The-Accountant-Jul-Aug-2016

PEN OFF
that in 2007, nobody could have forecast
that Goldman Sachs, Citigroup and AIG
would get caught up in a financial tsunami
and require government assistance in
order to survive. Train wrecks happen in
slow motion and he believes the US is
approaching just such a pile-up.
So where does the amount of time
teachers devote to academic research come
into the financial equation? A preliminary
analysis of costs at the University of
Texas at Austin by the Center for College
Affordability and Productivity discovered
that the 20% of the faculty with the
highest teaching loads taught 57% of
student credit hours and were responsible
for 28% of total faculty costs; that worked
out at $662 per student taught a year. The
80% of faculty in the next four quintiles
accounted for 43% of the school’s teaching
duties but 72% of all faculty costs, or
$2,142 per student. The least productive
20% taught just 2% of all student credit
hours but accounted for 9% of total faculty
costs, or $3,794 per student. On average,
the top 20% taught 318 students a year
while the bottom 80% taught about 63.
One of the study’s conclusions was
that if the 80% of the faculty with the
lowest teaching loads were to teach only
half as much as the 20% with the highest
teaching loads, the savings could result in
a 50% cut in tuition costs. Numbers like
these, if proven to be true, will not be lost
on legislatures, donors or parents.
In the US, along with health care,
academia is one of the few industries that
have enjoyed pricing power in a desultory
business climate and it has certainly
availed itself of that power. Higher
education is also one of the few industries
that has not improved its productivity
despite a turbulent economic climate.
But Zicklin states that this will change.
As economists tell their students, the free
market may sometimes work slowly, but
work it ultimately will, even in academia.
There is no doubt that the technological
change has already started, with distance
or online learning rapidly increasing
its share of the market. According to a
Sloan Consortium paper, more than 6.7
million students were taking at least one
online course during the fall 2011 term, an
increase of 570,000 from the previous year,
while 32% of higher education students
now take at least one course online. This
is taking place with only 2.6% of higher
education institutions currently offering
MOOCs (Massive Open Online Courses)
Dr. Rudy Fichtenbaum, professor of
economics at Wright State University
with another 9.4% in the planning stages.
There is much controversy about the
quality of online teaching, but there is also
evidence that students are satisfied with
it and learn just as much as they do with
face-to-face courses and live professors.
Rudy Fichtenbaum, an economist,
teaches at Wright State University,
Fairborn, Ohio, and is president of the
American Association of University
Professors. He states that one of the
most important factors driving price at
public colleges and universities has been
the decline in state support for higher
education. Between 1987 and 2012, in real
dollars, government support has declined
from $8,497 to $5,906 per student. He
adds that the second major culprit is rising
costs. Critics of higher education often
blame faculty salaries for rising costs.
However, when measured in constant
dollars, salaries for full-time faculty at
public institutions have actually declined.
What is driving costs is the metastasizing
army of administrators with bloated
salaries, and US university presidents
who are now paid as though they were
CEOs running a business—and not a
very successful one at that. There is also
the growth in entertainment spending and
spending on amenities. Many universities
claim that they must compete and
therefore have borrowed millions to build
luxury dorms, new dining halls and rockclimbing
walls. They also spend millions
subsidizing intercollegiate athletics.
Richard Vedder (mentioned above),
another economist, is now the director of
the Center for College Affordability and
Productivity in Washington, D.C., which
examines cost and efficiency in higher
education. He is blunt in his statement
of the problem of unduly high rises in the
cost of US university education. While
stating that Prof. Fichtenbaum tells
part of the story well, he points out that
university lecturers are not all saints. At
many universities, tenured lecturers have
acquired low teaching loads to pursue
trivial research published in journals no
one reads, forcing administrators to hire
cheap adjuncts who often do a fine job
teaching at much lower cost. He claims
that the role of sluggish state appropriation
growth is somewhat exaggerated. When
appropriations rise, universities have used
a large portion of the money to fund
unproductive bureaucracy. Moreover, he
states that Professor Fichtenbaumignores
the 50-fold growth in federal student
financial assistance programs since 1970:
former Education Secretary Bill Bennett
was mostly right when he said federal aid
programs enabled colleges to raise tuition
fees, helping to fuel the academic arms
race.
The government in Kenya will spend
31% of its total 2016-2017 budget
on education. For Kenya to compete
against other countries in the world, it
is important that its population is well
educated. In 2015, the total enrolmentin
(both government and private)preprimary
schools was 3.2 million, in
primary schools 10.1 million, in secondary
schools was 2.6 million, and in universities
507,700. The number of Kenyans in formal
employment in 2015 was 2,478,000, an
increase of 107,800 over the 2,370,200
in 2014; do not forget that this number
includes guards (all the guards in KK
Security Limited are graduates), cleaners,
drivers and messengers. How many of the
people in formal employment need to be
proficient in research? What is the valid
and useful research output from Kenya’s
universities? Should universities in Kenya
continue to claim that they are research
institutions or should they concentrate
on producing graduates who know how
to work well in whatever field they have
trained for and who are flexible enough
to change from one area of knowledge to
another because they can read and learn on
their own?
72 JULY - AUGUST 2016