Monday, March 29, 2010

Undercover Economics

Given the severity of our current recession, everyone I know has either been touched directly by this economic malaise or knows someone who has been adversely impacted – jobs lost or not found, salaries reduced or not increased, houses lost or not purchased, health insurance foregone, vacations foregone and the list goes on and on.  People are clearly hurting.  But the impact of this and any recession is on more than people; colleges and universities are good examples of institutions adversely impacted. The adverse impact can happen in many ways and take many forms; some are almost invisible with a price to be paid only over a long term time period.

We know that support from governments for public higher education has declined in many parts of the country.  As support has declined, tuition has increased and often there have been major increases in fees as well. In community colleges where the cost of education is lower (both for the supplier and the consumer) there have been some dramatic increases in enrollment.  In four year and graduate public institutions, enrollments are more likely capped and in some areas reduced.  Often at the same time that tuition is rapidly increasing, so is the use of adjuncts and the average class size. Faculty travel and sabbaticals in support of research are often also adversely impacted.

Private higher education faces many of the same challenges.  The difference between public higher education tuition (where there are varying degrees of government support) and private higher education tuition (where such support is much more limited and most likely tied to financial need) prompts some families, especially during economic uncertainty, to favor the lower priced alternative (even if they clearly recognize the benefits of private higher education).  Or the uncertainty could lead to more commuter students rather than residential students. Private higher education’s response, almost across the board is to increase need and or merit based financial aid, which requires almost across the board tuition increases as the funding source.  And here too, adjunct usage is increasing as is average class size.

The economic consequences of these actions are visible to either a greater or lesser degree to the student and his or her family.  Tuition increases are clear to everyone; increased class size is clear only if you have a basis for comparison; and increased use of adjuncts is much less visible.  But there are other effects which are even more undercover.  First of all, what is taking place is a fundamental shift in the allocation of resources away from the classroom.  Because funding has declined or because more dollars need to be allocated to financial aid, the dollars spent on education have been constrained. There is no alternative but unless too many resources were originally allocated to direct classroom education something has been lost. And it remains to be seen whether the allocation will shift back again to the classroom experience either in the short term or in the longer term.  For faculty, and faculty clearly are the heart of the education we provide, the lack of job opportunities for new faculty, the increased economic uncertainly for continuing faculty, larger classes and the reduced level of support for research can result in a morale problem that could extend past the current recession.  All at the same time as we look to faculty to play an increased role in retention.

Overall, as we move forward, we need to objectively look at what we have enhanced and what we have compromised.  And where compromises have been made, we must look for opportunities to restore what has been lost.

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