Accountability in Higher Education: Markets Work Better than Regulation

(And, Higher Education Needs to Look in the Mirror...)

University accreditation processes are now in the crosshairs of the Trump Administration for “being lax in ensuring academic quality” and “improperly focused on compelling adoption of discriminatory ideology”. Remaking these important, but arcane, processes joins a long list of other government interventions in a push for more accountability on the part of higher education.

The message is clear: it’s taxpayer money you are spending. If you, higher education, can’t get your house in order, the government will do it for you.

Continuing our series on the current battle between federal and state governments and higher education, we’ll look at accountability this week. What should universities be held accountable for today – and how are they currently held accountable? Why isn’t the blizzard of laws, policies, standards, and requirements that already constrain university behavior enough? Where should government and universities focus their efforts to ensure higher education delivers on its responsibilities to society?

Accountable for What?

Let’s consider six social responsibilities of higher education.

• Student Access, Opportunity, and Outcomes: Can students regardless of background enroll and succeed? Are students graduating? Is financial aid used responsibly while minimizing student debt levels? Are students ready for the work world and employed in their fields at competitive salaries or prepared for success in graduate/professional programs?

• Academic Program Quality: Is the curriculum relevant/forward-facing and does it develop in students the knowledge, skills, and abilities needed for successful careers? Are faculty and staff appropriately credentialed, sufficient in number, and prepared to deliver a quality experience inside and outside of classrooms?

• Research and Knowledge Creation: Is knowledge being advanced in ways that benefit society? Is the research enterprise effective, efficient, ethical, and responsible?

• Appropriate Financial Management: Are university resources stewarded responsibly? Is the total cost of attendance carefully managed, with decisions made to keep cost as low as possible while maintaining program quality?

• Legal Compliance and Transparency: Is the university following all relevant legal requirements, including use of public funds and with respect to non-discrimination. Are decision-making processes and reporting to stakeholders appropriate and transparent?

• Free and Open Inquiry: Does the university culture respect and support open inquiry, freedom of expression, and civil discourse?

Universities differ in their missions and so will attach different weights to these different responsibilities. Some schools emphasize providing access to underserved populations as their top priority. Others emphasize the teaching mission over research output, others the reverse. Some put an enormous weight on keeping cost of attendance down, while others work to maximize the quality of faculty and their teaching and research output, regardless of cost. And of course, legal compliance and transparency can look different for public and for private universities.

Regardless of these differences in mission, we believe that maximizing student outcomes is the single most important responsibility for all institutions of higher education, and yet, the one for which accountability is weakest.

Money for Nothing and Checks for Free?

With all due credit to Dire Straits, there is a clear implication of recent political interventions. Politicians seem to believe that higher education is currently free to operate without constraint, accountable to no one for delivering on its responsibility to society.

Well, that was certainly not our experience when we were administrators! Below we outline key stakeholders holding universities accountable for the social responsibilities described above.

• State governments: For public universities, states allocate funds, but they require significant accountability in return around finances, academic program quality, and decision-making transparency.

States approve tuition rates and some circumscribe access by limiting the proportion of out-of-state students a university can enroll. They set credit requirements for graduation and mandate how transfer credits are handled. In about 30 states, performance funding models tie higher education funding to state priorities including graduation rates and production of certain majors. Finally, they have the ultimate accountability lever, naming governing boards either through direct political control or through an electoral process.

• Federal government: For nearly all universities, the Feds are integral to financial operations, providing subsidized student loans and Pell grants, and directly funding university research. In exchange they require significant accountability around finances, the direction and conduct of research, and legal compliance.

Federal funding agencies exert a great deal of control over the research questions that universities can answer through their calls for proposals. Granting agencies decide who gets funding and then, for each and every grant, hold universities accountable to deliver what was promised on the timeline it was promised.

Universities must comply with all federal policy related to discriminatory behavior including (the continually shifting) Title IX requirements and the increasingly scrutinized Title IV. Eligibility to receive Title IV funds (federal financial aid) requires a university to be authorized by the state, accredited, and certified by the Department of Education (while it still exists…). FERPA, The Clery Act, Campus Sex Crimes Prevention Act, Drug-Free Schools and Communities Act, Violence Against Women Act,…, mandate faculty and staff training and reporting to protect student privacy and safety.

The Higher Education Compliance Alliance documents more than 300 different federal statutes with which universities must comply – we are not an under-regulated industry.

• Accreditors: Because access to federal funds requires universities to be accredited, accreditation bodies are empowered by federal law to set standards around academic program quality, student success, and financial resources.

Universities and some specific programs with field-specific accreditation go through an involved process to demonstrate they have met those standards on some regular cadence (e.g. the Higher Learning Commission, our university’s accreditor, uses a 10-year cycle; business schools through AACSB every 5 years)

These reviews are intensive and expensive because they include documentation of faculty credentials (what degrees they possess, what research did they produce), assurance of learning (how do you know that students actually learn what you teach), student graduation outcomes, governance processes, and resource sufficiency.

More controversially, accrediting bodies are under fire for an emphasis on DEI in curriculum and faculty credentials that aligns poorly with Trump administration priorities.

• Ourselves: Universities have plenty of their own internal accountability processes related to all six responsibilities. Colleges and departments get reviewed with resource allocation based on those reviews. Faculty promotion and tenure processes are extensive (and exhaustive). Annual merit-review for faculty and staff brings another element of individual accountability. Universities implement a wide range of legal compliance measures as required by regulators. (Reminded about all these internal accountability processes as we write this, it is a true miracle that any research and teaching actually gets done…)

• The Market: Perhaps the biggest accountability lever for higher education is as American as apple pie: competition. Universities compete (aggressively) for a declining number of traditional college age students – students and their families have choices. Universities compete (aggressively) for talent – the very best faculty can take a job literally anywhere.

Faculty compete intensely for grant funds from the federal government, foundations, and industry – fewer than 2 in 10 proposals are funded in many programs. Faculty compete in the marketplace for ideas and getting published in top journals is ridiculously competitive: acceptance rates for the top five economics journals range from 3-8%, and the vast majority of papers are never even submitted there because they have no chance.

Donors have many places they can invest their philanthropic dollars, and universities compete with those places. State budgets are constrained, so universities compete with all the other ways a legislature can invest taxpayer dollars – including in other higher education institutions.

Universities wither if they can’t attract students, hire great faculty, secure grant funds, capture donor dollars, and/or deliver something their state wants to invest in. They wither and increasingly they die. Historically death tends to be slow and painful in higher education but we expect the mortality rate to rise sharply given all the pressures on the sector.

No one should underestimate how powerful competition is as a source of accountability for higher education.

Where are Universities Falling Short?

Despite all this ‘accountability’, the government and more broadly, the public, doesn’t think higher education is delivering and wants more.

Judging from recent interventions, federal and state governments are not satisfied with what is being taught, who is being taught, who is being hired and retained, and the focus of research (or at least the results of that research). A lot of this is highly politicized and we think it’s hard for the university to be accountable to political actors on these dimensions without losing much of the value universities provide to society.

These political issues are only one of the public’s concerns. Other concerns held by politicians and the public focus on student outcomes: cost of attendance, student debt, completion, and preparation for their careers.

So much ‘accountability’, yet so much frustration at what higher education is (not) delivering - what is going on?

A few things strike us. First, accountability in higher education comes in many forms from many places. Given the many different stakeholders seeking accountability for any given responsibility, higher education faces a patchwork of rules, requirements, and standards. This raises a question as to whether higher education is actually being held accountable for the right things in any coherent, material way.

Consider two concrete examples. One, accreditation bodies emphasis on resource sufficiency means you’re more likely to lose accreditation for spending too little rather than spending too much. Two, compliance with state and federal regulations requires a literal army of lawyers, compliance officers, data analysts, training programs, all of which detract from, and raise the cost of, teaching and research.

So will the current barrage of governmental interventions actually improve higher education outcomes? It’s notable that increased ‘accountability’ as currently exercised is remarkably light when it comes to higher education’s first responsibility: student outcomes. The only external bodies that focus on student outcomes are accreditors and even they have been criticized for “vague, qualitative requirements”. (Still, that is better than nothing – and now the Trump administration wants to sharply diminish accreditors’ influence.)

This is not just about what ‘they’ are doing to ‘us’: we think higher education needs to take a deep look at whether it is simply complying with the rules as currently defined or truly delivering against its responsibilities to society – and there is a big difference.

A Better Way: The Role of Government

We think government could greatly increase university accountability by focusing on student outcomes and then letting the market for higher education work.

We have written on this idea before, but what if state governments collected detailed outcome data for every student enrolled in higher education? Then, students and their families could know, institution by institution, major by major, what completion rates were, what placement rates were, what starting salaries were, what debt levels were.

The market alone will bring accountability with such information freely available, but state governments could add another layer by linking such outcomes in a material way to higher education funding.

Building on this example, if governments want to promote innovation and productivity in higher education, why not take steps to make the industry more competitive, not more bogged down with even more rules and regulations. Getting more aggressive with outcome-based funding is one approach. Don’t tell higher education how to do things, tell us what you want. Reward us when we get it right, punish us when we don’t – but let higher education decide how it will be done.

Students who complete their degree? Graduates who are work world ready? Research aligned with state/federal priorities? Critics of such a performance-based approach will say every one of these ‘outcomes’ is fraught with unintended consequences and it would certainly take more data and careful thought to execute. But that effort by government to develop a robust way to reward performance in priority areas seems much more productive than dictating majors or trying to figure out if a faculty member in Food Science is doing their job.

A Better Way: The Role of the University

Outrage seems to be the first reaction from higher education in response to these questions about our performance. But, we need to take a look in the mirror. Regardless of the current political assault on our operating model, public trust in what we do has been on the decline for a long while…so there is more here than partisan politics.

No amount of complaining or pushback will solve the current crisis – though pushback and legal action is part of the solution, as is negotiation. Universities must get their heads around the fact that institutional autonomy and self-governance is a privilege – a privilege that can be taken away and one that must be protected and preserved through responsible discharge of the privilege. Harvard’s President put it this way:

• The work of addressing our shortcomings, fulfilling our commitments, and embodying our values is ours to define and undertake as a community.

For starters, we better take on (in a highly visible way) questions about our ‘political agenda’ – a recent Gallup poll found concerns about indoctrination, liberal political agendas, etc. made up the most important set of reasons Americans are not confident in higher education. That said, issues about cost, debt, retention, completion, and preparation are also major issues for our stakeholders and must get attention.

Refocusing on Our Core Missions

Turning to the more ideological points, we can’t self-sensor research questions or take only one side of a controversial issue. If we are to retain the privilege of self-governance, the public must be convinced that we are in good faith seeking the truth, and not some version of the truth constrained by faculty political beliefs or scientific bias.

We can’t ignore context when developing curricula. The work world is evolving, our students are different, and such context must be acknowledged as curricula are built. This means getting outside the walls of the academy, better understanding the needs of employers and the abilities and experiences of students. It means bringing relevant insights into curricula decisions, ensuring students are well prepared for successful careers.

Building trust and support for institutional governance and autonomy means more transparency. It means making data available to the public on outcomes that matter to them – placement and salary data as outlined above would be an example. It means sharing data we may not be proud of (i.e., completion data) and being forthright about what we are doing to improve.

Finally, accountability also means active engagement with the stakeholders we serve. Academic leaders spending time with elected officials, in communities, with parents/families, listening to concerns, acting on those concerns, and helping them understand the value that is being created. Being defensive isn’t going to cut it in this moment of crisis - this is no time to hunker down safely in the Ivory Tower.

The Role of Faculty

Perhaps most importantly, faculty can’t take the privilege of institutional autonomy and self-governance for granted. Faculty face severe time constraints meeting their teaching and research obligations. Participation in matters of institutional governance can be a residual claimant on time at best and left in the hands of a very few faculty at worst – a few faculty who may or may not represent the true voice of the institution.

We are in a different world today: there may have been a point in time when faculty could keep their head down and do their work, ignoring the winds blowing outside the university. Now, whether or not the university is seen as delivering on its societal obligations has a direct and in some cases, dramatic, impact on that faculty member’s world.

That means faculty (broadly) need to engage in discussions about core curricula, they need to pay attention to student retention and completion issues, they need to ask hard questions about student preparation for the work world, they need to be engaged in (and open to) efforts to find more efficient ways of doing things on campus.

A disconnect between the public and the institution is one thing. A disconnect between the public’s perception of the institution and what the broader faculty at the institution actually want/believe is a self-inflicted wound.

If higher education wants to retain the privilege of self-governance, faculty across the institution must engage fully in matters relating to the governance of the institution. This includes ensuring the integrity of the research enterprise, the relevance and balance of the curricula, and in general living every day the responsibility of seeking truth in a rigorous, academically honest way.

Next Week

In our final post in this series, we will offer up some questions that we believe should be on the minds of universities and their leaders as we head into the summer ‘break’. (Yeah, we know…) Thanks for reading Finding Equilibrium!

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Research assistance provided by Marley Heritier. Our thanks to Trent Klingerman for his helpful comments on this post.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.