By Richard Vedder
Charles Koch and the folks at the Koch Foundation are on a mission to make American universities do more to spread market based management, an excellent and noble mission. But, as we have been saying for the past year, part of the problem is that entrepreneurship has to begin at home --within the universities themselves. By and large, established institutions in the not-for-profit sector are slow to innovate, to take risks, and to respond to market forces. This has contributed importantly to rising costs and falling productivity.
There are, however, exceptions to this rule. Private enrollment is rising faster than public enrollment in U.S. higher education, and some of the so-called independent colleges are actually extremely dynamic and entrepreneurial. That was brought home again to me the past two days. Bob Maginn, CEO of Jenzabar, a private company that provides services to colleges and universities, hosted a President's Summit of a dozen or so presidents of institutions, mostly private and relatively small. I attended and made a presentation. By the way, while Jenzabar no doubt hopes to get good will and business from doing this, the Summit was in no way a blatant bribe like we have been hearing about recently in the student loan business, but a no nonsense meeting in a pleasant but not overly luxurious setting (admittedly in Palm Beach), and the college presidents paid their own way there.
Let me today talk of just one of the innovative colleges, Palm Beach Atlantic University. It is a school that during the day caters to a growing population of affluent kids living in the West Palm Beach area, and it gives them what they want --very nice facilities (fancy library, a new rec center under construction) --in a conservative, faith-based learning environment. All students must take a course in the free enterprise system, for example, a marked contrast to the vaguely anti-capitalist, anti-Christian "multi-cultural" emphasis often found on campuses. None of the faculty have tenure. From the 2000-01 to 2005-06 years, the budget over doubled, implying a more than 14 percent annual growth. Enrollment was up close to 40 percent.
Yet, as President David Clark tells me, this "Yuppie U" with rising test scores and increasingly affluent families in its daytime programs, also runs a distinctly different program at night --thereby using facilities more --reaching out to part-time working adult students of modest means. A satellite operation is growing in Orlando and more are planned. The lack of tenure allows the institution to expand in new and different directions from what its faculty, mostly long-term adjuncts, might choose on its own. Dr. Clark, I suspect, has a great deal more authority to move the school in new directions than the president of a typical Ivy League school has. Contributions from wealthy business persons are booming, including a big gift last year from the estate of a legendary General Electric executive, the late Lemuel Boulware (whose approach to labor relations was both innovative and controversial).
It is schools like Palm Beach Atlantic and the quite different but equally if not more innovative Cambridge College that are showing growth and change these days --not the Harvards, Berkeleys, or Williams. They are entrepreneurial and student-oriented, with high teaching loads and moderate ($10,000 to $20,000) tuition levels by private school standards. They do not face the resource rigidities of the traditional institutions, and thus are continuing to gain market share and prominence.
By giving students and their parents what they want, by sticking to the core mission of teaching mostly undergraduates, and by utilizing resources intensively and in a flexible way, Palm Beach Atlantic is one reason that American higher education is slowly but surely being privatized.