Learning to Count in Higher Education
John V. Lombardi
University of Florida

The Washington Post, January 8, 1997, A25

America's research universities remain one of this country's few internationally preeminent industries. But unless we in the universities face up to the challenges coming at us from every quarter, we risk becoming like big steel and the American automobile industries: downsized and outcompeted.

To sustain the preeminence of American higher education, we must learn to count, measure and be accountable. It shouldn't be all that difficult. Most of us began by counting. Starting with private universities, and then in a number of public institutions, we reconstructed our budgets in order to gain a better understanding of the cost of producing quality products in teaching and research. This practice, promoted under various names (mission-centered, responsibility-centered, cost-centered, or every-tub-on-its-own-bottom budgeting), sought to allocate the university's costs to its various products.

Success in accountability requires a direct link between the costs and revenues -- between production of academic "products" and allocation of funds. This linkage clarifies the conversation about resources and the university's principal missions, and it aids the faculty's efforts to become more productive.

But good internal management, while it improves the university's productivity and shows us the cost of quality, does not always meet the public's need for accountability. The public -- and for public universities this almost always means the legislature and boards of trustees -- constantly seeks measures of university performance that it can understand: measures that satisfy its sense of responsibility for public funds and ensure that we deliver the expected results.

There are many such measures, and much argument over which of them work best. A few examples: "time to degree" (the number of years it takes to achieve a bachelor's degree at the school), employment of graduates (defined as income on their first job), test scores for graduate or professional school, faculty hours spent in classroom contact with students and, of course, graduation rates.

The problem is that none of these measures works for budgeting. "Time to degree" fails to account for the complexities of undergraduate education involving many part-time and working students, who often need more than four years. Employment has no meaning at the moment of graduation, but becomes relevant only after 10 years or longer. Test scores for graduate and professional schools measure as much the inherent quality of the student body as the value of undergraduate education. Graduation rates cannot drive the budget because they create incentives to graduate without quality.

There is one area from which we in the universities can learn a great deal in this regard: It is medical care. Medicine focuses on the individual, a patient. Education focuses on the individual, a student. The managed-care medical industry budgets a fixed cost for a covered life: medical care for individuals throughout their lifetimes.

At the University of Florida, we focus on provision of the 120 credit hours needed for a "covered" undergraduate degree, plus another 10 for changes and other adjustments. In building a performance budget for undergraduate instruction, we ask that the state fund up to 132 credit hours for each student. Any credit hours needed beyond that would have to be paid for by the student and university.

In this proposed shared responsibility model, the state funds the majority of the cost of the "covered" degree, the university delivers the degree within the cost, and the student follows the program needed to earn the degree. This model does not count chronological time (years to degree) but rather the actual work funded by the state and the student (credit hours to degree). It works as well for the full-time student as for the part-time one.

In this instructional performance model we do not pay direct attention to quality, only to costs, which is the purpose of an annual performance-based budget. Quality measurement in education -- as in health care -- depends on a separate evaluation that measures long-term outcomes such as student and alumni satisfaction, employment, entrance into graduate school and performance on professional certification exams.

Research, the other major university product, receives state tax dollars. An effective measure of return on this research investment counts the number of outside dollars generated by each state tax dollar invested in research. Research dollars from outside sources are earned in national or international competition. They serve as excellent indicators of the quality, productivity and significance of our faculty's work. Thus, if the amount of money coming in for sponsored research at a university declines, the state might do well to reduce its investment in that school's research efforts and redirect it toward instruction.

The university exists primarily to teach and do research. Public accountability requires simple, easy-to-understand measures. Performance-based budgets require annual measures of performance. Given these principles, "covered" degrees and external return on state research investment offer effective approaches to the performance management of public universities.

Without a focus on these quantitative measures, universities cannot compete effectively in the resource-constrained environment of the next several decades. Without the ability to understand how our expenditures relate to the delivery products that define our mission -- teaching and research -- we cannot hope to achieve our expectations for quality and performance.

The writer is president of the University of Florida.

Copyright 1997 The Washington Post Company