselors, students should begin preparing for college as early as the eighth grade (Dickeson, 2004). Students can (and should) choose an academic plan of study that includes rigorous course work that prepares them for college. Such an approach should focus on finding ways to provide more support for students so that they will be prepared for college Rosenbaum (as cited in Dickeson, 2004) noted that "all students can plan to get a college degree; but if they are under prepared, they must be willing to repeat high school courses in college, spending the extra time and effort in non-credit remedial courses, with higher risks of failure" (p. 6). Having students who are academically ready can significantly decrease the need for remediation thus allowing colleges and universities to hold down those costs while preparing an edcuated workforce.
Participate in College Preparation and Bridge Programs
When possible, students should be encouraged to enroll in dual enrollment and advanced placement courses while in high school. Dual enrollment allows students to earn college credit while in high school thus decreasing the time needed to complete a degree program. Likewise, advance placement courses not only provide students with the opportunity to become college-ready but also a chance to earn college credit through the CLEP exam. The Department of Education (as cited in Coplin, 2006), for example, reported that "dual-credit courses are offered by 11,700 high schools and have 1.2 million enrollments and close to two million offer advance placement courses" (para. 23). Rosenbaum (as cited in Dickeson, 2004), maintained that "if students delay their effort until they get to college, the delay will make degree completion longer" (p. 6). Having students to enroll in college-level courses in high school can help reduce the need to offer a large number of course sections - especially in the first year general education curriculum. This in turn, could result in lower instructional costs. Colleges and universities can also benefit from dual enrollment programs. Instructional costs can be low especially when existing teachers - who are certified and eligible - teach the courses at adjunct rates. These institutions can also use dual enrollment programs as a means to generate revenues.
Academic Readiness
Perhaps one of the largest strains on higher education is to have students who are not adequately prepared for college work. With the assistance of their parents and guidance counselors, students should begin preparing for college as early as the eighth grade (Dickeson, 2004). Students can (and should) choose an academic plan of study that includes rigorous course work that prepares them for college. Such an approach should focus on finding ways to provide more support for students so that they will be prepared for college Rosenbaum (as cited in Dickeson, 2004) noted that "all students can plan to get a college degree; but if they are under prepared, they must be willing to repeat high school courses in college, spending the extra time and effort in non-credit remedial courses, with higher risks of failure" (p. 6). Having students who are academically ready can significantly decrease the need for remediation thus allowing colleges and universities to hold down those costs while preparing an edcuated workforce.
Participate in College Preparation and Bridge Programs
When possible, students should be encouraged to enroll in dual enrollment and advanced placement courses while in high school. Dual enrollment allows students to earn college credit while in high school thus decreasing the time needed to complete a degree program. Likewise, advance placement courses not only provide students with the opportunity to become college-ready but also a chance to earn college credit through the CLEP exam. The Department of Education (as cited in Coplin, 2006), for example, reported that "dual-credit courses are offered by 11,700 high schools and have 1.2 million enrollments and close to two million offer advance placement courses" (para. 23). Rosenbaum (as cited in Dickeson, 2004), maintained that "if students delay their effort until they get to college, the delay will make degree completion longer" (p. 6). Having students to enroll in college-level courses in high school can help reduce the need to offer a large number of course sections - especially in the first year general education curriculum. This in turn, could result in lower instructional costs. Colleges and universities can also benefit from dual enrollment programs. Instructional costs can be low especially when existing teachers - who are certified and eligible - teach the courses at adjunct rates. These institutions can also use dual enrollment programs as a means to generate revenues.
References
Coplin, W. D. (2006). Seven ways colleges can cut costs in their classrooms. The Chronicle of Higher Education. Retrieved October 31, 2009 from http://chronicle.comezproxy.memphis.edu/article/7-Ways-Colleges-Cut-Cos/17795/
Dickeson, R. C. (2004). Collision course: Rising college costs threaten America's future and require shared solutions. Retrieved November 1, 2009 from http://www.luminafoundation.org/publications/Collision
Wednesday, October 28, 2009
Unit 4: Reducing the Remediation Tab
The tremendous cost of remedial classes has motivated higher education to rethink how these classes are taught. Obviously, the easiest way to reduce the cost of remediation is to make sure students are prepared when they graduate from high school. Since higher education can not control that, it has since begun to try to control the costs associated with the delivery of these classes.
Southwest Tennessee Community College offers all the remedial courses that are needed, but a creative way in providing these classes has emerged. This college is providing the last level of remedial English and the first level of college level English in one course. Any student who has scored highly enough to only have to take one level of remedial English may have the ability to complete it and the college level English in the same semester, in the same class. This helps to reduce the cost and the number of remedial classes offered each semester. Southwest also offers two levels of remedial math in one class during one semester. Again, reducing costs.
Outsourcing remediation to companies such as Sylvan Learning Center and Kaplan Education Center is another way that higher education is considering decreasing the tab. These companies promise to "save institutions money and speed up the remedial process" (The Institute for Higher Education Policy, 1998). Some states have even proposed that the districts from which students who need remediation emerge should be sent the bill for remediation. Perhaps, a large bill would cause superintendents to ask some questions within the districts (Townsend and Twombly, 2001). Ultimately, saving higher education money by decreasing remediation is the issue here.
The Institute for Higher Education Policy. (1998a). College remediation: What it is. What it costs. What's at stake. Washington, DC: Institute for Higher Education Policy.
Townsend, B.K., & Twombly, S. B. (2001). Community Colleges: Policy in the Future Context. Westport, CT: Greenwood Publishing Group.
Southwest Tennessee Community College offers all the remedial courses that are needed, but a creative way in providing these classes has emerged. This college is providing the last level of remedial English and the first level of college level English in one course. Any student who has scored highly enough to only have to take one level of remedial English may have the ability to complete it and the college level English in the same semester, in the same class. This helps to reduce the cost and the number of remedial classes offered each semester. Southwest also offers two levels of remedial math in one class during one semester. Again, reducing costs.
Outsourcing remediation to companies such as Sylvan Learning Center and Kaplan Education Center is another way that higher education is considering decreasing the tab. These companies promise to "save institutions money and speed up the remedial process" (The Institute for Higher Education Policy, 1998). Some states have even proposed that the districts from which students who need remediation emerge should be sent the bill for remediation. Perhaps, a large bill would cause superintendents to ask some questions within the districts (Townsend and Twombly, 2001). Ultimately, saving higher education money by decreasing remediation is the issue here.
The Institute for Higher Education Policy. (1998a). College remediation: What it is. What it costs. What's at stake. Washington, DC: Institute for Higher Education Policy.
Townsend, B.K., & Twombly, S. B. (2001). Community Colleges: Policy in the Future Context. Westport, CT: Greenwood Publishing Group.
Unit 4: Remedial Classes
I have absolutely nothing against remediation. Sometimes students, for some reason or another, do not get the necessary skills that they need to perform on the college level. However, this problem is costing colleges billions. According to an article in USA Today, "a new study calculates, one-third of American college students have to enroll in remedial classes. The bill to colleges and taxpayers for trying to bring them up to speed on material they were supposed to learn in high school comes to between $2.3 billion and $2.9 billion annually" (Colleges spend billions on remedial classes to prep freshmen, 2008). This is reportedly the number one problem in California's community college system, the biggest in the country. Ninety five percent of students entering Long Beach City College require remediation (Colleges spend billions on remedial classes to prep freshmen, 2008). What's more is that these percentages are comparable to colleges across the country. Sadly, this is not a cost that can easily be "cut" from the budget. Where would the majority of our students be without remediation? Remediation makes college more accessible, but is the cost too great?
Associated Press. (2008, September 19). Colleges spend billions on remedial classes to prep freshmen. USA Today. Retrieved on October 28, 2009, from http://www.usatoday.com/news/education/2008-09-15-Colleges-remedialclasses_N.htm
Associated Press. (2008, September 19). Colleges spend billions on remedial classes to prep freshmen. USA Today. Retrieved on October 28, 2009, from http://www.usatoday.com/news/education/2008-09-15-Colleges-remedialclasses_N.htm
Friday, October 23, 2009
Baumol’s Cost Disease
Baumol’s cost disease (Baumol’s Effect) is a phenomenon first described by William J. Baumol and William G. Bowen in the 1966 book Performing Arts: The Economic Dilemma. In the book Bumol and Bowen pointed out that it takes the same amount of time was needed today to play a Beethoven string composition as was needed in the 1800; that is, the productivity of Classical music performance has not increased. They argued that costs in the live performing arts must rise relative to costs in the economy as a whole because wage increases in the arts must keep up with those in the general economy even though productivity improvements in the arts are not possible or will lag behind.
In the manufacturing sector and the retail sector, workers are continually increasing productivity due to technological innovations to their tools and equipment. In contrast, in many labor-intensive sectors that rely heavily on human interaction or activities, such as nursing, education, or the performing arts there is little or no growth in productivity over time. As with the musical performance example, it takes a nurse checking the vital signs of a patient or a college professor grading an essay, as much time in 2009 as it did in 1969.
No one can be held responsible for cost disease; it’s just common to businesses that are labor-intensive. For example colleges are always attempting to do things more efficiently, but, since their biggest expense is labor, the only way to reduce costs is either to increase the number of students each professor teaches (by increasing class size or increasing the number of section taught) or to outsource the work to poorly paid and possible unqualified adjuncts. Thus the dilemma: in order to lower prices you have to lower quality.
The true dilemma exists in the abundance of government subsidies to students through loans, grants, scholarships, etc. Once government steps in to subsidize education, the prices go nowhere but up - as the cost to the student decreases due to subsidy, the utilization and demand increases.
A perfect example of this exists in Tennessee. Every year since the lottery scholarships came into existence, the total number of enrolled students in the two- and four-year colleges across the state has increased. This increased enrollment has not been met by an equivalent increase in productivity because of the principles set forth in Baumol’s cost disease principle. Professors cannot increase their productivity. The solution should be to hire more professors, but the state legislature has not been willing to increase allocations to higher education. As a matter of fact the budget have been decreasing in real dollars, exacerbating the situation. This leads to the question of lowering quality in order to accommodate the increase demand that has resulted in the lottery scholarship subsidy.
In the manufacturing sector and the retail sector, workers are continually increasing productivity due to technological innovations to their tools and equipment. In contrast, in many labor-intensive sectors that rely heavily on human interaction or activities, such as nursing, education, or the performing arts there is little or no growth in productivity over time. As with the musical performance example, it takes a nurse checking the vital signs of a patient or a college professor grading an essay, as much time in 2009 as it did in 1969.
No one can be held responsible for cost disease; it’s just common to businesses that are labor-intensive. For example colleges are always attempting to do things more efficiently, but, since their biggest expense is labor, the only way to reduce costs is either to increase the number of students each professor teaches (by increasing class size or increasing the number of section taught) or to outsource the work to poorly paid and possible unqualified adjuncts. Thus the dilemma: in order to lower prices you have to lower quality.
The true dilemma exists in the abundance of government subsidies to students through loans, grants, scholarships, etc. Once government steps in to subsidize education, the prices go nowhere but up - as the cost to the student decreases due to subsidy, the utilization and demand increases.
A perfect example of this exists in Tennessee. Every year since the lottery scholarships came into existence, the total number of enrolled students in the two- and four-year colleges across the state has increased. This increased enrollment has not been met by an equivalent increase in productivity because of the principles set forth in Baumol’s cost disease principle. Professors cannot increase their productivity. The solution should be to hire more professors, but the state legislature has not been willing to increase allocations to higher education. As a matter of fact the budget have been decreasing in real dollars, exacerbating the situation. This leads to the question of lowering quality in order to accommodate the increase demand that has resulted in the lottery scholarship subsidy.
Reference
Heilbrun, J., (2003) Chapter 11, Baumol’s cost disease (PDF). A handbook of cultural economics. Edward Elgar. Retrieved from http://publishing.eur.nl/ir/repub/asset/782/TOWSE%20EBOOK_pages0103-0113.pdf
Raising Funds by Adding a Term and Cutting Pay
The University of Tennessee at Martin (UTM) implemented a Maymester this year as part of an effort to increase summer school revenue. The time frame was a three week period beginning the Monday immediately after spring semester graduation. Students were allowed to enroll in a maximum of six credit hours at a rate of $221/semester hour. A minimum of ten enrolled students was required for class continuation. That yielded a minimum of $6630 per 3-hour class. The faculty were remunerated at a rate of $4,000 per course taught. (If the class had fewer than ten students the faculty had the option of a prorated salary.) According to the UTM Faculty Handbook summer school pay is to be based upon a percentage of the nine-month contract pay. Remuneration for a 3-hour course is calculated as 12.5% of the nine-month salary.
For many faculty teaching in the Maymester the payment of $4,000 per course resulted in pay above their regular summer pay but for many more it resulted in a decrease in pay. The Faculty Handbook was violated by not referring in anyway to the Maymester as summer school. No administrator from the Vice Chancellor of Academic Affairs to the Deans (with the exception of mine) referred to the Mayester as anything but Mayester. Faculty accepted the pay without too much argument because of the shortened time-frame of three weeks.
Originally the projected net income from Mayester was in the neighborhood of $250,000. The actual net income almost doubled the projection to approximately $400,000. By squeezing another term into the academic calendar and cutting the total faculty remuneration UTM was able to realize a significant amount of net income. The venture was so successful that it is being implemented again this year.
References
Personal communications with Dr. Rich Helgeson, Interim Dean, College of Engineering and Natural Science and Dr. Jerald Ogg, Vice Chancellor of Academic Affairs, University of Tennessee at Martin.
For many faculty teaching in the Maymester the payment of $4,000 per course resulted in pay above their regular summer pay but for many more it resulted in a decrease in pay. The Faculty Handbook was violated by not referring in anyway to the Maymester as summer school. No administrator from the Vice Chancellor of Academic Affairs to the Deans (with the exception of mine) referred to the Mayester as anything but Mayester. Faculty accepted the pay without too much argument because of the shortened time-frame of three weeks.
Originally the projected net income from Mayester was in the neighborhood of $250,000. The actual net income almost doubled the projection to approximately $400,000. By squeezing another term into the academic calendar and cutting the total faculty remuneration UTM was able to realize a significant amount of net income. The venture was so successful that it is being implemented again this year.
References
Personal communications with Dr. Rich Helgeson, Interim Dean, College of Engineering and Natural Science and Dr. Jerald Ogg, Vice Chancellor of Academic Affairs, University of Tennessee at Martin.
Cutting Cost by Formula Change
While studying the performance funding question I stumbled upon one aspect of cost that I had never considered. Reading “Investing for Success”, a report from the Texas Higher Education Coordinating Board, it occurred to me that millions of dollars are wasted every year when performance funding is based on enrolled headcount. (Texas uses a formula that takes headcounts on the 12th day of class; Tennessee uses headcounts on the 14th day.) Consider that public money is distributed to universities based on enrollment by students who will drop the class after the headcount day. This is wasted money. Texas estimated that over $300 million is lost each year from courses that are not completed. In other words there are courses started by students that drop the courses before completion thus resulting in allocations that are too high based on actual student cost.
For example an institution might knowingly enroll students that have little or no chance of completing courses/degrees. The headcount day passes, money is allocated based on the headcount, and at the end of the semester a number of the students are no longer enrolled. The students are no longer enrolled in higher education while the institution is bringing in dollars based on false enrollment numbers.
Maybe I am cynical but I believe this happens in too many cases. Institutions are desperate for funding dollars so they recruit students that are unqualified. Completion based funding cannot be manipulated in this manner. Of course completion based funding can be manipulated by lower standards and allowing more through put (graduates) which is also not desirable. Formula funding that uses both enrollment and completion data would appear to be the ideal.
Reference
Investing for success: A comprehensive funding strategy. (2009). Texas Higher Education Coordinating Board. Retrieved October 23, 2009 from : http://katrinacollegestudents.org/reports/PDF/1742.PDF?CFID=3946743&CFTOKEN=18669638
For example an institution might knowingly enroll students that have little or no chance of completing courses/degrees. The headcount day passes, money is allocated based on the headcount, and at the end of the semester a number of the students are no longer enrolled. The students are no longer enrolled in higher education while the institution is bringing in dollars based on false enrollment numbers.
Maybe I am cynical but I believe this happens in too many cases. Institutions are desperate for funding dollars so they recruit students that are unqualified. Completion based funding cannot be manipulated in this manner. Of course completion based funding can be manipulated by lower standards and allowing more through put (graduates) which is also not desirable. Formula funding that uses both enrollment and completion data would appear to be the ideal.
Reference
Investing for success: A comprehensive funding strategy. (2009). Texas Higher Education Coordinating Board. Retrieved October 23, 2009 from : http://katrinacollegestudents.org/reports/PDF/1742.PDF?CFID=3946743&CFTOKEN=18669638
Thursday, October 22, 2009
Unit 4: Possible Problem / Solution: Cutting Costs by Increasing the Productivity of Administrators and Support Staff
At a time when many colleges and universities are seeking ways in which to cut costs, the Center for College Affordability and Productivity reported that between 1987 and 2007 the total workforce in higher education "increased 48 percent with full-time employment growing by 33 percent and part-time employment by 85 percent" (Bennett, 2009, p. 6). Over 353,500 of the full-time positions were administrative and support staff. This is compared to the 630,000 "part-time" instructor positions. It is easy to see that over the years, colleges and universities have hired a large number of "part-time" instructors and a disproportionate number of full-time administrators and support staff. This seems to be consistent with Hauptman's (as cited in Massy, 2001) report that noted "administration and support costs amount to 30 percent of education and general expenditures at public institutions and 40 percent at private institutions" (p. 317). One may ask is there really a need to hire such a large number of full-time administrative and support staff? How can colleges and universities increase the productivity of their existing administrators and support staff? In his article, Massy (2001) identified strategies that can be used to improve the productivity of administrators and support staff. This posting will summarize Massy's article on how to improve the productivity of administrators and support services.
Productivity: The Factors that Negatively Impact It
In his article, Massy (2001) identified organizational slack, task accretion, and function lust as factors that can negatively impact productivity. Having an understanding of the factors mentioned above provides administrators with information to adequately diagnose productivity issues. The following is a list and description of the factors.
Organizational Slack. Massy (2001) identified organizational slack as a common factor that can negatively impact productivity. Organizational slack occurs if there is not enough attention given to efficiency. Inefficiency can sometimes result in the need for additional staff and resources. Organizational slack also occurs if employees are not given the opportunity and resources to effectively do their jobs. Resource diversion - when an employee's goal replaces those of the institution - is another common form of organizational slack. Resource diversion can take the "form of loafing, appropriating the organization's resources for personal use, and becoming obsessed with one's own rights and privileges" (p. 319).
Task Accretion. Massy (2001) noted that task accretion occurs when an employee's task does not optimally contribute to the institution's mission and strategic plan. An administrator, for example, may lack competence thus creating unnecessary tasks for employees to complete. Completing the unnecessary tasks costs the institution valuable time and money. Massy also cited "escalating spirals of administrative actions as another cause of task accretions" (p. 320). A clerical worker, for example, may be employed to complete a job and while doing so discovers a new problem that requires the need to hire additional personnel. This spiral continues and the institution ends up paying the cost of having too many employees.
Function Lust. Administrators and support staff generally consider their jobs to be important to the institution. Some employees, however, develop a professional delusion in that they think they are the most skillful employee on campus and should be considered for promotion. These employees find it difficult to realistically understand how they fit into the overall scheme of the institution. If not handled correctly, these employees can have turf wars that can result in task accretion and issues with productivity.
Increasing Productivity
The academic culture tends to emphasize improving quality rather than containing costs (Massy, 2001). Referring back to the report published by the Center for College Affordability and Productivity, it is easy to see that higher education is willing to continue hiring new full-time administrators and support staff to promote quality rather than cutting costs by utilizing existing employees. Massy (2001), however, maintained that it is possible for colleges and universities to contain costs by increasing the productivity of administrators and support staff. To accomplish such a task, he noted that there are four critical conditions that must be in place and those are: having "resource constraints, individual and group empowerment, incentives, recognition, rewards, and strategic thinking" (p. 327).
Resource Constraints. Having constraints on resources will motivate institutions to improve efficiency and productivity. Massy (2001) made a good point in that "most educational leaders press hard to enhance quality, but without the effect of resource constraints, there is no incentive to consider cost effectiveness in relation to quality" (p. 327). He also noted that there should be a "wide understanding of the reasons why productivity should be high on the institution's agenda" (p. 330). Developing a communication strategy, therefore, is the first step in the process of improving productivity.
Individual and Group Empowerment. Massy (2001) made another excellent point in that "productivity improvement depends on the initiative and skills of the faculty and staff on both the individual and group levels" (p. 327). It is these individuals who will be carrying out any changes that are made. Encouraging individual and group empowerment "provides a powerful force for making things happen - thus providing a new way to think about productivity and change" (p. 328). Massy further noted that "the empowerment strategy should strive for commitment and leadership at every level and stress diversity, innovation, and personal responsibility" (p. 330).
Offering Incentives, Recognition, and Rewards. When offering incentives and rewards, it is important to take into consideration resource constraints (Massy, 2001). There are, for example, nonmonetary rewards that can be just as effective. It is suggested that such recognition process be spontaneous and ongoing with both major and minor achievements being included. Of course, institutions will need to have procedures on how employees are chosen. Massy suggested that the employee evaluation can be a good tool in this type of situation.
Strategic Thinking. Massy (2001) maintained that administration must "define what they mean by gaining productivity and make it clear that it is an important part of their vision for the institution" (p. 327). Plans must be made to develop ways of embedding their vision into the institution's programs and culture. Administration must also "arrange for the right incentives, recognition, and rewards and make sure there is follow-through across the organization" (p. 327).
Conclusion
Historically, colleges and universities have been considered a labor intensive industry (Bennett, 2009). With the advances in today's technology, one must wonder if there is really a need to have a large number of administrators and support staff or is it simply an issue with productivity? Colleges and Unviversities could certainly reduce costs by cutting back on hiring full-time administrators and support staff. Instead, institutions could look at ways in which to make the existing employees more productive. Much of the literature, however, focuses primarily on the productivity of faculty and very little studies have been done with support staff. It is for this reason that the emphasis of this posting was placed on the productivity of administrators and support staff. In his article, Massy (2001) offered an excellent explanation of the factors that can negatively impact productivity as well as suggestions to increase productivity. Given the current state of the economy, institutions will need to learn to do more with less and productivity is more important now than ever.
Productivity: The Factors that Negatively Impact It
In his article, Massy (2001) identified organizational slack, task accretion, and function lust as factors that can negatively impact productivity. Having an understanding of the factors mentioned above provides administrators with information to adequately diagnose productivity issues. The following is a list and description of the factors.
Organizational Slack. Massy (2001) identified organizational slack as a common factor that can negatively impact productivity. Organizational slack occurs if there is not enough attention given to efficiency. Inefficiency can sometimes result in the need for additional staff and resources. Organizational slack also occurs if employees are not given the opportunity and resources to effectively do their jobs. Resource diversion - when an employee's goal replaces those of the institution - is another common form of organizational slack. Resource diversion can take the "form of loafing, appropriating the organization's resources for personal use, and becoming obsessed with one's own rights and privileges" (p. 319).
Task Accretion. Massy (2001) noted that task accretion occurs when an employee's task does not optimally contribute to the institution's mission and strategic plan. An administrator, for example, may lack competence thus creating unnecessary tasks for employees to complete. Completing the unnecessary tasks costs the institution valuable time and money. Massy also cited "escalating spirals of administrative actions as another cause of task accretions" (p. 320). A clerical worker, for example, may be employed to complete a job and while doing so discovers a new problem that requires the need to hire additional personnel. This spiral continues and the institution ends up paying the cost of having too many employees.
Function Lust. Administrators and support staff generally consider their jobs to be important to the institution. Some employees, however, develop a professional delusion in that they think they are the most skillful employee on campus and should be considered for promotion. These employees find it difficult to realistically understand how they fit into the overall scheme of the institution. If not handled correctly, these employees can have turf wars that can result in task accretion and issues with productivity.
Increasing Productivity
The academic culture tends to emphasize improving quality rather than containing costs (Massy, 2001). Referring back to the report published by the Center for College Affordability and Productivity, it is easy to see that higher education is willing to continue hiring new full-time administrators and support staff to promote quality rather than cutting costs by utilizing existing employees. Massy (2001), however, maintained that it is possible for colleges and universities to contain costs by increasing the productivity of administrators and support staff. To accomplish such a task, he noted that there are four critical conditions that must be in place and those are: having "resource constraints, individual and group empowerment, incentives, recognition, rewards, and strategic thinking" (p. 327).
Resource Constraints. Having constraints on resources will motivate institutions to improve efficiency and productivity. Massy (2001) made a good point in that "most educational leaders press hard to enhance quality, but without the effect of resource constraints, there is no incentive to consider cost effectiveness in relation to quality" (p. 327). He also noted that there should be a "wide understanding of the reasons why productivity should be high on the institution's agenda" (p. 330). Developing a communication strategy, therefore, is the first step in the process of improving productivity.
Individual and Group Empowerment. Massy (2001) made another excellent point in that "productivity improvement depends on the initiative and skills of the faculty and staff on both the individual and group levels" (p. 327). It is these individuals who will be carrying out any changes that are made. Encouraging individual and group empowerment "provides a powerful force for making things happen - thus providing a new way to think about productivity and change" (p. 328). Massy further noted that "the empowerment strategy should strive for commitment and leadership at every level and stress diversity, innovation, and personal responsibility" (p. 330).
Offering Incentives, Recognition, and Rewards. When offering incentives and rewards, it is important to take into consideration resource constraints (Massy, 2001). There are, for example, nonmonetary rewards that can be just as effective. It is suggested that such recognition process be spontaneous and ongoing with both major and minor achievements being included. Of course, institutions will need to have procedures on how employees are chosen. Massy suggested that the employee evaluation can be a good tool in this type of situation.
Strategic Thinking. Massy (2001) maintained that administration must "define what they mean by gaining productivity and make it clear that it is an important part of their vision for the institution" (p. 327). Plans must be made to develop ways of embedding their vision into the institution's programs and culture. Administration must also "arrange for the right incentives, recognition, and rewards and make sure there is follow-through across the organization" (p. 327).
Conclusion
Historically, colleges and universities have been considered a labor intensive industry (Bennett, 2009). With the advances in today's technology, one must wonder if there is really a need to have a large number of administrators and support staff or is it simply an issue with productivity? Colleges and Unviversities could certainly reduce costs by cutting back on hiring full-time administrators and support staff. Instead, institutions could look at ways in which to make the existing employees more productive. Much of the literature, however, focuses primarily on the productivity of faculty and very little studies have been done with support staff. It is for this reason that the emphasis of this posting was placed on the productivity of administrators and support staff. In his article, Massy (2001) offered an excellent explanation of the factors that can negatively impact productivity as well as suggestions to increase productivity. Given the current state of the economy, institutions will need to learn to do more with less and productivity is more important now than ever.
References
Bennett, D. (2009, April). Trends in the higher education labor force: Identifying changes in worker composition and productivity. Washington, DC: Center for College Affordability and Productivity.
Massy, W. F. (2001). Improvement strategies for administration and support services (p. 317-336) In J. Yeager, G Nelson, A. Potter, C Weidman, & T. Zullo (Eds.) ASHE Reader on Finance in Higher Education. Boston: Pearson Custom Publishing.
Wednesday, October 21, 2009
Unit 4: Duh...Community College
While this may sound like a no-brainer, attending a community college during the summer or even for the first 2 years of a college career will help students contain costs. An article, Dollars and Cents: Choosing Cost-Effective Higher Education by Megan O'Leary-Buda (2009), highlights the main advantage of attending a community college: price. Community colleges were originally created to provide higher education at affordable prices to those who had to or chose to stay close to home (O'Leary-Buda, 2009). Everyone knows that though the price is cheaper, copmmunity colleges provide the same quality education as a four year institution, minus the expense. A four year education is averaging $42,000 a year (O'Leary-Buda, 2009). Of course, that is the cost of 4 years of education, not 2. So if one were to half that amount, $21,000 over 2 years at a 4 year institution, compared to $8,000 (on the very high end) over 2 years at a community college, the savings are enormous! Anymore explanation would be overkill. The numbers speak for themselves.
O'Leary-Buda, Megan. (2009). Dollars and cents: Choosing cost effective higher education. College View. Retrieved on October 21, 2009, from http://www.collegeview.com/articles/CV/financialaid/dollars-and-cents.html
O'Leary-Buda, Megan. (2009). Dollars and cents: Choosing cost effective higher education. College View. Retrieved on October 21, 2009, from http://www.collegeview.com/articles/CV/financialaid/dollars-and-cents.html
Monday, October 19, 2009
$ave money by reducing the work week
One way that more and more colleges have restructured to save money is by reducing the length of their work week. My college, Mid-South Community College, is one of them. In the summers, we’re only open 4 days (Monday-Thursday). All full-time employees work 4 ten-hour days, instead of 5 eight-hour days. There are no classes or events scheduled on Friday, Saturday, or Sunday during the summer. This helps to save money by keeping the campus open 20% less, which results in 20% less energy costs. The buildings are not cooled, no computers are active, lights are off, etc. on the 3-day weekend.
This policy at MSCC started back when gasoline costs were astronomical. The college president originally phrased the proposal as a way for employees to save their own money by commuting one day less per week. Gasoline costs are a little more than half of its price then, so this is not as much of an issue as it once was. Regardless, it does help to save costs for both for the individual and the institution.
As one of the full-time employees, I can say I LOVE the schedule. I think most of my co-workers agree. There’s really not that much different working 7:30AM-6PM than 8AM-4:30PM. Once you’re at work you really don’t notice staying around an extra two hours. The only discontent that I’ve heard are rumors that a few older people really dislike it because they get tired in the later afternoons.
Colleges are not the only offices where this occurs. The local Water Department office in my small town is only open Monday-Thursday. I’m sure there are others.
Sources
Mangan, Katherine. (May 21, 2008). Longer Days and Darker Nights as Colleges Adjust to Soaring Energy Costs. Retrieved October 19, 2009 from http://chronicle.com/article/Longer-DaysDarker-Nights/818
This policy at MSCC started back when gasoline costs were astronomical. The college president originally phrased the proposal as a way for employees to save their own money by commuting one day less per week. Gasoline costs are a little more than half of its price then, so this is not as much of an issue as it once was. Regardless, it does help to save costs for both for the individual and the institution.
As one of the full-time employees, I can say I LOVE the schedule. I think most of my co-workers agree. There’s really not that much different working 7:30AM-6PM than 8AM-4:30PM. Once you’re at work you really don’t notice staying around an extra two hours. The only discontent that I’ve heard are rumors that a few older people really dislike it because they get tired in the later afternoons.
Colleges are not the only offices where this occurs. The local Water Department office in my small town is only open Monday-Thursday. I’m sure there are others.
Sources
Mangan, Katherine. (May 21, 2008). Longer Days and Darker Nights as Colleges Adjust to Soaring Energy Costs. Retrieved October 19, 2009 from http://chronicle.com/article/Longer-DaysDarker-Nights/818
Saturday, October 17, 2009
Unit 4: phone response
The University of Kentucky and other schools like the University of Nebraska and The College of William and Mary have removed land line phone services from residential halls to save money and relocate funds previously spent on an unnecessary expenditure.
An alternative perspective to land line removal should not be overlooked. An institution concerned with safety, like Western Kentucky University, or one that does not save a discernible amount of money from removing land lines may choose to not follow the cost-saving trend.
While researching this cost saving trend, I assumed all land line service systems were the same and a savings could be made from removing the service altogether. My brother-in-law works for Bellsouth Communications and was able to educate me on the different telecommunication service systems offered to a mass group of people, like those commonly found on a college campus (personal phone conversation, October 16, 2009). College campuses typically use either a T-1 service, trunk line service, or an IP or phone-over-the-Internet service.
A T-1 service system typically has a server box located in various building (i.e. dorms) and can service 100-500 phones lines, depending on the size of the server. This phone system is more modern and expensive than a trunk line system. The University of Kentucky used a T-1 system. A person does not need to dial "9" to reach an external line. A trunk line system was used by many of us during our "dorm days." The trunk line system services the entire campus. A prefix and number pattern from 0001 - 9999 is given all lines; calls can be made internally by simply dialing the appropriate four-digit number. A number like "1" or "9" must be dialed to reach an external line. It is cost efficient, but outdated. An IP phone system is controlled by an Internet service provider and is the most modern system that is widely available. It is not cost-practical to offer this system to an entire campus community. Most college employees use an IP system that offers functions for messaging, call forwarding, and ring tones.
Western Kentucky University, my alma mater and former employer, uses a trunk line service system throughout its campus. The Director of Telecommunications, Edwin Craft, was asked why the university had not followed a similar cost saving approach as the University of Kentucky and removed all landlines in residence halls (Baker, 2008). He responded that the savings would be as noticeable since a flat rate for the trunk line service was paid for the entire campus. The campus currently shares the cost of the land line system between several departments. Furthermore, Craft brought up the issue of safety and its relevance to the land line system. The topic of safety was an original thought found through the literature I read regarding this cost-saving trend.
Western Kentucky University has had some safety concerns over the last 15 years; two were national recognized on major networks. A projected image of campus safety is essential if Western plans to continue its state leading enrollment pace. Craft intelligently squashed the topic of cost saving and diverted the interview dialogue back to safety. He said, "Removing the service would also hinder the effectiveness of Western's new emergency phone notification system that is designed to alert students with a phone call when there is a crisis on campus. It's (campus phone service) still a lifeline and safety device provided to the students. The system makes about 200 calls per minute as part of our crisis communication plan."
Last fall an alleged shooting took place on Western's campus in two different locations on the same day, the Main and South campuses (Dearbone, 2008). A friend of mine was working on campus the day of the incident. She was unable to make a call out or receive a call on her cell phone due to the mass hysteria; cell phone towers were unable to handle the capacity of calls being made and received (personal phone conversation, October 22, 2008). The emergency alert system used to send text messages and call campus phones was the most reliable method for informing people of the campus lockdown. Oddly enough, the interview Craft gave to the local paper justifying the use of landlines as a safety measure happened one month before the alleged shooting took place; impeccable timing Craft.
The point to this post is that campuses will need to continue identifying cost saving measures. It is important to remember institutional priorities when making these decisions. Western could have removed land lines in residence halls and possibly received some public recognition. Administrators realized safety was a higher priority and utilized the phone system accordingly. The campus took a technology that had grown obsolete and made it productive once again through a modern technology.
References:
Baker, J. (2008, September 15). WKU considers nixing dorm phones. The Daily News. Retrieved October 14, 2009, from http://www.bgdailynews.com/articles/2008/09/15/news/news2.txt.
Dearbone, R. (2008, October 23). WKU students coping after alleged shootings. Message posted to http://www.wbko.com/home/headlines/32703384.html.
An alternative perspective to land line removal should not be overlooked. An institution concerned with safety, like Western Kentucky University, or one that does not save a discernible amount of money from removing land lines may choose to not follow the cost-saving trend.
While researching this cost saving trend, I assumed all land line service systems were the same and a savings could be made from removing the service altogether. My brother-in-law works for Bellsouth Communications and was able to educate me on the different telecommunication service systems offered to a mass group of people, like those commonly found on a college campus (personal phone conversation, October 16, 2009). College campuses typically use either a T-1 service, trunk line service, or an IP or phone-over-the-Internet service.
A T-1 service system typically has a server box located in various building (i.e. dorms) and can service 100-500 phones lines, depending on the size of the server. This phone system is more modern and expensive than a trunk line system. The University of Kentucky used a T-1 system. A person does not need to dial "9" to reach an external line. A trunk line system was used by many of us during our "dorm days." The trunk line system services the entire campus. A prefix and number pattern from 0001 - 9999 is given all lines; calls can be made internally by simply dialing the appropriate four-digit number. A number like "1" or "9" must be dialed to reach an external line. It is cost efficient, but outdated. An IP phone system is controlled by an Internet service provider and is the most modern system that is widely available. It is not cost-practical to offer this system to an entire campus community. Most college employees use an IP system that offers functions for messaging, call forwarding, and ring tones.
Western Kentucky University, my alma mater and former employer, uses a trunk line service system throughout its campus. The Director of Telecommunications, Edwin Craft, was asked why the university had not followed a similar cost saving approach as the University of Kentucky and removed all landlines in residence halls (Baker, 2008). He responded that the savings would be as noticeable since a flat rate for the trunk line service was paid for the entire campus. The campus currently shares the cost of the land line system between several departments. Furthermore, Craft brought up the issue of safety and its relevance to the land line system. The topic of safety was an original thought found through the literature I read regarding this cost-saving trend.
Western Kentucky University has had some safety concerns over the last 15 years; two were national recognized on major networks. A projected image of campus safety is essential if Western plans to continue its state leading enrollment pace. Craft intelligently squashed the topic of cost saving and diverted the interview dialogue back to safety. He said, "Removing the service would also hinder the effectiveness of Western's new emergency phone notification system that is designed to alert students with a phone call when there is a crisis on campus. It's (campus phone service) still a lifeline and safety device provided to the students. The system makes about 200 calls per minute as part of our crisis communication plan."
Last fall an alleged shooting took place on Western's campus in two different locations on the same day, the Main and South campuses (Dearbone, 2008). A friend of mine was working on campus the day of the incident. She was unable to make a call out or receive a call on her cell phone due to the mass hysteria; cell phone towers were unable to handle the capacity of calls being made and received (personal phone conversation, October 22, 2008). The emergency alert system used to send text messages and call campus phones was the most reliable method for informing people of the campus lockdown. Oddly enough, the interview Craft gave to the local paper justifying the use of landlines as a safety measure happened one month before the alleged shooting took place; impeccable timing Craft.
The point to this post is that campuses will need to continue identifying cost saving measures. It is important to remember institutional priorities when making these decisions. Western could have removed land lines in residence halls and possibly received some public recognition. Administrators realized safety was a higher priority and utilized the phone system accordingly. The campus took a technology that had grown obsolete and made it productive once again through a modern technology.
References:
Baker, J. (2008, September 15). WKU considers nixing dorm phones. The Daily News. Retrieved October 14, 2009, from http://www.bgdailynews.com/articles/2008/09/15/news/news2.txt.
Dearbone, R. (2008, October 23). WKU students coping after alleged shootings. Message posted to http://www.wbko.com/home/headlines/32703384.html.
Friday, October 16, 2009
Unit 4: UK Phone Expense
The University of Kentucky decided at the end of the fiscal year in 2008 to remove all land lines from student rooms within campus residence halls. The removal of landlines was seen as a way to eliminate unnecessary costs. The university saved $840,000 by removing these lines and used the savings to improve cell phone reception.
Chief Housing Officer Mark Doherty said the university plans to leave emergency phones in residence halls. It is unknown if an emergency phone is located on each floor of the residence halls. The emergency phones are closed line to campus security. Students who lived on campus during the transition had the option of securing a landline in his/her room.
The University of Kentucky followed the practice lead by The College of William and Mary. William and Mary's Director of Residence Life, Deb Boykin, said The College was responding to a 2007 study which found 92 percent of students were using cell phones as their primary line of communication. The study's source was not revealed. William and Mary relocated the funds to improve Internet bandwidth and cell phone reception.
Doherty said the decision to remove room phones was a savings for both the school and students. The school saw a savings on manual maintenance fees and phone service. Students saw a reduction in room-and-board expense. The decrease in room and board expense was not disclosed.
Reference:
Ma, J. (2009, February 9). University to remove dorm landlines. Cavalier Daily. Retrieved October 16, 2009, from http://www.cavalierdaily.com/2009/02/09/university-to-remove-dorm-landlines.
Chief Housing Officer Mark Doherty said the university plans to leave emergency phones in residence halls. It is unknown if an emergency phone is located on each floor of the residence halls. The emergency phones are closed line to campus security. Students who lived on campus during the transition had the option of securing a landline in his/her room.
The University of Kentucky followed the practice lead by The College of William and Mary. William and Mary's Director of Residence Life, Deb Boykin, said The College was responding to a 2007 study which found 92 percent of students were using cell phones as their primary line of communication. The study's source was not revealed. William and Mary relocated the funds to improve Internet bandwidth and cell phone reception.
Doherty said the decision to remove room phones was a savings for both the school and students. The school saw a savings on manual maintenance fees and phone service. Students saw a reduction in room-and-board expense. The decrease in room and board expense was not disclosed.
Reference:
Ma, J. (2009, February 9). University to remove dorm landlines. Cavalier Daily. Retrieved October 16, 2009, from http://www.cavalierdaily.com/2009/02/09/university-to-remove-dorm-landlines.
Wednesday, October 14, 2009
Unit 4: Higher Education...Saving Money by Going Green
In light of the cost disease in higher education, many college campuses are making a serious effort to contain costs and help with sustainability by "going green." While "going green" does help the environment, it also helps with budget issues in some higher education institutions.The University of Memphis highlights the efforts of its college community who do their part to help with the budget at U of M and with sustainability. In an article entitled, Green efforts gaining traction at university, Russell (2009) reports, "with the current budget crisis, something as simple as switching off a computer at night not only means a greener campus, it saves dollars."
Other efforts like this one, such as recycling ink and toner cartridges and paper, fuel an effort in the Higher and Adult Education Department at University of Memphis. This department participates in a program called "Office Depot Work Life;" this program gives the department store credit for any empty toner cartridges and paper, thereby reducing the out-of-pocket costs for office supplies. Now when the department needs supplies, it only has to access the credit that it has with Office Depot instead of extracting money from the already minuscule budget.
Various departments on this college campus report using email instead of paper, turning off computers and lights when not in use, employing the use of high output fluorescent lighting, and recycling old office equipment for a project called "electronics recycling day." The email instead of paper initiative and publishing publications online could save approximately 118,000 8.5 x 11 sheets of paper annually. This translates into savings in the higher education budget. Not to mention a "new Physical Plant computer-driven pumping system that was recently introduced [and] is expected to save the University more than $400,000 a year" (Russell, 2009). While these are just a few of the many cost saving efforts at the University of Memphis, the saving money by going green initiative is catching at other higher education institutions as well.
Russell, G. (2009). Green efforts gaining traction at university. Retrieved October 14, 2009,
from University of Memphis, http://www.memphis.edu/releases/feb09/green.htm
Other efforts like this one, such as recycling ink and toner cartridges and paper, fuel an effort in the Higher and Adult Education Department at University of Memphis. This department participates in a program called "Office Depot Work Life;" this program gives the department store credit for any empty toner cartridges and paper, thereby reducing the out-of-pocket costs for office supplies. Now when the department needs supplies, it only has to access the credit that it has with Office Depot instead of extracting money from the already minuscule budget.
Various departments on this college campus report using email instead of paper, turning off computers and lights when not in use, employing the use of high output fluorescent lighting, and recycling old office equipment for a project called "electronics recycling day." The email instead of paper initiative and publishing publications online could save approximately 118,000 8.5 x 11 sheets of paper annually. This translates into savings in the higher education budget. Not to mention a "new Physical Plant computer-driven pumping system that was recently introduced [and] is expected to save the University more than $400,000 a year" (Russell, 2009). While these are just a few of the many cost saving efforts at the University of Memphis, the saving money by going green initiative is catching at other higher education institutions as well.
Russell, G. (2009). Green efforts gaining traction at university. Retrieved October 14, 2009,
from University of Memphis, http://www.memphis.edu/releases/feb09/green.htm
Monday, October 12, 2009
Unit 4: Athletic Costs: Steps to Recovery
The earlier post spotlighted the spending on athletics at Division I-A schools. It is important to note several points not mentioned in the article before costs and productivity are discussed. The article only highlighted what institutions spent on athletics and not the amount of revenue generated by athletic departments. Although positive net generated revenue was not found in all D I-A athletic programs, the cost of athletics was not completely shouldered by the institutions. For example, if Arkansas spent 56 percent on athletics, how much of that was shouldered by the department? The figures can be misleading.
Another point worth mentioning was the revenue generated through athletics elsewhere on campus. Enrollment, especially at Division II and III schools, and private dollars have a tendency to follow successful or well marketed athletic programs. In 2009, the University of Memphis saw a 6 percent increase in student enrollment, while the University of Alabama saw a 6.5 percent increase in enrollment. Both schools were listed in the top half of athletic spenders in the study and both had national notoriety for successful athletic teams.
An institution could minimize athletic costs by identifying what programs deplete money greatest with the least return or which programs were most inefficient. Factors should include costs to maintain the athletic team and the number of athletes enrollment due to the sport's presence on campus. The D-II football program at one of my past employers easily carried the most expenditures of any other program on campus. The program also brought an additional 60 students to campus and no one received a full scholarship during my time there; most football players on the 60 man squad received a 30 to 40 percent discount on tuition and had to pay full housing costs. Another institution I served was a Division I-A school. While in graduate school, the swimming program was terminated. The maintenance expense was too great. It didn't affect Title IX because the sport was replaced with a less expensive alternative, cross country running.
Obviously my attempts to save on athletic expenses are novice compared to the professionals at the Eastern College Athletic Conference or ECAC. The conference examined operations to reduce costs in 2009 and implemented new initiatives in officiating, marketing, championship tournaments, communications, administration, and going green (ECAC, 2009). The list of cost-cutting programs are extensive, but here are the highlights. The conference did not increase officiating fees in 2009. A full time marketing professional was contracted out to secure sponsorships from companies, which helped athletic departments throughout the conference save money. For example, sponsorships with Avis Budget Group saved on vehicle rentals and Sherbrook SBK Hockey saved on equipment and apparrel costs. The conference streamlined purchasing for chamionships so bulk orders were made mandatory; a larger quantity purchase resulted in less expense per item. Committee members for the conference, who lived where championships were played, were appointed ambassadors to save on meal, travel, and lodging costs. The ECAC eliminated printed media guides and drastically reduced game and event programs. Some staff positions were eliminated and contracts with employees and vendors were renegotiated. A new recycling program was encouraged throughout the conference and new energy efficient thermostats were installed. The conference did not mention how much money was saved, only that is was significant.
References:
Eastern College Athletic Conference (2009). ECAC announces cost-saving initiatives. Retrieved October 12, 2009, from http://www.ecac.org/news/08-09/cost_saving_initiatves.
University of Alabama (2009). Grow with quality. Retrieved October 12, 2009, from http://www.ua.edu/features/enrollment.html.
University of Memphis (2009). U of M enrollment promises to be up significantly this year. Retrieved October 12, 2009, from http://www.memphis.edu/releases/sep09/firstenrollment.htm
Another point worth mentioning was the revenue generated through athletics elsewhere on campus. Enrollment, especially at Division II and III schools, and private dollars have a tendency to follow successful or well marketed athletic programs. In 2009, the University of Memphis saw a 6 percent increase in student enrollment, while the University of Alabama saw a 6.5 percent increase in enrollment. Both schools were listed in the top half of athletic spenders in the study and both had national notoriety for successful athletic teams.
An institution could minimize athletic costs by identifying what programs deplete money greatest with the least return or which programs were most inefficient. Factors should include costs to maintain the athletic team and the number of athletes enrollment due to the sport's presence on campus. The D-II football program at one of my past employers easily carried the most expenditures of any other program on campus. The program also brought an additional 60 students to campus and no one received a full scholarship during my time there; most football players on the 60 man squad received a 30 to 40 percent discount on tuition and had to pay full housing costs. Another institution I served was a Division I-A school. While in graduate school, the swimming program was terminated. The maintenance expense was too great. It didn't affect Title IX because the sport was replaced with a less expensive alternative, cross country running.
Obviously my attempts to save on athletic expenses are novice compared to the professionals at the Eastern College Athletic Conference or ECAC. The conference examined operations to reduce costs in 2009 and implemented new initiatives in officiating, marketing, championship tournaments, communications, administration, and going green (ECAC, 2009). The list of cost-cutting programs are extensive, but here are the highlights. The conference did not increase officiating fees in 2009. A full time marketing professional was contracted out to secure sponsorships from companies, which helped athletic departments throughout the conference save money. For example, sponsorships with Avis Budget Group saved on vehicle rentals and Sherbrook SBK Hockey saved on equipment and apparrel costs. The conference streamlined purchasing for chamionships so bulk orders were made mandatory; a larger quantity purchase resulted in less expense per item. Committee members for the conference, who lived where championships were played, were appointed ambassadors to save on meal, travel, and lodging costs. The ECAC eliminated printed media guides and drastically reduced game and event programs. Some staff positions were eliminated and contracts with employees and vendors were renegotiated. A new recycling program was encouraged throughout the conference and new energy efficient thermostats were installed. The conference did not mention how much money was saved, only that is was significant.
References:
Eastern College Athletic Conference (2009). ECAC announces cost-saving initiatives. Retrieved October 12, 2009, from http://www.ecac.org/news/08-09/cost_saving_initiatves.
University of Alabama (2009). Grow with quality. Retrieved October 12, 2009, from http://www.ua.edu/features/enrollment.html.
University of Memphis (2009). U of M enrollment promises to be up significantly this year. Retrieved October 12, 2009, from http://www.memphis.edu/releases/sep09/firstenrollment.htm
Sunday, October 11, 2009
Unit 4: Athletics Expenditures
The Center for College Affordability and Productivity released a study in 2006 that calculated ratios between total athletic and instructional expenditures for Division 1-A institutions. The Center expressed the concern that academic values were in danger of becoming subordinate to athletics at some institutions, at least in terms of expenditures. Institutions are forced to make a trade off between allocating scarce resources to these two demands, athletics and instruction. The study found high ratios of spending on athletics pared to the resources allocated on instruction. The University of Arkansas spent 56.5 percent on athletics and the University of Alabama spent almost as much at 50.2 percent.
Much of the money spent on athletics is shouldered by the athletic department from generated revenues. However, in 2006 only 19 of the 119 athletic programs studied had a positive net generated revenue. The Center urges administrators to consider the value of both and how each ties into the institution's mission.
The University of Memphis spent 26.4 percent on athletics in 2006 and the University of Tennessee spent 23.7 percent. Vanderbilt held the lowest total at 6.4 percent.
References:
Center for College Affordability and Productivity (2006). Athletic/instruction expenditures. Retrieved October 11, 2009, from http://www.centerforcollegeaffordability.org/pages/page.asp?page_id=50432.
Much of the money spent on athletics is shouldered by the athletic department from generated revenues. However, in 2006 only 19 of the 119 athletic programs studied had a positive net generated revenue. The Center urges administrators to consider the value of both and how each ties into the institution's mission.
The University of Memphis spent 26.4 percent on athletics in 2006 and the University of Tennessee spent 23.7 percent. Vanderbilt held the lowest total at 6.4 percent.
References:
Center for College Affordability and Productivity (2006). Athletic/instruction expenditures. Retrieved October 11, 2009, from http://www.centerforcollegeaffordability.org/pages/page.asp?page_id=50432.
Friday, October 9, 2009
Unit 4: Cost Saving Measures
The National Association of College and University Business Officers (NACUBO) has a valuable site with a host of information for CFOs, CBOs or anyone interested in the financial operations in HE. A cost reduction strategy page on the NACUBO was constructed by the Comprehensive and Doctoral Institutions Council. It lists cost saving strategies for each of the following categories: IT, Education and Research, Personnel, Benefits, Finance and Facilities. There are some things that would be easy to implement like keeping pcs for a year longer than usual and increasing general faculty workload. Other things seemed far more complicated like suspend or close: all undergraduate minors; graduate and undergraduate special-emphasis programs; up to 25 percent of all undergraduate majors; nonprofessional master's/doctoral programs that are not signature programs or not ranked among the top 50 in the nation.
Overall the site had some great ideas to consider.
http://www.nacubo.org/Membership_and_Community/Comprehensive_and_Doctoral_Institutions/CDIC_Cost_Reduction_Strategies.html
Overall the site had some great ideas to consider.
http://www.nacubo.org/Membership_and_Community/Comprehensive_and_Doctoral_Institutions/CDIC_Cost_Reduction_Strategies.html
Unit 4: Cost Disease - Purchasing Processes
On our campus, we used to purchase computers within our individual departments whenever we needed them. Faculty and staff would determine the specs, and the cost etc. Then we would order maybe one Macintosh in the fall and two DELL pcs in the spring. With each department ordering computers at various times with similar specs, you can imagine the duplication of effort purchasing encountered in paperwork processing. Early this fiscal year, purchasing implemented batch ordering and a three tier selection of computers. So now when you need a computer, you will go to the end-user selections and pick one from the two cost-effective choices. If you are a super-user, there are two different choices. Still some modifications can be made to the unit, but we all start with the standard most cost-effective choice for batch ordering. Orders are compiled and only sent to the vendors quarterly, which maximizes bulk discounts. This was started in July of 2009, and I think it is already garnering savings!
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