Friday, January 07, 2011

Attacking Higher Ed Cost Inflation: Reform Academic Employment Policies

By Daniel L. Bennett*

With the November midterm elections delivering what President Obama called a “shellacking” to the Democratic party, many have suggested that there could be political gridlock in Washington for the next few years. With the 112th Congress taking seat this week, there is still a lot of speculation about whether the President and a newly divided Congress will be able to meet in the middle to pass any meaningful legislation. One policy concern that both sides of the aisle could and should address, however, is reigning in the rapidly increasing cost of college. Past political efforts to slow tuition inflation have been largely ineffective as the generosity of lawmakers to dole out cash in the form of student financial aid and institutional subsidies have been swallowed up and spit back out in the form of tuition hikes by college administrators whose spending habits (i.e., spend all of their revenues and then some) resemble those of Washington.

To slow the growth of tuition, we need reforms that attack the inefficient cost structure and low productivity in higher education. We have recently suggested a number of such reforms in our book-length policy research tool, 25 Ways to Reduce the Cost of College, which features 25 chapters, organized into five topical sections, each describing a different way that college administrators and policy leaders can make college less expensive. One such policy suggests that colleges reform their academic employment policies by replacing tenure with one of a number of alternatives that would preserve the holy grail of higher education, academic freedom, which is necessary to prevent faculty from being arbitrarily dismissed for saying or writing things that administrators or influential outsiders consider wrong or offensive.

As the 1940 AAUP Statement of Principles on Academic Freedom and Tenure describes, tenure is merely a “means to certain ends,” suggesting that it is not the only mechanism to protect academic freedom. In fact, it is an economically inefficient means of doing it. One theory behind tenure is that “only those professors who have proven their worth through excellence in teaching, research, and service during the probationary period will be awarded tenure.”[1]

Under most private sector employment policies, however, when an employee has demonstrated that his/her work no longer meets a minimum standard of quality (and often after efforts to rehabilitate have failed), the employer initiates action to terminate that unproductive employee. Under a tenure policy, however, the employer effectively loses this flexibility to eliminate tenured faculty whose quality of work fails to meet a minimally acceptable level or whose productivity has dwindled over the years. This is often referred to as the deadwood dilemma. And while deadwood faculty are by no means the norm in higher education (the majority of faculty surely pulls its own weight), the mere inability to remove unproductive faculty is economically inefficient for colleges and unjust to the students paying tuition and forced to sit through classes with professors who view them as a nuisance.

The dynamic nature of the global economy requires that organizations have the flexibility to adapt to changes in the world. The presence of tenure in higher education significantly reduces a college’s ability to efficiently reallocate resources in response to consumer demand–a hindrance that would be life-threatening to an organization in a healthy market economy. A tenure policy increases the cost of college, as institutions are forced to hire additional faculty to teach courses in popular disciplines with high demand, rather than being able to reallocate faculty resources from subjects that are in low demand by students and the labor market.

In addition to being a costly employment policy, tenure also results in a reward structure that is largely misaligned with the interest of the public, as tenure rewards research and public stature, while it punishes teaching. This opinion appears to be quite common among scholars, as it has been suggested that “academic culture is not merely indifferent to teaching, it is actively hostile to it,” and that “receiving an award for good teaching is considered the kiss of death for an untenured professor [implying that] anyone who spends so much time preparing for class must somehow be deficient in research.”[2] The current tenure system provides an incentive for professors to neglect their teaching and service duties in pursuit of publishing research, a questionable reward structure that appears to be misaligned with one of the primary missions of higher education – to educate citizens and the future workforce.

There are several alternatives to tenure, some of which colleges have widely adopted. For instance, many colleges have steadily increased their use of contingent, or non-tenure track, faculty. In public institutions, for example, the percentage of full-time contingent faculty increased from 19 to 32 percent between 1989 and 2007.[3] Additionally, most institutions have adopted a post-tenure performance review policy; however, many have criticized such policies as largely inconsequential. For example, the President of the American Council of Trustees and Alumni, Anne Neal, described the current post-tenure review process as a “ritualistic exercise in rubberstamping,” suggesting that while widely implemented, "it carries little value as an effective practice of increasing accountability among faculty.”[4]

There are several other prospective employment policies that would increase the economic efficiency of colleges, but have yet to be widely implemented. One alternative would be to replace tenure with long-term, renewable faculty contracts. Such contracts could be structured for an initial probationary period of three to five years, with the criteria for performance evaluation (a detailed outline of teaching, scholarly, and service expectations)[5] specified in the contract, including a clause pertaining to academic freedom to avoid diminishing it. If after the probationary period, a faculty member passed his/her performance review and there was still a need for the position at the college, then the contract would be renewed, with a subsequent performance review similar to the initial one. This contract renewal process would continue, with perhaps an increase in the length of additional contracts, not to exceed ten years, as a reward for continued successful performance. Several institutions, such as the Franklin W. Olin College, Lindenwood University, and Quest University in Canada, have adopted such a policy and have experienced some early successes.

Another alternative, an idea similar to that proposed by my colleague Richard Vedder in his book Going Broke by Degree, would be to offer tenure (or enhanced job security) as one of a number of compensation options for which individual faculty choose from a menu of compensation items, including salary, health and life insurance plans, retirement contributions, and time off, etc. Each faculty member would be allowed a given level of total benefits and would make trade-offs among the various options in accordance with their individual risk tolerance and familial needs. For example, a mid-career professor who is risk averse and has small children at home might elect job security in exchange for a reduction in his or her annual salary or other benefit levels; whereas a single and highly sought-after researcher might elect a higher salary and retirement contributions over job security. This would be a much more efficient means of allocating university resources, and would better meet the needs of individual employees.

The alternatives mentioned, if implemented judiciously, offer some generalized approaches to reducing the cost inefficiencies imposed by tenure without requiring a low-ball pay structure or imperiling academic freedom; however, there is no one-size-fits all solution. The optimal strategy for one institution type may vary from what is most effective at another. For instance, research-intensive universities might benefit most from a hybrid of renewable long-term contracts and fringe benefit trade-offs, whereas it may be most efficient for teaching colleges to utilize a combination of contingent faculty and renewable contracts. Tenure as an employment policy, however, is no longer economically sustainable if we want to solve the price inflation problem in higher education. You can read a more detailed analysis of this, as well as 24 other ideas to reign in college cost inflation, in CCAP’s publication, 25 Ways to Reduce the Cost of College. Free PDF downloads of each individual chapter, the entire 234 page report, or a 43 page summary of the report, are available on the CCAP website.

[1]Robert McGee and Walter Block, “Academic Tenure: An Economic Critique,” Academic Freedom and Tenure: Ethical Issues, (Lanham, Maryland: Rowman and Littlefield Publishers, Inc, 1997).

[2] Ibid


[4] Anne Neal, “Reviewing Post-Tenure Review,” Academe Online, September-October 2008.

[5] Victor Davis Hanson, “Reconsidering Tenure: Its Time Has Come,” Tribune Media Services, 16 May 2005.

*This post originally appeared on the Forbes blog site on January 3, 2010.

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