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Chairman Quern to higher ed:
Reallocate resources

IBHE Chairman Arthur F. Quern
Photo by Richard Foertsch/Photoprose

IBHE Chairman Arthur F. Quern

Last fall Illinois public universities submitted to the Illinois Board of Higher Education (IBHE) requests for increases of more than 20 percent in state funding. The magnitude of the increases, coming on the heels of budget cuts for almost everything except education, struck IBHE Chairman Arthur F. Quern as unrealistic. Quern responded by launching an initiative to look at priorities, quality and productivity in higher education.

On October 1 Quern wrote to all public and private university and college presidents and to the heads of public university systems: "As we confront the clear reality that neither the taxpayer nor the tuition payer can continue to accept escalating increases in the costs of higher education, we will come face-to-face with the need to make choices. We must choose to support quality and eliminate less effective programs. We must choose to demonstrate that every current dollar spent achieves the maximum impact by improving education before we ask for additional dollars to expand our services. Confidence in all of us as leaders and advocates will be based on our setting priorities and acting on them, not on hearing the hollow advocacy of reflex cries for more money."

Quern's words and the new initiative represent a higher profile and more aggressive role for the IBHE. The board, comprised of 10 "public" members appointed by the governor and seven representatives of colleges and universities, coordinates activities among institutions and makes recommendations to the governor and state lawmakers. Some in higher education see the board chairman's efforts as a threat. Still, Quern persists.

The attack on the status quo in higher education comes from an unusual quarter. Quern is no slash-and-burn conservative and does not damn higher education the way many critics damn government. Quern has 15 years of government experience working with Govs. Nelson D. Rockefeller and James R. Thompson, two Republicans noted more for spending excesses than their conservatism.

Ironically one of Quern's first jobs in government was tied to higher education. As an aide to Rockefeller he was involved in the expansion of the State University of New York system. Quern went on to Washington with Rockefeller, stayed on with President Gerald Ford, then came to Illinois to run the Department of Public Aid. He was Thompson's chief of staff from 1978 until 1982, helping steer Illinois through the last recession.

Quern left government in 1983 to join Rollins Burdick Hunter Co., a Chicago-based insurance brokerage and risk management firm. He is chairman and chief executive officer of the firm, a subsidiary of the Aon Corporation. In 1990 he served on Gov. Jim Edgar's transition team and was one of the authors of the report that warned of difficult financial times ahead.

Quern says that he took the IBHE chairmanship knowing that state resources would be scarce and that Edgar was committed to education. Not until he saw the September budget requests did he understand how far apart he and the other leaders of higher education were. "The letter was not in my head when I took the job, nor was the intensity that I now feel about the need for this," he says.

May 1992/Illinois Issues/11

Public university revenue and spending in 1990 dollars, fiscal years 1980 and 1990
(dollars in millions)

fiscal year 1980 fiscal year 1990 percent change

instruction $531.8 $475.5 - 10.6
research 89.0 128.2 + 44.1
public service 52.1 59.0 + 13.2
administration 229.7 293.0 + 27.6
student support/services 52.1 56.9 + 9.1
operating/maintenance 196.0 194.3 - 0.9
other support 106.4 139.0 + 30.6
other 1.4 0.3 - 74.5

general funds $1,065.7 $1,030.0 - 3.3
tuition and fees 185.7 304.1 + 63.7
other 7.2 12.1 + 68.2
Source: Illinois Board of Higher Education.

Today he says that higher education does a good job: "I think there is a very high quality to the education, both public and private, that is available in Illinois." And he acknowledges that there is no crisis yet, but he says that is all the more reason to act: "It takes 10 times as much resources to recover a reputation than to protect a reputation." And the solutions that government implements when faced with crises are not always well-thought-out.

Still, Quern says that the world has changed since Rockefeller built the SUNY system. Then, an expanding economy provided the money, and public demand created the support. Today, the money is in short supply, and public confidence in government has waned.

Quern believes some of public confidence in higher education has eroded. In talking to individuals Quern says he finds some people questioning both the price they pay for higher education and the product: "They are not sure the same value is there for the dollars that used to be there." He says that turf battles among universities have hurt higher education's image. Others in the education community suggest that public confidence has been hurt by large classes, students who cannot get the courses they need and professors who spend relatively little time teaching or who turn duties over to graduate assistants.

Because of the reduced confidence, Quern thinks that higher education's first priority must be spending well the money it already has, before seeking more. In the current year Edgar has proposed a $1.6 billion budget for higher education, with no increase in state funding. Elementary and secondary education saw a $30 million increase in Edgar's proposed budget. Under the traditional Illinois split by which higher education gets one dollar for every two given elementary and secondary education, higher education is being shorted $15 million.

Quern takes a big picture view of funding and cites underlying economic change: "The world of public finance is facing a whole different dynamic." Quern says that when Democratic presidential candidates talk about conserving resources and taxpayers begin to wonder about what they get for their money, things must change. The best that higher education can hope for is new resources that keep up with inflation. And to assure even that, higher education must demonstrate to taxpayers that it spends their money well.

Quern sees three other pieces to the challenge facing higher education. The first is increased demands, be they for traditional education or job retraining. Complicating the picture is that many who are entering higher education lack the skills that students have had in the past.

The second piece is accountability. Pressure on the state budget and higher tuitions have prompted citizens to ask about how well the money is being spent. Quern sees the push for accountability in higher education as the natural follow-up to the push in elementary and secondary education but says that the issue has been raised faster than the higher education community had anticipated. The third piece is focus. Higher education has gotten involved in many areas doing many things. Nobody quite understands what the mission is, Quern claims.

The four pieces of the challenge present the prospect of stagnant budgets at the same time that higher education is being called on to do more with students who are less prepared. And higher education must do more with less under ever increasing scrutiny from lawmakers and citizens. Quern finds the answer to the challenge in reallocation of resources.

He acknowledges that his is not a new idea and that universities are already grappling with reallocation but wants to see more disciplined and more aggressive reallocations. And he wants the effort to go beyond reallocation of growth, the traditional method of reallocation that says high-priority programs get bigger increases than low-priority ones, but everybody gets an increase. Instead, he says, low-priority programs ought to be eliminated to free up the money for those of higher priority.

The best that higher education can hope for is new resources that keep up with inflation

Quern is promoting this examination at all universities from the bottom up instead of from the top down. He says that individual institutions are best equipped to deal with questions of what they do best. Quern uses the example of teacher education programs, now offered at 11 campuses across the state. He explains that a state commission or the IBHE might decide that only four or five are needed and designate which universities would offer them, but preferable to Quern is to have the universities decide themselves:

"I'd rather have those 11 places look at it and have maybe three or four say, 'We don't do this very well, by some objective evaluation. ... But we do this over here very well, and we should build around it.' "

12/May 1992/Illinois Issues

Such reallocations are the kinds of thing that business has had to undertake in recent years, deciding what it does well and how it can go about its job more efficiently. His own firm, Rollins Burdick Hunter, on the one hand consolidated 55 U.S. offices into 43, while on the other acquired a European brokerage to reach foreign markets, Quern says.

Two things need to happen to allow the bottom-up proposal to work. First, Quern says that if institutions are to be held accountable, they need to be given more decisionmaking authority. Second, he says that the traditional governmental approach, if you don't spend the money you lose it, has to be modified to allow institutions to reallocate instead of lose their savings. So far, Quern says that he has converted few in higher education to his way of thinking: "I've got a lot of interested parties looking at the catechism, but nobody who's converted yet." He believes that universities are reluctant to change because they don't really believe everyone will change. "If they're going to give up sin, they want others to give up sin."

And there has been criticism of the numbers that IBHE has used. Quern sees nit-picking over the facts as pointless, when it is clear the state lacks the resources to put more funds into higher education. He also says that he has been disappointed with reactions that he should be an advocate and fight for higher education's budget share.

Publicly, the higher education community endorses Quern's ideas. "I think there's a general feeling that the issue he's attempting to address is a valid one.... This is an issue that's not going to go away," says Thomas R. Lamont, president of the University of Illinois Board of Trustees.

Stanley O. Ikenberry, president of the University of Illinois, characterizes Quern's tenure as productive and says that Quern's provocative questions are valuable. Thomas D. Layzell, chancellor of the Board of Governors, calls Quern's effort "the right initiative at the right time." Roderick Groves, chancellor of the Board of Regents, says, "We welcome the support of the Board of Higher Education."

Layzell says that while the initiative is the right thing to do, it is nevertheless difficult for the universities. He says that university types are basically optimists and believe that someday there will be more money. But, Layzell adds that it is better that higher education undertake reallocations on its own than to have them imposed from outside.

Groves sees pitfalls in deciding which programs are dropped and which are continued: "It looks a lot better from the outside." Recently he says that Northern Illinois University decided to drop a master's level library program because of budget problems and increased requirements for accreditation. The dropping of the specialized program has produced a storm of protests, Groves says, because the program was one of a handful offered by public universities. Groves predicts similar complaints if there are cuts to teacher education programs, offered at most campuses. While it may be more efficient to offer those at a few universities, there will be local demand for all the programs. In short, he says, programmatic reductions are "easier said than done."

Even Layzell, who describes himself as Quern's strongest supporter among the four system heads, sees a limit to the reallocations and the eventual need for more state money. "In the end the state is going to have to increase the income tax," Layzell says. Ikenberry shares a concern that the emphasis on reallocation will cause the legitimate need for more state money to be overlooked.

Privately, some in higher education downplay Quern's initiative, suggesting that his push simply reflects reallocation that is made necessary by a shortage of funds.

The reallocations that Quern champions will force difficult decisions on campuses. To help institutions deal with the issues IBHE has come up with a 25-element productivity guideline to use in reviewing programs, including:

Review programs that have excessively high or excessively low enrollments. High enrollments may cause large classes, closed course sections and high student-faculty ratios, threatening quality. Low enrollments are inefficient and expensive.

Review programs where projected new jobs are low and where job placement, graduate school admission and pass rates have been low.

Reduce specializations to be sure that institutions can be both economical and offer quality courses. The IBHE noted one graduate program that enrolled 30 students but had 15 subfields and 70 courses.

Examine staffing patterns to be sure that academic quality is maintained. The report notes that part-time faculty, who have assumed a larger share of the workload, are not available for the academic advising and other functions that students may need.

Consider shortening vacations and semester breaks so that students can pursue course work year-round and facilities can be better utilized.

'If they're going to give up sin, they want others to give up sin'

The only legislative development related to productivity thus far may end up diverting attention from Quern's productivity campaign. Legislative efforts to do away with the Board of Governors and the Board of Regents prompted Gov. Edgar to name a task force, headed by Quern and Lt. Gov. Bob Kustra, to make recommendations by June 1 on whether the various governing boards should be retained and whether administrative costs can be trimmed.

Quern says the issue ought to be handled straightforwardly. The functions of the boards must be reviewed and it must be decided whether someone else could handle those duties, he says. And any change must consider the impact on the other units of the system of systems.

The dilemma facing higher education is a national one and affects both public and private institutions. Quern is pushing for improved management of universities, where skills in fundraising, advocacy and politics have been the most important. His reading of the changing era of public finance is correct, and government and public universities must change too.

May 1992/lllinois lssues/13

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