Colleges hoping for more public funds instead of innovating risk hurting themselves


Apr 9, 2015

University of California President Janet Napolitano took recently to the pages of the Washington Post to review and critique new books on the future of higher education by University Ventures Fund Managing Director Ryan Craig (College Disrupted: The Great Unbundling of Higher Education) and New America Foundation’s Education Policy Program Director Kevin Carey (The End of College: Creating the Future of Learning and the University of Everywhere).

In her critique, Napolitano essentially agrees that higher education is in crisis—but for very different reasons from the conclusions that Craig and Carey reach. Napolitano unambiguously states that American higher education is not in crisis because of the rise of online learning nor because of rising tuition prices. Instead, to the extent American higher education is in crisis, she argues, it is because the nation is retreating “from the commonwealth ideal that gave rise to this nation’s great public universities in the first place.”

Unfortunately her diagnosis and prescription of what to do about higher education’s challenges are simplistic at best and, if taken at face value, negligent at worst.

Napolitano is correct that state government dollars for colleges and universities have declined, which has contributed to their worsening fiscal health. But her suggestion that state politicians step up and simply pump more government dollars into an expensive system ignores the reality that every day between now and 2030 10,000 baby boomers will retire, which will create huge governmental health care and pension costs.

With funding for K–12 schools taking precedence over higher education in state budgets, there won’t be enough left in the pie—even if it is somehow greatly enlarged—to cover traditional higher education’s expenditures, which have—as a general matter—risen over time (see page 4 of this College Board report) and will likely continue to rise. To maintain and improve the traditional higher education model—with its complex and bundled business models around research, teaching, and a social experience—expenditures must escalate. As we explain in Disrupting College, for most institutions whose expenditures have not risen in recent years, it is not because they have discovered how to make education low cost, but rather they have not made as many routine and breakthrough improvements—or sustaining innovations—to stay competitive with their peer institutions. They are, at best, treading water.

That’s why many public colleges and universities will need to take steps to reinvent their business model or be more creative than simply asking for more money. Hiding from this reality and hoping it were otherwise isn’t a wise strategy.

Michael is a co-founder and distinguished fellow at the Clayton Christensen Institute. He currently serves as Chairman of the Clayton Christensen Institute and works as a senior strategist at Guild Education.