The Chronicle: 3/12/2004: What If the Yankees Were Run Like a Public University?

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From the issue dated March 12, 2004

What If the Yankees Were Run Like a Public University?

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By MARK YUDOF

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Mark Twain would recognize the situation. Order Everyone talks about the governance and Subscribe reprints financing of higher education, although, as in the case of the weather, few feel that they can do anything about it. When considering efforts to improve such aspects of colleges and universities, however, Life on the Mississippi and the Adventures of Huckleberry Finn come less to mind than Tolstoy and Dostoyevsky. The saga of efforts to reform higher education often seems like a Russian novel: long, tedious, and everyone dies in the end. The current environment for public universities has been highly regulated for so long that those of us who govern, administer, and teach at them often fail to see the bars on the glass door, mistaking the view for the freedom to act. Accustomed to things as they have been done for generations, we fail to comprehend how regulation limits choices, stifles creativity and excellence, and thwarts widely shared aspirations for our institutions and our students. Meanwhile, we compete relentlessly to try to outperform each other and private colleges, often ignoring the serious limitations of our resources. To render our banal reality more transparent and understandable, we may need to consider it from an entirely different perspective. Cheerfully recognizing the immense differences between a consummate public good and a national pastime, I propose that we think about public universities in a new light: as if they were baseball teams. I am encouraged in my effort by Michael Lewis's new book on big-league baseball, Money Ball: The Art of Winning an Unfair Game (W.W. Norton, 2003). The subtitle might well be the mantra for public-university leaders. I imagine a team, owned and controlled by a state government, operating with a regulatory structure similar to that of public higher education. What if baseball were run like public universities? What would we see? And what might we learn? With apologies to Garrison Keillor, let's call the public team the Wobegon Warblers. The Warblers compete with privately owned teams. The private teams charge more for tickets than the Warblers do, and seek gifts from loyal fans and others to remain fiscally healthy. Although the less-affluent fans of those private teams receive some government tax breaks and subsidies to defray the price of admission, government intrusion is minimal. The teams themselves are regulated

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The Chronicle: 3/12/2004: What If the Yankees Were Run Like a Public University?

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as little as most other private enterprises are. Meanwhile, the Wobegon Warblers have a complex governance structure and must deal with state-government oversight, a generous dose of federal involvement, and additional regulations from the local government. (Local tax revenues, however, are not generally available to support the team.) In particular, the state legislature, representing the Warblers' investors (the taxpayers), sets broad policy for the team but also manages many aspects of its operation. It controls ticket prices, subsidizes the tickets of fans who otherwise couldn't afford to attend, and financially supports the construction of various facilities. It also occasionally establishes the rules of the game and involves itself in supervisory details, like going to the mound to talk to the pitcher. The state also makes the Warblers meet regulations and reporting requirements similar to those that it demands of other government bodies with very different missions and organizations -- for example, the departments of public safety, insurance, and natural resources. The state regulates the Warblers' holiday and vacation periods, determines the size of the team's staff, and limits the number of administrators. It also requires the Warblers to produce reports on everything: the range of salaries, the number of cellphones that players own, the amount of depreciation on buildings, even the number of balls, strikes, and hits after each inning. That approach to the boys of summer may seem rather odd; the team's hours are irregular, and its members do little filing or memo writing. But, after all, the Warblers are an agency of the state, the players are employees, and the coaches and managers are administrators. Res ipsa loquitur. The Warblers' board of directors, appointed by the governor and subject to legislative approval, is responsible for carrying out state policy, hiring and firing team executives, and ensuring sound management, prudent financial practices, and public accountability. It performs a number of policy-making and judicial functions, determining, for example, the rules for long-term contracts with players. At the same time, the board must also rely on the experience of the Warblers' players and staff members, often delegating to them decisions on new programs and players. Indeed, there is much discussion of governance in which the board shares authority with players, managers, and fans. As in other states, a "baseball system" oversees the Warblers and a number of other teams. Still other states have multiple systems of teams operating within their boundaries. The systems vary from loose confederations, assembled by accidents of history, to federalist arrangements in which the teams in the system are carefully chosen to serve fans across the state. Depending on the state, teams within the same system or in different systems may or may not compete against each other on the field. Often, a separate board -- call it the baseball coordinating board -- oversees capital expenditures and programs at the state level to avoid

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The Chronicle: 3/12/2004: What If the Yankees Were Run Like a Public University?

duplication of effort. Yet the Warblers and other public teams and systems often resist being coordinated in any way -- even in the color of their uniforms. What's more, the legislature wants to do its own coordination, particularly in establishing new teams in specific regions of the state. Hence the coordinating board often lacks authority to do its job, but still contributes to the endless flow of paperwork required of the Warblers' management. So let us imagine owners who demand a fully competitive team, but who, without any sense of contradiction, have gradually reduced their financial support, so that they now contribute less than 25 percent of the annual cost of operating the Warblers. The state has many budget priorities and is reluctant to write big checks to build and maintain a modern stadium at public expense, even though legislators and government administrators often express concern about the lack of seating for all the fans who wish to attend baseball games. Similarly, the government resists paying competitive salaries and benefits to the players and managers, but still expects a major-league performance from all of them. Why pay Babe Ruth more than Herbert Hoover -- even if the Babe had a better year? The state also expects the Warblers to compete successfully against the private clubs for players and managers, notwithstanding salary disparities. State policy makers also believe that the fans get the most out of baseball, and that the taxpayers -- many of whom are more attuned to professional wrestling, home-improvement channels, or opera -- should not foot much of the bill for the team. They contend that for revenues, the Warblers should instead depend increasingly on the ticket prices that they charge those who attend the games. Yet for reasons of fairness and equity, the state owners insist on setting ticket prices artificially low -- that is, well below what the market would allow or, at least, below the actual cost of fielding the team. Because that makes it virtually impossible for the Warblers to make ends meet, the owners feel that more-aggressive cost cutting is in order. They point to the increased productivity of other enterprises. Why are so many trainers and backoffice staff members required? The Warblers sing a different tune. They point to the economies that they've struggled to obtain by washing uniforms only once a week and making the players take out their own trash. Baseball is labor-intensive, they explain, and baseball players playing in America need to be paid American salaries. They also note that proposals to automate aspects of the game to help lower costs -- like installing robotic umpires, with precisely defined ball-and-strike zones -- do not fare well with the fans. The people who go to baseball games like booing a real human being. Every year the managers of the Warblers go to the legislature and plead for an increase in ticket prices so that they can have more money for operations and
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The Chronicle: 3/12/2004: What If the Yankees Were Run Like a Public University?

improvements. They show that the team's operating budget is cobbled together from ticket sales, concessions like food and souvenirs, donations, and federal grants, and that those resources are not sufficient to field a major-league team over the long term. The managers appeal to the patriotism of legislators. The Wobegon Warblers represent the state nationally. How can legislators support it less well than other states support their own teams without suffering embarrassment and a loss of state pride and self-worth? The Warblers' management would like to differentiate in its pricing of tickets by, say, charging more for seats along the first- and third-base lines or by reducing prices for unpopular game times. It also promises to provide free or reduced-price tickets to lower-income fans. But the state, reluctant to allow the market to operate freely, prefers single pricing. After all, a fan is a fan. The only point that everyone can agree on is to charge fans from outside the state substantially more. A complex system of discounts, governed by pages and pages of fine print, supplements the one-price policy for in-state fans. Some of them are adept at finding their way through these rules, but many are not -- even with a staff of "fan counselors" on the Warblers' payroll. The complexity of pricing makes it extremely difficult to know the average ticket price. In fact, over half of the fans receive substantial discounts. Yet the news media often report the full sticker price for tickets, as if it were rarely discounted, and most people believe that virtually everyone pays that price. The Warblers must also provide a special fund for fans who lack the wherewithal for transportation to the stadium. In addition, because people are sensitive to increases in hot-dog prices and parking fees, hot dogs and parking are sold at below cost -- which benefits the fans but adds to the Warblers' money crunch. The situation of many public universities is similar to the Wobegon Warblers'. Appropriations are not sufficient to support high-quality programs, and yet there are continuing demands for cross-subsidies of everything from food and housing to student tuition and athletics. States also expect students and professors to be competitive in the marketplace, and yet the operations of public universities are riddled by regulations, some of them picayune. More to the point, a legislature rarely permits the closing of a campus, no matter how desperate its finances or its inability to attract students. Price controls are often the order of the day -- working about as well as they did in the steel mills of Poland in the 1970s. Ideology aside, the test of any public policy is whether it produces the desired outcomes. The unfortunate truth is that the states' low-appropriation, low-tuition, and high-regulation approach to public universities cannot produce the quality of education that students demand and deserve; it cannot produce competitive research programs; it cannot propel a state's economy forward. In my home state, Texas, we've decided to change that approach. We have made great progress in giving each institution's board of regents its own authority over tuition, and we have introduced differential pricing. Thus, for example, if a
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The Chronicle: 3/12/2004: What If the Yankees Were Run Like a Public University?

student on the University of Texas' Austin campus takes a full load, he or she pays a lower cost per credit hour than does a student who takes only a few classes. We offer rebates on two campuses for taking and passing 15 hours in a semester. In addition, we don't raise tuition for students from families with incomes below $40,000, and Austin reduced the tuition increase for families with incomes under $80,000. We have achieved more deregulation in our operation partly by persuading legislators that universities should not be treated as simply another state agency. For example, it is hard to compare the work hours of a scientist doing research in a lab with the 9-to-5 hours of a white-collar employee in a state bureaucracy. Professors are part of university governance in ways that are not replicated in other agencies. Markets for top-notch professors are competitive, and their compensation is not akin to that for employees in local markets. While I recognize that the effort will not always be easy, I strongly recommend that universities in other states work with their legislatures to gain greater freedom and flexibility. For their part, universities should fully explore the freedom to serve their students and communities better. It is time for higher education to embrace a customerservice model that emphasizes the needs of students and engages institutions as full partners with their communities. If students cannot graduate in four years because a university does not offer required classes in a timely manner, or if students drop out because they cannot get what they need or cannot cope with an arrogant academic bureaucracy, the university is a failing institution. And a university that will not support its community with outreach services, engagement in contemporary problems, and contributions to economic development is an institution that cannot reasonably expect to draw support from that community. Beyond our relationship with the government, public universities resemble baseball teams in another key way: how we compete with each other. Competition is a constant topic in both baseball and higher education, and university leaders might find the situation in baseball instructive. In both baseball and higher education there is no fixed standard of excellence, and competition is intense. Like athletics prowess and finesse, education is a relative, or positional, good. If, as has been said, you can-not be too thin or too rich, you also can't have too many outstanding students and professors. Universities never reach stasis or equilibrium, but are dynamic institutions engaged in a continuous process of advancement. None of them are standing still, waiting for others to catch up. Hence, in baseball as well as in the world of the university, success is relative to the competition, and small differences are highly magnified. Both baseball and higher education are informed by chaos theory, which holds that small changes aggregate over time into gigantic differences. A baseball team may pay a
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The Chronicle: 3/12/2004: What If the Yankees Were Run Like a Public University?

considerable premium and be competitive every year because of statistically small variations in talent. A .300 hitter is highly valued over a .270 hitter, even though he gets only about 10 percent more hits a year. Still, a few of those marginally better players can make a decisive difference. So, too, when a university pays a considerable financial premium for slightly better cellular biologists or computer scientists, it may enhance its ability to assemble a critical mass of such people -- if for no other reason than that they like to hang out with each other. Such faculty members can also attract significantly more research support and outstanding graduate students. In fact, relatively small differences in the talent pool among public universities may be decisive in whether an institution breaks into the small club of universities with at least $100-million in annual research spending. If that is the case, the 200th university on the list of top institutions could be quite good and have improved significantly over time, yet still may have its aspirations for a higher ranking thwarted, or even see its ranking decline as others move up faster. What's more, in both baseball and higher education, no team wishes to be described as a "farm team." Each baseball team covets big-league status. But it is widely agreed today, at least by the experts on talk radio and in sports columns, that Major League Baseball suffers from a shortage of pitchers who are truly of traditional major-league quality. With 30 teams, there just doesn't seem to be enough top-quality pitching talent to go around. We find a similar situation in many fields in the university world -- whether among students or faculty members -- and we have far more than 30 universities striving for major-league status. As a result, even without a university's being burdened with too much regulation, the competition is unrelenting -- which makes it doubly difficult for overregulated public universities. It would be as if salary caps applied to some teams but not to others, or as if only selected teams could use a designated hitter. The fundamental issue, however, is that there is just not enough talent or money to place top-quality people in all of the universities that aspire to field a "team" of the first quality. Regardless of how quality is distributed and concentrated in higher education, it's clear that everyone can't finish in first place. Thus, as many institutions across the country aspire to an enhanced research status, we need to consider how many teams can really compete in the Nanotechnology League or the Molecular Biology League. How many "Top 10" or "Top 50" universities can there be? If you believe the university-generated news releases and development brochures, the answer seems to be something like 200. Yet for many public universities, in marked contrast to the winner-take-all nature of baseball, the most realistic goal may be to fill niche markets in research through specialized centers of excellence, rather than to aspire to become fullfledged research universities with world-class programs in everything from
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The Chronicle: 3/12/2004: What If the Yankees Were Run Like a Public University?

astronomy to zoology. One example of that type of success is the University of Texas at Dallas, which has built first-rate departments of electrical and computer engineering, although the campus does not have departments of mechanical, civil, or chemical engineering. The university's excellence in electrical and computer engineering recently prompted Texas Instruments Inc. and the State of Texas to make major new investments in the campus's research-and-development capacity. The Dallas campus is now poised for a new stage of broader academic development -- but its greatest strength continues to lie in the niche that it has already created and filled. Further, to evaluate realistically how one competes in either the baseball or the higher-education arena, one must work to eliminate hometown bias and the peculiar worldview revealed by news releases and cast a cold eye on performance itself, measured as objectively as possible. Accountability and productivity are as important in higher education as in baseball, even if higher education lacks an official scoreboard, the crispness of a win or loss, and the endless statistics gathered by baseball fanatics. If the primary goal is educating students, institutions should report on the experience and success of students: Do they stay in college? How long do they take to graduate? Have they learned what they should have? Do they get hired when they seek employment? And institutions that also have research missions should report on the success of their faculty members: What level of research support do they attract? Do they achieve major honors and awards? Do they obtain patents and create companies based on their discoveries? For public institutions, engagement with the community is critical: What is the university's economic impact in terms of revenues and jobs created? What is the level of private support from the community? Are citizens aware of and satisfied with the institution's activities? Ultimately, higher-education institutions need to develop accountability systems that match their missions. We wouldn't use football statistics to measure the achievement of baseball teams. Other parallels between baseball and higher education are worth drawing. Is the ball livelier than in the past? (Is there grade inflation?) Are the players as good as they used to be? (Are the high schools adequately preparing students for college?) Are changes in equipment, training, and diet making the game less of a challenge than it used to be? (How much writing is demanded of college students? Must they take a foreign language?) Are the players really committed to the game or just to making money? (Are the students genuinely interested in an education or just there to pay their dues and get a good job?) Is baseball being "sold out," with its dependence on the patronage of large commercial entities? (Is higher education too cozy with a private sector that it depends on for donations and research support?) It is clear that no one would want to run a baseball team the way universities are run today. It is also obvious that we should not expect or want universities to be
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operated like baseball teams (although professors and administrators may find baseball's salary structure intriguing). Higher education is a public good; we care far more about access to higher education than about access to baseball games. The stakes are far higher for culture, economic development, personal careers, and democracy. Students are not fans but participants in the enterprise -- more like players -- and their success is a joint effort of the institution and the individual's tenacity, diligence, and intelligence. And -- although it may be heresy in some circles -- nations are not judged by the quality of their baseball teams. The analogy with baseball, like all analogies, can be carried too far. But it exposes a critical observation: No sensible person would run public universities the way we do in most states. Overregulation chokes higher education's creativity and flexibility and, in many cases, prevents universities from adopting policies that further their strategic goals and their ability to provide high-quality programs to their communities and states. A new approach, one that emphasizes freedom, service, and accountability, would make more sense. If these thoughts on baseball and higher education have helped make the current reality of university finance and governance seem just strange enough to be understandable in a new way, I will have achieved my purpose. In today's highly regulated and competitive environment, those of us in higher education need to gain perspective on where we are and where we are heading. Otherwise we may find ourselves increasingly in the unfortunate situation where, to quote Yogi Berra, "We're lost, but we're making good time." Mark Yudof is chancellor of the University of Texas System. http://chronicle.com Section: The Chronicle Review Volume 50, Issue 27, Page B7
Copyright 2004 by The Chronicle of Higher Education

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