Getting More, Better on Less
- By James L. Fisher, Dr. Scott D. Miller
- April 1st, 2004
During the boom times of the 1990s, virtually all colleges and universities paid lip service to reducing costs while continuing to add academic programs, increase hiring and raise tuitions. All the while, the cost of attending a four-year institution continued to outpace the rate of inflation. In the aftermath of 9/11, with institutional endowments still weakened and philanthropic giving impacted by shrunken portfolios, universities are finally being forced to pay serious attention to reducing costs. College presidents and CFOs nationwide now need to know more than just "when" but rather "where" and "how" to do it.
We contend that virtually any institution can cut costs while actually improving quality. And, contrary to the conventional wisdom, operating expenses
may be reduced without jeopardizing the delivery
of academic and student services - and without compromising the reputation of the institution. Consider the following successful strategies adopted by some private liberal arts colleges.
Teaching loads can be increased. At many institutions, teaching loads have gone from 15 hours to 12, or even nine hours per semester, without a corresponding expectation of additional serious research or scholarship. Once the 15-hour "dam" was broken, the flood of fewer contact hours began - until today, when a new standard, unsupported by virtually any substantial rationale, has emerged. Many presidents fear that reversing this ill-advised trend may alienate faculty, governing boards and even accrediting agencies. We submit that the opposite is true: pay raises, in conjunction with increasing teaching loads, can be used to inspire faculty support, and combined action will become cost effective within a relatively short time.
Along with more realistic teaching loads, faculty size can be reduced, often by attrition, by increasing class size and establishing class minimums. In many selective liberal arts colleges, faculty-student ratios are in the 12:1 range. We are convinced that such ratios could rise as high as 15: 1 or even 30:1 without seriously compromising the quality of undergraduate instruction. Despite claims to the contrary, there is no real evidence that a student learns more in a class of 15 than in one of 30 or more. (Yes, faculty members do work harder.) Good teachers, after all, are good, regardless of class size. If enrollments aren't met, classes should be consolidated, postponed or eliminated.
To facilitate the reduction in faculty size, some institutions now offer attractive retirement "windows" to senior faculty, who typically are among the highest paid members of the teaching community. These inducements offer the dual advantages of bringing in fresh teaching perspectives while realizing cost savings in the form of fewer senior professors, part-time faculty with more real-world experience and the elimination of tired courses.
Even in very dire economic times, faculty can be motivated to accept higher teaching loads and larger class sizes by offering merit compensation in the form of performance bonuses. The latter would not be permanently built into the operating budget of the institution. As a very last resort, some institutions have frozen salaries, and reduced or eliminated benefits.
Again, contrary to conventional wisdom, part-time or adjunct faculty can sometimes be more valuable, as well as less expensive, than full-time faculty. What's more, in professional programs, they tend to be closer to the requirements of potential employers and to current career trends. The key here is proper orientation and evaluation. But, in any event, part-time faculties are more easily managed, less costly and require lower maintenance than full-time faculties. Today, some institutions call faculty "course managers" who appoint their own teaching adjuncts. In one case, 95 percent of the faculty is made up of adjuncts and the institution is fully accredited.
Faculty staff travel can be reduced or temporarily eliminated. In our experience, rarely are faculty or administrators enhanced by professional meetings beyond what they can obtain in academic journals. Moreover, when faculty travel is funded by the college, faculty may appropriately be asked to add value by assisting in admissions and/or development calls on prospects in their field of expertise.
Faculty evaluation procedures need to be more certain and telling. In too many institutions, these evaluations are left to faculty peers who are bound to consider association and tenure as important features, and teaching effectiveness is not given the priority it deserves. All faculty evaluation procedures should include as prime determinants student, peer and supervisor evaluations. In addition, student learning should be assessed by external measures. Finally, we think every traditional institution should have specific and systematic post-tenure review.
In addition to under-performing faculty, many colleges and universities are also burdened by a top-heavy administrative infrastructure. Our rule of thumb about reducing administrative costs is that five vice presidents are acceptable; four is better; and more than five is always questionable. We strongly suggest that all positions entitled "associate" or "assistant" in their prefix be scrutinized with an eye toward elimination. Instead, our experience shows that part-time staff, student workers and interns are frequently more productive and less costly. One administrative area that is frequently overstaffed is development. Although it's indeed true that "it takes money to make money," some campuses are paying more in development staff salaries and benefits than they are bringing in. Therefore, we're once again being counter-intuitive and suggesting that, in a crunch, it's best to put money into marketing rather than fund raising. Admissions travel costs can be cut significantly without compromising the quality of the applicant pool. Alumni, as well as faculty, can interview top prospects in their respective hometowns, especially in areas distant from the institution's primary recruiting area.
In this same vein, consolidate administrative functions and eliminate positions. If overtime and excessive workloads threaten to undermine staff morale, consider outsourcing and part-timers who do not contribute to benefits costs and whose labor is more elastic.
Farm out services whenever possible. Areas for outsourcing include, but are not limited to, food services, the bookstore, student housing and maintenance. It is cost effective, and most institutions report that the results are improved. Some co leges have gone even further, outsourcing payroll services, portions of information technology, campus safety/security and financial aid services. They often capitalize on the Interim Registry of College and University Presidents when transitional executive assistance (i.e., an interim vice president or dean) is needed.
Lease space rather than build. Many institutions have taken on heavy debt load in the mistaken belief that new, modern facilities would attract students. Such misguided strategies have a way of backfiring and actually losing support for a college. A related piece of advice is that, as new facilities are built, where possible, design them with an alternative use in mind. Put a hold on deferred maintenance to the point of the completely obvious, but don't overlook the appearance of the residence halls and classrooms where students spend most of their time.
Eliminate costly athletic programs, such as football. Reduce team travel and insist that athletic programs are sustained out of private support or special student fees. Insist that all full-time coaches also have teaching assignments.
Reduce the institutional allocation in financial aid. Instead, concentrate on public funds or special scholarships. Some farsighted presidents have turned their institutions around in one or two fiscal years by halting the insidious practice of tuition discounting altogether.
Finally, use tested consultants and your governing board for advice and most importantly, to take the heat for unpopular measures.
Using these proven business and financial strategies and others, one can, in relatively short order, reduce an institution's operating budget by 15 to 20 percent or more while increasing the quality of academic programs, elevating the morale of faculty and staff, and enhancing the reputation of the institution.
Dr. James L. Fisher is the most published writer on leadership and organizational behavior in American colleges and universities today. He is president-emeritus of Towson University and the Council for the Advancement and Support of Education (CASE). He resides in Vero Beach, Fla.
Dr. Scott D. Miller, a college president since 1991, is president of Wesley College, Dover, Del. He currently serves on 12 nonprofit boards.
Both Dr. Fisher and Dr. Miller serve as consultants to college boards and presidents.