Friday, April 03, 2009

Teach a College to Fish Rather than Give it a Fish

by Daniel Bennett

An interesting piece appeared in Inside Higher Ed this morning. The University of North Carolina accepted a (presumably substantial) anonymous gift with an unusual stipulation - that the university hire consulting firm Bain & Company to help trim up to 7% of its $1.9 billion operating budget.

There is concern among some UNC faculty (mostly those affiliated with the AAUP) about the stipulation. The two main concerns are:
1) A potential conflict of interest since the donor is anonymous
2) Bain has limited experience in academic consulting
UNC's chancellor alleviated the first concern by declaring that the donor was properly vetted to ensure that there was not a conflict of interest. The second concern, which admittedly has some validity, is mitigated by the fact that Bain has expertise in management consulting across a broad spectrum of industries. It has established a reputation, based on its success, for being able to help organizations trim the fat off their pork. While it has limited exposure to higher ed, it may actually be a great idea to get an outsider's perspective, as is a common practice in most other industries. Many corporations often hire executives from outside their own firm or industry because of their management expertise and the promise that such leaders will bring fresh ideas to the table. For too long, the higher ed establishment has been plagued with a resistance to change brought about by self regulation (via accreditation) and a lack of fiscal control that has resulted in spiraling tuition costs.

Let's do a quick and dirty empirical investigation:

With a total enrollment (undergrad and grad) of slightly more than 28,000 at the UNC Chapel Hill campus, this amounts to a budget of nearly $68,000 per student. According to NCES, the listed tuition and fees for an in-state student is nearly $5,400, and nearly $23,000 for an out-of-state student. It has been suggested that out-of-state tuition is a good approximation of the actual average cost of providing an education. Assuming that this is the case, this leaves a discrepancy of $45,000 per student between the operating budget and the cost of providing an education. There is obviously some discretionary spending taking place in Chapel Hill, as well as countless other colleges. Hiring an outside consulting firm (that has no bias towards academe) to point out cost savings sounds like a pretty good idea, especially since it is already bought and paid for by the donor.

In this case, the donor is doing the university a huge favor by providing a gift to further the institution's mission. He/she obviously has some concerns that the money be spent effectively and so, justly, he/she provided a reasonable stipulation that UNC hire a management consulting firm to point out excesses. This reminds me of the old proverb "Give a man a fish, you have fed him for a day. Teach a man to fish and you have fed him for a lifetime." In this case, the donor is attempting to teach UNC how to fish (fiscal control) rather than just giving it a fish (enabling bad habits).


capeman said...

This "analysis" is beyond idiotic, way beyond even the usual standards of the Doc.

The Doc’s wonderboy takes the total UNC operating budget of $1.9 billion, divides by 28,000 students to get $68,000, posits the out of state undergraduate tuition of $23,000 as the real cost of providing an education, and thereby comes up with “a discrepancy of $45,000 per student between the operating budget and the cost of providing an education”.

Has our Daniel taken even a cursory look at the UNC budget? Does the $1.9 billion include research grants? How about a medical school, does UNC have a medical school, do they run a medical center? Does UNC have dorms? Do they have an athletic program? I won’t even ask if UNC has an Extension division, etc. etc.

Admittedly, Daniel calls his analysis a “quick and dirty empirical investigation”. But this is beyond quick and dirty, it’s laughably incompetent.

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