Colleges rethinking the way to do business

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COLUMBUS, Ohio -- In a wood-paneled office lined with books, sports memorabilia and framed posters (including John Belushi in "Animal House"), E. Gordon Gee, the president of The Ohio State University, keeps a framed quotation that reads, "If you don't like change, you're going to like irrelevance even less."

Mr. Gee, who is often identified with a big salary and spendthrift ways, says he has taken the quotation to heart, and he is now trying to persuade Ohio State's vast bureaucracy, and the broader world of academia, to do the same.

At a time of diminished state funding for higher education and uncertain federal dollars, Mr. Gee says that public colleges and universities need to devise a new business model to pay for the costs of education, beyond sticking students with higher tuition and greater debt.

"The notion that universities can do business the very same way has to stop," said Mr. Gee, who is also the chairman of a commission studying college attainment, including the impact of student debt.

College presidents across the country are confronting the same realization, trying to manage their institutions with fewer state dollars without sacrificing quality or all-important academic rankings. Tuition increases had been a relatively easy fix but now -- with the balance of student debt topping $1 trillion and an increasing number of borrowers struggling to pay -- some administrators acknowledge that they cannot keep putting the financial onus on students and their families.

Increasingly, they are looking for other ways to pay for education, stepping up private fundraising, privatizing services, cutting staff, eliminating departments -- even saving millions of dollars by standardizing things like expense forms.

Many colleges are top-heavy with administrators and woefully inefficient, having not undertaken the kind of paring public companies did years ago -- until now.

"Schools are very good at adding new things, new programs," said Sherideen Stoll, vice president for finance and administration at Bowling Green State University in Ohio. "We are not so good at looking at things we have been doing for 20 or 30 years and saying, 'Should we be offering those academic programs?' "

At Bowling Green, 62 percent of graduates have debt that averages $31,515, the highest of public universities in Ohio. In addition to raising tuition, which has been limited by state-mandated caps, the university has laid off employees, encouraged early retirements, required unpaid furloughs and limited pay increases, Ms. Stoll said. The belt-tightening hasn't yet reached the point that academic quality has suffered, she said, but Bowling Green may not be able to offer as much in the future.

"We've done everything and anything to try to operate much more efficiently," she said.

At Ohio State, tuition has increased by nearly 60 percent since 2002.

But Mr. Gee maintains that Ohio State is getting its money's worth: On his watch, Ohio State has become a more prestigious university, he says, while remaining a relative bargain, even with fewer resources from the state. It now receives just 7 percent of its budget from the state.

Ohio State costs about $25,000 a year for in-state residents who live on campus. The average debt for graduates who borrow is $24,480.

Like many other college presidents, Mr. Gee has set about trying to make Ohio State's highly decentralized bureaucracy more efficient. He said he planned to find $1 billion in inefficient spending in the university's $5 billion budget over the next five years and redirect the money toward priorities.

nation


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