Economics

May 7, 2016 By B. Baylis Leave a Comment

The Business Model for All of Higher Education is Broken

I recently came across a very thoughtful and extremely well-written blog post This Needs to Be Run More Like A Business written by Jason McNeal. In this post, Jason gives an impassioned plea for a different approach to private education since “the business model approach to higher education is helping to discourage giving.” Jason suggests that board members and I would assume he would include administrators should know better than to say, “Our business model in higher education is broken.” I am sorry Jason, but “The Business Model for All of Higher Education is Broken.” I say this as an administrator with 40 years of effective service in private higher education. I have also spent considerable time praying, studying, thinking and writing about higher education. You do make a valid point when you imply a criticism of the board member’s statement, “I simply do not understand why our tuition and fees are not sufficient to cover our costs.” In the worlds of private, non-profit, higher education and public, higher education, no traditional college or university covers its education and general costs with just tuition and fees. It is like one individual in a sinking rowboat trying to bail out the boat, with other sitting by, just watching and doing nothing to help. This model is broken. However, the model of using a leaking boat to try to get across a lake is also broken.

Why do we want to get across the lake? We want to build an excellent education that works for students, faculty, and the general public. This education must be affordable for everyone involved, including the students, faculty and the general public. This education must be sustainable not only in the short run but for the long run. I, for one, see problems in all the current approaches that we are using to reach these goals. For 40 years, I tried to work toward these goals in the best way that I could. I had some successes, but I also had some failures. I will discuss some of both in future posts. Why? Because we can learn from both our successes and failures. When Thomas Edison was asked about thousands of experiments on light bulbs that didn’t work, he is reported to have said, “We haven’t failed. We now know a thousand things that won’t work, so we are much closer to finding what will.” When we find something that partially works, we should try to determine why and what we could do to make it work better. These are the steps to success. Let’s work together to bail out the leaky boat, find the leak and fix it. Then we can row together across the lake to the land of success, where we will have excellent, affordable and sustainable education for all.

We can begin by looking at two partial successes. The two areas where we see tuition and fees possibly covering all the costs of fulfilling the educational mission of the institution are non-traditional higher education and proprietary, for-profit, higher education. I say “possibly” because more than half of the non-traditional programs or for-profit institutions lose money and eventually fail. The traditional higher education institutions have been variously described as time and location fixed, brick-and-mortar, bastions of teacher-centric delivery of education to late adolescents recently graduated from high school. Non-traditional education disrupts one or more characteristic of traditional higher education. In other blog posts, I will speak more about the differences between traditional and non-traditional higher education.

Institutions of higher education have five sources of revenue. I am sorry if I offend educational purists who do not want to use business terminology to describe operations within higher education. In using the term “revenue”, I did resist the temptation to use the more highly-charged business term “income.” Thus, I will label money coming into the institution to pay for the operations of the institution as “revenue.” There can be no argument that colleges are required to pay operating expenses like salaries, fringe benefits, construction and maintenance costs, utility and insurance costs, supply, equipment and service costs. Since I am focusing on the revenue side of the institution in this post, I will reserve discussion of the expense side to other posts.

There are four sources of revenue for the not-for-profit segment of higher education. There is a fifth source for public institutions.The five sources of revenue are:

Tuition and fees;
Fund raising, advancement or development efforts;
Endowment income, appreciation, interest or dividends;
Auxiliary enterprises;
Governmental appropriations (Reserved for public institutions).

There are two very distinct ways to look at these sources of revenue. The first is how the general public sees these categories of revenue. The second is how colleges and universities are legally required to report them in audit statements. (OOPS, another hint at the trouble lurking within the presence of the higher education business model) In this post, I will restrict my attention to how the general public understands these five sources of revenue. In future posts, I will discuss how colleges are forced to handle and report the revenues associated with these categories.

Tuition and fees: These are the charges (I apologize for another business term) the institution individually imposes upon students for the privilege of attending and obtaining an education, and possibly a degree or some other credential. By “tuition” I mean that portion of the financial obligation imposed upon students for enrolling in classes. By “fees” I mean extra charges for a number of other things such as student services or activities, laboratory, clinical, internship, practica, music, travel, technology, special class charges, health or insurance fees, parking fees, and a myriad of other add-ons such as application, matriculation, course change, graduation and transcript fees, . I also throw into this category “Room and board charges” because these charges are individually assessed to participating students. These are the financial obligations imposed upon students who reside and eat in college-owned or operated facilities. The students and their parents see these charges on their college bill (a residue of a business model). Student and their parents refer to these charges as the total cost or the price of attending. I haven’t yet considered financial aid. Whether the financial aid is not from the institution or comes directly to the student as a government appropriation, it is usually considered a discount by the students and their parents Either way, when we get to the accounting of financial aid, it must be treated as a cost to the institution(another business model problem lurking in the forest).
from Presenter Media
Fundraising, advancement or development efforts: For the private, non-profit, and public segments of higher education, this category includes all charitable gifts and donations. These gifts may be in the form of cash, stocks, bonds, or physical property, including real estate, art, supplies, or equipment. They may also include services in lieu of payment. This category seems to be the area about which Jason is most concerned. From reading Jason’s blog, I know he doesn’t consider fundraising and development work as begging. However, in the eyes of many of the general public, this is what it comes across as. In the for-profit segment of higher education, this category also includes what is known in financial circles as the investment of assets. Investments are the purchase of assets with the hope of generating a profit. Investments are not always profitable and may incur a loss. Many colleges and universities, across all segments of higher education, raise funds through gifts that are known as grants. Grants are funds or products that do not have to be repaid given by the grant maker, which can be a government department, corporation, foundation or trust to a recipient. Usually, grants are awarded after the recipient has made a written request for funding of a specific project through a process that is known as grant writing. Most grants that are awarded will require of the recipient some level of verifiable compliance and reporting of outcomes. In future posts, I will consider the topic of university fundraising, including its rewards and perils.
from Presenter Media
Endowment income, appreciation, interest or dividends: By an endowment, I mean a financial asset, which normally came into the possession of the institution in the form of a gift or donation. Endowments may or may not have a stated purpose at the bequest of the donor. This category of revenues also includes the return or dividends on the investment of charitable donations. It also includes the appreciation in value of the gifts that the colleges and universities are holding in “trust.” Most endowments are designed to keep the principal amount intact while using the investment income from interest or dividends for the “charitable” efforts of the institution. By “charitable” efforts, I mean those efforts which contribute to the stated primary mission or purpose of the not-for-profit institution. This category also includes what are commonly known as “quasi-endowments.” These are funds set aside by the institution from institutional funds. These funds may have come from donors or excess institutional funds. As with “endowments” the principal of quasi-endowments are reserved, and only the interest or dividends are expended. The management of endowment principals and investment demands close scrutiny on the part of professional managers, whether internal or external to the organization. In future posts, I will deal with the topic of endowments and their management.
courtesy of GrahpicStock
Auxiliary enterprises: Auxiliary enterprises are entities that exist to furnish fee-based goods and services to the general public, students, faculty or staff, acting in a personal capacity and not as an agent of the institution. Auxiliary enterprises should be self-supporting in the sense that the revenue covers the full direct and indirect costs of providing the goods and services. Some definitions of auxiliary enterprises exclude areas that are outside the core functions of an academic institution. For all academic institutions, core functions would include teaching and learning activities. For many, they would include research activities. For some, they would also include service activities. such as agricultural extensions for land-grant institutions. There are many possible uses of the wealth of physical facilities associated with a college or university, which could be used outside the core functions of the college. There is an army of experts at a college which could be deployed to service students and the general public in areas outside the core functions of the college. When auxiliary enterprises produce a surplus of revenue over expenses, those surpluses may be used to offset budgetary deficits in any area of the institution, including areas essential to the mission of the institution. Although there are many calls for colleges and universities to stick to their knitting, and stay clear of auxiliary enterprises, these programs may be a way for a college to fill in some budget gaps. I will speak to this argument in a future post.
from Presentation Media
Governmental appropriations: With recent rulings of federal and state courts, Departments of Justice and General Accounting Offices, this category may seem to be reserved for public institutions. Because education is not mentioned in the United States Constitution, including its ByLaws, it is one of the areas reserved for the prerogative of the states. However, Congress has enacted certain laws with which all employers and public buildings must comply. In addition, there is a federal Department of Education (DOE). The DOE exists primarily to safeguard the federal investment in education. This investment comes from the billions of dollars over the years that have been designated for educational concerns by Executive Orders and Federal Appropriations approved by the US Congress. These monies have been augmented by state and local appropriations. Although direct appropriations primarily only go to public institutions, the federal and state loans and grants to individual students greatly affect the well being of most private institutions. With the acceptance of federal and state funding, colleges and universities must also accept certain increased levels of governmental oversight. Compliance regulations control what colleges can and must do in many disparate areas. These areas include human subject research compliance, environmental health and safety compliance related to research, animal research compliance, export controls compliance, conflict of interest, technology transfer requirements, research misconduct requirements, accreditation, financial aid, FERPA, sexual misconduct (Title IX), Clery Act, drug and alcohol prevention, IPEDS reporting requirements, Title IX athletics administration, gainful employment, state authorization, and equity in athletics data analysis (EADA), immigration, disability, anti-discrimination, and environmental health and safety regulations outside of those related to research. Uncle Sam surfing the dollar is in control. The perverse version of the “Golden Rule: He who holds the gold, makes the rules,” dominates the day here. In future posts, I will discuss governmental funding and compliance issues in higher education.

As with any living organism, colleges and universities ingest monetary resources in order to perform the life functions of growing or producing fruit. For colleges, the desired fruit includes student learning, research and scholarship, and community service. The five categories listed above are the life-giving resources upon which colleges and universities depend. They are the food and water of colleges. If colleges and universities do not get enough funds for their nutritional needs over extended periods of time, they will starve to death. Thus, in higher education, we have three choices. We can 1) increase funding from these sources; 2) cut expenditures, or 3) do a combination of increased revenue and decreased spending. To me, this sounds like a business model. If we look more closely at each of the five funding sources, we will easily find huge difficulties in getting significantly more funds from any of these sources. Due to the length of this post, I will look at those difficulties in future posts.

May 1, 2016 By B. Baylis Leave a Comment

The Business Model for Higher Education is Broken, Part II

In Part I of this series on the business model for higher education, we postulated that higher education must be operated as a business. I begin this post by reinforcing that assumption by referring to two articles. The first one is the blog posting According to the Duck Test, Higher Education is a Business that I wrote and published here in By’s Musings in August 2010. I began that post by relating an incident that occurred on the farm next door to our home as I was growing up. I remember vividly one instance when the farmer, completely frustrated with his broken down tractor, was yelling and screaming, and calling the tractor a “piece of junk,.” and threatening to send it to the “tractor graveyard.” From my experiences of watching and working with my father as he fixed broken machines, I learned that nothing was irreparably damaged. He operated under the principle that anything could be fixed. Our heavenly Father operates under this same principle. From scripture we know that if we confess our sins, truly repent of them, then God the Father will forgive us, cleanse us, repair us and not condemn us. If we confess our sins, He is faithful and just to forgive us our sins, and cleanse us from all unrighteousness. (I John 1:9, KJV) and There is therefore now no condemnation to them which are in Christ Jesus, who walk not after the flesh, but after the Spirit. (Romans 8:1, KJV) When my facial and body expressions questioned the farmer’s judgment, he proceeded to teach me a lesson that I never forgot, and one that I have used many times since then.

The farmer looked at me and said, “Son, do you know the Duck Test?” I hesitated a little and finally said sheepishly, “No Sir, I don’t.” The farmer, with a condescending glance said, “Well you really should, so let me tell you. When I see an animal in the farm-yard that looks like a duck, waddles like a duck, quacks like a duck, swims like a duck, and flies like a duck, I am very confident that animal is a duck.”

In my 2010 post, I went on to delineate many of the ways that Institutions of Higher Education (IHEs) resemble businesses. Relying on the duck test, my argument that institutions of higher education (IHEs) are businesses consisted of the following premises:

IHEs must be incorporated or chartered by the state.
IHEs own or rent property.
IHEs pay taxes or users’ fees.
IHEs have employees, who form or threaten to form unions to gain bargaining power against an entrenched management known as the administration.
IHEs must pay their employees wages at or above the federal or local minimum wage.
IHEs must pay FICA for all employees, except those excluded legally. If the institution doesn’t pay FICA, the employees are required to pay FICA as self-employed individuals, making those individuals businesses.
IHEs must provide medical insurance consistent with federal or local laws.
IHEs must meet all federal and local compliance regulations placed upon businesses.
IHEs offer products or services to individuals. Whether, you label those products or services courses, credit hours, instruction or an education, the institutions collect money in exchange for those products or services.
IHEs compete for students (just like businesses compete for customers).
Just like a business, the expenses of a given IHE can only exceed its revenue for a limited period of time. It doesn’t matter whether the IHE is classified as a not-for-profit or for-profit organization. If its expenses exceed its revenue for too long, the IHE can be forced to declare bankruptcy and close down.
IHEs are required to undergo annual audits of finances including balance sheets and cash flow sheets, and submit them to the appropriate federal departments, including the Department of Education. In some states, these audits must be submitted to the Department of Commerce.

Since institutions of higher education look, act and speak like businesses, I am very confident that according to the duck test, IHEs are businesses.

The second article I mentioned in my introduction, A University Is Not a Business (and Other Fantasies) is probably the more powerful of the two articles. It was written by Milton Greenberg and appeared in EDUCAUSE Review, vol. 39, no. 2 (March/April 2004): 10–16. Professor Greenberg was professor emeritus of government at American University until his death in 2015. He previously served as provost and interim president at American University, and as such devoted much of his work to developing and rewarding high-quality faculty. Greenberg once said, “College and university teaching represents more than expertise in a scholarly discipline. It means that you are privileged to be part of an extended community that constitutes one of the most important professions in the world.” Provost Greenberg was also known as the most eloquent expert on and spokesperson for the Servicemen’s Readjustment Act, also known as the “G.I. Bill,” which gave veterans across the country access to federal money to pay for higher education after it was passed in 1944.

In Greenberg’s article, he wastes little time in laying out the opposing positions in this war. His opening paragraph sets the stage for the epic battle that was to ensue. The battle lines are clearly drawn.

Academe emerges from—and largely remains within—a culture that sees only a remote and sometimes hostile relationship between its activities and the economic system. This view takes the form of an often-heard campus expression: “A university is not a business.”

Greenberg begins his attack with the two Washington Post December 2003 articles, “The Lesson Colleges Need to Learn,” and “An Educating Use of Business Practices.” These articles were written by one of their leading business columnists, Steve Pearlstein. Pearlstein committed the “ultimate sin” in the eyes of the academy by questioning the efficiency of teaching the “same course” on many different campuses using many different faculty of varying calibre. Pearlstein suggested the unthinkable: greater efficiency and perhaps better learning could occur by using a simple technology like CDs to provide the same superior lectures by superior lecturers to all students across the many different campuses. Pearlstein came under general hostility and heavy fire from the higher education establishment, which considered learning “too special to be run like a crass business enterprise.” You can’t use the word efficiency in the same sentence with learning.

Greenberg continued by noting that although the usual readers of the EDUCAUSE Review had probably heard, and possibly even uttered, that same thought many times, this was most likely the first time it appeared on the front page of the business section of a leading U.S. newspaper. Pearlstein had done the unthinkable. He challenged one of the basic tenets of the academy right in front of the general public. How dare he do this? Higher education was one of the untouchable foundational columns of our society. It was beyond the pale of criticism or suspicion. It held such a position of high esteem that people didn’t dare question the academy or what it did. They trusted the academy. However, here was one of the leading newspapers in the country, raising doubt. This was treason! This was war! Faculty took to the streets, and joined the barricades. They raised their torches of the “true light” and shook their fists at this interloper who had the courage to question their legitimacy. How could higher education be a business? The guiding principle of the business world was antithetical to everything for which academy stood. What standard was this pariah attempting to foist on the academy? Simply stated the principle was “the hierarchical and orderly management of people, property, productivity, and finance for profit.” Greenberg didn’t let up his attack. He continued by noting that in his observation, the ” ‘not a business’ mantra arises on a campus whenever an administrator expresses concern over a program that is losing money or whenever a governing board suggests that the faculty be better managed or supervised in their work. Any mention of such matters will call forth the faculty judgment that the administration has a corporate mentality and is treating the university like a business, the ultimate sin.” The implication was clear. Faculty had the truth. Everyone else, especially those outside the academy, had to have faith in them and trust them. Here we had the first chink in the armour, the first admission from someone of stature, that essentially all IHEs were essentially faith-based institutions.

To be fair, Greenberg attempts to present another side to this argument by appealing again to the Washington Post for his ammunition. This time he turns to an October 2003 op-ed piece, “When States Pay Less, Guess Who Pays More?” by two economists, Robert Archibald and David Feldman. In their article they claim, “Our universities are not inefficient institutions on a bad business plan. Their administrators understand that a college degree is the ticket to the 21st-century economy. There is a crisis in higher education today, but it’s not well-publicized tuition spikes. It’s the long-term decline in political and financial support for the idea that all students should have access to higher education, regardless of ability to pay.” At this point Greenberg leaves the revenue side of the equation and focuses his attention on the expenditure side. Since we’re not looking at the expenditure side in this blog post, we’ll leave Greenberg’s arguments for later posts, However, to whet your appetite for a good debate, at this point I include his closing statements: “…how the academy perceives itself matters. If higher education is to lead its own renewal, it must think about its people, its property, and its productivity in business terms.”

I am sorry Professors Archibald and Feldman, but our universities are grossly inefficient and operate on a very bad business plan. If you consistently have more expenditures than revenues, and you know your projections for increases in expenditures far outstrip projections for increases in revenues, then you have a bad business plan. We can (and probably will) debate why your education model is the very best model available. Before we proceed to the expenditure side of the equation, we will still have much to discuss concerning the revenue side. I am sure that we will end up debating many questions about the sources and potential magnitude of revenue sources. The debates will continue to expenditures as we argue about the manner in which we are using our given resources and, possibly of greater importance, how we should use them. To my readers, I apologize for adding argument after argument, seemingly complexifying this issue unnessarily. However, I am very interested in this topic and feel very strongly about it. Oliver Wendell Holmes Jr. reportedly said, “I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.” Friends I am seeking simplicity, but I am afraid we will have to battle through complexity to get there.

April 22, 2016 By B. Baylis Leave a Comment

Public Education: Public or Private Good?

In American education and political arenas, this question has unquestionably been front and center under the bright, spot lights and cameras during the recent presidential debates. In the P-12 scene it has also been a focal point of many contentious state and local election discussions and contests. I found the history of this hotly debated question very fascinating. This is not a new political or educational argument in America. It has been an issue for America’s schools since the 17th century.

The question “Public Education: Public or Private Good?” is very simply stated. However, it is really an extremely devious and furtive question. To begin to answer the question, we must have a firm handle on the five important concepts that comprise the heart of the question. These terms and concepts are: 1) Public; 2) Public Education; 3) Goods; 4) Public Good; and 5) Private Good. We will begin to parse these five terms in this post. Once we have a grasp on these concepts we will continue the discussion in future posts, attempting to unravel the tricky nuances that are fraught with danger. In so doing, we will immediately find that we have jumped into a snake pit of poisonous vipers, which have intricately woven themselves into a sliverly web worthy of any Indiana Jones movie.

I hope we will not be like the unsuspecting pilgrim trying to find the mother lode of inexpensive, high quality education, who comes upon a tree loaded with delicious looking Granny Smith apples. One of these green apples is especially appealing. It is hanging from a low branch, just in the reach of our intrepid seeker of truth. This potentially, prize-winning apple is crying out to the unsuspecting traveler, “Pick me; eat me. I am delicious!” However, as soon as the hand reaches out to touch the prize apple, it feels the fangs of the green snake hiding among the leaves.

Returning to consideration of our five concepts, let’s begin with the question:”What do we mean by public?” There are two primary answers to this question. The first is a more formal answer. Public refers to the collective whole, or the state. When we use the term state, we usually mean the government, whether it be at the local or national level. In the United States, we have a problem with this term since, we have divided up our land and people into a large unit which we call the country. We then subdivided that large unit into smaller units which we call states. States are further subdivided into units which are usually called counties, cities, and towns. Most of the time when we use the term public to refer to one of these units, we are referring to the governing body of that unit. The second answer is more informal. In this usage, we will refer to the people that compromise the unit as the public. How do we distinguish which definition we are using? It depends upon the context of the situation. Public law is concerned with political matters, including the powers, rights, capacities, and duties of various levels of government and government officials. A park that is owned by the state, and open for use by anyone is called a public park.

What is “Public Education”? The quick answer is that it is education under the control of and financed by the state. At the primary and secondary levels, this definition usually suffices to distinguish public from private educational entities. It is more complicated at the post-secondary level. We will work on breaking out and explaining the intricacies of this conundrum in a subsequent post. However, for the sake of this post, let us assume that we can distinguish between public and private post-secondary institutions.

“What is a good?” In economic terms, “A good is a material or service that satisfies a human need or want, or provides utility to people.” “Public Goods” are those goods which are controlled or dispensed by the general public, usually in the form of the government. “Private Goods” are those goods which are controlled or dispensed by individual, private citizens.

In trying to formalize and tighten up the analysis of the role of the government in dispensing public goods, the first economist who attempted to define “Public good” was probably Dr. Paul Samuelson, winner of the 1970 Nobel Prize in Economics. His world famous textbook Economics was initially published in 1948. In all its various editions, it is one of the top ten best selling book of all times. It is currently in its 19th edition. When I took Economics during my sophomore year in college, my professor had selected this classic as the textbook for the course, because Samuelson had been his instructor in his college days.

An academic paper published by Samuelson in 1954 may have one of the greatest pedantic titles of all times. The title was “The Pure Theory of Public Expenditure”. The paper appeared in the Review of Economics and Statistics, Vol 36, No. 4. In his paper, Samuelson suggests that his predecessors neglected the very important point of optimal public or government expenditure in their economic analyses. To remedy their omissions, Samuelson defined two categories of goods:

Private consumption goods: goods which are distributed according to individual preferences, primarily focusing on the consumption side, but also including the preferences of the individual producers and providers
Collective consumption goods: “goods which all enjoy in common in the sense that each individual’s consumption of that good leads to no subtraction from any other individual’s consumption of that good,”

Subsequent economists labeled Samuelson’s “Collective consumption goods” as “Public Goods“. They broke Samuelson’s description of the definition of collective or public goods up into two distinct characteristics:

Non-excludability: “..enjoy in common” meant that It was impossible for the government to exclude non-payers from consuming the good.
Non-rivalrous: The “no subtraction” concept was translated into the idea that consumption by one individual does not exclude any one else from consuming the good.

Today’s economists employ national defense and clean air as two standard examples of public goods. One of the basic illustrations of the principle of non-excludability involves national defense. The federal government can’t reasonably deny an individual national protection, and adding one more individual under the protective umbrella of the military doesn’t subtract any protection from anyone else. It should be clear that pure public good and goods that are strictly private are mutually exclusive. The difficulty comes when we begin to see that there are very few pure public or private goods. This is a topic for another post.

Samuelson considered the concept of a public good as the most essential component of his economic analysis in the allocation of governmental resources, and central to his theory of an optimally functioning welfare state. He did admit that people would be “tempted” by their “selfish desires” to revert to acting on their private goods appetite, thus making it very difficult to come to a point of optimal public consumption. When he formulated this theory in the mid-20th century, he conceded that there was no “magical adding machine” that could do all of the calculations necessary to solve the mathematical, optimization problem at the heart of his theory. However, he wishfully added that huge strides were being made in the realm of computing machines, which he hoped one day would arrive at a solution. We’ve come a long way in the past 70 years in computing capabilities. However, we still haven’t found Samuelson’s silver bullet. The perfect welfare state, utopia, is still an illusion. However, on the other side of the coin, the state governed by peoples’ selfish desires is a maelstrom of gigantic proportions. Is there a solution somewhere in the middle where we live and thrive together?

Returning to the question that began this discussion: Public Education:Public or Private Good? Many commentators since Samuelson’s ground-breaking work have tried to force public education into the category of a public good. They argue that providing everyone a free education “has to advance society.” Unfortunately, public education does not meet the two uncompromising characteristics of a public or common good. Public education does meet either the non-excludabilty or the non-rivalrous criteria. Why is this the case?

An individual can be excluded from receiving an education at the public’s expense in many different ways. Some of these ways are subtle, and others are very blatant. To enter the temples of learning, you have to be an “authorized person.” What keeps people from being authorized? In one word: Discrimination. Before you go running off, crying FOUL!, there is legal and illegal discrimination. There is ethical and unethical discrimination. There is proper and improper discrimination.

Discrimination is just the process of separating things into two or more categories. When colleges admit some students and reject others, they are discriminating among students. It is an educational truth: Some students shouldn’t be accepted into some colleges. Even with an abundance of assistance, some students would not be able to do the work to succeed at Harvard University. The DoE actually encourages colleges to discriminate on the basis of academic ability. For a given student to receive federal or state financial aid, the college must demonstrate that the particular student has the ability to do college level work at that given institution, and can benefit from the degree program in which the particular student might enroll. As a student progresses through their college career, they must maintain satisfactory progress as defined by the DoE, or their given institution if the institutional criteria are stiffer than the federal criteria. There are three parts to the federal satisfactory progress criteria. The first criteria is that students must have a grade point average of at least a “C” or its equivalent by the end of their second year of enrollment. The second criteria is that students must complete their degree or certificate within a maximum time frame measured by attempted credits equal to 150 percent of the number of credits required for their primary degree program. The third criteria is that a student complete (earn) a minimum of 67 percent of the credits they attempt in order to remain eligible to receive student financial aid. If a student fails to meet any one of the above criteria, that student is denied federal and state aid. For many students, denial of federal or state aid is tantamount to dismissing the student from the institution.

Students are excluded for academic reasons from every institution of higher education, even those that label themselves “open admissions.” If a student does not have a high school diploma or its equivalent, then that student is routinely excluded. Other forms of exclusions may not be for academic reasons. Students adjudged to be a danger to themselves or others may be prohibited from enrolling. If they have already enrolled, they may be dismissed. At many public institutions, sexual offenders or sexual predators may be prohibited from enrolling, and again, if they have already enrolled, they may be dismissed.

By definition, rivalry could be considered a form of exclusion. If consumption by one individual prevents another individual from consuming the product, the second individual is excluded. College enrollment is obviously rivalrous. There are only so many spaces to be taken. When all the seats in a given class are filled, the class is closed, and no more students are permitted to enroll. This is the way that colleges have operated for many years. This has particularly been the modus operandi since the middle of the 20th century. In many states, this is a big problem. Students need certain classes to fulfill the requirements for their programs. The students believe that the college has “promised” to offer those classes, according to schedules laid out in the college catalog or advising manuals. When the students try to register for the classes, they discover that there are not enough spaces for them. What are the reasons for this form of discrimination and exclusion of students? This also will be a topic for a forth coming post.

So what do you think? What’s your definition of public good? Is there really such a thing as a public good? If so, is public education a public good? Should it be available to everyone without charge?

November 13, 2014 By B. Baylis Leave a Comment

What Makes a Better Neighbor: a Prison or a University?

In February 1980, one of the most horrific prison riots in US history occurred at the Maximum Security State Prison in Santa Fe, New Mexico. Several years later, at an academic gathering in the beautiful conference setting of quaint Santa Fe, the dinner discussion turned to the question of why the main branch of the state university was located in Albuquerque, while the maximum security state prison was located in Santa Fe. An administrator from a college in New Mexico, replied, “As State Capital, Santa Fe had first choice.” When I first heard this comment about 30 years ago, I thought it was a joke. However, I immediately recognized that this one-liner could come in handy in future discussions. Thus, I filed it away in my memory to pull out at an appropriate time.

I will admit that over the intervening years, in addition to employing it myself, I have heard others use the “first choice” quip on more than one occasion in discussions of seemingly anomalous situations. My next post, “Which Would You Find More Acceptable in Your Back Yard, a Toxic Waste Dump or a Murder of Crows?” represents such an occurrence.

When I started this series of posts on the NIMBY syndrome, I figured it was time to pull out this old story and look at it more closely. I thought of three general questions that I should answer. Firstly, are there other state capitals which may have chosen prisons over universities? Secondly, what are positives and negatives for a community having a prison within its environs? Thirdly, what are the benefits and detriments that an institution of higher learning imparts to the community in which it resides?

I quickly discovered that arriving at the answer to the first question was much more time consuming than I expected it to be. I first ascertained that all 50 state capitals had jails, prisons, and/or detention centers of some stripe within their metropolitan boundaries.

Surprisingly, trying to determine how many state capitals hosted state-supported universities also proved a little trickier than I thought. I began by settling on a definition of state-supported university. For my purposes, I looked at institutions of higher education that: 1) called themselves public colleges or universities; 2) offered four-year baccalaureate degrees as the core of their undergraduate academic programming; 3) offered primarily full-time, traditional, residential programs; 4) offered campus housing to students; and 5) garnered a significant slice of their general operating budget from direct state appropriations. In my search I found 41 states that had institutions that met all five of my conditions. Besides New Mexico, the other eight that did not were Iowa, Maryland, North Dakota, Oregon, South Dakota, Vermont, West Virginia, and Wyoming.

The higher education options in the capitals of these nine states present an interesting mix. All nine of the state capitals have for-profit institutions offering non-traditional degree programs for adult students. Four of the state capitals do not have any private colleges or universities that offer traditional four-year baccalaureate programs. These are Des Moines, Iowa, Pierre, South Dakota, Montpelier, Vermont, and Cheyenne Wyoming. Only two of the state capitals, Annapolis, Maryland and Pierre, South Dakota, do not have public two-year community colleges.

Although Annapolis, Maryland does not have any state supported four-year school, it is the home of the United States Naval Academy. As a national military academy, it is not the typical college. First students do not pay tuition. They “pay” for their education by a military service requirement after graduation or separation from the academy. The admissions process is also quite complicated, with the student completing a normal academic application and a nomination application to those individuals or groups that are authorized to nominate students to the national military academies.

Thus, Pierre, South Dakota seems to fall completely outside the normal pattern of educational opportunities in state capitals. There are no traditional college options, either public or private, in Pierre. Students just graduating from high school must leave Pierre and go elsewhere to attend any college.

Therefore, the data suggest that most state capitals have not picked prisons instead of colleges or universities. While 96% of state capitals had state supported, two-year technical or community college, a hefty 82% were also home to state supported universities. Thus, most state provided their state capitals with both prisons and state supported higher education.

Although most economic impact studies give the edge to universities over prisons in providing economic benefits to the surrounding community, there are a few negative blips on the radar screen. In the last quarter of the 20th century, the two unrelated trends of an economic downturn in rural America and the epidemic-like increase in U.S. prison population caused some rural communities to turn to prisons as a basis for economic development. While most economic and employment impact studies look at the increased revenue produced by the universities and prisons, they do not take into account the added costs of increased services required and social disruption.

With all the economic, cultural and educational advantages that colleges and universities provide communities, why would any community embrace a prison before a college or university? There are some economic reasons, but many of the reasons seem to be social. Whereas a college or university is likely to drastically change the culture of a community, a prison is very unlikely to cause any such changes. Colleges may attract a diverse student body that is very different from the community. This can cause tensions among the students and the local residents. Faculty and students are also by nature activists and push for change, while the local residents may be very content to remain in their status quo. College students are also generally free to move about. I once read a newspaper account concerning a community resident complaining about a wild party which spilled over from a college into the surrounding community. It described the scene by saying, “The inmates were running wild.” With prisons, the inmates almost never run wild in the local community. Prisoners are locked up and have little or no contact with the surrounding community.

Once a prison is built, there are few extra demands on public safety services or transportation infrastructure. Once a college is built there are multiple extra public safety or infrastructure concerns. Colleges and universities have numerous, large events with a concomitant influx of visitors, which must pass through the community to get to the campus. Communities are left with the big question of who is going to pay. Since all public and most private colleges are tax-exempt organizations, they do not pay state and local taxes to cover the cost of the common public services that communities must provide like public safety, transportation infrastructure like roads and bridges, and utility infrastructure concerns like water and sewer. To get around the tax questions, some communities have asked college and universities and other tax-exempted organizations to pay user fees to cover what might be considered their fair share of the cost of providing community services.

One other concern with a number of college communities is the disruption that the expansion of a college causes the local neighborhoods. From personal experience, I have seen neighbors very upset with the way colleges have bought up properties and changed the nature of the neighborhood. With public institutions, the use of eminent domain can further alienate the locals.

Why are prisons sometimes considered better neighbors than college and universities? Colleges and universities change the nature of their neighborhood. They are a disruptive force, costing more than they are worth in the opinions of some neighbors. Once prisons are built, they usually just sit there and have no interaction with the neighborhood.

September 22, 2014 By B. Baylis Leave a Comment

Don’t Count Your Chickens Before They Hatch

Before I focus on the NIMBY scenario in which the United States Department of Energy and the residents of Oak Ridge, Tennessee, faced off against the State of Tennessee, I would like to provide a little background on the title Don’t Count Your Chickens Before They Hatch.

I was surprised to find that this quip is approximately 700 years old. It can be traced to a 14th century French, oral fable about a milk maid on her way to the market. In this tale, the young girl is day dreaming about what she’s going to do with the eggs she’s planning on buying with the money she’ll receive when she sells the milk in her pail. Unfortunately, she is paying more attention to her day dream than where she is walking. She trips and spills the pail of milk. Since she has nothing to sell, she runs home. She falls into her mother’s arms out of breath. Her eyes and cheeks are red from her crocodile tears. Her mother tries to calm her down and find out what’s wrong. The young maid finally composes herself and blurts out the whole story. At this point, there are two possible morals to this fable. In the first one, a consoling mother says, “Be more careful, and pay attention to what you’re doing. However, when there is an accident, there’s no sense in crying over spilled milk.” In the other, an angry mother says harshly, “Pay attention to the task at hand! Confine your thoughts to what is real.”

Although the phrase “Do not count your chickens before they hatch.” has been around for approximately three-quarters of a millennium, there are variants of the story with similar morals that are almost three millennia old. One Indian version is from the Panchatantra, a set of Sanskrit parables for children, from the 2nd century B.C. It is the story “The Brahman Who Built Air-Castles.” It is about a poor man with a wife and child who are given a jar of grain. The three get so excited about planting the grain, reaping a large harvest, and then reinvesting the gains in animals and more grain. In their imagination, they go through numerous cycles until they are very rich and have built imaginary castles. The child is jumping all around playing in their new imaginary home. The father yells at the mother to calm the child down. When the mother doesn’t follow the father’s instruction, he takes a real stick and begins to beat the child who starts running away from the father. The child in all the excitement runs into the real jar of grain, breaking it. This spills the grain all over the ground outside their real hut where chickens and wild birds begin to gather and eat the grain.

A similar Jewish fable from an earlier period of time is called “The Dervish and the Honey Jar.” In this story, a poor man begs for handouts of honey at the Jewish temple and market every day. When he finally has a full pot of honey, he is so excited, he puts the jar next to his bed so no one can steal it. HIs excitement carries over into his sleep. He dreams of what he is going to buy with the proceeds from selling the honey. In his sleep, he dreams robbers try to steal his newly acquired wealth, so he tries to fight them away with his staff. In swinging the staff around in his sleep, he breaks the honey jar spilling the honey all over his dirty floor. When he hears the jar break, he jumps up quickly and walks through the honey on the floor mixing more dirt with the honey.

What do these fables have to do with the confrontation between the Department of Energy,and the State of Tennessee? As noted in a previous post, the DOE had already built a nuclear lab and power plant in Oak Ridge, Tennessee. With every nuclear lab and power plant, there are nuclear waste products which must be disposed of properly. The cornerstone of the economy of Oak Ridge was the atom. The majority of the residents of Oak Ridge dealt with nuclear materials every day. They knew the dangers and the precautions that had to be taken to handle such materials safely. The residents of Oak Ridge were perfectly comfortable with having a nuclear waste dump in their neighborhood.

The DOE expected the approval process to build a waste dump in the Oak Ridge area to be a walk in the park. However, the DOE didn’t count on the resistance from the remainder of the state of Tennessee. This resistance came primarily from three sources and came in three forms.

The first source was a very broad segment of the State’s business community. Arguably, the biggest economic player in Tennessee is the Tennessee Valley Authority. The TVA is a federally owned corporation created in 1933 to provide flood control, navigation, land management and electric power for the Tennessee River system and the surrounding region. Since its inception, the TVA has been extremely successful in doing that job. As a result of those successes, farming, recreation and the sale of electricity became three of the most profitable industries in the region. The coalition of these three industries didn’t want anything upsetting their apple cart. The possibility of nuclear power became a threat to the goose that was laying golden eggs for them.

The second source was the general population of the rest of the state of Tennessee. Since so little was known about nuclear dangers, it was easy for opponents to raise fears in the uninformed. Protests against nuclear power, laboratories and waste dumps were held in all parts of the state. Residents cried for their local officials to protect them from the nuclear dangers and the DOE which they saw as an encroaching enemy. These cries were not unheard in the halls of the state government, which lead to the third source of resistance.

The third source was the state governmental complex. When the federal government established the Oak Ridge laboratory and power plant, it did not involve officials from the State very much at all. It used its federal clout to “just do it.” This affront turned off the members of the executive and legislative branches of the state government. They were angry and suspicious of the federal government, particularly the DOE. They were also afraid of their local constituents who were demanding action and protection. This resulted in a number of laws which greatly restricted the placement of nuclear facilities and the movement across the state of nuclear material. Not only did local governments have to approve such placements or movements, the State Legislature had to formally approve any new facilities and movement of nuclear material anywhere within the state.

When the proposal for a nuclear waste dump in Oak Ridge became public, the Tennessee State Legislature quickly passed a resolution prohibiting the establishment of such a facility. The DOE attempts to appease the legislature were met with complete contempt and rejection. When the DOE attempted to bypass the state and proceed with their plans, the State of Tennessee took legal action against the DOE. This road block complicated the DOE’s plans greatly. The DOE lost the first round of the battle in Tennessee courts, but eventually won the war in federal courts. However, this victory was costly. The delays cost years and millions of dollars. In addition, many residents of Tennessee are still suspicious of the federal government and fight it over very minor matters that have nothing to do with nuclear material.

So one would have thought that the DOE learned its lesson about the reaction of local residents to their plans about nuclear plants and waste facilities. The DOE was still counting its chickens before they hatched when they went to locate a nuclear waste dump in Allegany County in New York. I relate that story in my next posting, Never Underestimate a Group of Angry Senior Citizens.

September 13, 2014 By B. Baylis Leave a Comment

Facing Down the NIMBY Dragon with Humor and Scriptures

Although most NIMBY situations are very serious affairs to the local communities involved, individuals outside of the fray can often find humor in the midst of the tension and fiery passions of the antagonists. My next four posts are NIMBY scenarios with some of their humorous aspects front and center. I have tried to be humorous or witty even in the titles of the posts. The first two posts present real NIMBY scenarios with which Inhaber deals in his book, Slaying the NIMBY Dragon. The second two posts concern NIMBY situations which are not real, but are realistic enough to sound real. I did not originate these two scenarios. I have done an exhaustive search for the originators. However, my searches have come up empty. If someone knows from where these scenarios came, please let me know so that I can give credit or blame to whom it is deserved.

I know full well that humor is not always the most appropriate way in which to deal with problems. Therefore I will end my series on NIMBY situations with several posts that look at NIMBY through the lenses of scripture and faith. What do scriptures say about the NIMBY attitude? Is it ever justified to invoke a NIMBY approach?

My first humorous NIMBY post is entitled: Don’t Count Your Chickens Before They Hatch. It concerns the State of Tennessee against the United States Department of Energy over a low-level nuclear waste dump to be sited near Oak Ridge, Tennessee. Oak Ridge was already the site of a nuclear laboratory and a nuclear power plant. The whole economy of the Oak Ridge region was built on nuclear science. The overwhelming majority of the residents of the Oak Ridge area were in favor of placing a nuclear waste dump in their town. Where did the Department of Energy hit a snag?

My second humorous NIMBY post is entitled: Never Underestimate a Group of Irate Senior Citizens. It deals again with the United State Department of Energy attempting to build another nuclear waste dump. This time the proposed dump is in Allegany County, New York, a very rural area, that had few populated areas. It seemed perfect for a nuclear dump. The DOE did all their homework. There were no geological problems which which they needed to be concerned. The land was only farm land and therefore should be cheap to acquire. What went wrong?

My third humorous NIMBY post is entitled: What Makes a Better Neighbor, a Prison or a University? The seed for this post was planted many years ago during a dinner conversation at an academic conference in Santa Fe, New Mexico. I don’t remember the names of the participants. However, I know one was an individual from a New Mexican institution. Another attendee at the table made the observation that there were no four-year state colleges or universities in Sante Fe, the capital of New Mexico. The person from New Mexico chuckled and said that this was an ongoing debate in the state that degenerated into a very biting joke. The joke was: “Why did Albuquerque get the state university and Santa Fe the prison? The answer: Santa Fe got first pick.” In this post I will dissect the advantages and disadvantages of both prisons and universities as neighbors.

My fourth and final humorous NIMBY post is entitled: Which Would You Find More Acceptable in Your Back Yard, a Toxic Waste Dump or a Murder of Crows? I know many of my readers are saying “Who would want a toxic waste dump in their back yard?’ Many are also saying “Who cares about crows anyway?” This question turns on a play on words in the phrase, “a murder of crows.” The scientific term for a group of crows is “flock.” However, the literary or poetic term for a large group of crows is a “murder.” But the play on words doesn’t end there. The word “crow” is a derogatory word for a lawyer. The seed for this post was planted by a joke on a late night television show just after the super fund toxic waste dumps were identified. The joke started out with the comedian reminding people that New Jersey had the most super fund toxic waste sites. He then continued by pointing out that the District of Columbia had the highest concentration of lawyers anywhere in the United States. He concluded the joke by asking, “How come New Jersey has the largest number of toxic waste dumps and Washington has the highest concentration of lawyers? Obviously, New Jersey got first pick.” In this post I will analyze why New Jersey leads the nation in toxic waste dumps while Washington leads the nation in lawyers.

Although laughing at the foibles and silliness of others may make us momentarily feel good, it is ultimately not the best solution. Not every problem can or should be solved with humor. Sometimes we must be serious, and go back to the foundational values of our culture. Christians are suppose to turn to Scriptures to find their values. God’s Word should be the basis for our actions. There are three passages of Scriptures that jump out at me in terms of talking about how we should treat our neighbors, and who are our neighbors. I will divide these lessons into three posts.

The first post will deal with the familiar parable of the good Samaritan. The second post will consider another of Christ’s lesson about how we should treat the poor and unlovely. The third post considers the passage about the two Great Commandments.

My final post on the teaching of Scriptures concerning NIMBY situation examines the question, “Are NIMBY and Scriptures completely incompatible?” Is it ever okay to stand up and say, “Not in My Back Yard”? We will look at a couple of Old Testament examples and a very prominent one from the New Testament involving Christ’s actions in the Temple.