Reducing Operational Costs and Helping the Perception of Value

In my last post and the post before, I discussed the public’s perception about higher education not contributing to the welfare of society.  One possible reason is that the cost of higher education has risen significantly and the funding mechanism for students to pay for these higher costs is loans.  A real harm to society could occur should these loans be so burdensome that they cannot be repaid.  Of course, should demand drop as a result of less subsidized loans, it is possible these costs could be lowered.  Otherwise, the result would be lower supply from the closing so some colleges that failed to manage their costs.  This conclusion would fall under the basics of economic theory that we typically teach to all undergraduate students.
I can hear the administration wailing as I write.  “We cannot afford to cut any costs”, the administrator say.  “We are already operating on a razor thin budget,” they continue.  They lament, “our funding from the state continues to decrease”.  They might even mention, funding from endowments continue to feel pressure by historically low returns.  “We have to raise tuition”.  These are excuses and assumptions based on narrow viewpoints.  Here are some basic facts about college operating budgets. 
The main cost of running a college is not the facilities.  The number one cost in running a college or university is faculty salaries.  Whether this is called instructional cost, compensation, or salaries with benefits, it is the number one cost from University of Florida, the University of Texas System, the University of Michigan, University of Southern California, Vanderbilt University, or Duke University.  Back when I was running businesses and before I became a professor, it became apparent that if I needed to reduce the operational costs, I started with the largest line items.  (Just an aside, if I had an operating budget of $100 million and my cost of raw material was $75 million, I was better of looking for a 2% savings, 1.5 million, in raw material than a 10% savings in a $10 million dollar line item).  So based on my logic, the best possibilities for efficiencies or cost reductions are available in instructional costs.  These savings can reduce cost of attendance and have a real impact on potentially lowering tuition and the subsequent student need for financial aid. 
Yikes, I can hear my colleagues in academia screeching now.  Seems we in academia like to make a lot of noise.   The accusations will fly about cutting the compensation of professors that are already woefully under paid.  This is a debatable argument for a position that pays full year compensation for 9 months of work.  That, however, is not the thrust of my argument.  Please, recall that my goal is around a 2% reduction in what arguable is typically 75% or more of the operating budget of the college or university.   I think we can do that without touching salaries.
First, I need to provide some background on a common practice in colleges and universities called course releases.  A course release is a decision by the college or university to excuse a professor from teaching one or more sections that would be their normal teaching obligation according to the professor’s contract.  So for instance, if a professor is contracted to teach three courses per semester in addition to their research and service obligations, a one course release would mean teaching two courses one semester and three courses another semester. 
As I stated in an earlier post, I believe this practice of granting course release sends the wrong message to everyone involved.   This approach fosters a culture of avoiding teaching.  I mean that the colleges and universities encourage professors both tenured and untenured to seek and receive a release from teaching.  The university or college is tacitly acknowledging the perception that teaching is burdensome.  By a release from teaching, a professor is ‘rewarded’.  This seems to imply that teaching is not the core purpose of being a professor.  Additionally, the replacement instructor is often an adjunct or graduate student that is demonstrably less qualified to teach the subject.
Eliminating the use of course release, except in most exceptional circumstances, has the additional benefit of likely being our 2% cost savings.  Now I am not going to go into a long list of citations about studies that have found this cost savings exists.  I do not think studies about the impact of course releases on college budgets exist.  Instead, I will walk you through my own experience as a department head and try to translate that into my projected savings. 
Just a quick reminder, I have run academic department at universities for 7 years.  In that time, I have always had one or more faculty that has been granted course releases.  Sometimes the course releases were offered as inducements during hiring.  Other times, they have been offered to faculty that agree to some University desired project such as Ethics training, Curriculum development, Implementation of Honors College, etc.  This list of reasons and the amount of releases is extensive.  The question is just how extensive.
Here is one way to calculate the impact.  In any given academic year, the department head knows the number of faculty and their contracted teaching assignments.  So for example, if I have 15 faculty and each is contracted to teach 6 courses in a year, then I have 90 sections of marketing ‘something’ that I can offer.  Unfortunately, it is not that simple.  I have to take into account the course releases (most of which are provided by the college and/or university).   In the last three years, course releases have reduced available teaching by 12%, 14%, and 10%.  Fortunately, for the students of my university, I have been able to fill about half of those teaching shortcomings with visiting professors with PhDs in marketing.  The rest of backfilling the teaching shortcoming comes from using larger class sizes.  I do not use adjuncts.
I do not think my department is uniquely burdened.  I believe this course release policy is common and represents a hidden ten percent cost.  Even a reduction of half of these course releases would represent a a 5 to 6% savings in faculty compensation costs.  Implementing a significant reduction in the use of course releases across all departments leads to a real savings.  That savings can be used to lower the cost of attendance and subsequent loan amounts.  If higher education really choses to address their customers concerns about potential negative impacts on society of high education, then solutions such as dramatically reducing course releases would be a great first step.
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