Shaping Emory's Future

Funding the university in changing economic times

Gray Crouse

Professor of Biology and President of the 2012–13 University Senate

Cost of college risingThis essay shares its title with a series of talks the University Senate has sponsored this year exploring how private research universities are financed and the increasing difficulties of this model. The basic problem has been illustrated in many different graphs such as the one to the right, which shows that the cost of education at private colleges has been rising at a much faster rate than the cost of living and even medical costs. 

As a scientist looking at that plot, I see no reason to think that in the future the three lines will get closer together. Therefore I have two basic questions: 1) If such trends are sustainable, how are they sustainable? 2) If such trends are not sustainable, what are the consequences for private research universities like Emory?

On the one hand, it is difficult to imagine how such trends could continue, yet private research universities continue to receive many more applications from qualified students than can be admitted. After all, it was difficult to imagine how house prices could keep rising, yet they did (until they didn’t). On the other hand, if rising tuition costs are not sustainable, major changes will have to take place, even at universities like Emory. And if that is the case, faculty must understand the factors leading to that change so that we can play a constructive and imaginative role in finding solutions. Otherwise, if we faculty choose to sit on the sidelines, university administrations will be forced to act on their own. 

In trying to understand the financing of higher education, I believe it is important to hear from people who understand the particular context of private research universities—hence the Senate-sponsored lecture series this year. We have been fortunate in finding these speakers. All of the talks are archived on the Senate web site (http://senate.emory.edu/) and are well worth viewing. 

In October, Ron Ehrenberg of Cornell’s Higher Education Research Institute answered the title of his seminar (“Is the Golden Age of Private Research Universities Over?”) with a “Yes.” Having studied the financing of higher education for many decades, he gave a cogent analysis of what is happening to our financial models and why. His 2000 book (Tuition Rising: Why College Costs So Much) is still amazingly relevant and covers most of the issues we face today, even that of online courses. He indicated that economic and political forces are likely to limit our ability to sustain tuition increases in the future as we have had in past decades. In addition, financial aid budgets have increased so dramatically that many schools are giving back 40 percent of new tuition dollars, limiting the amount that can be raised by tuition increases that do occur. Also, instructional expenditures have declined relative to the cost of almost everything else the university does—a fact that we faculty like to refer to as administrative bloat. He pointed out the various reasons that costs, and tuition along with them, keep increasing, and it became clear there are no easy fixes. He ended up with some possible solutions to the cost problems but had to admit that his suggestions perhaps did not seem robust enough to fix the problems we face.

In December, Robert Zemsky of the Learning Alliance in Higher Education at the University of Pennsylvania gave a talk focused much more on faculty (“A Faculty Encamped Just North of Armageddon”). At private research institutions like Emory, we tend to think of ourselves as relatively isolated from the general higher education market, but Zemsky provided examples of how a federalized higher education market affects us in sometimes unexpected ways. His analysis of faculty as independent contractors seemed to come all too close to the mark. Although his analysis has a lot to say about that type of faculty behavior on student education, it is less clear about the impact on college financing. His comment that faculty should not be focused on the number of tenure track lines in their department did point in an uncomfortable direction, as all institutions are seeing a shift toward more faculty not on the tenure track.

In February, Jeff Denneen’s talk (“The Law of More: Unmanaged Cost Growth in Universities”) supported much of Ehrenberg’s analysis on university costs and the reasons for their rise. The higher education practice leader at Bain & Company, Denneen is a graduate of both Emory College and Goizueta Business School, and he teaches a course in the business school every fall. He knows Emory well. He gave a thorough analysis of cost structures in research universities, the problems that such universities typically face in administrative structures, and the substantial funds that can be recovered by reorganization. He also indicated the resistance that occurs in the face of such reorganization, not only within the administration, but also by faculty. As just one example, he provided the following:

I met with the faculty senate at one university. We were talking about technology, and I said OK, PCs versus Macs. And I heard, Oh jeez. [I told them] it costs you about $1.5 million a year extra to be maintaining the Mac platform in parallel. Let’s say that’s ten faculty positions, or pick your number; it depends on your college or department. What do you think of that trade off? They said, Well, it depends on which department those faculty members come out of. It’s a little bit of that “every man for himself” mentality that comes through in some circumstances that we need to work through. At the end of the day, it’s the organizational dynamics that are going to make or break the success. The mechanics of what to do—build shared services, streamline your management infrastructure, build scale capability, outsource non-core businesses and activities—all that stuff is really straightforward. Getting people to agree to do it, to support doing it, to sustain doing it over time, is really hard. It requires changing the culture, changing the mindset, changing the way you actually manage yourselves.

The talk in March by Sandy Baum of the George Washington University Graduate School of Education and Human Development (“Financial Aid: Moral Imperative, Competitive Tool, or Unsustainable Burden?”) was revealing in many ways. Emory is one of a small and decreasing number of institutions with a need-blind admissions/meeting all needs financial aid policy. Compared to all other types of higher education institutions, private research universities have the lowest percentage of students from low-income families. One marker of low-income status for students is those who receive federal Pell grants. The percentage of Emory undergraduates who receive Pell grants (22 percent) is higher than almost all of our peer institutions, so our financial aid policy is working as intended. Is that good or bad? That is, are we to be applauded for admitting so many deserving students who otherwise could not afford to attend, or are we spending so much in financial aid that we are sacrificing the quality of our teaching and research? Baum noted that the socioeconomic status (SES) of a student makes a large difference in the likelihood of graduating from college, as does the type of institution a low SES student attends. Thus it is not true that an excellent student of low SES who attends Emory would be equally likely to graduate if he or she attended another type of institution. An additional factor increasing both the need for and the cost of financial aid is the growing income disparity in the U.S., making it even more difficult for low SES students to afford college. I believe the issue of financial aid is only going to get more difficult. Given the steadily increasing price of graduate and professional education, there is increasing need for financial aid in those schools as well, and there is currently little capacity for such aid. 

In my view, faculty have much more “power” with shared responsibility, but that means we must take greater responsibility for our decisions. 

What are the lessons from this series of talks? I think there has not yet been enough time for proper reflection, but faculty need to understand the problems we face at Emory in financing what we do, then we need to be part of crafting solutions. The way forward will not be easy. Since I arrived at Emory in 1984, I have observed the creation of many new departments and programs in the college, with no opposition from faculty. As we saw last fall, however, eliminating existing academic programs is extraordinarily difficult and painful. As faculty, we talk (justifiably in many cases) about administrative bloat. Can we really expect that eliminating administrative activities will be easier than eliminating academic programs? If we were to accept the idea that tuition could no longer rise faster than cost of living, what implications would that have on our budgets? Looking at school budgets reveals no parts that would be expected to rise at a lower rate than cost of living. As faculty, would we be content in the long term with raises that would only mirror increases in cost of living? The hope is that we could achieve significant savings from administrative reorganization, but even that would represent one-time savings: once a lower level of administrative costs was (hopefully) achieved, that lower level would then tend to rise at least at the level of cost of living. We also should not forget the faculty and staff resistance to administrative restructuring that Denneen mentioned. 

As president of the Senate this year, I have tried to shift our thinking about governance from “shared governance” to “shared responsibility.” In my view, faculty have much more “power” with shared responsibility, but that means we must take greater responsibility for our decisions. If we say that some proposed action in order to achieve a balanced budget should not be carried out, then what is the alternative? If the “best” alternative, getting more money, is less and less likely to be possible and generally not within our purview, then what do we do? With shared responsibility, we don’t have the option to “just say no,” but we have to be part of crafting a credible, realistic solution. For the real problems that we will face in financing our teaching and research missions at Emory, I don’t know what the best answers will be. I do believe that the collective minds of our faculty should give a better answer than we would otherwise have, but I also think that difficult decisions will have to be made if we want to become a better place for teaching and research rather than to just try to maintain what we have.