ERIC ED345601: National Symposium on Strategic Higher Education Finance and Management Issues. Proceedings (Washington D.C., February 24-25, 1991).

229 Pages·1991·3.6 MB·English

by  ERIC

DOCUMENT RESUME
ED 345 601
HE 025 491
TITLE
Proceedings of the National Symposium on Strategic
Higher Education Finance and Management Issues
(Washington, D.C., February 24-25, 1991).
INSTITUTION
National Association of Coll. and Univ. Business
Officers, Washington, D.C.
SPONS AGENCY
College Board, New York, NY.; Office of Educational
Research and Improvement (ED), Washington, DC.
REPORT NO
ISBN-0-915164-68-X
PUB DATE
91
NOTE
232p.
AVAILABLE FROM
National Association of College and University
Business Officers, One Dupont Circle, Washington, DC
20036 ($45.00 members, $65.00 non-members).
PUB TYPE
Collected Works - Conference Proceedings (021)
EDRS PRICE
MF01/PC10 Plus Postage.
DESCRIPTORS
Administration; Educational Economics; *Educational
Finance; Educational Quality; *Expenditures;
*Financial Problems; Higher Education; Inflation
(Economics); Meetings; Money Management; Paying for
College; Postsecondary Education; *Student Costs;
Trend Analysis; *Tuition
ABSTRACT
This publication presents the proceedings of a
symposium that brought together the people who create the
agenda for
higher education with the aim of determining the financial
and
managerial direction of colleges and universities into
the 1990s.
General topics covered are the following: (1) financial challenges
facing higher education; (2) financing higher education in
the 1990s;
(3) tuition pricing; (4) current research
on reducing institutional
cost structures; (5) financial implications of demographic
trends;
(6) prognosis for federal financing of higher education;
and (7)
productivity. Specific papers cover the subjects of tuition
discounting, college quality and tuition, level of family
willingness
to pay for tuition, cost reduction trends and student
employment,
demographic and work force trends and their impact
on higher
education in the 1990s, and an examination of the
causes and cures of
cost escalation in college and university administrative
and support
services. Brief biographies of participants are included.. (GLR)
***********************************************************************
Reproductions supplied by EDRS are the best that
can be made
from the original document.
***********************************************************************
U.I. DEPARTMENT OF EDUCATION
Offfce of Educational Researcn end Improvement
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INFORMATION CENTER (ERIC)."
1
14)
Copyright 1991 by the National Association of
College and University Business Officers
One Dupont Circle
Washington, DC 20036
All rights reserved
Printed in the United States of America
Edited by Deirdre McDonald
Cover an,i text design by Carla Lott
Library of Congress Cataloging-in-Publications Data
National Symposium on Strategic Higher Education Finance & Management
Issues (1991 : Washington, D.C.)
National Symposium on Strategic Higher Education Finance &
Management Issues : proceedings.
p.
cm.
Conference sponsored by the National Association of College and
University Business Officers February 24-25, 1991, in Washington,
D.C.
ISBN 0-915164-68-X
1. Education, Higher--Umted States--Finance--Congresses.
2. Education, Higher--United States--Costs--Congresses.
I. National Association of College and University Business Officers.
II. Title.
I.132342.N356
1991
378'.02'0973--dc20
91-15698
CIP
3
Foreword
This publication is an edited version of the proceedings of the National
Symposium on Strategic Higher Education Finance & Management Issues in
the 1990s, held February 24-25, 1991, in Washington, D.C. The invitational
symposium was sponsored by the National Association of College and
University Business Officers, the U.S. Department of Education's Office of
Educational Research and Improvement, and The College Board.
The symposium brought together the people who create the agenda for higher
education: institutional presidents and presidential policy makers,
corporate
leaders and leading financiers, top administrators from
campuses and the
government, well-known politicians, and widely respected researchers. The
purpose of this meeting was to determine the financial and managerial direction
of colleges and universities into the 1990s. The
range of issues discussed was
necessarily broad. It is hoped that the spirit of this inaugural symposium
will
continue in the form of a biannual series of conferences
on specific topics
affecting the higher education
arena.
Contents
Foreword
iii
Financial Challenges Facing Higher Education
Introduction to the Symposium, Caspa L. Harris, Jr.
3
A World of Change: Applicability of Business
Practices to Higher Education, Michael H. Walsh
5
Questions and Answers
15
Symposium Overview, Jeffrey L. Gilmore
23
Financing Higher Education in the
1990s: A Panel Discussion
Moderator
Richard E. Anderson
30
Panelists
Charles E. M. Kolb
32
Richard T. Jerue
35
Patrick J. Hennigan
38
George A. Brake ley, Jr.
41
Robert M. Rosenzweig
45
David A. Longanecker
51
Questions and Answers
55
Tuition Pricing
Introduction, Frederick A. Rogers
65
College Tuition: How Much Are Families
Willing to Pay? Rita J. Kirshstein
67
College Quality and Tuition: Exploring
the Relationships, Jeffrey L. Gilmore
77
Tuition Discounting, Sean C. Rush
93
Questions and Answers
101
Current Research
on Reducing Institutional Cost Structures
Reducing Institutional Costs, Michael L.
Tierney
107
Activity-Based Costing, Frederick J. Turk
113
Cost Reduction Trends and Student
Employment, Roger D. Lowe
117
Questions and Answers
121
Financial Implications of Demographic
Trends
Introduction, Janet S. Hansen
129
The Impact of Demographic Trends in Higher
131
Education in the 1990s, Carol Frances
Work Force Trends and Their Impact on Higher
143
Education in the 1990s, K. Scott Hughes
153
Questions and Answers
Prognosis for Federal Financing of Higher Education
159
Introduction, Caspa L. Harris, Jr.
161
Welcome, Christopher T. Cross
Financing of Research, Scientific Instrumentation,
165
and Facilities, Senator James M. Jeffords (R-VT)
171
Questions and Answers
Productivity
177
Introduction, Frederick A. Rogers
Causes and Cures of Cost Escalation in College
and University Administrative and Support
179
Services, William F. Massy
201
Questions and Answers
State Policy and Productivity in Higher
205
Education, James R. Mingle
221
Questions and Answers
A Look Ahead
227
Future Directions, Janet S. Hansen
231
Biographies
6
Financial Challenges Facing
Higher Education
Introduction to the
Symposium
Caspa L. Harris, Jr.
National Association of College and
University Business Officers
The winds of change
are blowing at gale force in higher education. Events that
once
took decades to unfold
now sweep by within years and even months. Individually,
these events seem like unrelated strands in
a tangle of chaos, but when woven
together and seen as a whole, they form
a tapestry of a new demographic and
economic landscape for higher education.
The environment in which American higher
education operates has undergone
profound change. The
essence of that change can be distilled down to
one word:
competition. Major research universities that
once enjoyed an easy command uf the
national markets for high-quality students, faculty,
and research contracts
now find
themselves engaged in a raging battle
to maintain their competitive position within
the industry, while smaller, regional colleges
are fighting to ensure their very survival.
In the community college sector, however,
changing demographics and increased
demand for low-cost college
prep and vocational programs have swollen the supply
of applicants. Meeting this increasing
demand for college preparation, vocational, and
special assistance programs has severely strained
community college budgets, budgets
that are already over-extended by the political
demands for continuing low tuition
and by financially hard-pressed
state and local government.
In this new environment,
many college and university managers have
come to
realize that their institutions
must make radical changes in the
way they operate.
Today's intense national competition for
resources has generated considerable
uncertainty for institutions in virtually
every sector of higher education. Increased
competition demands a rapid
response to initiatives by other institutions and
unconventional education providers. It also
calls for continuous improvement in the
quality and productivity of
an institution's education distribution network and
administrative support structure to enable
it to effectively control costs, while
enhancing services. The 1990s will
require a flexible and adaptive organization,
as
well as a different pattern of work behavior.
Faculty and staff must recognize what
their students want and their competitors
offer. Our lumbering institutional governing
process must take this knowledge and translate it into
action, making improvements
in programs, service, quality, and
cost at all levels.
At the same time, higher education markets,
programs, and technologies are
changing too quickly for top
management to keep abreast of all of the latest
developments. Slowly, we
are becoming aware that it is impossible to respond rapidly
to the simultaneous demands for lower
cost and higher quality without radically
improving coordination and teamwork.
Managing organizational change is
a topic that higher education must examine and
Issues
National Symposium on Higher Education Fi lance & Management
4
day for our industry in the
understand. Fundamental change will be the order of the
quickly and effectively to
foreseeable future. Clearly, those institutions that can adapt
decade. What
change will have a powerful competitive advantage during the coming
is less obvious is where and how change should begin.
that meet
Institutions are faced with at least four options: one, create programs
eliminate excess costs
market demands and divest those programs that do not; two,
functions; three,
and enhance productivity in both academic and 3drninistrative
quality management
revitalize faculty and staff performance through the use of
creation of an institutional climate in which
programs, task realignments, and the
in
short-term demands for cost reduction are balanced by long-term investment
liabilities in an
human resources; and, four, manage capital and financial assets and
effective manner.
committed
NACUBO, through its Financial Management Committee and Center, is
that will help institutional managers
to providing tools, strategies, and insights
challenges of the 1990s. With
understand and address the financial and managerial
Education and
this objective in mind and with the assistance of the Department of
only the first of
The College Board, we have organized this symposium. It will be
undertake over the next three years to expand the
many initiatives that NACUBO will
literature and to extend the state-of-the-art in college and university finance and
management.
chairman and
It is now my distinct pleasure to introduce Mr. Michael H. Walsh,
chief executive officer of the Union Pacific Railroad. i can think of no one more
the board
suitable to lead off our program than Mr. Walsh, who currently serves on
University.
of trustees at Stanford University and the board of directors at Creighton
received his bachelor's
Mr. Walsh has headed Union Pacific since October 1986. He
degree in economics from Stanford University in 1964 and an LL.B. from Yale
member of
Univusity Law School in 1969. Between college and law school, he was a
the first group of White House Fellows. In that capacity, he was special assistant to
Secretary of Agriculture Orville Freeman.
before being
Mr. Walsh practic2c1 law in various public and private capacities
he joined
named U.S. Attorney for the Southern District of California in 1977. In 1980,
Cummings Engine Company in Columbus, Indiana, as a member of the board of
and
direc tors and executive vice president and general manager, Worldwide Engine
Components Businesses.
based
Mr. Walsh is the director of PirsTier Financial, a multibank holding company
in Omaha, of Flemming Companies, a wholesale food distributor headquartered in
Oklahoma City. He is also a trustee and director of a host of other organizations,
which, ii I mentioned them all, would occupy most of the evening!
Ladies and gentlemen, please join me in welcoming Mr. Walsh.
A World of Change:
Applicability of Business
Practices to Higher Education
Michael H. Walsh
Union Pacific Railroad Company
Every time I get up to give a speech and frankly, I give quite
a few I wonder how
many people are going to show up to listen. Not long ago, I heard about a speaker
who arrived, after arduous preparation on the speaker's part, to find only
a single
person in the audience. Anticipating that more people would drift in, he went ahead
and started to speak. Soon, though, he gave
up because his one-person audience was
reading a newspaper. Looking at the
guy squarely in the eye, the speaker said: "Look,
this is kind of silly. Why don't I just give you
a copy of my speech and we can both
go home?" No. The man wouldn't have any part of it. He shook his head and
demanded that the speaker continue.
"Why are you doing this to me?" the speaker said. "Why force
me to go on when
you are the only person here?" The one man in the audience looked up and he said,
"Because I am the next speaker."
[Laughter.]
Now, happily, I don't have that problem this evening. Rather than
me worrying
about how many of you would be here, I expect many of
you are asking why am I
here. What is the chairman of a railroad doing
as the keynote speaker for the National
Symposium on Strategic Higher Education Finance and Management Issues in the
1990s? What do I have to say?
I hope the answer is plenty. Let's face it, each of
us is tempted to think that there
is something both special and unique about
our own institutional circumstances. In
my view, this view is especially virulent in higher education. I can't tell you how
many times in almost 20 years total as a trustee olvarious educational institutions I
have heard the words: "But you don't understand. We
are talking about a university
here."
The implied but unstated premise behind such statements is almost
one of a ritual
order in which only the initiated
are trusted. In today's world, there isn't any place
for such parochialism. Let me make myself absolutely clear. I
am not saying that
universities can be run just like a business. I
am saying, however, that how a leader
effectively manages change and how a leader thectively
manages change in all large
entrenched institutions have a lot in common.
Sure, businesses have a bottom line and they
can and do measure profit.
Universities don't and can't. That, however, is the beginning and
not the end of