Saturday, June 06, 2009

administrators think like a bank--faculty think like a credit union

Higher education faculty and administrators continue to butt heads because they see colleges as two very different things. Administrators see them like banks or corporations, and themselves as CEO's, and faculty see college as more like a credit union.

For those who aren't familiar with credit unions, they are owned and run by their employees and customers, so they have a vested interest in seeing that employees are treated fairly, customers are well-taken care of, and of course that the credit union itself continues to be solvent. This is more or less how faculty see the college, as a community of scholars that should take care of all its members. Students should get a good education for their money, faculty should be able to make enough to support their families, and yes even administrators should be fairly compensated for their duties of making sure the electric bill gets paid and enough buildings are built to hold all the classes.

That is profoundly different from the bank or corporate model. A bank is concerned for the financial welfare of shareholders and a small group of senior executives. Customers and lower level employees exist only to enrich that group.

Ideally, market forces could pressure them to provide a similar product to the credit union since one way to make a profit is to provide the best product at the best price.

Unfortunately, there are less admirable ways to reward those shareholders.

For example, they could provide progressively shoddier products for the same price and hope their customers don't notice. This was the path GM and Chrysler took beginning in the 70's. It worked for a while, but now they are teetering on bankruptcy. In higher education, there are any number of ways they can do this. One is by increasing class sizes and converting too many in person classes to online. Administrators actually have the nerve to call increasing class size "productivity" when it is really the opposite--increasing the appearance of education while delivering a diluted version of the reality.

The other way they can reward the few at the expense of the many is relying heavily on underpaid part time workers. This is done more in higher ed than just about any other industry except maybe Walmart. This also creates the false impression of a labor "glut" because underpaid part time faculty work more than a full time load by stringing several jobs together. The few who do get full time jobs are pressured to teach more than a full load, so administrators get their money's worth for what they are forced to pay out in benefits. If both full timers and part timers are overworked, that means fewer total jobs will be available.

Administrators also measure their success in bookkeeping games more than the quality or even quantity of education delivered. Here in California, this is most obvious in the budgeting of "reserves," money given by the state that districts put in the bank instead of spending on education. A small percentage of this is required to cover things they can't cut in bad years like pensions, but districts sock away far more--the highest I heard was something like 25%--and at the same time they will be denying faculty health insurance benefits in labor negotiations, cutting jobs, or even doing away with the school paper at most campuses as happened in one district where I work. This seems an awful lot like the problem with GM and Enron--they got so wrapped up in short term profits that they made crappy products and fired people to look profitable on paper while they were really undermining public trust which eventually leads to no customers, no products, and no profits.

Higher ed and community colleges also ape the corporate practice of giving ever higher salaries to top executives while cutting salaries of faculty or even cutting faculty jobs. At several districts where I worked, the chancellor made a six figure salary, more than the governor of California. This serves two purposes that are both bad for education: one is it makes top administrators as a breed apart from the faculty they work with. People who actually teach are no better than "burger flippers" as the VP at one of my schools said to union leaders. The inflated salary is also necessary because the job requires a rare skill that is cherished in the corporate world as well--being able to harm others without hesitation or losing sleep. They must be able to fire people and deny them things like health insurance solely to pad profits or in the case of community colleges, pad their reserves.

I ran this corporate analogy by a couple of people and one person objected--he said when he worked in the corporate world, he was actually treated and compensated better than he ever had been teaching at community college.

There is another weakness with the analogy as well. The corporate world went through a phase of laying off middle managers, partly to legitimately trim bloat, but also as part of gaming the books to look more profitable than they really were. Community college administrators do the exact opposite. Shortly after one of my districts closed the school paper at two out of three campuses, the new chancellor decided the district needed a new VP, whose salary would be double the budget of the student papers he closed. They also push to replace department chairs, who are faculty, with deans, who are administrators and typically paid far more. Why replace someone with a person paid far more? To extinguish something that has existed at colleges and universities for centuries but hasn't existed in the corporate world, a form of democracy called "shared governance." The idea is administrators have control of money issues, and faculty control all things actually related to teaching. This division of labor has been very successful, but is uncomfortably close to a cooperative, a "socialist" business structure that corporations will not tolerate, and part of the reason why we and NATO invaded Yugoslavia--to forcibly convert the cooperative businesses there to a corporate model that would benefit the few (most living in another country) at the expense of the many. By replacing faculty managers with administrator ones, they are trying to snuff out all expectation in faculty of having control over the job and eventually even over the content they teach.

A final weakness with the analogy is that public universities and colleges have a very different relationship with for-profit businesses than those businesses have with each other. A for-profit business will always try to buy people (labor) and things for the lowest price possible to increase their profits. Public colleges and universities will try to buy people for the lowest price possible (except top execs) but not so with things. This is because they get most of their money from the state but their boards of trustees are composed of local business people who see their position as a way to add to their profits--not by creating a more educated workforce that therefore has more buying power, but by swinging contracts toward themselves or their cronies. For administrators, the payoff is more direct in the form of kickbacks. I have heard stories about this my whole teaching career. One faculty member, now retired, told me he served on a committee that worked for months evaluating software only to be have their choice over-ruled by an administrator and different, more expensive software bought instead. Did the person who made this decision know more than the people who would actually be using it day in and day out?


I actually got to experience kickbacks first hand. I was evaluating a piece of equipment for possible purchase and use in the classroom, and the vendor was dropping off a cart of samples for students to try out, but had one in a box by itself that they handed to me. They said they thought it was important for me to have one to play around with myself. I asked when I needed to return it to them, and they said I didn't. I had no use for the gadget, but they clearly thought it would sway my decision (as if I had the power to decide to buy their stuff). The same thing probably goes on with bigger bribes at the district level.

The most recent case I heard was about a school district that paid more than twice market value for a piece of property in the midst of a real estate glut and collapsed market. What are the odds that part of that overpayment didn't end up in the pocket of the administrator who made the purchase?

Clearly, in the ways that colleges and universities diverge from the corporate model, it is for the worse, and the differences that are good they are trying to undo.

The consequences of choosing the corporate model over the cooperative one are not hypothetical or small.

I was talking to a retired faculty member about the current budget debacle here in California and the misplaced priorities of administrators, and he said he wondered how long it was until the whole education system collapsed too--the way Wall Street already has.

As Wall Street and banks have crumbled, choking on their own greed and incompetence, more and more consumers are realizing that credit unions are a safer and more stable place to put their money. If we trust that model with our money, shouldn't we trust it with our kids' college education too?