Perhaps you think that way, too. Did you ever say, "I can't run a program and produce good results if you give me that tiny a budget!" or "Let's look at the average of what institutions like ours spend on X, so that we can figure out what to spend on X." Both statements rest on the assumption that higher education is at least vaguely like a recipe: if you want to produce a good angel cake, it takes a certain amount of flour, yeast, eggs and so on. Too little or too much of any one ingredient: equally wasteful.
But economist Howard Bowen did a major study (Bowen, 1980) showing that very similar institutions of higher education (similar governance, physical setting, and reputation) spent very different amounts of money per student, and spent each dollar in quite different ways. In other words, there is no 'recipe' (production function) that relates higher education spending with higher education results. So one distance learning program with a particular design and a particular reputation might have low costs per student while another with a similar design and reputation might have high costs per student. Revenues, of course, can vary unpredictably as well.
Having said that, traditional budgets can be misleading. They divide costs by organizational unit, hiding the true costs of educational activities. Each activity is supported by people from several departments and offices. Higher education budgets go mostly to pay for people's time. So the real costs of any given activity (a distance learning program, a large course, an institution's use of clickers) - the real costs of any such activity are driven by how the individuals involved each choose to ‘spend their time.’
I’ll never forget a workshop on cost modeling that we ran some years ago. A faculty member and several staff members were creating a simple spreadsheet that listed the time (money) it took them to implement help that faculty member use a new technology at their college. So the faculty member recorded how he had spent time, and whom he'd asked for help. Those ‘helpers’ also recorded how much time each of them had invested, and noted when they each had asked the instructor to do something.
By the time I listened in, all of them were in a state of shock. Each individual had known that their own roles had been time-consuming (i.e., expensive). But each had assumed that, when they had asked one of the others to do something, it didn’t take that other person much time. However, when they totaled the time each of them had spent, they realized for the first time that the total time (cost) had been staggering.
These kinds of spreadsheets are called activity-based cost models, because they total all the costs associated with doing a particular thing in a particular way. If you can model how something really gets done in your program, you can then use your model to help figure out how to do that thing better, with less stress, and at lower cost. Several of us wrote a book on how to create such models, the Flashlight Cost Analysis Handbook.
At this point, you may be thinking that the way to reduce costs of an activity is for staff to spend less time on that activity. That's a good way to drive away your best staff, if you inadvertently cut down those activities that are most motivating for them! The Handbook includes a wonderful case study by David Pope and Helen Anderson on improving (and cutting the costs of) undergraduate engineering laboratories at the University of Pennsylvania (Pope and Anderson, 2003). Instead of asking each faculty and staff member how much total time they spent on different aspects of running the laboratory, Pope and Anderson asked them to separate time that was fulfilling from time that was burdensome (e.g., training students how to use the laboratory equipment). Armed with those kinds of insights, the Penn team redesigned the engineering laboratories in a way that simultaneously improved learning and made teaching more satisfying, while reducing costs for staff time, equipment breakage, and space.
We've known for years that such cost modeling can produce important insights into how to reorganize work. But it has been so frustrating to see how rarely institutions actually look at their own work. Either times are good so no one cares about costs, or else times are bad so no one has time to do the study...
Nonetheless, what I now believe is:
- Institutions often have no idea what specific programmatic uses of technology cost, because those costs are spread across different units and consist largely of how individuals spend their time;
- if a program does study such costs, that study creates opportunities to make programs more effective and work more fulfilling, while also controlling costs.
PS One organization that has done a lot in this area is the National Center for Academic Transformation. Their Redesign Alliance has a couple workshops coming up this fall, focusing on redesigns of large enrollment courses in ways that can improve learning while reducing per-student costs.
Note on this series of blog posts: "Ten Things I (no longer) Believe about Transforming Teaching and Learning with Technology" was introduced in this post. Past posts (and my evolving ideas for future posts) are summarized in this table.
Bowen, Howard R. (1980), The Costs of Higher Education: How Much Do Colleges and Universities Spend per Student and How Much Should They Spend? San Francisco: Jossey-Bass.
Pope, D. & Anderson, H. (2003). Reducing the costs of laboratory instruction through the use of on-line laboratory instruction. In S. C. Ehrmann, & J. Milam (eds.), The Flashlight Cost Analysis Handbook: Modeling Resource Use in Teaching and Learning with Technology, Version 2.0. Takoma Park, MD: The TLT Group.