Privatization of higher education services: Propositional pros and cons

The decline in and lack of state and federal monies for public higher education institutions and the limited amount of finances available from private sources, both foundation and individual contributions, has forced many institutions to privatize, or outside contract, many of their services. These services range from college food services (Eddy, 1977) to health clinics and hospitals (Bernstein, 1995), and counseling center (Philips, Halstead, and Carpenter, 1996). Even the curriculum is becoming sensitive to the privatization strategy; CD ROMS for complete courses are for sale and entire degree programs are offered through on-line education. There are advantages and disadvantages to privatization of higher education services. Are higher education officials proceeding without significant research and analysis of the pros and cons? Certain important propositions relating to these pros and cons are suggested in this article.

The decline in and the lack of state and federal monies for public higher education institutions, combined with the limited amount of finances available from private sources such as foundations and individuals, is forcing many universities and colleges to consider and implement a strategy of privatization of services and curricula as a method of saving money (Goldstein, Kempner, Br Rush, 1993). Privatization, or outsourcing of services, ranges from food services (Eddy, 1977) to health clinics and hospitals (Bernstein, 1995), and counseling services (Phillips, Halstead, and Carpenter, 1996). The curriculum is even involved in the sense that some universities and professors are marketing complete courses on CD ROMs while some universities and colleges are considering expanding distance education to the point of offering degrees on-line (Eddy & Buchanon, 1996). Although not exactly a new approach, contracting student affairs services is of such importance that administrators should consider more than just the bottom line. Privatization may save costs, but it has advantages and disadvantages (Drum, 1994). Are administrators aware of and considering some of the more critical aspects of both? This article explores, in the form of propositions, several of the important advantages and disadvantages that should be thoroughly examined prior to implementation of the privatization strategy. Propositional Advantages of Privatization University and college officials considering and implementing the privatization of activities on their campuses should weigh the following propositions:

Proposition 1. The contractor or provider will provide the product, service, or operation at a price that will result in clear and long term cost savings, other factors bearing consideration include convenience to students and quality of the service or product. Is cost savings the only bottom line? Proposition 2. The administration will deflect criticism toward a specific contractor or provider of services should it become necessary to increase revenues as a result of higher costs. Will university or college officials lose cognizance of or ignore cost increases and simply blame a contractor or provider?

Proposition 3. Management skills within the contractor's supervisory hierarchy as well as at the site where a particular service is activated will result in higher quality service. Is the management structure in the private sector likely to be of greater competence than that hired and working within higher education? A reason for this managerial gap, should such exist, may be that universities and colleges internal managers lack capital incentives to make their entity client-friendly.

Proposition 4: The financial resources of a contractor or provider are likely to be greater than those of the university.

Thus, in such a situation, it is likely that the contractor or provider can minimize price by maximizing orders or services - cost savings via volume purchasing. Yet again, is bottom line the sole criterion for judgment of productivity?

Proposition 5. The regulations, rules, and red tape (3 R's for bureaucracy) of state laws controlling expenditures of state monies inhibits the potential of higher education institutions to maximize their dollars. Such restrictions are not imposed on private businesses. State Coordinating Boards of Higher Education may be interfering, through the imposition to supplement state laws, to the point of complicating the process of operating an efficient and effective operation (Eddy, 1995).

Propositional Disadvantages

Just as there are assumed advantages to privatization there are numerous, some directly contrary to the advantages, disadvantages to privatization. The following propositions are offered:

Proposition 6. Will the expected cost savings - the primary argument for privatization to the institution still be passed on to students, in the form of higher costs, in the long run even though such costs are not passed on to the institution? Thus the question, will costs of operation that would have previously been passed on by the institution to the student still be passed on, albeit by a third party (the contractor or provider).

Proposition 7. The student development philosophy, accepted and expressed in higher education as a key and primary mission, which calls for the intellectual, moral, physical, social and spiritual growth of students will be compromised by the lack of such intent on the part of contract businesses and services or individuals within the contracted entity or service. Each individual employee of the university or college is imbued with this value and commitment but, will this attitude prevail in the contracted business or service or will this be just an organizational goal for the contractor or provider? Two sub-propositions result from this proportion: (a) the contracted service will be better performed if provided on-campus, and (b) the contracted service can be effectively provided at an off-campus location.

Proposition 8. Privatization contracts will be difficult to change, particularly if this change impacts the bottom line of the contractor or provider. Within contract protocol, the specifications and expectations of delivery of service are considered sacrosanct for the term of the contract. Inexperience on the part of the university or college representative to the contract may not be readily overcome by suggested changes to a contract prior to completion. Moreover, changes in the nuance of the mission, role, or scope of an institution may not be readily implemented through an inflexible contractual system.

Additional Concerns

Beyond the above propositions several other concerns are apparent when considering privatization. These concerns raise questions that include (a) have all of the ways in which privatization will impact students and staff been identified in the literature, and more importantly, at each institution considering privatization, (b) how will privatization impact the student development philosophy and mission of higher education institutions, (c) is the profit motive a healthy concept within the parameters of student development, (d) will all of the personnel in the privatization structure be (Continued on page 542) role models for students, (e) will contractors or providers uphold the high professional and ethical standards expected of higher education personnel, and (f) how will student development professional organizations and associations interact with contractors and providers?

Conclusions

Privatization is taking place throughout the higher education community, especially within student services_but will it overtake the philosophy and mission of student development? Should higher education officials neglect their responsibility to consider all aspects of this shift then, higher education student development may change in ways unacceptable for such institutions. The propositions and concerns offered herein should be of primary concern to higher education administrators so as to not inhibit the mission of the university or college.

References

Bernstein, E.M. (1995, October 25). "Trustees say going private is to save SUNY hospitals." New York Times, p. BSY

Drum, D. (1994, October). Changes in the mental health service delivery and fiance: Implications for college counseling centers. Keynote presentation at the Association of University and College Counseling Center Directors 1994 conference, Memphis, TN. Eddy, J.P. (1977). College student personnel development, administration and counseling. Washington, DC: University Press of America. Eddy, J.P. (1995, October 31). Interviews with private college and university administrators on privatization advantages versus public institutions, Denton, TX: Unpublished paper delivered at the University of North Texas.

Eddy, J.P. and Buchanon, J. (1996). Privatization in higher education: What is the bottom line? Paper prepared for American College Personnel Associauon, Baltimore, MD.

Philips, L., Halstead, R., and Carpenter, W. (1996). The privatization of college counseling services: A preliminary investigation. Journal of College Student Development, 32(1), 52-59.

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