Über die Autorin bzw. den Autor

Gary C. Fethke served as a university administrator for over twenty-five years, as Dean of the Business School and Interim President at the University of Iowa. He is the Leonard A. Hadley Professor of Leadership in the Tippie College of Business. Andrew J. Policano is the Dean's Leadership Circle Professor and Dean of the Paul Merage School of Business at the University of California at Irvine. He is widely recognized for his innovative leadership, which spans twenty-two years in three deanships.

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PUBLIC NO MORE

Stanford University Press

Contents

Preface......................................................................................................................................viiPART I: environmental issues.................................................................................................................11 Introduction: Challenges, Solutions, and Themes............................................................................................32 Challenges Facing Public Research Universities.............................................................................................9PART II: Practices, Procedures, and Strategies...............................................................................................233 A Framework for Defining, Creating, and Distributing Value.................................................................................254 Tuition Setting in Practice................................................................................................................495 Basic Financial Structure of Public Universities...........................................................................................676 Two Prominent Models for Resource Allocation: Central-Administration Management and Responsibility-Centered Management.....................80PART III: Policy and Analysis................................................................................................................1077 Subsidies to Public Higher Education.......................................................................................................1098 An Efficiency-Based Subsidy and Tuition Policy.............................................................................................1349 The Quality of Education...................................................................................................................153PART IV: Culture and Governance..............................................................................................................16910 Cultural Impediments to Change............................................................................................................17111 Templates for Change and Lost Opportunities...............................................................................................19412 Public No More............................................................................................................................213Notes........................................................................................................................................223References and Selected Bibliography.........................................................................................................243Index........................................................................................................................................257

Chapter One

Challenges, Solutions, and Themes

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith

Challenges

The belief that higher education should be funded by society dates back at least to the fourth century BCE, when Plato's Academy offered free admission to selected students—a philosophy that prevailed throughout most of history. Today we face a different and challenging environment, with collapsing government budgets and rising tuition revenues. The emphasis of Public No More: A New Path to Excellence for America's Public Universities is that the long-standing dependence on state subsidies that facilitated low tuition and easy student access to public higher education is unsustainable. We view the recent cuts in public university funding as permanent and their consequences, both for higher education and for society, as profound. Public universities can either recognize and confront major strategic challenges or face prolonged financial stress, deteriorating quality, and eventual competitive decline.

To retain both access and quality, many public university systems are dramatically increasing tuition and fees to high-income students while providing an internal subsidy to low-income students. In effect, external market forces and internal reallocations are replacing state financial support. The inevitable outcome of these forces is that the traditional high-subsidy–low-tuition model, which helped to create the premier system of higher education in the world, is on a steady path toward extinction. Its emerging replacement will feature high tuition for some, high aid for others, and substantially reduced public support. The consequences will be less discretion in subsidizing inefficient programs, regardless of their appeal to basic notions of academic taste and fairness.

While public financial support, along with the award of an exclusive franchise, has led to a level of academic research, open inquiry, and scientific investigation that is the envy of the world, it has also acted to isolate public universities from competition and has engendered a sense of privilege and entitlement. Greater reliance on tuition revenue, better-informed and more selective students, rapidly emerging national and international competition, and stunning new technologies present a different reality. The question is not whether public universities will adjust to reflect this new reality—because they must; rather, it is whether they can react quickly, successfully, and sensibly enough to sustain their competitive position as premier providers of instruction and research.

One of the major impacts of increased market competition is to drive the prices of products of given quality toward average cost, thereby reducing operating margins and forcing a relentless quest for operational efficiency. Competition is a healthy force; countries with open markets, well-developed institutions for the protection of private property, and transparent legal processes have the most innovative and dynamic organizations. Vibrant economies provide the highest levels of sustainable economic growth and productivity. However, there are also the apparent downsides to enhanced competition. In particular, individuals and organizations that are threatened and displaced by existing or new rivals will not welcome competitive pressure; they will typically resist the implications of competition both politically and economically. For these reasons, the critical choice confronting public universities is whether to compete aggressively in the new environment or to retrench and do everything possible to resist competition and to avoid making needed changes to practices and processes.

Some public university leaders deny the implications of this new funding reality and continue aggressive lobbying of their state legislatures to return to the high-subsidy model. Often, they feel empowered in this by a conservative faculty and staff governance process that promotes strong resistance to change. Although some level of advocacy is important and can be effective, demands on state and federal funds and the lack of appetite for additional taxation offer little hope that future needs can be funded through traditional public sources. Excessive lobbying, accompanied by denial of a permanent problem, has the potential of...