Thursday, April 2, 2015

Can we save America's small colleges by sharing some administration?

At many of our institutions of Higher Education, undergraduate tuition has inflated significantly faster than the Consumer Price Index (CPI). This inflation has multiple sources; e.g. administration and administrative redundancy; facilities management; expenditures to accommodate increasing enrollment; and a broad reduction in research investments.

It is important to note that teacher compensation has not exceeded CPI, and tend to lag behind. Yet, many current strategies to reduce the overall cost of college currently focus on reducing instructional cost or reducing the number of classes that students take at college. These strategies will fail to reduce tuition and may, in fact, increase it… as schools seek additional financial input to preserve core functions.

Sharing certain administrative services between several institutions may be an effective way to tackle administrative cost. This approach might benefit smaller public schools, in particular. (Larger universities may find more benefit by implementing a shared service approach within their school, i.e. sharing services between departments and schools in order to tackle administrative redundancy.)

Many administrative functions served at our colleges and universities are quite similar to analogous functions elsewhere and do not require full-time, local personnel. For example, routine procurement and financial functions; grant pre-award reviews; routine accreditation reviews; certain HR functions; and perhaps even initial admissions reviews might be effectively pooled.

Moreover, there exists a need for highly specialized expertise that may be difficult for smaller schools to source; for example, specialized financial, legal, and intellectual property consultation.

It is very important to note that this “shared services” approach is not intended to eliminate core functions. Nor can this approach be implemented in a manner that makes services less accessible to faculty, staff and students. On the contrary, the objective is to find more resources for those core functions that truly require customization due to the particular needs of a school, whilst reducing cost for other functions.

As an initial step toward implementing this approach, I suggest that schools begin to distinguish, within their own administrative structures, those functions that require high levels of customization and local service, etc. in order to serve the core mission of their school. These core administrative services must be preserved and should indeed be enhanced. Next, functions that could be perform equally -or perhaps even better- with a shared service strategy can be identified, and those items can be considered for pooling with similar schools.

If this can strategy can be implemented without adversely affecting their core mission, several of America’s smaller institutions of Higher Education that currently struggle with escalating administrative cost may soon find incentive to unite and conquer.

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