Tuesday, October 7, 2014

What if We Budgeted in FTE?

Loyal readers familiar with my views on the subject (Hi, Mom!) know that I am not very sympathetic to most of the arguments about the costs of higher education. They tend, for example, to confuse costs to students (i.e., tuition and fees) with cost per student (i.e., spending). At UVU, for example, the latter increased at an annual rate of 7.4% between 1990 and 2010. But real per FTE spending was flat. The additional tuition almost exactly offset cuts in state funding. That's the real story at many regional state institutions and community colleges, the workhorses of higher education in the US.

But that isn't to say that spending doesn't matter. There has also been a shift in where money is spent, with much more money spent on administrative costs and less on full-time faculty. To make up for that shift, more instruction is done by part-time employees, many of whom barely make minimum wage.

That leads a bit too easily to blaming administrators. There is a perception, not entirely unjustified, that administration is something like Arrested Development: just like, "There's always money in the banana stand," there is always money for more "deanlets." Again, I'm unsympathetic to blaming administrators here; universities have far more responsibilities that they once did, and responsibilities don't meet themselves.

Part of that is formal, with government and accreditors increasing requirements for compliance. In The Washington Monthly's golden-age baseline year of 1975, neither IPEDS, nor the Cleary Act, nor most Title IV funding, nor Core Themes, nor State Longitudinal Data Systems existed. And there is the further expectation that routine decisions will be made using evidence-based, data-driven processes.

At the same time, we've also taken on more informal responsibilities in the form of being held responsible for things that were once others'. When I was in college in the 1990s, there was no talk of retention rates; students who dropped out did so because they were ultimately not good students (or so we thought). To meet these new responsibilities, institutions created a host of new programs: student support, student engagement, mental health centers, writing centers, tutoring programs, first-generation student programs, etc.

I'd argue those are Damn Fine Things. But they cost Real Damn Money.

And that raises the question of whether all of this is worth the effort. That's where the banana stand becomes a problem. How can we say no to helping first-generation students? How can an accreditor not believe in evidence-based assessment of learning outcomes? When there's always money in the banana stand for another deanling (put there by cutting an open tenure line and replacing it with a few adjuncts), it becomes hard for institutions, government, and those who hold them accountable to not demand that we make it so. The consequence, of course, is the shift of core spending from faculty to administration, enabling universities to more effectively manage efforts to fulfill a hollowed out mission.

The problem is the failure to understand the trade-off between administration and instruction, and it is a problem that exists as much in those to whom institutions are accountable (and probably more so) as in the administrators who run the institutions. The Department of Education requires us to do X, so we have to find the money for it. The trade-off is invisible, hidden behind the requirement.

So let me propose making the trade-off more visible. Instead of budgeting in dollar amounts, institutions might start budgeting in full-time equivalent students. The basic premise is that every non-instructional expense (at least every hard-budgeted one) is taken from a potential pool of money full-time faculty who could be teaching students. We can calculate the average faculty salary and the FTE that they teach on average, and identify a cost-per-FTE. Our budgets are then expressed in this FTE rather than dollars, and we can judge expenditures based on whether the sacrifice in the number if students who can take classes with full-time faculty is worth it.

Take a hypothetical university similar enough to my own but with numbers that round easily. An average tenure-track faculty member might have a budget line of $100,000 including taxes and benefits. (Remember, that's full professors in the business school, not just assistant professors in the humanities.) They teach 12 credit hours per semester, in classes averaging 25 students each, for a total of 50 student FTE per year. That means that for every $2,000 spent on non-instructional activities, one student is not taught at all, or is problematically taught by an adjunct instructor.

Now use that standard to make decisions about administrative activities. How many students are we willing to sacrifice to fulfill this activity? Surely, some of the activities will be worth the cost, perhaps because without them professors couldn't teach 12 credit hours, or perhaps because they significantly improve the quality of the experience for those we do serve.

But would they all be worth the cost? This could be a very effective argument against more reporting, more compliance, and more support. Institutions that say $10,000 to support a reporting process is too much won't be taken seriously; that's not Real Money. But is a member of the state legislature willing to say that his new rankings scheme is worth failing to educate five students? That's a hard sell come election time.

My own office is responsible for assessment and accreditation management. (With the latter function we won't be going anywhere, but that simply shifts the burden of proof up to NWCCU, so stay with me here.) Are we worth keeping around given the cost?

Including support and related functions from other offices on campus (such as Institutional Research and Academic Affairs), university-wide assessment costs UVU around $375,000. There are 187 full-time equivalent students who could study with full-time faculty members if we didn't have to worry about assessment. The cost of proving that we have fulfilled our mission is that we fail to fulfill it for 187 students per year.

Put in those terms, I'm not convinced that the price is worth paying.

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