Blog | HESA | Higher Education Strategy Associates

February 21

Stuff Happens: Rise of the Latinos

When you think about recent developments in American higher education, the negatives tend to predominate. Cutbacks in state funding, soaring tuition fees, ballooning debt levels – it all leads you to believe that there’s been an enormous diminution of access. But, very quietly, there’s been one incredibly good piece of news: a massive jump in Latino participation rates.

For decades, now, one of the biggest challenges in American higher education has been low participation rates among Latino students. Latinos are, of course, quite heterogenous, even with respect to higher education. Puerto Ricans in the Northeast have long had access rates similar to those of whites, while participation rates among Mexican and Central American Latinos in the West and Southwest have been persistently abysmal. Other immigrant groups with low-education backgrounds have tended to see their participation rates rise by the time the second generation rolls around. In many cases in the west, the Latino population was well into its third generation; it seemed, by-and-large, as if Latino youth simply hadn’t grasped the fact that higher education was increasingly necessary to succeed in the modern economy.

As Latino birthrates rose, and as that population became an increasing percentage of the general population, there were real worries in the Southwest that the persistently-low participation rates would lead to declining overall participation rates, and an increasingly de-skilled labour force. A lot of policy attention – and some money as well – got lavished on this population, through groups like Excelencia in Education. But for years, Latino access rates flatlined, and all this work seemed to be for naught.

Then suddenly, in the middle of this recession, the situation changed dramatically. Between 2008 and 2011, the participation rate of Latinos, aged 18-24 years-old, who had completed high school, jumped from 36% to 46%, surpassing the black participation rates for the first time ever. And no, this wasn’t a trick of the denominator – Latino high school completion rates were rising too, from 65% in 2005, to 76% in 2011. In 2010 alone, the country saw an increase of nearly 200,000 Latino enrolments from the previous year (to put that in perspective, that’s the equivalent of the population of Quebec’s francophone universities).

Maddeningly for policy wonks who want to replicate this little miracle, it’s really not clear what prompted it. There was no big policy shift that preceded it, for instance. Many say “it’s the recession”, but this begs a lot of questions (e.g. why this recession, and not earlier ones? Why isn’t it having a similar effect on black enrolments?).

Sometimes, if you work at something long enough, stuff just happens. That’s bad news for social scientists who like to link cause and effect, but good news for America’s Latinos.

February 20

Some Consequences of Declining Public Funding

Home truth: while total funding for higher education has increased rather substantially over the past couple of decades, an increasing proportion of this funding has come from private sources. If anything, that trend is going to continue for the next decade, at least. Unfortunately, our decision-making structures and mentalities are stuck in the era when institutions could count on governments to bail them out.

I noticed this initially during the St. FX strike. One of the main lines of discourse from the union has been, essentially, that management’s claim of poverty is evidently untrue because of all the money that’s been made available to “non-essential” projects, like new residences. This echoes a line that we’ve heard from Quebec students in their protests, as well: stop putting up new buildings and satellite campuses and we wouldn’t need to have higher tuition.

Partly, this is nonsense: budgets for capital and operating aren’t fungible, and not using donors’ and government’s money for a residence doesn’t make money magically available for salaries. But the sentiment isn’t complete nonsense; when money is scarce, frustration at seeing money spent on non-academic projects is easy to understand.

But when you depend on tuition for more than 50% of your budget, and demographic pressures are reducing demand (as is the case at St. FX), it’s not the faculty who get to decide what’s essential, it’s the students. It’s not like the old days where you could be pickier about your customers and they paid only a small portion of the bill. Now, if you fail to spend on “nonessentials” like residences, you run the risk that the tuition dollars dry up. And then who pays for faculty salaries? That’s a reality that faculty unions have to deal with.

Management, too, needs to change, though. The shift to greater private funding has led to a certain degree of academic entrepreneurialism. Where administrators are thus able to gain resources, that’s to the good; but what happens when money is lost? When that new can’t-miss international branch campus on the other side of the world actually does fail, who’s accountable, and how are the lost funds recouped? Too often, it seems, the answers are “nobody”, and “out of teaching resources”, and that’s not really acceptable.

Shared governance of universities is a lot easier when government’s paying the bill. When universities have to go out and earn money themselves, it’s a different story. But it’s a reality we have to deal with. Faculty need to come to terms with the fact that income is a lot more fragile than it used to be, and administrators need to be held much more accountable for money put at risk.

February 19

Comparing Delivery Costs

HEQCO is consistently putting out interesting reports these days, and it’s a shame they aren’t attracting more attention. The latest one is called, College-to-University Transfer Arrangements and Undergraduate Education: Ontario in a National and International Context, by David Trick. It’s a really nice paper which gives a multi-jurisdictional overview of transfer policies and practices, and provides a balanced assessment about both the benefits and the limits of 2+2 policies. Its final conclusions concerning different possible policy positions for increasing transfer are also clear and sensible.

That said, one aspect of the paper is highly problematic: namely, its financial projections.

The paper attempts to compare the costs of delivering a degree through 4 years in university, versus delivery via a 2+2 transfer arrangement. This is done – far too simplistically – by comparing the tuition a student would pay with the amount of government grants each student would attract using each pathway. To his credit, Trick does show that it’s not quite that simple: savings to students and governments would, in fact, vary by field of study and by time spent in university after the transfer (2+2 college/university is cheaper than 4 years of university, 2+3 isn’t), and he notes that there are some scenarios in which transfer is more expensive than not transfering.

Regrettably, though, HEQCO’s project summary page glosses over this caveat with the headline, “2 + 2 = potential savings for students and government”, which – possibly unintentionally – makes the paper seem a lot less equivocal than it actually is. But there’s an even more basic problem in Trick’s math: his assumption that the “cost per student” at universities actually approximates “income per student”.

Over the course of a degree, this assumption is undoubtedly true, but on a year-by-year basis it’s plainly false. Universities spend a lot less per student in years 1 and 2 than they do in years 3 and 4. It’s not a trivial difference; just looking at class-size differentials in Arts, you’d have to think the gap is as much as 4-to-1. If that had been taken into account, the paper would have arrived at the opposite conclusion: that shifting to 2+2 would actually raise costs per students because it would take students out of universities for precisely the years they don’t cost very much. If this became government policy, it would undoubtedly “save money” in the sense that formula-driven costs would drop. But it would mean that universities would see a cut in their budget, but no cut in the number of expensive upper-year students. Inevitable end result: larger class sizes.

As I said, it’s a good paper. But greater realism in these numbers would have made it even better.

February 15

A Revolution in Faculty Bargaining?

Earlier this week, I was riffing on how to make good salary comparisons when I came across a faculty union which has been doing just that.

The faculty union at the University of Victoria is feeling a bit aggrieved that its members’ pay is lower than at comparable universities. When I first saw their numbers, I was a bit skeptical: UVic went through a significant generational shift nine or ten years ago, so their age/rank profile might potentially account for some of the difference. But, as page three of this document shows, UVic trails comparator institutions, even controlling for rank. (The fact that the comparators differ across ranks suggests a bit of cherry-picking, but the existence of a gap is undeniable.)

I was reflecting on the consequences of this – would the university actually be able to give the faculty a pay raise over inflation without the BC government (which takes an active oversight role in such pay negotiations) coming down on them like a load of bricks? – then my eyes drifted to the right… and my jaw dropped.

The columns on that left side of the page compare U Vic profs to those elsewhere, based on rank by salary. The ones on the right show UVic’s position in the Maclean’s rankings (2^nd among comprehensives), and among Canadian institutions in the Times Higher Education rankings (8^th). Peruse the text and you soon realize why they’ve chosen this data: they want pay raises to reflect their level of excellence.

Got that? There’s a CAUT-affiliated union out there making a case for pay based on productivity and excellence.

I see a big win-win here. The university is constrained by government in what it can give out (hard to say for sure, but more than 6% over 3 years would be tough). But the UVic faculty, clearly, on the basis of merit and the existing pay gap, deserve a much bigger bump – say, 15% over three years. I don’t have their actual salary figures at hand, but my guess is that this would cost an extra $14-15 million over three years.

So here’s what I propose: every other medical/doctoral or comprehensive university in the country should agree to pony up $500,000 over three years and ship it to David Turpin at Vic (bank drafts, unmarked tens and twenties – whatever) so he can give his professoriate a big raise in exchange for an explicit commitment to keep up those levels of performance. With that precedent set, every university in the country should be able to bargain on the basis of relating pay to external measures of excellence and productivity.

For that, half a million would be cheap. C’mon guys: do it.

February 14

That Conservative White Paper

On Tuesday, the Ontario Conservatives released a “white paper” on Higher Education. It’s an extraordinary document, by far the most detailed vision for PSE ever released by a Canadian political party. Everyone in higher education should read it, even if they aren’t likely to enjoy it much.

Much of the paper revolves around the notion of reducing the cost of delivery of higher education. For that reason, it liberally raids the ideas of Ian Clark et. al on teaching faculty, as well as the goofier elements of Glen Murray’s plans regarding online education. On the assumption that transparency will improve efficiency, there are musings on getting administrations to better explain spending, and even a threat of legislation on financial transparency for student unions. (Students! Time to read up on voluntary student unionism.

Much will be made about the paper’s “College First” pledge – which suggests students should be encouraged to go to college rather than university (partly in the name of cost savings, partly due to some ideas about graduate earnings, which rely on some fairly cock-eyed data analysis), but the vagueness about how to do this suggests to me there’s less here than meets the eye. I think a bigger deal is the idea that, in the name of excellence, there should be a mechanism to choose “elite” programs, which would receive extra investment AND be allowed to charge higher fees. The idea that this can be determined via a set of objective metrics like graduate employment and income suggests that the paper’s authors have never examined those metrics to see how much inter-institutional variation there really is (note: there’s almost none).

Oddly, for a conservative party, this paper is a recipe for much, much heavier government involvement in the running of post-secondary education. A few months ago, I wrote that the main difference between right and left on higher education policy in Canada was that one of them didn’t care how universities were run, while the other thought it knew how to run them better than actual university and college staff. Well, that distinction’s gone now. This paper is prescriptive about what should be taught, how it should be taught, and how accounts should be published. It suggests that some tuition liberalization will be allowed, but only for programs which the government itself picks. The only part of the system that will have less regulation are private career colleges. They’re OK, apparently, because they’re cheap.

This is an ambitious paper which should be applauded for asking a lot of very good questions. Ontario institutions need to spend the next few months patiently explaining why there are better answers than the ones contained in here.

February 13

If University Presidents had a Union

It occurred to me while writing that last piece about salary comparisons: what if University Presidents used the same set of arguments about salary that professors do? What if we set their salaries as a function of what a comparator set of institutions were paying?

For this exercise, I have compared the presidential salaries at each of the top eight Canadian institutions in the Shanghai Academic Rankings of World Universities to those at the nearest comparator institutions among public universities in the United States, the United Kingdom, and Australia (for institutions outside the Top 100, where universities are grouped into bands of 50 or 100, I chose the “adjacent” institution by overall publication output). The resultant comparators are shown below.

Canadian Universities and Closest Comparators in ARWU Rankings

I took data for Presidential salaries from a variety of sources. For Canada, the data is from the ever-useful CAUT Almanac, except for l’Université de Montréal, which is from here. These don’t yield perfect comparisons; one notable issue is that Alberta reports total compensation rather than salary, which makes Indira Samarasekara’s compensation look significantly higher than her comparators, for whom only data on salary is provided. For the US, the data is from the Chronicle of Higher Education (via Berkeley to avoid the annoying paywall). UK data is from the Times Higher Education Supplement, and Australian data is from The Australian. Data for Australia and the UK are 2010-11, for the US it’s from 2009-10, and Canadian data comes from the 2010 calendar. Currencies have been converted to Canadian dollars using the 2011 Big Mac Index. The results are shown in the figure below.

Figure 1: Salaries of Canadian University Presidents and Close Foreign Comparators

Here’s what we learn from Figure 1:

1) Man, oh man, oh man, being a Vice-chancellor in Australia is a sweet deal. Remember a few weeks ago when I asked why no Canadian institution had hired an Australian? Apparently the answer is, “we can’t afford them”.

2) There isn’t a straight line between university status and CEO pay in any country. It’s never the top school that pays its President the most.

3) In four of these comparisons, the Canadian President is the worst-paid among the comparators; in the other four, they’re the second-worst. This is somewhat different than the situation among full-time academic staff, where the wage gap tends to go in.

To be clear: I’m not suggesting our Presidents could use a raise. I’m simply pointing out that if Presidents used the same kind of arguments that faculty unions use to demand wage hikes, the data above could certainly be used to make a very persuasive case. Sauce for the goose, and all.

Maybe “what the guy down the road earns” isn’t the be-all-and-end-all for salary comparisons. Maybe we need some better benchmarks.

February 12

How to Compare Salaries

One of the things that keeps popping up in labour relations is the salary comparison: a union at one institution says, “we deserve what professors at the University of X get”. It’s a reasonable tactic, but making useful and accurate comparisons at the institutional level is much harder than it looks, and one needs to be alert to the possibility of cherry-picking comparisons.

Academic salaries in Canada are, for the most part, based on three things: rank, years of service, and field of study. The greater the proportion of staff with full professorships, the older the average faculty age; and, the more professional programs a school has, the higher faculty salaries will be. The last is especially pernicious: comparing the averages at, say, Winnipeg and Manitoba will lead to all sorts of the distortion, due to the presence of Law, Medicine, Dentistry, and Engineering at the latter. My advice: ignore anyone who tries to sell you something based on those types of comparisons.

But even within institutions of similar size and scope, there’s still plenty of potential for bad comparisons. Take, for example, this close comparator set of institutions from the Maritimes: St. Thomas University (STU), Mount Allison University (Mt.A), St. Francis Xavier University (St. FX), Mount St. Vincent University (MSV), and Acadia University.

Figure 1 – Distribution of Faculty by Rank, Selected Small Maritime Institutions, 2009-10

As Figure 1 shows, these institutions have quite different rank structures. St. FX has a lot more junior faculty than the others, with 40% of the staff being at the assistant level; At MSV and STU, the proportion of assistant professors is half that of St. FX. Given the salary gap between full and assistant professors, this has a non-trivial effect on the overall average salaries; if St. FX had MSV’s rank structure, its average salary would rise by about 6%.

To get closer to an apples-to-apples comparison, one needs to look at the actual average salaries by rank, as in Figure 2.

Figure 2 – Salaries by Rank, Selected Small Maritime Institutions, 2009-10

According to this data (and yes, it’s a little old, but this is a free email, and you get what you pay for), St. FX has the lowest salaries across the board, while Mt.A has (mostly) the highest.

But even this might not be an entirely accurate comparison. If the average years-since-promotion at one institution is higher than at another, even the comparisons within each salary band may be off a bit, because of the effects of rising through the ranks (worth 2-3% per average year of difference, at the moment). That’s probably not enough to explain the entire gap between St. FX and the others, but it may explain some of it.

Finally, of course, all of these comparisons are suspect, without comparing work loads. But that’s another story, all together.

February 11

The Demand for PSE: Never as Simple as You Think

The New York Times website had a great little graphic the other day about youth unemployment rates in urban China. It looked like this:

Unemployment in Urban China, 20-24 year-olds

For people who see higher education entirely in terms of “work outcomes”, this kind of chart is deeply perplexing. If higher education doesn’t pay, why do Chinese students keep lining up for university?

There are really two sets of answers.

First, one shouldn’t conclude from this chart that higher education is a bad deal. Say, for instance, the pay of a higher education graduate is twice that of a high school graduate. On a risk-adjusted basis, higher education is still a great bet: staying a high school graduate means a 92% chance of getting $X, moving on to higher education means an 84% chance of getting $2X. People will still line-up to go because the rewards and the odds remain pretty good. Either tuition or graduate unemployment would have to go up a lot to dissuade people from attending.

(Governments might legitimately look at numbers like this and question why they’re subsidizing education, but that’s an entirely different question. And even then, you’d need to take into account the fact that, at a certain level, governments deliberately over-produce graduates because the resulting wage pressure on educated graduates does drive competitiveness.)

Second, and this is a problem a lot of policy wonks have trouble understanding – not all returns are financial returns. Society accords different levels of respect to different jobs, and people want respect at least as much as they want money. Most people would pay quite a bit to not have to do manual labour, for instance. They’d also pay to get a title to which society accords respect. Hence, in most of the world, there’s a general preference for being an unemployed lawyer rather than an employed plumber (unemployment being a temporary condition and all).

In some cultures, the non-monetary rewards go a lot further. In Confucian societies, higher education is an ethical good; a university diploma is not just a mark of intelligence and hard work, but it denotes moral excellence, as well. OK, this ethics stuff is really just an echo of class propaganda from two millennia ago (it obviously suited Han-era officials to pretend that they were ethically superior to the rest of Chinese society, as well as richer and more powerful). But it’s still a powerful pan-East Asian driver of what, in South Korea, they call “Education Fever” – the drive to have as much education as possible, regardless of the cost.

But whether you’re in China or Canada, the demand for higher education is almost never just about jobs. Smart policymakers would do well to remember that.

February 08

The Collapsing Demand for Law School

If there is one place bucking the worldwide trend of rising higher education enrolments, it’s American law schools.

As the New York Times noted last week, demand for US law schools is down by something like 40% over the last two years. The effect on enrolments hasn’t been as pronounced – excess demand meant that schools were collectively only meeting about 60% of total demand in 2010. But inevitably, outside the very top tier, all schools are cutting admissions standards in an attempt to keep the numbers up.

The reasons for the collapse aren’t hard to find. Tuition at American law schools is astronomical – in some places $70K per year, or more. Meanwhile, signs indicate that the current hiring lull at law firms isn’t just a temporary fad; most observers seem to think that billing margins are tumbling and remuneration – at least below partner level – is likely to be squeezed for some time (see: The Atlantic’s Jordan Weismann for more).

In the US, there’s a lot of vitriol attached to this debate. There are a pair of new “insider” books on the subject: Failing Law Schools, by Washington St. Louis Law School Professor, Brian Tamanaha, and Don’t Go to Law School (Unless), by Colorado’s Paul Campos, (who also writes the very good blog “Inside the Law School Scam”). And the anger’s easy to locate – it’s not just the high fees, but also the perception that law schools were either deliberately negligent, or outright deceptive, about reporting their graduates’ outcomes.

There are echoes of this in Canada, particularly in Ontario. As I noted in a piece a couple of months ago, Law school admits were increased just before the economic bust, leading to a shortage of articling spaces (and, presumably, of underemployed law students). And though our law school fees aren’t in the same league as American ones, they’re high enough that this situation causes serious irritation among graduates.

Some of the criticism of law schools is misplaced. The idea that there’s some kind of “scam” going on unless every single law school grad gets a job in the legal profession – which some of the wilder critics occasionally imply – is nuts. Not everyone who wants to study the law wants to practice it (same goes for teacher’s college). And we no more need to align law school intake with labour market needs than we do philosophy program intakes. If people want to use their hard-earned money to study law, let ‘em.

But there is a lesson here: as tuition rises, so too does the need for better data and greater transparency about outcomes. That truth is universal, and Canadian law schools need to take it more seriously than they currently do.

February 07

Paying it Forward in Tech Transfer

An interesting item from my hometown, last week: the University of Manitoba is starting to license technology for free.

I exaggerate slightly. What they appear to be doing is issuing technology, licensed for a percentage of the future net revenue, rather than for an up-front fee; the cost only kicks-in once the company starts making money. U of M describes this arrangement as unique; but while this specific legal arrangement may be so, it’s actually part of a broader and under-reported trend taking hold in Tech Transfer.

When Tech Transfer offices opened at Canadian universities in the 80s and 90s, it was almost always with an American model in mind. Following the adoption of the Bayh-Dole Act of 1980, and the astonishing success of university spin-offs like Genentech, universities everywhere started to believe that their own laboratories held untold riches, if only they could work with companies to commercialize them.

But commercializing technology is tough. Really big companies who could go to town with some university-developed knowledge have their own development processes – it takes a discovery of exceptional magnitude to attract their attention, and to get them interested in dealing with all the hassles of patenting and licensing. Smaller companies are easier to attract because they don’t have big R&D programs of their own, but they frequently don’t have the scientific, technical, or marketing wherewithal to get a product successfully to market.

To get big returns from a patent portfolio requires a local innovation ecosystem, with large numbers of entrepreneurs who have experience in science and technology firms, and a venture capital industry which understands S&T. A number of US cities boast that kind of environment; in Canada, it’s a lot harder to find communities that fit the bill: outside Toronto, Waterloo, and Vancouver they’re in awfully short supply. This is one of the main reasons Canadian attempts at commercialization over the past decade have been disappointing.

So, universities really have three choices: they can get out of the patent/licensing game, they can resign themselves to meager returns, or they can go out and create these communities themselves. This last option is, in a sense, what places like UBC have done over the past couple of decades. It’s a strategy that requires paying it forward (or, in newer management-speak, it means engaging in more “invisible handshakes”, as per Meyer & Kirby’s new book, Standing on the Sun, from HBR) – basically, doing whatever is necessary to create that external business community. If that means foregoing profits in the short term, so be it; in the long run, it’s worth it.

So good-on Manitoba. It’ll still take decades to reap the benefits, but there’s no time to start like the present.

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