Who, What, When
President's Perspective Value and strategic focus
CTMoment Show up and wait
Letters Holistic is healthy, credit where it's due, informed citizenry
Value and strategic focus
by President Philip A. Glotzbach
The global economic recession has directed much critical attention upon the cost, price, and value of the education offered by liberal arts colleges. This issue of Scope explores several facets of these challenging issues. Let me begin by posing an overarching question: How can we most effectively articulate the “value proposition” of Skidmore College and continue to realize that promise for our students in an era of constrained resources?
With a comprehensive fee of just over $51,000 per year, Skidmore is one of the most expensive schools in the country. Like other institutions of our kind, however, we spend considerably more to educate each student—approximately $63,000—meaning that even “full-pay” students receive a sizable discount off the true cost of their education. Beyond that, some 42 percent of our students qualify for financial aid and so receive a substantial additional discount. This business model is sustainable only if we continue to attract sufficient numbers of qualified students who can pay our fee (with or without financial aid). It also depends heavily on continuing philanthropy—including the expectation that our graduates, all of whom have benefitted from the contributions of alumni, parents, and friends, will in turn generously support the students who come after them in whatever way they can.
For some time, the escalating comprehensive fees of liberal arts colleges have pushed inexorably toward what’s known in business as “the walk-away point”—the price at which prospective clients choose not to pay. Heretofore, we had felt the effects of this progression only incrementally. But last year’s financial disruptions produced a more pronounced reaction. A national survey conducted in November 2008 of 1,030 US households with college-bound high school students found that 46 percent had changed their college-search plans either “somewhat” or “dramatically” because of financial considerations. Skidmore saw a 13 percent drop in our applicant pool and a significant spike in demand for financial aid among both prospective and continuing students. Knowing that our experience was similar to most of our peer institutions provided small comfort.
To accommodate reduced endowment returns, substantially add to our financial-aid budget, and limit the increase in our comprehensive fee, we implemented significant cost-cutting measures. This year we will continue to make very difficult choices to avert serious deficits in the coming years. But changing our cost structure in any deep way is much easier said than done. Higher education is a “service industry” whose cost of doing business is determined primarily by its workforce, and at most colleges and universities—especially smaller schools—these expenses are not scalable. Unlike Microsoft or Starbucks, colleges cannot simply lay off employees in proportion to reduced revenues while continuing to provide essentially the same services. To offer their core programs under conditions of economic scarcity (even for fewer students), schools typically need to retain most of their employees. Moreover, cutting costs to the point of dramatically reducing the educational value that defines our distinctive sector of higher education would nullify the primary reason students choose to attend colleges such as Skidmore.
Businesses whose structure resists large gains in productivity suffer from what economists call “Baulmol’s cost disease.” As James Surowiecki has noted (The New Yorker, July 7, 2003), it still takes five musicians to play a Mozart quintet. Liberal arts colleges represent a paradigm case of this condition for, as Surowiecki also says, “the average college professor can’t grade papers or give lectures any faster today than he did in the early nineties.” We operate on a deliberately inefficient pedagogical model—one that privileges close contact between faculty (and coaches and staff) and students. This is where value and cost most significantly intersect: More time spent on instruction (e.g., in summer student-faculty collaborative research) equals more cost, in both time and money. All of this has led some commentators to wonder whether higher education will be the next economic bubble to burst and, indeed, whether institutions such as Skidmore can survive at all.
Fortunately, evidence suggests that the perceived value of a given educational choice continues to figure prominently in the “strategic plans” many families have developed for their children’s future. Even last year, Skidmore still received more than 10 applications for each available space in the next entering class. In the above-referenced study of college-bound students, 76 percent of responding families indicated that they were “somewhat” or “very” likely to reconsider an institution “initially perceived as too expensive,” provided it “could demonstrate greater value.” Families who continue to seek the greatest educational advantages for their children will understand the worth of high-performing institutions. As costs in all sectors of higher education continue to rise, the perception of value added by a given school will loom ever larger in family decision-making. But even so, price will inevitably force many more families to consider lower-cost options over time.
So here is the task Skidmore faces. First, as indicated above, we must give much more attention to our “value proposition”—what we promise our students and their families in return for their investment of time and treasure in a Skidmore education. We must think even more deeply about, and articulate more clearly, the continuing worth of a Skidmore education. Specifically, we must revisit, reconsider, and reaffirm the principles and beliefs at the core of our mission:
• the core competencies we develop in our students as their best possible preparation for an uncertain world;
• the centrality of community and citizenship, and the power of individual action to enhance the
common good, both in the life of
• the College and in the lives of our graduates;
the value to our graduates of intercultural literacy and scientific literacy in the 21st century; and
• the transformative power of human creativity—the conviction that, today more than ever, creative thought does matter.
In her essay in this Scope, Prof. Sandy Baum presents additional ways to describe the “value” of a college education today. And of course, the most telling commentary on the value of a Skidmore education comes from our alumni.
This year I plan to engage the entire Skidmore community, on campus and off, in this critical inquiry. Beginning this fall, we will hold a series of regional “town-hall meetings” in seven cities across the country, to provide a forum
to include as many voices as possible in this discussion (see the inside front cover for more details). We will continue these conversations through our Web site, on Facebook, and in other venues to make certain that all members of the extended Skidmore family can participate fully. The end product will be a summary document that will become the basis of further work by the faculty, administration, and board of trustees in shaping Skidmore’s future.
Second, even as we cherish and preserve what we do, we must change how we do it. The College is currently engaged in a thorough reconsideration of how we operate. By the end of next year we will have trimmed our annual budget by nearly 8 percent, roughly $10 million. Although these adjustments have been motivated by the acute financial exigencies of the moment, we have never
wavered from our purpose in not just sustaining but increasing the value of what we offer to our students. In another New Yorker article (April 20, 2009), James Surowiecki describes a telling pattern from past recessions: Enterprises that invested in their strengths and resisted the urge to cut back on value emerged, when the economy recovered, stronger than competitors that merely controlled their costs. Accordingly, our aggressive search for efficiency will ensure that everything we do—every dollar we spend—creates the most value for our students. We must regard every commitment of resources as a strategic investment.
Financial aid is a prime example. Since my arrival in June 2003, we have nearly doubled our annual financial-aid budget, from $16.2 million to $31 million. This strategic investment has made Skidmore more accessible to a wider array of students while strengthening both the quality and diversity of our student body. This year we increased our commitment to financial aid by more than 10 percent, even as we reduced virtually every other budget at the College. And I am proud to report that we maintained our strict limit on non-need-based or “merit-only” aid. Indeed, the increasing reliance throughout higher education on “merit aid” to attract students is neither economically sustainable nor socially responsible. It diverts both dollars and attention away from what should be one of our highest national priorities: increasing access for students from all economic strata to all sectors of higher education. Skidmore’s commitment to need-based aid is placing ever-greater demands on our budget, and we are carefully considering our long-term strategy. But its value, relative to our mission, is beyond question. Here you can read the perspective of Skidmore’s student-aid director, Robert Shorb, on the importance of access.
Finally, we are developing new ways to assess what our students are learning. We will employ the knowledge we gain from these efforts, first of all, to continue improving our programs and pedagogy. In addition, our results will provide powerful additional evidence of the value of a Skidmore education. Please click here for a report on these important efforts.
Even in the midst of today’s economic distress, we intend to position Skidmore for the future by focusing steadfastly on the distinctive value we provide for students as they prepare to enter the uncertain world of the 21st century. We will continue to make targeted strategic investments, contain our costs, and increase our efficiency. Staying this course will not be easy, but I invite you to share the voyage.