Trustees | Costs

How Disruptive Innovation Makes Some Colleges Into Ants And Others Into Grasshoppers

FORBES   |  September 3, 2019 by Michael Poliakoff

When Harvard Business School Professor Clayton Christensen predicted that as many as half of American colleges could go bankrupt in the next 10 to 15 years, most of the leadership of American higher education refused to believe it. It is an old and dangerous collegiate habit, perhaps ultimately born from the comforts of tenure, to trust the status quo. The title of a 2009 article from the Chronicle of Higher Education rather says it all, “In a Time of Uncertainty, Colleges Hold Fast to the Status Quo.” The article begins, “The financial meltdown that has caused seismic upheavals in many other corners of the economy hasn’t changed much about how colleges operate.”

It’s time for higher education leadership to study carefully the Aesop story about the ant and the grasshopper. The latter sings and squanders all summer and starves in winter, in case anyone has forgotten that important lesson. In my last piece, I discussed how too many colleges are expanding construction, while failing to utilize fully existing infrastructure. This is yet another way that colleges are loose with student and taxpayer funds: building lavish new facilities while classrooms are only occupied about half the time during the work week. But there are outliers, breaking away from the habits of the past.

When Carlos Campo took over the presidency at Ashland University in 2015, he inherited a campus in financial crisis following overexpansion in the previous decade, including a $19 million recreation facility. The building boom debt garnered Ashland a junk bond rating. Over the last few years, President Campo has cut costs, raised revenue, and improved the university’s fiscal position by making the hard decisions and necessary cuts, as well as focusing the university’s mission on academic excellence. Its composite financial index has risen from 1.1 in 2014 to 2.5 in 2018. Dr. Campo observed: “As we look to the future, we are very cautious about ongoing residential campus build-outs, and are looking instead to align our future spending on improved teaching and learning, technology, and strategic program expansion.” 

An example of both prudent and innovative thinking is that of Brigham Young University (BYU)–Idaho. Founded in 2000 as an expansion of the two-year school Ricks College, BYU–Idaho hit the ground running with a distinctive feature: The school would operate year-round with only a minimal summer break. It also developed a thoughtful, faculty-led set of online courses. Instructional capacity increased 50%. Faculty received pay increases for full-year teaching contracts, with the option even of teaching through the summer break—a practice that increased capacity by another 15%. And no new buildings were needed. Its president, Henry Eyring, takes quiet pride in noting that he is the first president in the history of BYU—Idaho or Ricks College to shrink campus square footage. And enrollment has increased.

The University of Florida has tried a similar approach to maximize its use of resources. When freshmen are admitted, they are sorted into either “fall” or “summer” admits. This allows the university to get the most out of its physical resources, and increases student access to the university. Students who did not meet the cut off for fall admission get a head start and adjust to collegiate life. And if it turns out that college is not the right fit for them, they can part ways without being saddled with crippling debt.  

State legislatures have taken note as well. California’s Legislative Analyst’s Office observed in 2017: “Summer enrollment is at about 20 percent of fall enrollment at UC and 6 percent of fall enrollment at CSU—both well below the state’s expectations.” Moving to enforce those guidelines may be timely. The report of the Legislative Analyst regarding the California State System continued: “we estimate it could accommodate 92,000 [more] in its existing facilities.” In 2016, Louisiana passed the “Know Before You Build Act,” which requires boards of trustees at state universities to publicize building utilization reports and hold public hearings before proposing any construction project worth over $10 million. Several other states require the publication of building utilization reports, and a handful have set targets for building usage.

Burlington College, the College of New Rochelle, Dowling College, Green Mountain College, John Wesley University, Marylhurst University, Mount Ida College, Newbury College, Southern Vermont College and more. All are now shuttered, with some storied institutions, including Sweet Briar College, Hampshire College, and Antioch College, in fragile financial positions. Between 2010 and 2017, nearly 40 public institutions have merged. Maybe Professor Christensen’s prediction is high, but prudent higher education leadership will think long and hard before putting scarce funds into bricks and mortar. High-quality teaching and measurable student learning gains matter, and if capital projects are not essential to that process, they may well be on a quick path to builder’s remorse or worse.


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