by James C. Sherlock

The economist Herb Stein once said that if something cannot go on forever, it will stop.

The University of West Virginia has just stopped to take stock.

Facing a $45 million shortfall, it had to cut programs. Instead of taking the unthinking way out — assigning a cut target to each department — it restructured.

The university shut down nearly 10% of its majors entirely. The axe fell most directly on the humanities. The Athletic Department was told it was on its own for funding.

President Gee did not want a bailout, figuring it was time to bite the bullet. He and his board decided to emphasize the programs in demand and let go those which could not attract enough students to justify their costs.

Virginia’s portfolio of institutions of higher learning (IHEs) faces challenges, some unprecedented, from at least a half dozen different sources.

Eventually, sooner rather than later, we will have to deal with them as a state. Virginia’s state “Plan” for its IHEs is not helpful.

This issue needs detail for discussion, and I will provide some here.

Costs of attending. College is too expensive. By a lot. That has both social and economic consequences.

But a Darwinian competition persists among state schools to build new infrastructure instead of looking for ways to cut costs in order to reduce tuition.

Unchanged, it will bring the destruction of some and impose continuing economic pressure on taxpayers and students.

U.S. student loan debt is nearly $1.8 trillion and counting. It is having profound negative effects on both the economy and society. It slows the growth of new businesses, lowers rates of home ownership, suppresses consumer spending, delays marriage and childbearing, slows savings for retirement, makes recessions harder to weather, and causes hopelessness.

Personnel cost reduction. All state IHEs have an obligation to cut costs to make a degree affordable.

The primary cost is personnel.

“In higher ed, it takes more workers to educate a given number of students today than it did a generation or even two generations ago,” says Richard Vedder, an economist and distinguished professor of economics emeritus at Ohio University. “That’s the opposite of what you see in other fields and industries.”

But personnel cost reductions are fiercely and successfully opposed by the loudest voices closest to the ears of the Boards of Visitors and the State Council for Higher Education in Virginia (SCHEV).

The Boards will have to finally start resisting their administrations by cutting the ranks of administrators themselves and considering which programs are no longer earning their keep.

Given its highly asymmetric growth for the last 30 years compared to faculty, a 50% reduction in administrative staff seems like a good goal across the system. It is more than reasonable to ask for significant efficiency returns on huge investments in IT already made and from AI going forward.

Forward-looking enterprise architectures are needed to address goals culled of sacred cows, operations to support goals, personnel to support operations and IT and databases to support personnel.

The architect must be given a clean slate upon which to describe that architecture.

The University of Virginia has hired an Associate VP and Chief Enterprise Architect to get to that result. I wish him well. We’ll see how free a hand he has, how much cooperation he will get and whether and when the initial project will be completed.

From U.S. News

At public four-year schools in 2010, 32.1% of expenditures were for instruction and 23.7% were for academic support, student services and institutional support.

In 2021, instructional spending had decreased 4.7 percentage points to 27.4% of total expenditures while spending on academic support, student services and institutional support dropped less than 1 percentage point, to 22.9%.

The U.S. News article went further on administrative bloat.

The steady growth in administrative and nonteaching staff positions is largely due to broader student support, often referred to as “wraparound services,” in areas such as mental health, entertainment, intramural sports, academic support, workforce preparedness and initiatives focused on diversity, equity and inclusion.

Empire building.

At private universities and the richer publics, academic support, student services and institutional support now for the first time ever equal or exceed costs of instruction.

The instructional faculty, and with it the value proposition for students, has gone in the other direction.  From fall 1987 to fall 2021, excluding medical faculty:

• Contingent faculty as a percentage of total college faculty grew from 47% to 68%;
• Part-time faculty as a percentage of total faculty grew from 33% to 48%;
• Full-time tenured faculty appointments dropped from 39% to 24%.

Infrastructure cost de-escalation.

While the costs of personnel went up and the numbers of administrators increased constantly compared to academics, even they did not keep up with infrastructure costs.  These went up even faster, especially since the turn of this century.

See the 2005 article in The Wall Street Journal , “Colleges Get Building Fever.” It still rages.

One economics professor called the syndrome at that time the “country clubization” of universities, as competition for students heated up.

That reason for construction has been joined by changing tastes in majors, which somehow can never fit in existing buildings. Because, unlike at WVU, assets cannot be shifted to match priorities.

Infrastructure costs are forever. But at least the IHEs can quit escalating them and instead maintain and re-purpose as required what they have already built.

Taxpayer support. Taxpayers, most of whom did not go to college, are less and less likely to agree to support with state funds IHEs from which they are increasingly distant in cultural values.

It is up to the state and the schools to demonstrate to them the economic value and efficiency of the system.

And to try to avoid insulting them in the process.

Demand. Public four-year college enrollment in Virginia peaked in the fall of 2019.

Now we have the looming student cliff from the baby draught during the great recession. Virginia college-age population is set to decline between 3% and 8% more starting in 2025 from that single factor.

The choice of majors has changed far more. Since the spring of 2019, there has been a huge shift in undergraduate enrollment by major at 4-year institutions. While the numbers were affected by COVID, the trends were not.

See here, table 9, for those 2019 – 2023 trends. I have illuminated in green the growth majors and in yellow the declining majors. Some are predictable. Others are not. There is something worthy of a Ph.D. thesis on why psychology majors increased every year of that period.

In sum, demand has undergone generational change. Supply, it appears, has not kept up.

Gender. Enrollment by gender in the past school year was 42% male and 58% female. That portends significant societal problems going forward. Our state IHEs need to try to find more ways to attract men to deal with declining demand overall. Or admit that they do not intend to do so.

Cannibalization of the smaller state 4-year schools by the increasing sizes of the student bodies of the biggest — George Mason, Tech, VCU, UVa Charlottesville, ODU, James Madison and William and Mary in that order — is not sustainable.

If that is the path the state and its taxpayers choose to support, we should deal honestly with those schools that we do not intend to let survive rather than watch them waste slowly away.

COVID kids. The profoundly negative effects of Virginia’s public-school shutdowns during COVID will be seen in applicants and freshmen for another dozen years.

How are Virginia’s state junior colleges and 4-year colleges and universities going to deal with that? Lower standards? Add an extra year for remediation. Make greater use of community colleges for remediation and demonstrated attainment?

If they know, they should share it with the rest of us.

State Plan. The existing state plan, Pathways to Opportunity: The Virginia Plan for Higher Education, dated January of 2021, is hopelessly out of date and was inadequate when written.

To develop the plan they took a survey of “stakeholders,” 200 out of 220 of which represented higher education interests.

In addition to all of the equity language, it also said it was going to:

Lower costs to students. Invest in and support the development of initiatives that provide cost savings to students while maintaining the effectiveness of instruction.

It concluded that

Three core issues face higher education: equity, affordability and the transformative outcomes of higher education. [Emphasis added.]

Because of the missing “stakeholders,” they missed most core issues.

The 2021 plan unsurprisingly considers increased state funding to be the solution to affordability rather than reduced cost structures. An amorphous administrative and program “efficiency” goal is buried at the end of a long list of bullets on page 34 of 36.

There was never any chance that a plan from those stakeholders would target cost reductions.

December 2022 Plan update. The “Biennial Initiatives” to lower costs to students on page 8 of the 2022 SCHEV annual report  on the progress of the Plan show that SCHEV, in my view, does not get it.

There is not a single initiative — not one — to reduce cost structures at the schools or even to shift resources to meet changing demand, but rather this:

Provide state support for increased costs at institutions to help offset tuition increases, including maintenance reserves.

A rhetorical blank check.

Middle class disadvantaged. The same 2022 annual report shows that the middle class is significantly underrepresented in state schools relative to its size. Twenty-six percent of the Virginia population is middle class, but only 15% of the enrolled students.

Lower income Virginians are over-represented by that same measure with 23% of enrollees and 20% of the population.

(Upper class representation is a data muddle because they are assessed to be over-represented in the large unknown-income category.)

Borrowing to afford college in Virginia state schools falls disproportionally on the middle class. The 2022 annual report (page 27) showed that fifty nine percent of Virginia middle class undergraduates were borrowing.

They apparently think the middle class can’t figure out that substituting taxes for cost reductions may not be in their best interests in the case of programs in which they are both:

1. disproportionately underrepresented; and
2. have to borrow disproportionately to pay for when they do access them.

Bottom line.

Virginia has one of the finest portfolios of state colleges in America.

But it is very fragile given the real multifaceted challenges, many unprecedented.

It is not acceptable for students and their parents to have to borrow future-crippling amounts of money to get an undergraduate degree in a state school that has no spending discipline. Annual political posturing for tuition freezes reflects not a strategy but the absence of one.

The core problem is that the inmates have been running the asylums.

The interests of administrators and faculties are not aligned with those of taxpayers and students and never will be. Yet they have been ceded total control within the institutions and at the state level. They have very effectively resisted change that is not expansive of their own opportunities.

The strategy and actions necessary to adapt will have to be externally imposed.

The schools and the state government must get on with cost reduction while simultaneously dealing with the other challenges discussed above or they will be overwhelmed by them.

It won’t happen without leadership.

I lay that responsibility at the feet of the Governor, SCHEV, the Boards of Visitors and the school presidents.

I hope to see them to step up to the challenge.