James A. Bacon
University of Virginia Rector Helen E. Dragas gets it. Explaining the Board of Visitors’ differences with departing President Teresa Sullivan, she told university deans and vice presidents that Virginia’s flagship educational institution can not continue to conduct business as usual.
“The pace of change in higher education and in health care has accelerated greatly in the past two years,” Dragas said. Higher education in the United States stands “on the brink of a transformation now that online delivery has been legitimized by some of the elite institutions,” referring, most likely, to the decision by Harvard and M.I.T. to begin delivering free online courses through a nonprofit partnership, edX.
The university, said Dragas, needs a new strategic direction as it faces challenges that “are truly an existential threat to the greatness of U.Va.” (See the Times-Dispatch coverage of her remarks.)
As we’ve been saying on this blog for a couple of years now, disruptive change is coming to higher education, a sector of the economy badly in need of disruption. The business model is broken. Administrations are bloated, faculty are protected by tenure, innovation is lagging, costs are out of control and tuitions are soaring. Students and graduates have accumulated $1 trillion in student-loan debt. For the first time forever, parents, students and outside observers are questioning whether a college education is worth what you have to pay to get it. While the University of Virginia may be less guilty of inflated costs and predatory tuition hikes than many other institutions, it will get caught like all the others in the perfect storm of technological advance, consumer revolt and shrinking state government support.
Facing financial pressure and hard decisions on resource allocation, the university needs a new sense of direction, Dragas said.
Writes the T-D:
In her remarks, Dragas said “compensation of our valued faculty and staff has continued to decline in real terms, and we acknowledge the tremendous task ahead of making star hires” as eminent faculty members retire.
“We see no bright lights on the financial horizon as we face limits on tuition increases, an environment of declining federal support, state support that will be flat at best, and pressures on health care payors,” she said.
In an email notice to alumni, Dragas said the board for the past year has had “ongoing discussions about the importance of developing, articulating and acting on a clear and concrete strategic vision.”
She said the board “believes that in the rapidly changing and highly pressurized external environment in both health care and in academia, the university needs to remain at the forefront of change.”
Sullivan did not elaborate upon her view of UVa’s strategic imperatives, noting only that there was “a philosophical difference of opinion.”
I am speculating now, but it seems likely that Sullivan did not share the board’s sense of urgency. As products of a pampered industry that has been largely immune to the traumas and turmoil of the recession-racked private sector, many university administrators cannot imagine how quickly their ivory towers can come tumbling down. Faculty and administrators have no idea of the frustration and rage that has been building against their bastions of privilege and how eagerly consumers will desert them for a better value proposition — even if it is delivered online.
Dragas, the 50-year-old CEO of the Dragas Companies, a Virginia Beach real estate developer, sees what’s coming, even if cosseted university administrators do not.