If Only Wal-Mart Ran My College
Universities with shrinking endowments need to get creative about raising revenue: put the rare-book collections on eBay and ask the philosophy professors how they’d run the budget.
In a recent email sent to me and every other student and faculty member at UMass-Amherst, Chancellor Richard C. Holub wrote that the university is facing more than $45 million in budget cuts. "To think of this only in terms of short-term savings misses the point. We should not only produce a structure that reduces administrative costs now, but also better positions us going forward."
I doubt that dollar-store MBA-speak will lead to real solutions, but Holub's rhetoric is right. Colleges’ finances are in meltdown right now, exposing the mismanagement normally hidden under layers of endowments and taxpayer funding. It’s time for colleges to do what the rest of us have been doing since the economy tanked: get creative in their efforts to keep their coffers from completely evaporating.
My school is the top Google hit for the phrase “long lines and red tape.”
For example, if UMass wants to get serious about cutting costs, it should start poaching Wal-Mart executives from Bentonville. Wal-Mart has made a science of trimming fat and keeping operations perfectly streamlined. My school, on the other hand, is the top Google hit for the phrase “long lines and red tape,” and is riddled with jobs that are at least 50% computer solitaire.
At Wal-Mart, “associates were encouraged to develop cost-cutting measures--and rewarded when their ideas were put into place,” according to an article in Discount Store News. Couldn’t UMass do something similar? After all, universities are just businesses staffed by smart nerds, making them the perfect institutions to emulate this kind of bottom-up brainstorming. I would love it if my college would ask every person on campus (not just the economics professors) to submit three blue-sky ideas for how the school can cut costs. Imagine the wealth of innovation that could come from the philosophy department, the history department, the librarians, the janitors.
The problem goes far beyond bureaucratic waste. The past ten years have witnessed a collegiate arms race for upscale dormitories and ever-fancier dining halls that’s left colleges looking like idiots now that they’re turning off the lights earlier at night to pinch pennies. In 2006, UMass spent $11.2 million renovating—not building—a single dining hall, at a cost of $14,000 per seat. That pales in comparison to Princeton and The Case of the $200,000-Per-Bed Dormitory.
There are also short-term solutions colleges could pursue—instead of implementing the sharpest tuition hikes in years during a recession. For instance, how many millions of dollars in unused assets are gathering dust in university storage spaces? Colleges: take your rare books and manuscripts, make copies of them, and sell the originals. Right now, Indiana University is facing budget cuts and, according to the National Report Card on Higher Education, failing miserably at keeping tuition reasonable. Luckily, Indiana University at Bloomington has a large collection of Sylvia Plath's journals, including original drafts of The Bell Jar. Put those up for auction on eBay. A single Sylvia Plath love poem written when she was a child is listed on AbeBooks for more than $11,000. Among its “most notable items,” Southern Oregon University boasts "Shakespeare's Second Folio of 1632,” which is valued at just under $60,000. There are thousands of collections like these in universities across the country—lovely luxury items to have when you’re flush, but indefensible to keep when you’re a state school that’s raising tuition beyond reach.
Another idea: many hotels that have faced financial issues have sold off some or all of their rooms as hotel-condominiums. Couldn't a similar scheme work with dorm rooms? Many college towns have seen real estate values weather the housing downturn. Even Michigan, one of the worst housing markets in the country because of the auto industry meltdown, has seen student housing remain stable as a pocket of relative strength. Colleges could generate cash by selling dorms as hotel-condominiums to parents and real estate investors -- and continue renting them out to students. The college could then continue to make money as the management company, providing valuable sales and work experience for business students.
Some well-intentioned bureaucrats point out that funds are allocated in different places for different things, and that selling books to lower student fees isn't as simple as it sounds. This is true, and that’s part of the problem. We need a unified approach to funding higher education that’s based on a set of common themes, not a piecemeal allocation of funding to various special interests.
Will schools actually adopt any of these ideas? My guess is no. Like most colleges, UMass seems poised to take the easy way out and raise student fees. (What are we going to do? Transfer somewhere cheaper halfway through junior year?) Referring to the need for budget cuts, UMass journalism professor Ralph Whitehead, a member of the Budget Planning Task Force, recently told The Daily Collegian, "It's very important that the sacrifice be shared. Everybody's got to contribute a pint of blood."
Here’s this student's perspective: College costs have been rising at more than twice the rate of inflation for decades, and the average graduate takes $21,000 in student loan debt with him once he ventures out into the world. The ease with which schools can raise fees has helped colleges build themselves into the monsters of waste that they are today. Students have been contributing blood by the gallon for years. It’s the management’s turn to smarten up.
Zac Bissonnette is an editor with AOL Money & Finance and its new personal finance site WalletPOP.com. He is a sophomore at the University of Massachusetts Amherst.