For the free exchange of ideas

October 2017 issue

Corporatizing college

The story of ideological divide at Ithaca College

By Justin Henry

"People over profits!"

This has been the rallying cry of faculty unions allied with tenured professors across the United States in retribution against the “corporatization of higher education”. At the “corporate” college, the visions of traditional scholarship and teaching are compromised. Students are now customers purchasing a commodified college experience from administrative executives; professors, whose crafts were once the soul of a college’s operations, are relegated to mid- and low-level employee-status.

It is worth noting that most independent colleges like Ithaca College are technically corporate—a legal status which means they are viewed as one entity under the law. However, for critics of the “corporatization of higher education”, colleges and universities have begun to act like for-profit businesses rather than humanistic centers of learning.

The majority of colleges in the U.S. are nonprofit institutions, meaning they are driven by an altruistic mission statement rather than the incentive to maximize profits for shareholders. But as administrators have modified their college's operations in response to unsteady student enrollment, traditional scholars point to uncanny resemblances the modern university bears to a business conglomerate. The result has been grassroots revolts against an aloof administrative class by faculty whose departments have often been the price paid for financial sustainability.

But what does the “corporate” university or college look like?

Take Ithaca College as an example, whose evolving trends during the last ten years serve as a case study for the modern college’s adoption of a “corporate” culture. These trends include: reliance on tuition income, declining student enrollment, increasing reliance on contingent faculty and investments in features which make the college more “marketable” to prospective students.

At the corporate college, all campus community members are stakeholders: administrators “invest” in innovative educational programs in the hopes they will yield tuition revenue and donations from alumni. Students “invest” tens of thousands of dollars per year in a degree which they hope will settle their debt after graduation and yield them a profitable career. However, with some degrees offering significantly higher chances of success in the job market, many liberal arts programs receive less support from the annual budget.

The ideological split is a result of the administration's free-market approach to the operations of higher education, a sector of society whose inhabitants refuse to think of it in capitalist terms. How can one quantify the value of a well-rounded education?

Because the virtues of liberal arts learning cannot be quantified in terms of investment and payoff, the corporatized university devalues classroom learning in favor of professional training, according to many professors of the humanities. Thus, the modern college is turned into a glorified trade school with well-furnished gym facilities.

“We do not have to submit to the neoliberal ideology that turns everything and everyone into a disposable commodity, and in the process corrodes the very foundations of our society,” Ithaca College Faculty Union member Tom Schneller wrote in commentary submitted to The Chronicle. “These forces are inevitable only if we fail to resist an unsustainable status quo, if we listen to those who tell us to give in and give up. By doing so, we would betray not only the future of this institution, but that of higher education as a whole.”

To understand how this “corporate” culture took hold, it is important to understand the finances of higher education—where a college’s money comes from and where it all goes.

Like many independent, nonprofit colleges, Ithaca College maintains a delicate balance between three sources of income: student expenses, charitable donations and payoffs from the endowment, which is the college’s savings fund.

Because the college is dependent upon student expenses - tution, fees, room and board - for 91 percent of its total budget, any unexpected decline in enrollment takes a major toll on the college. The college reserves 1-2 percent of its operational budget every year to respond to the ebbs and flows of student enrollment called the contingency fund.

As a tuition-driven institution, the college funds academic programs somewhat proportionally to student enrollment. This is why the administration was so resistant to the contingent faculty union’s demands of increased compensation and longer contracts. Because Ithaca College is almost entirely dependent money from students and families, Provost Linda Petrosino said contingent position allows for the college to respond to the ebb and flow of student enrollment.

In the graphs below, stratified by academic departments for the 2011-2012 academic year, notice how student enrollment all but mirrors allocations from the budget.

Ivy League institutions with multi-billion dollar endowments and wealthy alumni networks don’t have the same problem of tuition dependency. Take Cornell University, for example, which is dependent on tuition and fees for only 24.8 percent of its 3.5 billion-dollar budget, according to the budget for the 2014-2015 academic year. With endowment payout and donation income totaling over 4 hundred million dollars, Cornell supplies the majority of its expenses with funds that don’t rely on student enrollment.

Dependence on enrollment sets the stage for Ithaca College’s investment innovative academic programs and low costs of admission with other colleges of similar size and standing like Hofstra University and Providence College. Such competition results in the college’s investment in programs which make it more “marketable” to prospective students.

Additionally, the Office of Business and Finance, which has seen three different leaders since 2013, has made efforts to maintain low tuition and a high discount rate, since the college has found them to be its greatest appeal to prospective students. For the 2017-18 academic year, the discount rate is set at 45 percent, according to the budget. This means the college does not receive nearly half of the income from tuition and fees it would if each student paid full tuition.

In order to liberate itself from enrollment dependency, the administration has made efforts to diversify its income by courting donors and adding funds to the endowment. Healthy colleges regularly depend upon charitable donors, especially alumni, which for Ithaca College has led to the establishment of the college’s most richly endowed programs—for example the Park School of Communication and the Park School for Business and Sustainable Enterprise.

Ithaca College isn’t alone in its attempt to keep tuition low and raise discount rate; IC’s efforts correspond to a similar nationwide trend, according to a study by Cornell University Economist Ronald Ehrenberg entitled “American Higher Education in Transition”. At all but the wealthiest institutions with the most economic freedom, the average discount rate climbed by an average of 26.7 percent in 1990 to 42 percent in 2008, according to Ehrenberg’s study.

Due to sharply decreasing rates of student enrollment in recent years, the narrative for the 2017-18 academic year budget predicts the college will be left with only 233 thousand dollars after its expenses by the end of the 2017-18 academic year, compared previous years when the college’s net revenue exceeded 10 million dollars.

As the budgets become tighter, nonprofit funding for higher education becomes a world without any final solutions, only infinite trade-offs, as expressed by this quote from the budget narrative for the 2009-10 academic year, written in the midst of financial turmoil:

“No matter the ultimate outcomes, there will be those who feel we raised tuition too much, financial aid not enough, that our employees are being asked to sacrifice too much by our not providing for a salary increment.”