Tuesday, February 09, 2010

Rent Seeking in Columbus

By Richard Vedder

Another example of why universities perhaps should be taxed rather than subsidized surfaced recently. Ohio State University announced that its CFO of two decades, Bill Shkurti, is retiring. He has done a fine job handling finances at this ambitious school that, if US NEWS is to be believed, is getting better all the time. At the time of his retirement, he is being paid a bit under $342,000 a year, a hefty amount for a public servant but perhaps not unreasonable for someone running a $4.5 billion annual operation. His successor, who comes from the private sector, is being paid $625,000 annually --over 82 percent more. Could they not fine a good person for, say, $375,000 a year, not much less than the president of the university was making a half dozen years ago.

Millions in economic rent for middle aged administrators --not a penny for poor students paying ever rising amounts to help finance this scam. Shame.

Robbing the Cradle

By Richard Vedder

The University of Southern California has been rising in the US NEWS rankings through somewhat dubious means I suspect, hiring lots of expensive faculty, doing flashy things that raise ratings. We at FORBES/CCAP rankings have a different view about USC. The kids don't like the professors much, possibly because a lot of them don't speak English but write dull articles for dull journals for a nonexistent audience. We think USC is not in the top five schools in Los Angeles County using an outcomes based approach to measuring excellence.

Now the ultimate example of why this is not a real great university, but more of a tacky entertainment oriented school that venerates Bubbas more than Brains. The new football coach, recently arrived from Tennessee (home of the Escorts who tantalize high school seniors in order to sign them up for football), has signed a 13 year old middle school kid to play football whenever he gets to college in 2016 or thereabouts. Is there no end? Is there anything beyond the pale in intercollegiate sports? Why don't university administrations, the NCAA, the Pac10 or someone put a stop to this madness? Is USC a serious school dedicated to the pursuit of knowledge, or is it an exploiter of child labor for decidedly non-academic purposes?

Links for 2/9/10

Arthur M. Hauptman
The Pell Grant has not had much effect on tuition levels in part because the amount of the awards does not vary with where a student enrolls. Institutions cannot affect how much a student receives, and the institutions that charge the most enroll the fewest Pell Grant recipients.

By contrast, despite the argument that there is no proven causal relationship between aid and price increases, there are several good reasons to believe that student loans have been a factor in the rising cost of a college education. Tuition has increased by twice the inflation rate for the past three decades while annual loan volume has increased tenfold in constant dollars.

Unlike Pell Grants, as part of the aid packaging process, colleges have some control over how much students borrow as loan amounts. Moreover, just as one couldn’t imagine house prices being as high as they now are if mortgage financing were not available, it is difficult to believe that colleges and universities could have increased their charges so rapidly over time without the ready availability of students’ ability to borrow.
Jill Laster
Portland State University is investigating a tenured professor of economics who is reported to have accused a student during class of being an FBI informant and selling weapons to other members of the class…

John B. Hall, stopped teaching in the middle of a lecture … Mr. Hall said an FBI informant was in the room and pointed at one of their classmates, Zaki Bucharest.

Mr. Hall then went on to say that Mr. Bucharest had served as a sniper in the Israeli army, tried to sell weapons to members of the class, and worked with the FBI, among other claims, the students said. Mr. Hall also showed students a letter he had written to the FBI.
Uwe E. Reinhardt
a modern university is a prepaid, staff-model, pedagogic group practice – the educational analogue of a staff-model health maintenance organization, or H.M.O., like the Kaiser Permanente Health Plan…
But suppose universities operated instead on a piece-rate compensation basis, like the current health system…
A “comprehensive initial consultation on a senior thesis,” for example, might cost anywhere from $150 to $300, depending on the student...

The faculty in the natural sciences and engineering would own the laboratories used by their students and charge a facilities fee for each use, along with a professional fee for faculty supervision and set-up costs…

Each time a student used the reserve library to read the voluminous material assigned by the professors, there would be a separate charge… Reading lists in the humanities would be especially long, leading to endless library charges for assigned chapters in archaic books found only in the library…

Students would be charged a professional lecture fee for every class they attended along, of course, with another facilities fee…

Upon requesting a fee schedule from the dean of the college, the latter would patiently explain that different prices had been negotiated with different parents and that all of those fees are proprietary information…

If universities conducted their business in this fashion they, too, might provoke endless rancor and suspicion, endless lawsuits and, sooner or later, much government regulation on how they conduct their business. It may be the reason universities prefer to function like staff-model H.M.O.’s.

And has this approach produced poor quality, as physicians devoted to the hallowed fee-for-service system have so often alleged of H.M.O.’s? It does not appear so, as universities do compete fiercely for students and faculty on their overall reputation…
Jake with a graph of unemployment by educational attainment.

Monday, February 08, 2010

Links for 2/8/10

Chad Aldeman
after teachers had a couple years experience and were up for lifetime tenure, could a district accurately cut off the bottom 25 percent of teachers and improve their workforce?

The answer is a qualified yes.
Tom Deans
I've been considering such evaluations ever since I went through the tenure a second time: the first was at a liberal arts college, the second two years later when I moved to a research university. Both institutions valued teaching but took markedly different approaches to student course evaluations. The research university relied almost exclusively on the summary scores of bubble-sheet course evaluations, while the liberal arts college didn't even allow candidates to include end-of-semester forms in tenure files. Instead they contacted former students, including alumni, and asked them to write letters…
Daniela Werner channels my inner thoughts.
Self-loathing kicks in, and I mentally whack myself over the head…

Like most of my fellow Web users, I exercise little self-control when spending time on the Internet. What I don't know is how I'm going to change…

It's embarrassing to admit that I willingly give up free time that I could spend accomplishing something of academic or personal value…
David Moltz
Amid the enrollment boom at community colleges, two-year honors programs have become more popular…

“More and more of our students in the program are coming here because they can’t afford to go off elsewhere,” Britt said…

Friday, February 05, 2010

Tenure: Gordon Gee Espouses Time for Change

by Daniel L. Bennett

Gordon Gee, one of the most influential university presidents, has recognized that the model used to grant tenure - mainly quantity of research - is outdated, suggesting that
a new approach to tenure is needed to ensure the university stays relevant to students and the outside world.

The universities of the 21st century are going to be the smokestacks of the century...The notion of the large, massive public university that can exist in isolated splendor is dead
Dr. Gee recognizes that the quality of research is more important than the quantity, and that teaching and other service to the college are also important criteria for performance. By saying so, Gee recognizes that diminishing returns have set in for academic research, something that CCAP has been saying for quite some time. He also likely recognizes that public support for higher ed is waning, as the cost of college continues to rise without a comparable increase in quality. Not to mention that the public largely supports education for the purpose of providing just that, education, and not dubious research.

Hopefully, Gee takes the lead with his university. US higher ed often plays follow the leader, so I'm sure that if OSU were to mandate higher average teaching loads and make teaching evaluations (or some other measure of teaching performance) a greater emphasis during contract extensions, then many colleges would begin to follow suit. Better yet, why not eliminate tenure altogether and replace it with a series of long-term renewable contracts of say, 5 or 7 years, to give colleges the flexibility to reallocate resources from time to time, but also the option to dispel the deadwood. While this is likely wishful thinking at this point, I do applaud Gee's comments and think it is a step in the right direction.

Thursday, February 04, 2010

Rising College Costs: A Federal Role?

The NY Times Room for Debate forum today asks the questions:
Is there a connection between federal education aid and the inflation rate in higher education? More broadly, what can Washington do, if anything, to improve the effectiveness of its programs and reduce the costs of college?
Richard Vedder opines:
President Obama wants more and bigger Pell Grants to help relieve rising college costs, along with revamped student loan programs. I think he has it backward: federal student financial assistance is more a cause than a consequence of rising college costs.

Work done at my research center reinforces findings of others that exploding student loan programs have contributed to higher tuition charges, and if Pell Grants grow more inclusive and generous, the same effect will occur with them.

The president joins many Americans in wanting to equalize college participation for all. Yet the root cause of low college attainment among poor people is not a lack of resources. It is dysfunctional living arrangements and abysmal academic preparation in our mostly free public secondary schools, particularly those located in inner cities. Indeed, Pell Grant recipients on average are less likely to graduate within six years from college — despite generous financial aid — than others, in large part because of prior educational deficiencies.

It is an inconvenient truth that a larger portion of college students were from low-income backgrounds in 1970, before Pell Grants, than today. No doubt the rise in college costs relative to family incomes makes more believe that higher education is something for the affluent, not everyone. But the cure — federal student aid — is causing (at least in part) the disease.

The demand for higher education grows with rising federal financial assistance, but the supply grows less rapidly, pushing up prices (tuition fees). Supply is comparatively rigid because the so-called best schools attain their lofty reputation by turning away customers: college rankings are enhanced by taking very qualified bright kids who likely will graduate (and are disproportionately affluent). Dropping money out of airplanes over the houses of college students (or its equivalent) is not the solution.

The three “I”s of higher education reform are incentives, information and innovation. Colleges must provide incentives for their staff to want to cut costs and be efficient, they must provide better information on outcomes and finances to consumers, donors and taxpayers, and they must embrace innovation in the forms of labor-saving technology. That, not more student financial aid, is the key to making colleges more affordable.
Arthur Hauptman also offers some interesting analysis:
Unlike Pell Grants, as part of the aid packaging process, colleges have some control over how much students borrow as loan amounts. Moreover, just as one couldn’t imagine house prices being as high as they now are if mortgage financing were not available, it is difficult to believe that colleges and universities could have increased their charges so rapidly over time without the ready availability of students’ ability to borrow.
As does Pat Callan:
But recent increases in Pell Grants during the Bush and Obama administrations and higher levels of federal expenditure for the program have had little, if any effect, on improving college access and affordability. As additional Pell dollars are absorbed by steep tuition increases, the effect is to shift costs from colleges and states to students and the federal taxpayer, with little or no net gain in higher education opportunity.

Links for 2/4/10

David Glenn
Students' minds have been wandering since the dawn of education. But until recently—so the worry goes—students at least knew when they had checked out. A student today who moves his attention rapid-fire from text-messaging to the lecture to Facebook to note-taking and back again may walk away from the class feeling buzzed and alert, with a sense that he has absorbed much more of the lesson than he actually has.

"Heavy multitaskers are often extremely confident in their abilities," says Clifford I. Nass, a professor of psychology at Stanford University. "But there's evidence that those people are actually worse at multitasking than most people."…

In a recent unpublished study, he and his colleagues found that chronic media multitaskers—people who spent several hours a day juggling multiple screen tasks—performed worse than otherwise similar peers on analytic questions drawn from the LSAT. He isn't sure which way the causation runs here: It might be that media multitaskers are hyperdistractible people who always would have done poorly on LSAT questions, even in the pre-Internet era. But he worries that media multitasking might actually be destroying students' capacity for reasoning.
Tim Ranzetta
Nationally, student loan delinquencies have risen 15% from 9.1% in 3Q 2008 to 10.5% in 3Q 2009.
The Onion
The University of Michigan has become the 17th institution of higher learning to be implicated in the checks-for-degrees scandal rocking American campuses…

"We have strong evidence that the University of Michigan granted academic degrees to students in exchange for hefty payments, often totaling tens of thousands of dollars," Deputy Attorney General James B. Comey said. "In the process, thousands of graduates have emerged with degrees, but few or no skills applicable to everyday life. And many are as unprepared to enter the job market as they were when they first enrolled."
Thomas S. Dee and Brian A. Jacob
the decision to plagiarize reflects both a poor understanding of academic integrity and the perception that the probabilities of detection and severe punishment are low.

Wednesday, February 03, 2010

Upcoming Event - February 26 - National Debate

Does the United States need more college graduates to remain an economic power, or is college just too expensive to benefit many Americans? That will be the focus of a debate that the Miller Center of Public Affairs at the University of Virginia, in partnership with MacNeil/Lehrer Productions, is holding Friday, February 26 at 7:00 pm at the National Press Club in Washington DC. It will air on PBS stations across the country.

Participants include:
•Richard Vedder, Director, The Center for College Affordability and Productivity; Economics Professor, Ohio University
•George Leef, Research Director, The John William Pope Center for Higher Education Policy
•Margaret Spellings, former U.S. Secretary of Education
•Michael Lomax, President and CEO, United Negro College Fund

Paul Solman, business and economics correspondent for “PBS NewsHour,” will moderate the debate.

Today, about 40 percent of Americans, aged 25 to 34, have graduated from college. That figure has remained stable for decades, while graduation rates in other countries, including China, have increased dramatically in recent years.

Debate participants will argue several questions, including:
*To remain an economic superpower, does the U.S. need to focus on jobs that require innovation and critical thinking, skills best acquired in college, because it cannot compete with the world on the price of labor?
*Are college graduates better off financially and socially? Or with annual tuition averaging $20,000 for public colleges and $30,000 for private schools, does the cost of college outweigh the benefits for many Americans?
*Is it sound public policy to urge Americans to go to college, with the personal savings rate at its lowest since the Great Depression?

If you’re interested in attending, please e-mail or call one of the contacts listed below:

Kristy Schantz
202-758-3918
kkschantz@virginia.edu

Kim Curtis
434-243-2985
kcurtis@virginia.edu

Links for 2/3/10

Erin Einhorn on NYC’s Rubber Rooms
roughly 700 workers accused of various wrongdoings collect their full salaries for spending seven hours a day in low-ceilinged, over-heated rooms, playing cards, doing puzzles, reading magazines and sleeping…

the longest-serving person stuck in a rubber room as a teacher who was accused of sexually abusing a child and yanked from his classroom 5-1/2 years ago.

Because the allegations were never proved, and because he refuses to quit his job, he collects his full annual salary - up to $95,000…
Lewis Pyenson
Paul Courant and his colleagues at the University of Michigan want the federal government to support the research habits of elite public universities… Not so fast.

Elite public research universities have pots of money, which they can and do choose to fritter away on enterprises of dubious value…

creating a special strategy to feather the nests of fancy universities is not a responsible use of federal funds.

It would make much more sense to award federal funds to scholars and scientists individually, wherever they are located…
Scott Jaschik
the "no loan" policies adopted by many colleges three years ago… The plans were financed by endowments that had grown so large and so rapidly that members of Congress were demanding to see more spending. Then came the collapse of the stock market -- and deep declines in endowments…

That's when Williams College -- which had a gold-plated no-loans, no income limit policy -- announced that it was shifting back…

Lafayette College… raised the loan limit it pledged to students with family incomes of between $50,000 and $100,000…
Lee Burdette Williams with a humorous take on tenure.
offered the gift with the stipulation that tenure be abolished, the president told him we could never do such a thing. But $75 million! Imagine turning that down! Carson offered a compromise, which the president, without a second thought as to the consequences, accepted: tenure food services employees in addition to faculty…

I realize now that back in 1985, Carson still harbored a 20-year old grudge against a professor and the institution that was powerless to hold that instructor accountable, and that Carson’s very clever form of revenge was to subject us to more misery than any college, even a small, private, wealthy liberal arts college, deserves…

two tenured line servers who were miserable in their jobs but unable to get hired elsewhere, were woefully out-of-date on current food serving technique and research, and invested the majority of their energy in sabotaging the authority of both the head of serving and the Food Services director. They were a pathetic pair of institutional critics who, in faculty parlance, would be called “dead wood.” In food services, though, they’re known as “salad spinners.”…

Though we enjoyed the fruits of his generous gift, he had taken one of our most sacred institutions, tenure, and skewered it like lamb on a kabob. The joke, we all knew, but never admitted out loud, was on us...

Tuesday, February 02, 2010

Obama and the Doctrine of Fiscal Irresponsibility

By Richard Vedder

I am wondering if the day will come when one of the bond rating agencies announcies it is putting the sovereign debt of the United States government on its "watch" list for possible downgrading. The Bush Administration was irresponsible, but irresponsible within previously observed bounds of recklessness. The Obama Administration is proposing a budget with a deficit of over $1.5 trillion, or 10 percent of GDP. It looks like the three year deficit for fiscal years 2009, 2010, and 2011 will exceed $4 trillion, much larger than deficits, even in relation to the economy, than ever observed except in all-out war. For all the talk of budget freezes, etc., Obama wants to spent over 5 percent more next year over this year's bloated total.

I would be surprised if interest rates do not start increasing on long term debt, and that to deal with that Obama will pressure Bernanke into doing the equivalent of printing money. These are bad times fiscally, just as they are in the real economy with its 10 percent unemployment (despite two so-called "stimulus packages" that have had no positive economic effect whatsoever in my judgment).

Amidst all of this, as American families tighten their belts to deal with economic adversity, the president wants to nearly double Pell Grant spending. As I read the numbers, he wants to both expand a good deal the number of Pell recipients as well as the average grant size. A near doubling in the size of the program is proposed. Moreover, he wants to make it an entitlement --everyone, no matter their economic condition, their ability to complete college, etc., has a "right" to large federal grants.

This is a recipe for disaster. We have had a number of good things to say about Pell Grants over the years, and in many ways prefer them to other forms of federal aid. Yet a large expansion in numbers will bring students into the program who are less needy economically and likely to be marginal academically. A growing number of college students, if they are able to graduate, have a terrible time getting a job related to anything they studied in college. A huge expansion in the number of recipients and grant size is an invitaiton for bigger tuition hikes, more attrition of students prior to receiving a degree, and more underemployment of new college graduates.

Links for 2/2/10

Daniel B. Klein
why do college professors overwhelmingly lean to the left?...

The pyramidal structure of each discipline means that publication, awards, grants, recommendations will follow the pyramid's apex, and if the apex goes left it tends to sweep leftists/neuters into job posts throughout the pyramid.

If leftists have a lock on many fields, it means that non-left applicants will tend to be screened out. Awareness of that feeds back to the non-left student's thoughts about the future. Self-selection is a function of the screening…

We found that Republican-voting members of the scholarly associations were significantly more likely to have landed outside of academia… 41% versus 25.
Jay Greene HT: Andrew Coulson
A press release from the National Education Association landed in my inbox this morning with the alarming headline: “Teachers Take ‘Pay Cut’ as Inflation Outpaces Salaries…

The only problem is that this is not what the data in the NEA report actually show. In Table C-14 “Percentage Change in Average Salaries of Public School Teachers 1998-99 to 2008-09 (Constant $)” we see that salaries increased by 3.4% nationwide over the last decade after adjusting for inflation…
I can’t find a single table or figure in the report that would justify the headline and claims in the press release. But when the Ministry of Truth speaks who are you supposed to believe — them or your lying eyes?
Edububble
Now that the police have found a healthy and self-sufficient Phil Agre, I can make a snarky comment. He was a professor of information sciences at UCLA and then he just stopped coming to work. Finally after a number of months, his family noticed he was gone and took action…

most plausible one to me is that Prof. Agre didn’t have any responsibilities between exams in December 2008 and May 2009. So no one at the university noticed when he wasn’t around…

taxpayers have bosses that will notice if you’re not showing up for work. I wonder if UCLA cut off Agre’s paychecks yet. Given what I know about universities and tenured folk, Agre’s checks could still be automatically appearing in his account every two weeks. Gotta love academia.

Somewhere there’s a university leader arguing that the taxpayers need to support more excellence like this.
Paul Basken
President Obama is cracking down on some institutions seen as wasting taxpayer money while they sit secure in the fact that they are too important to be allowed to fail.
He means, of course, the nation's banks.

The nation's colleges, by contrast, appear to be entering another year in which Mr. Obama will be doing all he can to ensure education gets the most possible federal support…

most colleges still haven't made fundamental changes, said Charles Miller… They typically respond to tough economic times by seeking new ways of getting government money or simply cutting staff members, Mr. Miller said, rather than finding ways to be more productive with their existing resources...

Monday, February 01, 2010

NegReg Fails to Reach Compromise

by Daniel L. Bennett

Inside Higher Ed reported today that the Department of Education's (ED) Negotiated Rulemaking Committee failed to reach a consensus during its third round of negotiations last week. The committee ostensibly got hung up on 2 measures that were directed towards career colleges: gainful employment and incentive pay. I wrote negatively about the potential negative impact that such changes would have on the sector in a recent article for Career College Central.

The committees failure means that any regulatory amendments will now be subject to Congress and the political process. I doubt that the attempt to link student debt to income, which is chock-full of problems as I explained here, will survive the political process. This should not, however, be perceived as a free pass to any college to become complacent at seeking to add value to its programs. Students and the taxpayers are investing large sums of money and hope in the postsecondary education system, and these students and the public deserve better outcomes than is currently the case.

Links for 2/1/10

F. King Alexander
many states based their entire higher education reductions not on valid educational principles or state formulaic considerations, but on the simple threat of losing federal resources…
12 states (including Colorado in 2011) reduced their funding for higher education to the exact amount or within less than half of 1 percent of the threshold set by the maintenance of effort requirement…

The power of these data convinces me that … Congress should make maintenance of effort requirements a regular part of doing business when allocating federal funds for higher education…
Tim Ranzetta
the number of Pell Grant recipients grew to 6.2 million from 4.7 million while the dollars disbursed grew to $13.9 billion from $8.9 billion. The average Pell Grant also grew to $2,223 from $1,885, an 18% increase…
Eric Kelderman
The report is from the Data Quality Campaign, an effort begun in 2005 through the efforts of 10 education groups to press states to collect and use information on student performance. The campaign says states are largely succeeding in gathering the data: Forty-six states have put in place at least eight of the 10 benchmarks the organization has set for such systems…

But having data doesn't help if states aren't sharing the information with decision makers and using it to drive their policies, the campaign says, and that is where states continue to fall short.
For example, only nine states share reports on individual students with their teachers, the survey found, and no state yet has policies to train teachers in how to access, analyze, and use the data on student achievement to improve their work in the classroom…
Doug Lederman
a U.S. Congressman and several supporters unveiled legislation Thursday … The bill… would (1) cement in federal law definitions of "diploma mills" and "accreditation mills" (the unauthorized agencies from which the phony institutions claim to derive their authority to operate), (2) bar federal agencies from using degrees from diploma mills to provide jobs or promotions that depend on candidates' educational credentials, and (3) give the Federal Trade Commission more authority to define and crack down on deceptive practices by dubious institutions...