Monday, January 28, 2008

On Funding Public Higher Education, Part IV: The Billion Dollar Endowment Club

Late last week, NACUBO released their 2007 report, which discloses that there are now 76 colleges and universities in the Billion Dollar Endowment Club. That same week, Inside Higher Education covered new developments in the world of higher education endowments and their political repercussions. And the always-thoughtful Timothy Burke, riffing on an Andrew Delbanco/Roger Lehecka op-ed in The New York Times, considered alternatives to a renewed financial aid arms race between the Harvards (#1; $34.63B) and Yales (#2; $22.53B) and the Williamses (#1 small liberal arts college; #33 overall; $1.89B) and Pomonas (#2 SLAC; #38 overall; $1.76B) of the U.S. My goal in this post is to use Burke's analysis and proposals as a lever to shift the discussion from relations between the top and bottom of the Billion Dollar Endowment Club to relations between the BDEC and the overwhelming majority of the 4000+ higher education institutions in the U.S.--those with endowments less than $50M.

Let's start with Burke's insight that, particularly among peer institutions, endowments matter:

Each institution uses marketing literature to highlight its major sources of distinctiveness, like Swarthmore’s Honors program or Reed’s focus on individualized senior research projects. But these are like shiny decorations on top of a basically similar cake. The big difference, in the end, is the relative wealth of a given institution: that’s what determines how big and lustrous and tasty the cake really is. Swarthmore can support the range of subjects and favorable student-faculty ratio that it has because in the end, that’s what it spends its considerable money doing: having a curriculum that’s unusually wide for the small size of the institution without using large lecture courses or adjunct instructors as the primary vehicle for delivering that curriculum.

You don't have to get to the final analysis to conclude that Swarthmore is wealthy. Its $1.44B endowment (#6 SLAC and #50 overall), is over twice the size of Hamilton College's (#16 SLAC; #101 overall, $.7B)--the college I graduated from--which, by the way, has an endowment around 40 times the size of the institution's at which I work, even though we enroll more undergraduates than it and Swarthmore put together (don't even ask what percentage of Princeton's endowment ours is!). With its wealth, Swarthmore can offer about the same range of majors and courses to about the same range of students as the much larger institutions at the top of the BDEC, but distinguishes itself from them through its choice to do so in small classes taught mostly by tenured and tenure-track professors. Part of this is by necessity--they have no graduate students to apprentice exploit. But a lot of it is seeking comparative advantage--they believe that severely limiting the number of courses taught by non-tenurable faculty on their campus will better prepare the students they choose and who choose them to excel in their careers and donate enough over the course of them so that they can continue to afford to try luring future students from the larger highly selective private colleges and universities at the top of the BDEC.

Burke would like to see the SLACs that can afford to make this gamble

do a lot more to shoulder the responsibility of social mobility, to work harder to bring in first-generation college students. To a significant extent, I’d like to see Swarthmore and all of its peers shift some of the efforts we presently put into pursuing diversity across a very wide range into the dedicated pursuit of qualified applicants who would be first-generation college students, to look at economic diversity as Job #1.

Although Swarthmore could afford to add resources to this effort rather than shifting them away from other kinds of diversity initiatives, Burke's proposal is admirable for many reasons, particularly in light of Delbanco and Lehecka's "scandalous fact" that

between 2004 and 2006--an era of enormous private wealth accumulation--27 of the 30 top-ranked American universities and 26 of the top 30 liberal arts colleges saw a decline in the percentage of low-income (Pell-grant-eligible) students.

And it is clever, as well. Those schools that follow Burke's lead would be gaining, at least for the short term, another comparative advantage on their peer institutions, as there presumably are the same or perhaps greater advantages from the experience of economic diversity as of other forms. Still, implementing it would affect only the relatively few such students who could be admitted into such highly selective small colleges. This is one of the key problems with the social mobility model that Burke invokes here. Even if every single private institution in the BDEC were to act on his proposal, we'd continue to have a higher education system in which the most educational resources were devoted to the students who, in a sense, least need them.

To be sure, there are several public systems in the BDEC, but take one guess where most of the endowment resources typically flow in them. Yup, to the "flagships," the Ph.D.-granting institutions--those that value research over teaching, that substitute non-tenurable teachers for tenurable ones as often as they can, just like the Harvards and Yales of the BDEC. The portion of the endowment that escapes this gravitational field and makes its way to the "satellites," the public regional universities, guarantees that no matter how much individual administators and faculty in them value teaching, the percentage of courses taught by the non-tenurable remains shockingly high.

Let's face it: probably about a dozen of the schools in the BDEC can afford to do just about anything they want with respect to student target markets, curriculum, staffing, tuition, fees, and aid, and institutional growth. The rest are looking nervously over their shoulders at what those institutions decide to do. But if they all were to ask themselves how they could have the greatest effect on class in America, they would stop obsessing over intra-BDEC relations, stop acting as if the relations between the wealthy and less wealthy were all that mattered, and start paying attention to relations between elite and non-elite colleges and universities.

The BDEC could, for instance, turn the table on the states and the federal government. There's an easy way to shift public discussion from why the BDEC is spending so little while their endowments are growing so much to why public higher education is so underfunded. If most in the BDEC were to follow my advice and get creative about donating 1% of their capital gains each year to deserving colleges and universities that value teaching, they would not only be putting their endowments to better use but also showing up the state. If they were to act on the principle that quality education ought not to be a class privilege, they might be able to shame the state into changing how, in Marc Bousquet's nice phrase, the university works. But of course they'd have to get their own houses in order, at the same time, and stop relying so much on non-tenurable teachers.

I hope that Burke would support such a strategy, even though in the long run it could jeopardize the very comparative advantage that distinguishes the Swarthmores of the world from the Harvards. The best SLACs, after all, benefit from the exploitation of graduate employees and other casualized academic workers that is the norm in the rest of the American academic world. Were that exploitation to become the exception rather than the rule in U.S. higher education, what would become of the formerly exceptional SLACs? This is where Burke's emphasis on mission differentiation takes on added significance.

Less wealthy institutions could make a different choice than throwing poorer students overboard in order to discount tuition to less academically qualified but financially attractive upper-middle class students. They could aim to live in the “long tail” of the education marketplace. Right now, there are relatively few selective colleges and universities that try to deliver a strongly distinctive kind of education....

I think the answer for less wealthy institutions isn’t to either keep up with the Joneses or complain bitterly about the inequity of Harvard’s tuition initiatives. It’s to get out of the game of trying to be all things to all possible students, to drop services and curriculum not because of a need to indiscriminately economize but because of a strategic, deliberate decision to specialize or seek distinction in some highly specific area or philosophical approach. Frankly, I think the wealthier institutions could use a shot of this kind of thinking, too.

To return to Burke's earlier "cake" metaphor that is recalled by his closing "shot" metaphor, his advice is open to multiple readings. Perhaps Burke is playing with the metaphor that in the American educational system primary education is the appetizer, secondary education the main course, and post-secondary the dessert. Diversifying dessert offerings makes sense within this frame. Rather than trying to decorate the cake differently or use an innovative icing--or even develop a new recipe--he is calling on those outside the BDEC to stop assuming that cakes are the only dessert that need be served. Or perhaps Burke is juxtaposing the meat and potatoes education available at most colleges and universities with the luxuries of the BDEC and suggesting that less wealthy institutions get out of the dessert business entirely.

In either case, while avoiding a certain "Let them eat cake" cluelessness about class in America, Burke's metaphors obscure as much as they reveal. U.S. higher education does need a shot in the arm. But no matter what an institution specializes in or how it differentiates its mission from its peers, its students still need well-balanced meals produced and served primarily by tenured and tenure-track professionals. Unfortunately, as Bousquet shows in How the University Works, what most get instead is a system modelled after the fast food industry:

Ask any thirty-seven-year-old graduate employee, with her ten or more years of service and just beginning to peak in her pedagogical and scholarly powers, yet soon to be replaced by a twenty-two-year-old master's degree candidate: Is this a system that teaches well? And she will answer: Heck, no, it is just a system that teaches cheaply.... [T]he system of disposable faculty continuously replaces its most experienced and accomplished teachers with persons who are less accomplished and less experienced. (42)

This is why Delbanco and Lehecka's proposals for federal action, while representing a valuable first step toward solving the accessibility crisis in private higher education, don't go nearly far enough toward addressing the disease raging through the entire system.

For every college to become accessible to talented students regardless of income, the federal government must create enhanced grant programs, progressive tax incentives and programs that reduce the debt of graduates who spend time in public service.

Making higher education affordable for all matters little if the way it is done provides perverse incentives for the few colleges and universities that don't follow the sickening labor and staffing practices of the Harvards and Yales of the world into following their lead. If the best-endowed private institutions in the BDEC were instead to follow the lead of the Swarthmores and the Hamiltons of the world, their example might help restore the health of higher education in America.

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