Three Ideas from Louisiana Legislature on How to Reduce Their Higher Education Budget

Budget crisis recently hit Louisiana in the tune of $1.6 billion dollars with $300 million projected to be taken out of higher education (1). Lawmakers are struggling to determine which actions they can take that will lessen the burden and avoid painful cuts to educational quality. The methods they choose will likely be watched closely by other legislative bodies who are struggling with some of their own budget issues.

Ideas can be good or bad depending on its impact. In the complex higher education system not every idea works well in isolation. There are multiple factors that come to play in the complex web of political, financial, and market oriented aspects of higher education. Sometimes it is better to use multiple methods to approach a problem and adjust thereafter when needed. 

Considered three ideas proposed (2):

Tax Exemptions: One of the proposals is to remove tax exemptions for business. In the short run it will likely work but many business come to rely on those tax exemptions and new businesses will consider these exemptions when deciding a location to start a business. he end result could be loss of business to other states and cities.

What could work better is adjusting tax exemptions to support higher education. Instead of removing them to shift short term money to colleges it may be a more comprehensive solution to switch tax exemptions to those organizations that support higher education in some way; or some variation of reducing and shifting tax exemptions. It would help businesses that hire graduates, collaborate in research, provide services, or in some other way encourage a self-sustaining educational system.

How might this help higher education? As companies receive exemptions they will factor these ideas into their investment decisions. Investment decisions related to higher education service, products, or quality can reduce costs and better hedge the advantages of having universities in the area in the first place. It is not an immediate solution but it will strength the university system to be more competitive in the future. 

Variable Price Per Program: In this method it is hoped that by allowing the free market to work those programs that have worth more can charge a higher price than those that don't. Medical programs, engineering, or any other high value degree can charge more to attend and therefore reduce the reliance on state aid.

The problem with this method isn't that programs have inherently different value on the market but that programs will out price what the average person can possibly afford. Those who come from stronger financial means will be pushed into high value programs because of pay and not ability. Many of our best and brightest will be left behind and blocked by social class.

Moreover, if programs can go up in value they should also go down in value. Maybe that is appropriate. I would hate to have less poets, philosophers, and artists in society only because their programs aren't worth anything on the market but that may be life. Maybe some of these art programs shouldn't be charging the amount of money they do but that is a broader question. 

Private Contractors for University Service: Privatization is a popular method of lowering costs. Expenses associated with unionized positions that have high pay and great benefits can eat up budgets. Privatization offers an opportunity to lower those costs by transferring the jobs to a private contractor that can specialize in certain competencies with lower costs; albeit with lower wages.

Outsourcing is helpful in balancing budgets but is likely to create a lot of anger and seen as a direct attack on unions. Ultimately, without some type of change it is likely closing of programs, lay offs, and other adjustments will be made. Vested interests won't be excited about loosing even more government paid positions.

There are only a few short term solutions and all have to do with draconian cuts. It can be extremely difficult to cut so deep and quick. One of the best ways to avoid unnecessarily damaging one facet of higher education is to do a combination of a number of methods but at much less intensity. Instead of trying to take too much from one area, such as outsourcing, it may be possible to spread it around creating more of a collective adjustment.

Another solution is to adjust the higher education model to ensure that universities become more sustainable by finding new uses for facilities, starting online programs, and adjusting strategies find ways to save and earn money. It is much better to start applying the financial screws to force change now versus having a larger collapse down the road.

Lower Oil Prices and Optimism Fueling Consumer Spending

The 4th Quarter saw a slow down of growth from 5 to 2.6% but consumer spending popped up 4.3%. This is good news as 70% of the economy functions from consumers spending. Growth might have slowed in the 4Q but people are more optimistic about their future and this can create positive signs for economic growth in the first half of this year.

According to Sam Bullard a senior economist at Wells Fargo, "Sharply lower oil prices do present downside risk to business investment, but accruing benefits to the consumer in the form of lower gasoline prices should increasingly offset the near-term drag(1)."

As consumers save money at the pump and heat on their homes they are naturally going to spend that extra money somewhere. Americans are not great savers. Nearly 75% of people live pay check to pay check while only 25% have enough to cover 6 months of expenses (2). 

If we aren't going to save that money most likely it is going to be spent somewhere. We love to eat, buy clothes, go to the moves, and take trips. All that extra money will make its way into the market to fuel sales and great economic activity. Watch the restaurant, retail, and beauty markets next quarter.

It isn't all about the money saved from oil as this doesn't consume the largest percentage of American budgets. As optimism rises Americans simply like to spend more money. It is the psychological effect of feeling good about one's life and prospects for the future.

Oil isn't the only thing working in American's favor as hiring is increasing and wages are starting to rise. A few percentage points in income could lead to even more spending. As the economy moves forward we will find that the combination of events coming into play at different times will hopefully keep us happy, optimistic and motivated.

Developing Learning Teams-Lessons from the Military

Teamwork is the bread and butter of creating stronger organizations.  Research in military teamwork and leaders can help organizations develop higher levels of functioning teams that learn and develop with each new challenge. Transformational leaders matched with learning teams can produce some of the highest outputs in performance. When developing your next team you will be wise consider a few lessons from the services.

It is first beneficial to understand what a learning team is. Learning teams are capable of taking in new information and adapting to the environment around them. When these teams are capable of changing to stressors they become stronger and are more capable to solving problems in a ways that help them survive.

According to a study on military teams in challenging situations  a transformational leader matched with a learning team can create positive adaptation (Di Schiena, et. al, 2013). Adaptation being the process of developing to a higher level of functioning through new knowledge, higher mental models and shared vision.

New challenges bring more opportunities to learn, integrate the information, and put it to practical use. As teams stay together and face these challenges they also begin adjust themselves to handle new situations when they arise. Transformational leadership provides that extra push to keep the team changing and moving in the same direction.

The study helps business leaders understand that team development is more than throwing a bunch of people together to find a solution. Developing a strong team requires facing challenges and then adapting to those challenges. Each successful adaptation creates a stronger business team that can handle more difficult situations.

Teams don’t always adjust without some level of guidance. When put under major pressure a team can dissipate into chaos. Transformational leaders help to ensure the team stays pliable and continues to adjust without disintegration. Businesses should connect teams with transformational leadership to help them build new models on how to compete.

Di Schiena, R., et. al. (2013). Relationship between leadership and characteristics of learning organizations in deployed military units: an exploratory study. Administrative Sciences, 3 (3).        

National Innovation Through Online Scholarship

Research is an important component of both online and ground based professorship. As matter of concern, trying to differentiate the two is dangerous as more universities move online and adjust the expectations of professors to fit online modalities. The institutions of higher learning have an important contribution to furthering knowledge through discovery and it makes no difference what modality they use. Removing this function can slow the pace of development for the nation by slowing new discoveries and innovation.

The nature of that scholarship may be a little different than that which we find in the laboratories of hard sciences. The far majority of new ideas and scholarship activities don’t require a formal laboratory setting and often can be conducted in virtual format. Modern technology allows for data collection, research, and scholarly writing on a new level. 

It could be argued that online tools could allow scholarship to flourish by connecting people, institutions and ideas to expand the body of knowledge. As more research moves online, and virtual libraries expand, information will move from theoretical conception to the practical output as decision-makers become more aware of existing discoveries.  Awareness and implementation in the private sector helps grow the nation.

It wasn’t that long ago that only printed forms of research were available and unless a person paid for, was a student, or otherwise provided with a library card to some a large university they would not be able to engage fully in scholarship. Small schools and adjunct faculty simply were not much part of the process. This appears to be changing as information becomes more available and consolidated in online libraries. 

Online scholarship can be theoretical or applied; perhaps a bit of both. On the theoretical side a mix of practical experience and scholarly writing can lead to new and profound discoveries. On the applied side those theoretical discoveries are implemented to create practical examples of the theory at work. Practical academics, or pracedemics, can do both research and practical implementation.  

Online education doesn’t need to damage, destroy, or negate the function of research in a professor’s life. As a practical matter online education can encourage higher forms of scholarship and at a faster pace than what was seen in the dusty halls of manual libraries by exchanging ideas and information for greater public consumption. The very function of research in today’s society can be enhanced by online education.

The Importance of Information Flow for Business Development

The flow of information helps entities integrate operations and services that lead to a more efficient system. It doesn’t matter if we are discussing a single company, a group of companies, or an entire hub of economic activity. The process of encouraging proper information transfer and collaborative problem solving is important for moving an organism to its highest state of existence. 

Imagine for a moment how well your body works if your feet didn’t communicate with your brain and your brain had no way of talking to the hands. You would have a difficult time walking, grabbing items, and otherwise functioning. You would eventually starve and pass away. The same occurs in companies and economic hubs when elements can’t communicate together. 

Glazer in his book Smart vs. Dumb Service Strategies: A Framework for Ebusiness Intensity discusses the importance of information flow in developing an entity for higher levels of performance (2001). He makes three distinctions where information integration can be beneficial: 

Downward flow: The flow of information between companies and customers (i.e. the in and outflow of information). 

Upward Flow: The flow of information between suppliers and the company (i.e. efficient operations by integration of networked operations). 

Internal Flow: The flow of information held internally by a company (i.e. collaboration of internal elements). 

Within any entity there is a need to ensure information to and from stakeholders is being used to improve the overall system.  That information needs to flow includes customer to company, company to supplier, and department to department.  Without that ability the system becomes dysfunctional and non-competitive. Improving the flow of information can make a difference in an organism’s ability to effectively adjust to its environment and succeed. 

How that improvement in information flow occurs depends on the type of organism but generally relates to meetings, positive relationships, egalitarian structure, information postings, open cultures, surveys, collaboration, and promotion. The organization must fully and functionally accept the inherent nature that new information should be encouraged, accepted, and capitalized on. 

Glazer, R. (2001). Smart vs. Dumb Service Strategies: A framework for EBusiness Intensity. New York, Armonk E-Service.