Tuesday, March 31, 2009

Reinventing Universities: Out-Sourcing

By Richard Vedder

A number of years ago, David Osborne and Ted Gaebler wrote an interesting book, Reinventing Government. The most insightful thought in the book was that government had a role to see that certain functions got performed that it viewed as being socially useful, if not vital. However, that is not the same thing as government actually providing the services itself. Often, it is smart for government to contract out (out-source) the actual delivery of governmental services to private firms that are specialists in providing the desired service. This takes advantage of the efficiencies inherent in specialization, the division of labor, and the theory of comparative advantage.

The same thing can be said about universities. Their job is to certify that student X has achieved a certain level of competence, knowledge, critical learning skills, etc., to warrant the rewarding of a degree. It is relatively irrelevant WHO provides the services, as long as they are provided at an acceptable level of quality and at an affordable cost. Sometimes, this may involve online instruction, sometimes large lecture hall teaching, sometimes expensive but sometimes life-altering small group seminars. Why shouldn't universities concentrate more on seeing that high quality services get delivered at an affordable cost, and less on delivering the services themselves? The reason, of course, is that vested interests on campuses resist any attempt to break their monopoly on the provision of services.

This brings us to today's INSIDE HIGHER ED (I am indebted to our friend and for-profit educational entrepreneur Burck Smith for bringing this to my attention). We learn that students at Fort Hays College in Kansas are revolting against courses provided at a low cost online by private for-profit provider StraightLine, with credit readily transferable to Fort Hays to be applied for graduation. Students cannot have it both ways -- wanting low cost, affordable education, and at the same time insisting on traditional modes of delivery that are inherently costly.

Are there issues involved in offering out sourced courses? Of course -- but those same issues exist for courses taught internally. Is the course's quality high? Are students in fact doing the work for which they are getting credit? Is the cost of providing the services reasonable relative to the benefits? A university that allows a lot of credit to be provided by disreputable outside providers may find their reputation damaged, or even their accreditation threatened (however: have you ever known a major institution that lost accreditation for academic reasons?) There are risks for reputable universities that try to cut corners using disreputable providers, and most prudent universities will be aware of this and act accordingly.

I am not surprised this story involves Fort Hays. In my book GOING BROKE BY DEGREE, I praise Fort Hays and its veteran president Edward J. Hammond for the innovative approach he took to reducing costs during the last recession. Now in his third decade as president (itself a real novelty these days), Dr. Hammond apparently has not lost his penchant for trying new and innovative ideas. When I last talked to him several years ago, I found an unusual president --not afraid of controversy or a willingness to confront change, Dr. Hammond was very cost conscious. I liked him very much.

I am not here to hawk StraightLine or its courses, but rather to say more power to universities who embrace the position that "we want to offer quality degrees at a low cost -- no matter who does the teaching, be it a for-profit provider, the institution itself, or a series of different providers, each good at what it does."


capeman said...

Doc, face it, when even the students are complaining about a setup that supposedly offers to do the remedial education stuff for $99/mo. (to the student), something is probably fishy.

Burck said...

Why do you say that $99 per month is fishy? You are confusing price of education with cost. Check the case studies at www.thencat.org to see what schools say they spend on 3 credit general education classes both before and after course redesign. Frequently, before redesigned courses, schools are spending less than $150 per student for a credit-bearing 3 credit course. After redesigned courses, they are spending $70 or less per student. Of course, they are charging $1000 or more when you include tuition, fees and government subsidy. General education can be very, very affordable. We've just never let it.

capeman said...

Burck, without going into too much detail, I've checked out the kind of stuff you're talking about. In large departements in major state universities in my field (one of the natural sciences). What I hear is that the stuff is oversold, it doesn't save money, it doesn't improve student performance (or hurt it, either). It does save a lot of gruntwork time for low-level people, so they can spend the time on other stuff. It takes a big input of high-level time on the part of someone who is enthusiastic. This is what I hear from department heads. from people who actually use this stuff.

Here where I work, we don't use this kind of online tutoring, but we do use online graded homework. It does save the department money (fewer hours for TAs grading their brains out), and there are some (modest) advantages for the students in large intro classes. Also probably some disadvantages. The students pay extra for it, a modest amount. They are not saving money, they're paying more.

Melissa said...

Capeman - You are so full of bullshit you're going to pay some very high taxes to Obama for the CO2 and CH4 you are creating. If they don't tax CH4 yet, Obama will. Yes We Can!!

I'll bet you studied for your HIV test.

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