What Is Texas A&M up to?

image001.gifSomewhere in America the president of a public university is getting hammered by the chairman of the board of regents. The hammerer—let’s say he owns a chain of automobile dealerships – is arguing that the president must get faculty costs under control – or else.

“Admit it, John,” the chairman says to the president. “Your faculty are a bunch of lazy, overpaid whiners. You’ve got six months to figure out a pay-for-performance plan, or start looking for another job.”

A former physicist who understands well the hornets nest he’s about to fall into, our beleaguered university president is left with little choice but to come up with a quick and dirty plan.

“Give me a spreadsheet,” he orders his senior vice president for budget and planning. “I want every faculty member in this system to have a dollar value attached to his or her name, reflecting their net contribution to our bottom line. Then I want a faculty salary schedule to reflect that.”

The president got his spreadsheet. A former physics colleague who was awarded a Nobel Prize some twenty years ago saw his salary slashed in half. Though he’d become a star teacher since his Nobel, his research grants had been dwindling for years. By contrast, there was the recent hire in the Construction Management program. She was a new Ph.D. who was already bringing in tons of industry money for “research.” In contrast to the Nobel Laureate, her salary would shoot up 35 percent. Our university president could think only about what Albert Einstein once said: “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.”

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Welcome to the brave new world of performance pay in American higher education, where some universities — Texas A&M comes to mind — are ignoring Einstein’s quaint admonitions with spreadsheets on what faculty members cost versus the revenues they bring in.

According to the Texas A&M Eagle, the infamous spreadsheet in question — formally titled “The Texas A&M University System Academic and Financial Analysis” — remains under wraps until it will be formally presented to the A&M System Board of Regents. The proposal already has the informal backing of both the regents as well as Texas Gov. Rick Perry, who apparently was persuaded by the Texas Public Policy Foundation, a local think-tank, which has called for imposition of stricter performance measures on university faculty.

When it comes to imposing new accountability measures on the public education system, teachers and faculty members are frequently singled out as the main targets of politicians’ wrath. At the K-12 level, policy makers in several states are linking teacher pay to how well students perform on standardized tests. No matter that the high-stakes testing movement’s record on the whole standards thing has been abysmal.

Politicians don’t seem to get that people — teachers and administrators included — act in their own self interest. Schools under pressure to raise test scores predictably turn teaching and learning into little more than a mechanistic test-prep activity that raises scores, but the gains prove ephemeral in the long run. Time after time, we find that scores go up on the high-stakes test, in the short run, only find that underlying achievement remains unchanged.

In the same vein, the political forces for greater accountability have recently been targeting college and university faculty members as the main culprits of educational waste and excessive college costs. While few serious observers would argue that more accountability in public higher education is unnecessary, creating simplistic spreadsheets on the costs and revenues of faculty members will do little to solve the real underlying problems of escalating costs.

First, consider the apparently widespread belief that faculty are overpaid. During the academic year 2008-09 and 2009-10 real salaries for all faculty declined 1.5 percent, while the Consumer Price Index rose 2.7 percent, according to the most recent annual faculty pay report from the American Association of University Professors.

To be sure, those are recession pay scales. But in the nearly 40 years between 1972 and 2010, real faculty salaries at American colleges and universities, for all ranks, was virtually unchanged from year to year, and rarely equaled even the change in the Consumer Price Index. While real salaries for all faculty increased a total of about 10 percent in the early to mid 1980s – the period of greatest improvement — that increase was trivial compared to the 20 percent total decline in real wages during the early 1970s.

Production costs are rising in public higher education. But the evidence suggests that politicians should look well beyond front-line faculty and if they hope to get spending under control. What’s more, trends in recent spending priorities at public universities are considerably misplaced considering the fundamental challenges that public higher education is facing in the years ahead.

Indeed, real spending on instruction at public research universities per full time student rose a modest 10 percent during the ten-year period ending in 2008, according to a recent report by the Delta Cost Project, a big-think group that hopes to change the conversation about higher education accountability.

By contrast, spending increases in virtually all other cost categories at public research universities were about double the increase in instruction spending: Research spending per student rose 23 percent in real terms; student services spending rose 20 percent; public service costs went up 17 percent; institutional support, the category that captures most day-to-day administrative expenses, shot up 19 percent; and operations and maintenance spending rose almost 30 percent.

The shortchanging of instruction budgets is particularly egregious at public institutions offering master’s degrees – which are ostensibly more oriented toward teaching than public research universities. Instruction spending at public master’s colleges rose a mere 8 percent per student from 1998 through 2008. By contrast, research spending shot up almost 50 percent; public service spending rose by 26 percent.

This means that, while students at public universities are being asked to pay higher tuitions and fees, they are actually receiving increasingly less teaching and learning for their money.

“Are college tuitions rising because spending is growing?” the authors of the Delta Cost Project report asked. “If so, where is the money going? For more than three-quarters of the students enrolled in higher education, the answer is no: students at public institutions are paying for a higher proportion of costs, but their money is not translating into a higher level of service. These students are paying more, and getting less.”

In contrast to public universities, private, not-for-profit institutions – that primarily serve relatively affluent students — have ramped up spending in virtually all categories of spending, including instruction. Student subsidies, which is spending on students over and above what students actually pay in tuition and fees, dwarf the subsidies offered in the public sector. This means that the relatively well off students at private universities could well be paying net prices that are significantly less than their public counterparts — and are receiving greater value to boot in terms of resources that private universities are devoting to teaching and learning.

Making matters worse for public universities, they are trying to keep up with the wealthy private universities by ramping up spending even as their budgets are being reduced by state legislatures. Unfortunately, the public universities are expending scarce resources on things peripheral to their educational missions, believing that doing so will help them compete with the private universities on college rankings such as U.S. News & World Report. But this strategy is a losing proposition if that spending never reaches students who are actually enrolled in the institution.

“There are at least two stories to be told here, one of a private sector where competition for students and resources are clearly driving costs; and one of a public sector characterized by rapid changes in revenues, growing privatization and cost cutting,” says the Delta Project study. “They are competing for the same pool of faculty and students. So growing spending in the private institutions is increasing pressure on public institutions to grow spending — even if this spending is not going into direct services for students.”

Against this unfortunate backdrop, politicians are calling for more accountability, but their simplistic solutions, such as the Texas A&M spreadsheet, will make matters even worse if they penalize “inefficient” teaching faculty because they produce less revenue than researchers.

We need a fundamental reassessment of what accountability really should mean in public higher education. A more necessary notion of public accountability, for instance, would be how much a university spends per student graduating with a degree – on all categories of cost.

Policymakers of all stripes generally agree that American higher education needs to do a much better job at expanding access to students at the lower ends of the socioeconomic spectrum. What’s more, there is general agreement that the nation’s future economic productivity depends on improving educational attainment among demographic groups that currently tend not to seek higher education in high numbers.

Genuine accountability in American higher education, which would take into account these broad policy goals, is presently non-existent. Instead of accountability, we have a weekly newsmagazine, aka, U.S. News & World Report, that defines educational quality and effectiveness almost exclusively in terms of institutional wealth and prestige.

To be sure, the current “accountability” paradigm, which rewards selectivity in admissions, enrollment yield rates, academic “reputation” is an entrenched part of American culture, and it’s a hard one for ambitious university presidents to bust out of on their own. For their part, policymakers need help to quit playing games with accounting gimmicks and give university presidents permission to do what’s right by their students and the public.

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Peter Sacks is a writer and economist. He is the author of Generation X Goes to College and Tearing Down the Gates: Confronting the Class Divide in American Education.

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