Ronald G. Ehrenberg

Who Bears the Growing Cost of Science at Universities?

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:50:13 PDT

Scientific research has come to dominate many American university campuses. The growing importance of science is due to exciting breakthroughs in biology, information technology and advanced materials that have promise of tremendously improving human welfare. Along with the growing importance of science has come a growing flow of external funds to universities to support research. What is not well known, however, is that increasingly the costs of research are being funded at universities are coming out of internal university funds. Over the last three decades of the 20th century the percentage of university research that is funded out of internal funds rose from about 11 to 20 and internal research expenditures per faculty member almost quadrupled in real terms. Our paper sketches the reasons for the tremendous increase in university expenditure on research out of internal funds including changes in federal indirect cost reimbursement policies and the growing cost of start-up funds for new faculty. We present evidence, based upon a survey of department chairs, deans and vice presidents for research at over 200 public and private universities, on the magnitude of start up packages received by researchers in science and engineering disciplines. We then use panel data for 21 years and over 200 universities to estimate the impact of growing internal expenditures on research on student/faculty ratios, the substitution of lecturers for tenure track faculty, on average faculty salaries and on tuition levels at public and private universities. Among our most important findings is that universities whose research expenditures per faculty member out of internal funds has been growing the most rapidly in absolute terms, ceteris paribus, have the greatest increase in student/faculty ratios. So while undergraduate students may benefit from being in close proximity to great researchers, they also bear part of the costs in the form of larger class sizes and fewer full-time faculty members.

Policy Considerations for Enhancing Student Access and Persistence in a World in Which Tuition Keeps Rising

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:50:09 PDT

[Excerpt] The United States no longer leads the world in college completion rates. Inequality in college access rates by income have barely narrowed over the last 25 to 30 years and inequality in college completion rates have narrowed even less. The groups in the population that are growing the most rapidly are those that have historically been underrepresented in higher education. What types of federal policies might help to address these issues in the face of tuition levels at private colleges and universities that have risen for over a century by an average of 2 to 3.5 percent a year more than the rate of inflation and tuition levels at public colleges and university that have recently risen at similar rates. And why does tuition keep rising and can anything be done about that? Improving undergraduate access and persistence through to graduation is not the only goal for higher education policy. We should seek to improve, or at least maintain, the quality of higher education. We should also remember that higher education is much more than undergraduate education. The scientific research that goes on at research universities is essential for our nation's economic well-being. So too are the doctoral students who contribute to the production of research and become the next generation of college faculty and researchers. Finally, there is the role of land grant universities specifically, and public higher education more generally, in improving the welfare of the population beyond their enrolled students through extension and outreach activities. Public policies that affect any of these other aspects of higher education will inevitably influence the ability of academic institutions to improve access and persistence. For example, over the last 25 to 30 years the share of the ever expanding research budgets at America's research universities financed out of institutional funds (such as endowment income and annual giving) has increased. A recent Congressional proposal to cap indirect cost reimbursement rates at 35% on basic-research grants and contracts financed by the Defense Department would further shift the costs of funding research onto the universities, leaving them with fewer resources to provide grant aid for students and/or putting more pressure on their tuition levels.

Changes in Faculty Composition Within the State University of New York System: 1985-2001

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:50:06 PDT

[Excerpt] The last two decades of the twentieth century saw a significant growth in the share of faculty members in American colleges and universities that are part-time or are full-time without tenure-track status. Growing student enrollments faced by academic institutions during tight financial times and growing differentials between the salaries of part-time and non-tenure track faculty on the one hand, and tenured and tenure-track faculty on the other hand, are among the explanations given for these trends. However, surprisingly, there has been no recent econometric evidence to test whether these hypotheses are true. Our study uses institutional level data provided to us by the Office of Institutional Research and Analysis of the State University of New York (SUNY) System to begin to address these issues. In the next section, we present background data on how the ratios of full-time lecturers to full-time professorial faculty and of part-time faculty to full-time faculty changed at SUNY during the fall 1985 to fall 2001 period. Counts of faculty numbers tell one little about who is actually teaching undergraduate students and so we also show how the share of undergraduate credit hours taught by part-time and non-tenure track faculty members increased during the part of the period for which we had access to credit hour data. Section III presents a simple conceptual framework that illustrates why an institution's usage of part-time and non-tenure track faculty members should depend upon both the revenue per student received by the institution and the relative costs to the institution of the different types of faculty. While we have no data on the costs of part-time faculty members, we do have institutional level information for SUNY institutions for an eleven year period on the average salaries of tenured and tenure track faculty on the one hand, and of non-tenure track faculty on the other hand, as well as information on the revenue per student received by each institution each year. This enables us in section IV to estimate the roles that average salaries of both types of faculty members and revenues received by institutions play in explaining the observed changes in faculty composition.

The Sources and Uses of Annual Giving at Selective Private Research Universities and Liberal Arts Colleges

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:50:02 PDT

[Excerpt] While there have been numerous studies of the determinants of total annual giving and of alumni giving to institutions, including those by Bade & Sundberg (1996), Clotfelter (forthcoming), Cunningham & Cochi-Ficano (2002), Dugan, Mullin & Siegfried (1999) and Shulman & Bowen (2000), no study has sought to explain why the shares of annual giving coming from different sources varies over time or across institutions. Similarly no study has sought to explain why the share of giving going to different uses varies over time or across institutions. Our study addresses the determinants of the cross section variation in these shares using panel data for 30 major private research universities and 30 selective liberal arts colleges that historically have been ranked among the top undergraduate institutions included in U.S News & World Report's national research university and liberal arts college categories. The next section of our paper provides background data on the variation over time and across institutions at a point in time, in the shares of annual giving coming from different sources and going to different uses at these institutions. Section III sketches the analytic framework that leads to the specification in section IV of sets of equations for the sources and uses of annual giving. These equations are then estimated using panel data that span the 1968-69 to 1998-99 period. We conclude by illustrating how these estimates can be used to simulate how changes in key explanatory variables influence an institution's shares of giving coming from different sources and going to different uses.

The Changing Nature of Faculty Employment

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:49:59 PDT

[Excerpt] The last two decades of the twentieth century saw a significant growth in the shares of faculty members in American colleges and universities that are part-time or are full-time without tenure-track status. Growing student enrollments faced by academic institutions during tight financial times and growing differentials between the salaries of part-time and full-time non-tenure track faculty on the one hand, and tenured and tenure-track faculty on the other hand are among the explanations given for these trends. However, there have been few econometric studies that seek to test these hypotheses.Our paper begins by presenting information, broken down by form of control (public/private) and 1994 Carnegie Category, on how the proportions of full-time faculty at 4-year American colleges and universities that are tenured and on tenure tracks and that are not on tenure tracks have changed since 1989, using information for a consistent sample of institutions from the annual IPEDS Faculty Salary Surveysand the biennial IPEDS Fall Staff Surveys. The latter source also permits us to present similar estimates of the proportions of faculty that are employed part-time and the share of new full-time faculty appointments that are not on tenure tracks. To analyze the role that economic variables play in causing changes in faculty employment across categories, we conduct two types of econometric analyses. First, in section III, we use panel data to estimate demand functions for tenure and tenure-track faculty on the one hand and full-time non tenure-track faculty on the other hand to learn how changes in revenues per student and the average salaries of different types of full-time faculty influence the distribution of faculty across categories of full-time faculty. We do this using both equilibrium models that assume instantaneous adjustments to changes in revenues and faculty salaries and lagged adjustment models that permit partial adjustments to equilibrium each year. Second, in section IV, we estimate models that seek to explain the flow of new hires of each type of faculty member (rather than the levels of faculty employment) using data on new hires that are available from the IPEDS Fall Staff Surveys. To explain new hires, in addition to information on changes in revenues per student, changes in enrollment, and the levels of faculty salaries, we require information on the number of vacant positions that are available to be potentially filled. We construct information on the latter using data on the number of continuing full-time faculty members at an institution each year that the American Association of University Professors (AAUP) collects (but does not publish) as part of its annual salary survey. Continuing faculty members in a rank are defined as the number of faculty members in a rank one year, who also are on the payroll of the institution in the next year, regardless of their rank in the second year. Summing up an institution's continuing faculty members across ranks in a year and subtracting that number from the institution's total faculty employment in the previous year provides us with an estimate of the number of full-time faculty vacancies that an institution could have filled in a year if it had replaced each of its departing full-time faculty members. A brief concluding section summarizes our findings and discusses their implications for American colleges and universities and their students.

The Sources and Uses of Annual Giving at Private Research Universities

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:49:55 PDT

[Excerpt] In 1998-99, Cornell University and Duke University were ranked second and third in the nation, respectively, in terms of the volume of giving each received from external donors. That year Cornell reported receiving $341.3 million in annual giving and Duke reported receiving $331.0 million. The similarity in the total volume of giving that the two institutions received is actually very misleading. Fifty-four percent of Cornell's gift total came from alumni, while only 15.3% of Duke's gift total came from alumni. Similarly, 79.7% of Cornell's gift total came from individuals (alumni plus other individuals) while only 26.2% of Duke's gifts came from individual donors. Cornell's giving is clearly much more dependent on individuals than is Duke's and Duke's is much more dependent in turn on corporations and foundations. Institutions differ not only in the sources of their annual giving but also in their uses of such funds. For example, during the 1993-94 to 1997-98 period, the average percentages across 78 private research universities of annual giving devoted to current expenditures, building and equipment, and enhancing the endowment were 53.5%, 14.5% and 31.5%, respectively. However, there was wide variation across the institutions in each of these percentages, with the standard deviations of these percentages being 16.9, 12.1 and 15.5, respectively. Our paper addresses why private research universities differ in the sources and uses of their annual giving. The next section provides some background data on the trends and variations in the shares of annual giving coming from and going to different uses. We then use data from a panel of private research universities for the 1968-69 to 1998-99 period to estimate models that provide explanations for why the levels and shares of giving coming from different sources and going to different uses vary across institutions and over time. Our explanations focus both on differences in characteristics of the institutions and differences in macroeconomic variables, such as changes in federal estate, corporate, and capital gains tax rates.

Resident and Nonresident Tuition and Enrollment at Flagship State Universities

Michael J. Rizzo — Wed, 30 Apr 2008 08:49:52 PDT

[Excerpt] The recent economic downturn in the United States has led to severe current and projected budget deficits in most states. Sharp rises in healthcare costs and increased competition for state funds from other sources has concurrently led to a decrease in the shares of state budgets earmarked for the higher education sector.1 Because universities are able to attract revenue from other sources (e.g. tuition, annual giving and federal student aid) and they are a discretionary component of most state budgets, they are often the first to go under the knife during tough times. The resulting revenue shortages from these budget cuts will most certainly have deleterious effects on college accessibility and on the behavior of these higher educational institutions. Inasmuch as 65% of the 9.2 million students enrolled in four-year institutions in 1999 were enrolled in public institutions and in most states the major public research universities are also the most selective in terms of admissions, it is important to understand institutional responses relating to tuition and enrollment policies, as well as the likely changes in state grant aid policies.How tuition levels, or the availability of grant or loan aid, influence access are empirical questions that we will not address in this chapter. Rather, we will analyze how tuition and enrollment strategies at institutions react to changes in federal and state student need based aid and to state appropriations to public higher education institutions. The former increases student mobility by expanding their choice set, while the latter does not travel with the student.

The Perfect Storm and the Privatization of Public Higher Education

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:49:49 PDT

In this paper the author discusses the various factors which have contributed to a substantial decrease in state funding for public colleges and universities, including increased strain on state tax revenues, rising tuition costs, the discrepancy between public and private institutions in endowment revenues, faculty salaries, and expenditures per student. The author argues that this "perfect storm" of contributing factors threatens the very fabric of the public education system, and paints the dire consequences that could result from the privatization of public education.

Financial Prospects for American Higher Education in the First Decade of the Twenty-First Century

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:49:45 PDT

[Excerpt] In an important paper written for the National Center for Public Policy and Higher Education, Harold Hovey pointed out that even if economic growth continued, the outlook for state funding of public higher education might not be as rosy as it had been in the recent past.My objective in this paper is to speculate about the financial futures of both public and private higher education, using Hovey's paper as a base. After outlining his argument about the hard times ahead for public higher education, I will discuss the responses that campus and system administrators may well undertake. I will then turn to the financial pressure that private higher education institutions will face and the likely responses of these institutions. As will come as no surprise to most readers, I conclude that ten years from now the privates will look more like the publics and the publics will look more like the privates.

Reaching for the Brass Ring: How the U.S. News & World Report Rankings Shape the Competitive Environment in U.S. Higher Education

Ronald G. Ehrenberg — Wed, 30 Apr 2008 08:49:41 PDT

[Excerpt] So institutions at all places in the selectivity game are thinking about their US News & World Report (USNWR) rankings. In the next section of the paper I will discuss the formula that USNWR used to compute its rankings in its America's Best Colleges: 2001 issue and show how the elements that constitute it have altered how colleges and universities behave. Sometimes an action taken to improve an institution's rankings may also make educational sense. However, sometimes it may not and it may also not be in the best interest of our educational system as a whole. In the final section of the paper, I ask whether the methodology that USNWR uses to calculate its rankings prevents institutions from collaborating in ways that make sense both educationally and economically. My answer is to a large extent no. Hence, while the USNWR rankings may have caused institutions to worry more about the peers with which they compete, the ranking should not prevent the institutions from working productively towards common goals. Put another way, institutions should not blame USNWR for their failure to collaborate more.