There was a time when colleges and universities handled almost all the functions necessary to enroll, educate, and graduate students. As financial and political pressures mount, more colleges want to focus on the academic core — teaching and research — and transfer much of the rest of their operations to specialized businesses. The result is a complex relationship between colleges and companies, and it’s quickly growing more common: the public-private partnership, or P3.
The Chronicle recently released a special report, “The Outsourced University: How Public-Private Partnerships Can Benefit Your Campus,” that provides an all-in-one primer on P3s. The following is excerpted from that report — read more by purchasing a copy here.
Higher-education institutions once handled almost all the functions necessary to enroll, educate, and graduate students. They built and maintained residence halls, sports complexes, and rec centers. They operated their own power plants, laid cable, and pushed steam through underground pipes. They ran kitchens to feed thousands of people, opened stores to sell toiletries, snacks, books, and memorabilia. Security, parking, marketing … the list of duties beyond the classroom goes on.
Today, financial and political pressures are leading more institutions to focus on the academic core — teaching and research — and to transfer much of the rest of their operations to companies that specialize in those areas. Enter the public-private partnership: a kind of marriage between an institution and a private company, in which the company often finances, designs, builds, and operates a college “asset,” as industry insiders call the outsourced facilities and services. Those projects can be fraught with problems over the control, revenue, and risk of a particular campus activity or asset.
While P3s, as the partnerships are known, have long been used to build and operate student housing, they are increasingly being developed now for other kinds of campus infrastructure, like hotels and arenas. And some people see P3s expanding into activities that are closer to the academic core, like online program management and advising. Here are two case studies of successful partnerships.
The Hotel at the University of Maryland at College Park
The strip of Baltimore Avenue that runs in front of the University of Maryland at College Park has long had its share of eyesores. With its cluster of car-oriented, fast-food restaurants and auto-repair shops, the community didn’t exactly bring a shine to the institution. The university has longed to change that.
A cornerstone of that plan has been the Hotel at the University of Maryland, the first hotel to open near the campus since the 1960s. The project was the culmination of a series of partnerships among the university, its foundation, a development company connected to the university, the local government, and a private developer.
The Terrapin Development Company, created by the foundation and the university, was charged with transforming 17 properties that the university had acquired on the strip. In the case of the hotel, the university transferred that property to the development company, putting the land on the tax rolls and easing negotiations with the city.
[[relatedcontent align="right” size="half-width”]]
Terrapin Development also found an unusual P3 partner: The Southern Management Corporation, a company that builds and operates apartment buildings and hotels in the mid-Atlantic region, was owned by a Maryland alumnus, David Hillman.
Hillman was willing to put up all the investment money for the project — $180 million — without help from the university or the state. The university has a lease on the land and will get a percentage of the gross revenue from the hotel, which includes restaurants, a spa, a fitness center, and meeting space.
“Obviously, because we share in the gross revenue, we have an incentive for the hotel to continue to do well,” said Ken Ulman, president of Terrapin Development. But he noted that the university is not responsible for the performance of the hotel.
The hotel, which opened in 2017, has already spurred nearby development, also in the form of partnerships: WeWork, a company that develops and runs shared working spaces, opened a location behind the hotel, its first on a college campus. And nearby the Capital One Tech Incubator — a partnership between the financial company and the university — opened late last year. Capital One gave about $6 million to the university to support laboratories, faculty positions, and the creation of the incubator; the company may benefit from access to student and faculty work in the space.
A P3 Boosts Academics at Concordia U. at St. Paul
Concordia University at St. Paul has a range of partnerships, but one of the most prominent is its relationship with Learning House, a company that offers services in academic program management.
Eric LaMott, provost and chief operating officer of the Minnesota university, said colleges always believe they can handle the administration of academic programs by themselves. But the complexity of the sector and the competitive pressures within it have grown significantly in recent years, and colleges have trouble getting the right people to spin up new programs.
“I tell everybody I am focused entirely on talent acquisition,” he said. “In some categories where I can’t get good talent, I’d rather put the tasks on the shoulders of another professional group and say, You’re responsible for achieving these outcomes.”
[[relatedcontent align="left” size="half-width”]]
Concordia formed its partnership with Learning House in 2012. The company works on branding, marketing, recruitment, and retention for the university’s adult undergraduate programs and many master’s programs, both on the ground and online. (While the company helps recruit students, LaMott stressed that admissions decisions are always made by the university.)
The company can also identify academic programs that could have potential for the university, and help get them off the ground. For example, Learning House identified a regional need for a computer-science program, then went to industry experts to find out what skills employers wanted applicants to have. It provided Concordia with content and resources from its technology boot-camp programs, and faculty members used that information to build lesson plans for the new degree program.
Attending to the elements of partnership is among the most important aspects of the relationship, LaMott said. That has required the university to break down some of the operational walls between departments on the campus, and to align their duties with Learning House.
Administrators have pushed staff members at Concordia to accelerate their responses to the company and developments in their shared projects. Given that its activities affect students directly, a failure by Learning House would reflect poorly on the institution as well.
“This is not a vendor,” said LaMott. “This is a partner and a relationship, because they are holding our entire brand in their hands.” He sees Learning House as a kind of investment firm.
“They’re investing in this institution,” he said, “expecting that we’re going to be able to return that investment.”
Scott Carlson is a senior writer who covers the cost and value of college. Email him at scott.carlson@chronicle.com.
