Ithaca College » About IC » Office of the President » President's Notebook »

President

Blog

President's Notebook

My View from South Hill

Next » « Previous

Monday, December 10, 2012

The Challenge Before Us, part 3 on Cost

Posted by Thomas Rochon at 11:00AM | 3 comments

Our focus at Ithaca College is on increasing our VALUE to students. Given IC’s standing as one of the best student-centered learning environments in the country but also as a relatively expensive higher education option, it is my opinion that we must be focused on both parts of the value equation at this time: increasing quality while also controlling cost.

Having discussed last week what constitutes quality and how we are seeking to go from good to great in quality at IC, I would like this week to focus on the matter of cost.

As Professor Elia Kacapyr pointed out in a comment posted on my blog two weeks ago, the cost of attendance at Ithaca College has increased at 3.58 times the rate of inflation since 1983. His calculation does not take into account financial aid that is provided through the college; when you consider such aid our final cost to students has risen at “only” a bit more than twice the rate of inflation. Cumulated over decades, though, that is still a big disparity! Even more relevant is the comparison of the net cost of attending Ithaca College to growth in family incomes. The net cost of IC after financial aid has grown at twice the pace of growth in the median family income over the last decades, a trend that is causing stress among prospective students and their families. Obviously, this trend is not sustainable from the perspective of affordability.

Graph showing the rising price of college between 1988-2009

In order to reverse the cost spiral – which is general in higher education and not unique to IC – we must reduce our expenses in order to allocate funds to quality improvement. We must also reduce the current reliance on annual cost increases that are approximately twice the rate of inflation. It is this latter task, of reducing the annual increase in student cost, that has commanded the most attention in society. President Obama, for example, has stated the goal that colleges must cut their rate of cost increase in half (to approximately the rate of inflation), and pledged in his campaign that he would seek to withhold federal financial aid dollars from colleges that do not do so. If we are to move in the direction of meeting this challenge, we will need to find on-going operating efficiencies. If you think of our costs over time as a line with an upward slope, cutting expenditures shifts the line down while finding operating efficiencies lowers the slope of the line in the future.

In the 46 years from 1962 to 2008, annual gross tuition cost increases at Ithaca College averaged 7.3% per year, including a 6.9% per year average from 2000-2008. Some of those years were high inflation years and there was also a significant increase in financial aid during that period of time. Even so, the numbers bear out the fact that IC fully participated in the general trend of an unsustainable cost spiral. From 2008 to the present – since the global economic crisis – gross tuition at IC cost has gone up by 4.9% per year. This is significantly less than our long term rate of cost increase. But if we were to meet President Obama’s goal (to name just one possible objective), the rate of increase would need to come down still further to about 3.5% per year. How can such efficiencies be achieved?

Broadly speaking, there are two strategies for cost control. One is an across-the-board belt tightening. We could freeze salaries or keep salary increases minimal. We could keep all controllable budgets flat, recognizing that some of our expenses – such as for energy and for employee health care benefits – are likely to grow by much more than 3.5% from one year to the next.

The other strategy is targeted, based on a careful review of all expenditures with the aim of reducing or eliminating expenses that are not closely aligned with the quality of our core educational mission. Under a targeted approach, we would reduce expenditures in some areas in order to have the funds to maintain quality in others and even to increase our commitments in areas that significantly advance our educational quality and our vision for the future.

There is no one right answer for all situations when it comes to the choice between across-the-board and targeted cost reduction strategies. Which strategy is best at a given time depends on context and on what one is trying to achieve. In the global economic recession of 2008-2010, for example, IC adopted a one year salary freeze and every division took proportionate cuts to their operating funds. Those are classic across-the-board strategies, appropriate to a situation where the goal is to work through a temporary financial gap.

In our current situation, we are not seeking to weather a temporary economic crisis but instead to end a cost spiral that has gone on for decades. We are challenged not just to reduce our rate of tuition increase for one year, but on an ongoing basis. To adopt across-the-board strategies under these circumstances would be to paralyze the college with no financial capacity to adopt new ideas. Over time, this strategy would surely condemn IC to a slow decline. We would be able to afford only minimal salary increases year after year, leading to a loss of morale and an increase in attrition. It would not be possible to invest in further advancing quality, opening us up to the possibility of a long term erosion in both quality and reputation. In short, across-the-board strategies are not a good response when the goal is long term change.

Unlike 2008-2010, IC is now embarked on a strategic and targeted cost reduction strategy. With the help of Huron Education Consulting, we are now reviewing every aspect of our administrative organization and processes. The IC campus will review Huron recommendations early in the spring semester and offer input into the development of a plan that in future years will produce savings and generate new revenue. With the participation of the faculty, and recognizing their primacy as the experts in academic instruction, we will take parallel steps in considering how to reduce the future rate of annual growth in the cost of our academic programs.

The commitment to cost control at Ithaca College is not primarily directed at weathering a temporary budget gap or getting us through to the next period of expansive economic growth. We are seeking to find a permanent footing that will enable us to offer a world class education at a price that keeps Ithaca College accessible to students of talent from the widest possible range of economic circumstances.

3 Comments

9:16 a.m. on December 11, 2012 Zack Ford said,

Your points here make a lot of sense, and no doubt it's a conversation many campuses are similarly having. One thing I noticed was absent from your post was any mention the college's endowment. I remember when IC's first Capital Campaign went public in 2006, we had a lot of conversations on campus about how dependent the annual budget was on tuition and the importance of creating a better foundation in the endowment.

I expect, of course, that IC's endowment was hurt by the recession, and much of the campaign was to support the new buildings on campus, including the A&E center. Could you speak a little more about the health of the college's endowment, the prospect of becoming less dependent on year-to-year tuition payments, and plans for future campaigns? Thanks!

7:41 a.m. on December 14, 2012 Dani Novak said,

Many faculty may be reading the blog (everyone one with one exception that I asked are!) and I just noticed another blog that the dean of the communication school created and is now displayed in

/rhp/blogs/dean_gayeskis_blog/

These blogs are useful and allow us as a community to exchange ideas communication and information also also and this is why I decided to write this: INSPIRATION.

Maybe some faculty will also consider writing their own blogs and share them and so we will increase the communicating between us that is so much needed.

Meeting elder residents in Oak Hill Manor once a week gave me another perspective to appreciate life and what me personally and we as a community do have. If we focus on that rather than on our problem we can have a better chance to weather the storm. So I thought to write a list of things to be grateful about (not personally but as a member of Ithaca College Community).

On the surface it looks like writing this is kind of disconnected from the grim and dark situation that Tom is painting. I am am not denying that we are facing and going to face even more difficult challenges (it reminds me of the ad hoc course we volunteer faculty ran a few weeks after the september 11 attack where hundreds of students signed up because they wanted to know WHY did it happened and were looking for some kind of guidance. I personally do feel that our whole country and it will not exclude IC is going to face hardships soon. But just because of this it is important to focus on our strengths and I believe that both Tom and Diane or trying to lead us to face them.)

So here is my list:

We have an amazing place. Ithaca, the finger lakes, gorges, trees, Cornell University nearby....

We have jobs! We have wonderful jobs. Not just faculty but I want to focus on that. We have a chance t interact with young people, many of us have the security of tenure. Some of us may want to decrease our contact hours but many of us are very happy with the current situation. I am thinking of many teachers (music school for example) who teach many hours a week and find it so rewarding because they see the impact that they have on their students.

There are other aspect for faculty to be so grateful about and this is the fact that we help young people realize their dreams and this is also what helps us remember our dreams and keep young in our hearts. One of the residents of Oak Hill, Florence is 97 years old but people keep visiting her from the community because they find her company so refreshing. What a wonderful opportunity and privilege we have to interact with young people, teach them but also learn from them because if we set the ego aside we know that age and degrees are not a real measure of maturity and every semester we meet students are are actually our teachers even though we may now always know it. I have a student this semester and some of you may actually know him. His name is Jonathan Cummings who is a Sophmore and an RA and makes a huge difference in the lives of other students. Even though he is taking the lowest level math class (Math Fundamentals) his talent for Math is amazing. He understands concepts intuitively. Jonathan does not have time to come to every class and at first I felt a little upset but after learning more about what he is doing, how much work he has to do, what an impact he has an RA and in other way on other students I realized that judging him was a mistake. He recently wrote a paper where he described his life philosophy and how his parents and other circumstances helped him acquire these precious human values that are more precious than salaries, contact hours or even Gold :). I hope to share this paper with you. Think how the world changes through leaders. Mother Teresa, Wendy Kopp http://www.teachforamerica.org/our-organization/our-history
and million other dreamers who continue to transform the works.

There so many other aspects to be grateful about: We have an amazingly beautiful campus with a chapel and a pond by it that is serene. The grounds folks plant flowers and every spring they greet us. The stuff of Ithaca College are dedicated and work many hours and they have a chance to take classes for free. Working in a college environment is usually much less stressful than a regular job.

Many faculty may not agree with me but I think that we do have an amazing president. We may not agree with the president on everything but we need to be careful because the human tendency is to project outside what we do not want to see within ourselves. I think that Tom sincerely cares for IC even though he may not see clearly the problems but no one ever does. This is an opportunity for growth and learning. Tom is facing a very very difficult situation because he sees the mounting difficulties coming both from outside and inside and has much more information than we do and yet is not able to connect with faculty. When Peggy came to campus after JJ there were difficult meeting with faculty because JJ “rule” was perceived as “controlling and authoritarian” while in Truth Peggy was very open and willing to make changes. Finally she said one day to the faculty: “Be careful. If you keep defining me that way I may eventually become that”. The dream of 20/20 came about because Tom felt intuitively that the clouds will eventually come and wanted IC to be prepared but the faculty in general was not supportive. The bottom line is that we need to keep an open mind and see that Tom has unique gifts that can help us all as a community. Even the fact that he is writing this weekly blog is a gift for us.

We should not forget the group of people who support the college selflessly and this is the board of trustees. The name “trustees” says it all. They Love IC and serve it for many years. They do not have an investment in it like we do (salaries etc.) but serve because they care. I am sure that at least some of them are reading and very much aware about what is going on and are trying to find ways to help us become stronger. Maybe it is time to break walls and have also open communication with and by the board?

Another thing that comes to mind is the fact that we have young faculty who care and a lot of renewal will happen at IC as the older folks like me come closer to say goodbye. These amazing young faculty will give IC the energy and vision to survive and amazing newness will eventually emerge here on South Hill.

There is so much more to be grateful about.

1:09 p.m. on February 8, 2013 John Mullineaux said,

I am pleased to see the IC leadership team tackling this issue. I believe the US higher education "industry" is in a similar place as the US airline industry was in 1980. The industry was both labor and capital intensive. Costs were high, competition existed but everyone knew how to play the game. In 1981 Peoples Express was launched and that was a transformative event which changed the industry forever. One only has to look at the carnage wrought in the airline industry over the last 30 years to understand what could happen to higher education in the future. I believe getting IC's cost increases below the rate of inflation is the only way to ensure a bright future.

Add a comment