Enough ‘Do More With Less.’ It’s Time for Colleges to Find Actual Efficiencies.

If controlling costs were a baseball game for colleges, what inning would it be? Panelists at a recent conference suggested the seventh inning (almost there) and the fifth (a ways to go). Rick Staisloff said the game hadn’t even begun: “We’re warming up the band to start singing ‘The Star-Spangled Banner.’”

Staisloff, who spent many years as chief financial officer of a small institution, Notre Dame of Maryland University, and as a finance-policy analyst for Maryland’s higher-education commission, now consults with colleges on finance and strategy.

Most campus leaders, he finds, do not know how much they spend to educate students in various majors, and so don’t know where to find efficiencies. Detailed data can bust some preconceived notions: Staisloff cites one college where religious studies was bringing in more net revenue than some preprofessional subjects.

Dozens of experts informed The Chronicle’s new report, “Sustaining the College Business Model: How to Shore Up Institutions Now and Reinvent Them for the Future.” Staisloff, a clear voice on the business of higher education, pivots from balance sheets to the value of the liberal arts. He sees colleges across the country grappling with spiraling costs and diminishing revenue amid skepticism about the value of a degree.

Here he offers insight into where colleges can look for efficiencies and how they need to shift the conversation on campus about financial sustainability. This interview has been edited for length and clarity.

Q. Where are colleges’ big opportunities for efficiency?

A. When you think about where most of the money is, it’s in people, and most of the people cost is in academic programs. Of course, that’s also the heart of operations and mission. But it’s something we really haven’t touched — ever — in most cases.

When you think about how we’ve tried to solve the cost problem in higher ed, on the academic side it’s been kind of a one-note solution: bringing in more and more lower-cost labor, in the form of adjuncts. Full-time faculty have become so diluted across more sections, more courses, more curriculum, that we really are not well positioned to take care of core mission, student success, etc. The big money, ultimately, is in how much curriculum are we offering, to whom, and how.

Q. So what needs to change?

A. We have to be able to connect core operations — teaching and learning — back to the business model. We’ve done a disservice by pretending those are two separate things. Do I make or lose money on various programs? Most institutions — the overwhelming majority — have zero idea how they earn a living, where the margins are across programs. That doesn’t mean every program should make money, but you should probably know, right? That’s a pretty fundamental thing.

Even when you think about how we monitor what faculty do, it doesn’t connect to the business model. For instance, think about the primary metric for faculty work, which is course load. That has almost zero connection to financial sustainability. But if you look at faculty throughput — how many student credit hours each faculty member is producing — and activity-based cost models of how faculty are spending their time, you understand how you’re investing and what you get for that investment.

Q. When you see slack on the academic side, what does that look like?

A. We did a project recently for a large research university, and we were presenting the data analysis to the faculty. We put up a slide that showed one course with 12 sections. When you looked at the sections, one had 25 students, one had three, another had five, another had 10. It was really eye-opening for the faculty see that. Same course, different sections, and we have this huge variance. If we could just make some smarter decisions around scheduling, we could pull back time and money and do other things with them.

Also, there’s not always a very good match between demand — that is, what students are saying they want — and what we’re offering them. Pretty consistently we see that most of an institution’s students are in relatively few programs — you know, 20 programs, even though the place offers 50, or 80, or 150. Now that doesn’t necessarily mean we should just get rid of all that curriculum. But it might mean we take a hard look at what our students are telling us they’re really interested in.

Q. Perhaps those underperforming majors are just not marketed well?

A. Once you get the data and the analysis, you still have to make meaning out of it. It’s not a math problem to solve. Where you have that lack of demand — maybe students aren’t showing up, or they’re transferring out quickly — you’ve got to get under the hood to find out what’s going on. You have to be careful, because everybody always assumes, “If only more people knew all the good work we are doing, they would come here.” We know that’s not always true, but in some instances, it is. You see that, for instance, when programs have lower demand but really high yield. Boy, those students really want it.

Q. Everyone talks about “administrative bloat.” Is there room for efficiency there?

A. There are definitely significant savings to be found, and you can get at them more quickly. I can’t tell you how often we work with institutions that have expensive systems and software, and people print out reports and walk them down the hall, where someone else rekeys them into another expensive system. Happens all the time. Things that require six signatures that nobody has ever not approved. More and more levels of administration with associate this or deputy that, which slow things down, because it’s not clear who gets to make the call. We’re moving people from more line positions — the doers — to management positions, titles, and salaries, yet they aren’t managing anybody. There’s a lot of that in higher ed.

Q. Why does that proliferation of management happen?

A. To get around restrictions on compensation, particularly on the public side. There’s a salary cap, so I make someone an associate manager to try to keep them around. That happens a lot. You also see it in recruiting as title inflation and salary inflation.

Q. Why has it taken higher ed so long to grapple with costs and efficiencies?

A. As an industry, we’re still catching up to the notion that we have abandoned the public-good idea. I mean, if we look at the divestment that states are making and the pressure they’re under on public safety, K-12, or Medicare, we don’t like it. But we may be spending too much time trying to shame people into providing higher levels of funding. We should continue to advocate for government spending, but the things we can control are the money, people, and time we already have. And we haven’t been willing to talk about that.

Also, most leadership coming up hasn’t been trained in business models and optimization. Where they have attacked it, they’ve largely attacked it on the revenue side of the equation: How do I drive more philanthropy or maximize net tuition revenue? How do I advocate for more state support? All important things. But we haven’t said, Why does higher ed cost what it costs? And could it cost less without reducing quality?

When you look at cost per completion, cost per credit hour, cost per incomplete credit hour, waste and leakage in the system, there’s such enormous opportunity. But we haven’t had a way into that conversation. The only conversation we have is around cutting, which isn’t strategic. People are kind of tired of being told to do more with less. And until we’re willing to rethink how we reduce cost and maintain quality, I don’t think we’re really going to get there.

Scott Carlson is a senior writer who covers the cost and value of college. Email him at scott.carlson@chronicle.com.