A Brief History of Higher Education (part 3)

When and if the shakeout is complete, higher education will not be populated exclusively by e-educators. Nor will the landscape of higher education boast only the largest and wealthiest brick-and-mortar institutions. Rather, as in the past, we should anticipate a mix of liberal arts colleges, land-grant universities, and wealthy private universities, including megaversities, coexisting in rationalized competition with the e-educators and other for-profit entrants of this 21st century wave of institution building.
A mature industry may be defined as, “An industry that has passed both the emerging and the growth phases of industry growth. Earnings and sales grow slower in mature industries than in growth and emerging industries.”(http://financial-dictionary.thefreedictionary.com/Mature+Industry) American higher education is in the midst of a profound transformation. Some leaders in higher education contend that it is a mature industry, which must co-exist and compete in the global marketplace, while others argue that its primary role remains as ever a public responsibility to create good citizens.   For some, like Arthur Levine, president of Teacher’s College at Columbia University, college and university education as we know it is a relic of the past, irrelevant to the economic developments and desires for individual career advancement in the global economy. The real business of the “mature industry” of higher education is to serve the marketplace of information economies. This, he claims, can best be done through on-line technology by the profit-making sector. Quaint campuses, classroom lectures, and a community of scholars are irrelevant to the business of education.
For others, higher education has a different purpose, and an historical tradition, that is tied to education for effective citizenship. In this view, higher education should have a central role to play in the health of our democracy but has been deficient in rebuilding the civic life of the country. Our institutions of higher education were shaped in the era following WW II that is not readily adaptable to meeting the need of transforming civic life. The structure, organization, administration, and academic culture of campuses embraced science and technology, emphasized a cult of objectivity and detachment, and elevated the role of the scientifically educated expert over ordinary citizens in public affairs. This ethos of professionalism and expertise that defined higher education’s response to the national crisis of the Cold War now contributes to public disillusionment with institutions that represent and legitimize a system that no longer addresses the most pressing national needs. Ivy towers, inert knowledge, and credentialed students are irrelevant to the civic purpose of education. (Saltmarsh)
Most colleges and universities have attempted to take a middle ground, reforming antiquated practices and encrusted procedures sufficiently to meet the more competitive market of the millennium, while retaining many vestiges of the venerable past, such as faculty tenure and academic freedom. Critics complain that reform for the most part has been thus far a case of too little, too late.
Colleges and universities provide a setting for the contemplative life. The word “school” is derived from the Greek schole, meaning leisure. Efficiency is not always prized on campus, and this spirit has translated to fiscal matters. Bowen (1980) captured the spendthrift philosophy of higher education in his “revenue theory of cost”: “Each institution raises all the money it can” and “spends all it raises” (p. 20).

College costs have escalated for reasons rooted primarily in organizational culture and market forces. Institutions of higher education often have defined quality in terms of resources acquired rather than results achieved (Guskin,1994; Lovett, 2005). Colleges and universities have survived profligacy through monopolistic competition, achieving sufficient differentiation from other institutions by geographic location and programs (Bowen, 1980). But high technology, which supplies the capacity to deliver academic programs at a distance from the physical campus, is eroding the product differentiation so long enjoyed by traditional colleges and universities.
The pressure on institutions to control costs has likely never been greater. Tuition at four-year public institutions in the 2003-04 academic year increased at the highest rate in three decades, an average of 14 percent more than the prior year (Farelle, 2003). State appropriations to public colleges and universities fell 2.1 percent from the 2002-03 fiscal year to the 2003-04 fiscal year–the first decline in 11 years (Hebel, 2004). Colleges and universities, particularly private institutions, are only now recovering from endowment losses in 2002. The National Association of College and University Business Officers’ study of endowment for that year showed that institutions of higher education lost six percent on their investments, marking the first time investments had declined for two consecutive years since 1974 (Lyons, 2003). In company with other employers, colleges and universities struggle with the escalating cost of health care for employees. Health insurance premiums rose 13.9 percent in 2003, the third consecutive year of double-digit increases (Basinger, 2003).
Institutions of higher education confront many barriers to cost control. Perhaps the most basic impediment is poor cost information. Progress toward improved costing for higher education was advanced in the 1970s by the work of the National Center for Higher Education Management Systems (NCHEMS), but the cost systems proposed by NCHEMS largely were abandoned in the affluence of the 1980s (Turk, 1992). Day (1993) noted “no general consensus on costing methodology in higher education” (p. 13). Even now internal management reports focus on salaries, travel, and research costs, and generally ignore such indirect costs as facilities and administration.
Higher education is also a labor-intensive endeavor, making gains in productivity more difficult and exposing institutions to the spiral of benefit costs. Moreover, consensus management continues to pervade academic administration and bring inefficiency to the decision-making process (Zemsky and Massy, 1990)(Adams).
Faced with these pressures, colleges and universities are: -Competing harder than ever for students, as well as grants and gifts; -Seeking to control and exploit intellectual property that, once upon a time, was left to faculty to promulgate as they saw fit; -Growing and expanding, often at the expense of competing institutions and for-profit providers of post-secondary education; -Streamlining operations where possible, such as by bringing Student Life divisions under the umbrellas of Academic Affairs; hiring more adjunct and non-tenure-track full-time faculty; offering accelerated degree programs, sometimes at the expense of traditional core requirements; and
-Being all things to all potential students, such as by offering on-line courses, professional certifications, and remote-site alternative facilities.

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