By Richard Vedder
INSIDE HIGHER ED has an interesting story this morning about a controversy at the University of Toledo. The school is contemplating signing a contract with Higher Education Holdings, a Texas-based for-profit comppany, in which that company would handle some of Toledo's on-line instruction in return for a share of tuition revenues. This is precisely the type of innovative thinking that we have long advocated at the Center for College Affordability and Productivity, and I was delighted to hear about the proposal.
Full disclosure: I am a very small stockholder in Higher Education Holdings. I bought the stock (which is closely held) because I admire Randy Best, the company's head, immensely, and consider him one of the great visionary leaders in higher ed. I did some rather extensive consulting work for Randy a few years ago (before I was devoting most of my time to CCAP), and agree with the UT Prez that the company has done some remarkably innovative things --at low cost, good quality, and high consumer satisfaction.
The outsourcing of some educational sources makes sense. A university should view itself as a service provider that buys the services of various vendors in order to offer its "output" of degrees and courses. Some of those vendors will be individual professors like myself, whose services will be hired by the institution on an employer-employee basis. Other workers may simply contract with the institution individually rather than become an employee. In still other cases, a for-profit company may offer to provide the services, as with the Toledo case. A good university will use all of these modes of purchasing inputs used in producing educational services, the exact mix of them varying with cost and sometimes legal considerations.
The outsourcing appoach has advantages. It often uses cheaper, more fliexible labor inputs, and avoids the rigidity and bureaucracy associated with tenure and dealing with teacher unions (a malady inflicted on Toledo), etc. As needs change, out-sourced contracts change as well, allowing for a faster reallocation of resources. Whether the Higher Education Holdings arrangement is optimal for Toledo, I do not know --there are other for-profit providers, for example. But I do believe that the principle of outsourcing more services is an excellent one, and I commend Toledo for considering it strongly. I also hope the Education Establishment at Toledo does not prevail in preventing this innovation from occuring. It is this type of obstructionist behavior that contributes to the high schools prevailing in higher education.