More spending doesn't always equal better quality

Quality instruction and scholarship clearly require a significant investment of resources. However, the relationship between cost and quality is not always linear. In some cases, additional investment may not increase quality, particularly if those investments are not targeted appropriately. In fact, excess spending may actually reduce quality, as is the case of smaller class sizes resulting in reduced classroom interactions.

Three models for the cost-quality relationship

Three models for the cost-quality relationship

The high cost of comprehensiveness

A major driver of increasing academic costs is the proliferation of specialized academic offerings. Colleges and universities add new courses, new academic programs, and new departments without reducing options that no longer attract students or align with the institution’s core mission. As a result, they experience costly excess capacity in some courses and programs even as they struggle with bottlenecks in others. Universities that add specializations during periods of enrollment and revenue growth often find they cannot maintain quality across so many offerings and specializations. In addition to driving up academic costs, maintaining low-demand offerings also increases administrative costs and diverts funds from higher-impact programs that require additional investment.

Key benchmarks you should review before discussing class size

The Long Tail
Bachelor's Degrees Granted by Major, Three Sample Institutions

The Long Tail

Proliferation drivers

While the proliferation of specialized offerings stemmed from a desire to increase diversity and quality of academic offerings and attract a wider range of students, many institutions now recognize that the cost of proliferation has outstripped the value of choice. Below are the three key drivers of proliferation at colleges and universities.

  • Academic disciplines: Faculty training, hiring, and tenure practices encourage specialization in both research and teaching

  • Incremental budget models: Budget models typically incentivize academics to add new offerings without reducing the old

  • Competition for students: Universities believe that adding more specialized programs will attract students and prepare them better for careers

Strategies to improve budget behavior and reallocate meaningful resources

Gainsharing can incentivize units to find cost savings and return resources to central administration, but isn't always easy to implement.

This study outlines two options for structuring a gainsharing program as well as strategies to help you transition to a more strategic budget surplus policy while mitigating campus resistance to change.

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The Periodic Table of Budget Model Elements

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