Universities in Crisis

The media is replete with stories about a crisis in higher education. Most of these stories address the ‘crisis’ that is most familiar to the public—the funding of universities, the rising cost of higher education and the translation of that cost into long-term individual debt. However, this financial crisis is closely related to other crises in the university system as we witness changes in universities’ relationship with the state, an increase in global competitive pressures and transformations in organisational forms, practices and strategies. In the USA, where the problem is most acute, student debt is at record levels and is threatening to derail the fragile recovery from the ‘great recession’. As Suzanne Mettler lays out in her book on higher education and inequality in the USA (Mettler, 2014) Americans with bachelor’s degrees graduate with a median debt of $ 33,000. What is most striking about Mettler’s analysis is that, despite the role of higher education in economies where higher level skills and the ability to learn and to keep learning are critical, higher education no longer plays its historical role as a social leveller. In the USA, returns to higher education investment are strongly influenced if not determined by the type of institution one attends. The situation in US higher education places it at the far end of this particular crisis. It demonstrates increasing conflicts over the extent to which higher education is a private or a collective good—whether it primarily benefits individuals or the broader society. The sharp decrease in state support for higher education in some countries represents one answer to that question—higher education is primarily a personal investment and to what extent its costs should be borne by the individual who reaps the reward of that investment. Other countries have weighed the balance between individual rewards and societal benefits differently, continuing to support universities as critical institutions in complex and rapidly changing economies and societies (European Universities Association [EUA], 2014). This commitment to higher education’s broader social and economic role not coincidentally translates into higher levels of social equality. Canada’s support for mass higher education is one reason that the country has better social mobility outcomes than the USA. The funding issues in European universities are just as complex and uneven as in their American counterparts. The long-term sustainability of universities has become an issue as uncertain and uneven state commitments of financial resources are coupled with the pressures of expanded mass higher education along with growing pressures for them to carry out competitive, high-end research. In response, many European states, such as Germany, Britain and the Netherlands introduced tuition fees during the last decade. In some countries, such as England, the introduction of fees is explicitly meant to shift the cost of higher education from the state to the individual student. At the same time, European states’ education policy is heterogeneous and there have been numerous counter examples (Martin, 2012). Germany, for example, has reversed their experiment with tuition fees and now offers free university education for all domestic students (Hotson, 2014), while other countries, such as Denmark and Sweden, have never charged for access to university and remain free to domestic students. The impetus for this special issue arose from the awareness that, like many critical social and economic institutions, higher education institutions sustained a series of major blows following the global economic crisis beginning in 2008. As the banking crisis of 2008 became a sovereign state crisis and often a subnational and urban crisis, university budgets increasingly became a target for austerian policy makers (Kitson et al., 2011; Donald et al., 2014). While all segments of this sector—public and private—have been affected, the deepest and most sustained impacts have been felt by publicly supported and assisted universities. Public sector austerity has led to significant reductions in government funding for universities’ operations. Downturns in global financial markets have reduced payouts from institutional endowments and undermined the solvency of universities’ defined-benefit pension or superannuation plans, putting a further squeeze on operating budgets. University funding in countries such as England, the Netherlands, Ireland and Spain all saw an overall decrease in public funding of more than 10% (EUA, 2012). Of course, this is also true of the American university system, with many institutions facing major reductions in state funding. For example, in California, in many ways one of the epicentres of the financial crisis in the USA (Bardhan and Walker, 2011), the University of California’s state support for the system of 10 campuses has fallen nearly $900 million, or 27% between the 2007–2008 and 2012–2013 budgets (University of California, 2012). This budget squeeze, in much of Europe and the USA, has changed university staffing patterns, reducing the proportion of full time, tenured faculty with responsibility for governing the university as well as for teaching and research. In some universities changing budget metrics and performance standards have undermined the historical ‘cross-subsidisation’ practices that supported the humanities. Some universities have increased tuition fees dramatically, while others have begun to recruit ‘full fee paying’ students more aggressively within the global higher education marketplace. At the same time, overall demand for university places has increased in response to high levels of youth unemployment and an uncertain labour market. In some European countries, such as Italy, the indirect subsidies to University students, in food and housing, for example, have affected the time students take to complete their degrees. In these instances, universities are absorbing the broader economic shock and its ramifications for long-term unemployment. However, as the papers in this special issue elaborate, the financial challenges affecting university roles and capacities have their origins long before the recent financial crisis. In some countries, particularly the USA, they can be traced back to the 1980s, when states began to reduce their support for major public higher education institutions and new opportunities for funding streams became available through the Bayh-Dole Act, which allowed universities to retain profits from intellectual property developed on the campus. In many countries, however, including the UK and Canada, the recent financial crisis did constitute a critical tipping point. In the USA, the crisis exacerbated an already problematic situation around student debt. In many countries, the financial crisis came after a period of rapid higher education expansion, fore-grounding questions about financial management, accountability and performance as budgets shrank precipitously. This special issue examines the nature of the crisis and its consequences for the cities, regions and nation-states in which they are situated. The papers included in this issue address the effects of the recent financial crisis on public universities but also illuminate some of the roots of the crisis in longer term trends. The papers also examine ways in which the short-term financial crisis and its longer term pressures have affected the mission of the public university and its ability to carry out that mission. The articles are drawn from different national contexts. They illuminate distinctive approaches to the crisis but also some of the common issues facing these major social and economic institutions. It is difficult to talk about the effect of the ‘crisis’ on higher education institutions without recognising the differences among higher education institutions. The recent financial crisis has had different consequences depending on the extent of privatisation of higher education in a national context and on how the bubble preceding the crisis translated into expansion of higher education programmes and infrastructure. In some countries, such as Ireland and Spain, the economic bubble that preceded the financial crisis led to a broadening of higher educational opportunities, a building boom and a proliferation of new programmes. It is this rapid and uncoordinated expansion that set the stage for the crisis that affected higher education institutions in 2008. In other countries, such as the USA the crisis has been shaped by longer term trends toward privatisation of higher education and a recent proliferation of for-profit institutions. With the onset of the crisis, some higher education institutions have been relatively resilient while others have faltered. Elite universities, where research is a central priority, have been somewhat sheltered from the impacts of the financial crisis. By and large, elite universities have been less affected by the crisis because they have multiple sources of income and large endowments. Although those endowments suffered temporarily following the financial crash in 2008, they have recovered along with the stock markets. Other types of higher education institutions have fared unevenly. In some counties, such as Ireland, in which there is nominally ‘free tuition’, other types of fees or ‘indirect tuition’ have become more important. These countries are considering various options to address the need to increase fees in a political climate in which tuition is a contentious issue. These include means testing or variegated fees for different programmes (Hazelkorn, 2014). Most of the authors in this issue address the role and changing circumstance of a particularly important segment of the higher education sector, the comprehensive public university or ‘multiversity’. These institutions are critical because of their complex programmes in both research and education and because they play a central role in educating large numbers of graduates, including those from disadvantaged backgrounds. They play a key role in addressing social goals to foster upward mobility through higher education and to create a broadly educated public that can be knowledgeable producers, consumers and citizens. As the articles in this issue illustrate, these institutions developed differently within different national contexts. In the USA, the large public university system developed because of state initiatives, and responded to state needs for particular types of expertise in the industries specific to the state economy. The rationale for the public support for major public institutions in the USA was rooted in connection with the state economy. While vastly different in many respects, what were to become major British diversified universities—in Leeds, Manchester, Birmingham, Newcastle and Liverpool—also originated in the interests of urban elites not only for prestige but also for engineering and scientific expertise related to their enterprises (Scott, 2014). It is among these institutions that the concept of a ‘civic university’ originated and flourished. In the USA, the terminology was different (reflected in the concept of the ‘land grant’ mission) but there was a similar commitment to serving the economic, social and civic needs of a city or region. Public and elite support (in the form of philanthropy) grew from this perceived commitment. Since the 1970s in both the USA and UK, these universities redefined themselves as national institutions, loosening if not losing their sense of territorial identity and with it their ties to local and regional public support for their educational, research and civic missions. In both the USA and UK, these critical public institutions have come to rely significantly on national programmes to support students and the educational mission, and on national research initiatives. During what might be considered a golden age in the 1970s and into the 1980s, they were able to retain both national and local support, a balance that is only retained now in residual forms. In the most recent transformation, these major public institutions reconceived themselves as international institutions, competing with each other for international students and allying research missions with global industrial enterprises. In many ways, universities have become key actors in the globalisation of higher education and research, which many governments consider as important for national and regional competitiveness and prosperity. Many new campuses and programmes were constructed with global, not national or regional, interests in mind. The emergence of international university ranking systems and their increasing prominence in the past decade reflects this competition and these priorities. This has led to consolidation in universities as they use institutional mergers to improve competiveness and their positioning in the international rankings (Rauhvargers, 2013). Pinheiro et al. (2014) show how this plays out in Scandinavian countries. Further, the narrow metrics used to rank universities is controversial and thought to be biased against institutions which specialise in the arts, humanities and social sciences. Rauhvargers argues that the international ranking system serves to reinforce the segmentation among universities as the reputation for ‘world-class’ status brings with it yet further potential for institutional partners, funders and foreign students. The fiscal crisis exacerbated the limitations of international competition because the competition was based on similar metrics (patents in bio-science and computer science) rather than recognising distinctive strengths. Only a select number of universities were able to compete within the narrow metrics used to measure quality and performance, with only 1–3% of the world’s universities included in the rankings (ibid.). Despite their public mission, universities in countries such as the UK have become more like private sector organisations. Because of the diversification of their functional roles and commitment, university management has become more centralised, replacing a college-based, dean-driven governance model with one that is closer to a corporate management model. Howells et al. (2014) argues that universities are exposed to changing institutional pressures, due to this emergence of ‘new managerialism logic’ as an alternative to the previously dominant ‘bureaucratic logic’. They note that this interactive process has been both a consequence of and contributed to the way in which universities have responded to fiscal crisis. Public comprehensive universities have, according to some of the authors in this issue, been ‘marketised’, that is they adhere to competitive market logics in arenas such as governance and evaluation of performance rather than cooperative cohesion-oriented logics (Engelen, et al., 2014). In part, this is a reflection of the changing composition of university employment, where non-academic staff in roles as diverse as risk management, diversity training and grant control comprise a growing portion of the payroll. Modern diversified universities are frequently described as having multiple agendas that reflect complex university priorities. In addition to their core commitment to promote scholarship and teaching, they are expected to stimulate innovation in the private sector and commercialise intellectual property; develop community links; compete for global students and invest in international connections. Perhaps, lastly, they are often places where societal critique can still occur. Hughes and Kitson (2012) contest the dominance of technology transfer to industry in many scholars’ narrative of the university’s expanding role. Instead, they present survey data to show that UK universities now routinely play a large role in knowledge exchange with a wide range of partners, including non-profit and public sector institutions. As Howells et al. note, these competing logics have resulted in hybrid institutions. And, within these hybrid institutions, competing logics have become conflicting logics, particularly with the onset of fiscal stress. As Teixeira et al. (2014) examine, one of the most important challenges facing comprehensive publicly funded universities in the wake of the fiscal crisis has been the demand to serve a much larger and more diverse group of students. In some cities, such as Barcelona, Spain and Melbourne, Australia, this new diverse population of students is celebrated for its diversity but presents complicated problems for curriculum, classroom instruction and assessment. Thus, the expanded and hybridised agenda, described by Howells et al., sets the stage for internal stresses and competition among what have become complex university priorities. These tensions are highlighted by Miller and Feldman (2014) when analysing the changes in staffing policy in American universities. They explore the increasing importance of post-docs as long-term, non-tenured staff acting as substitutes for the more expensive tenured staff. Although more flexible for universities, this signals the rise of more precarious employment contracts in the sector. The authors in this issue approach the question of the origins and implications of the crisis for large, comprehensive higher education institutions from various perspectives. In many European countries, higher education benefited from the bubble economy. There was more public support and public funding for widening access. In the post-crisis era, however, faced with increased expectations for mass education and a commitment to a complex agenda, including investments in biosciences and computer science, diversified mass universities are struggling (EUA, 2014). This crisis within the university has been mirrored in its external relations. As Scott (2014) notes, all universities are somewhere and that somewhere matters. As they moved into international status, universities crafted different relationships with their immediate locality and with the surrounding region. These relationships have shifted with longer term pressures to respond to diverse demands—from trustees, state policy makers, faculty, students, and from the ever-larger component of non-academic staff that compose their employees. There is a strong connection between the health and fate of universities and the cities, regions and nations in which they are situated. Goddard et al. (2014) highlight the strong link between the potential vulnerability of cities and regions and their institutional and geographical distinctiveness. In the new national–international role of major diversified universities, national regulatory frameworks and assessments can replace regional connections, and international rankings can supplant regional identity. This has opened opportunities to an international higher education market and research opportunities but has decreased local and regional support. The recent fiscal crisis has made that gap more visible because the public sector is, itself, under pressure to reduce expenditures. In fact, though publicly supported large comprehensive universities are portrayed as regional anchor institutions, they need to convey an international footprint both in teaching and in research. In reality, as Charles et al. (2014) note, policymakers tend to have a poorly developed of how universities to the local or regional economy. a of what universities and for policymakers have expectations of what they can These expectations be exacerbated by the between universities and public in those where large universities and over Pinheiro et al. (2014) highlight the of these changing relationships between higher education institutions, the state and in countries as universities for a new the papers in this issue that fiscal crisis has contributed to in educational and research capacities among institutions. 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With this tensions around the and of the of and its relationship to the and that the Although these papers highlight a wide of state response to the ‘crisis’ in the university system, the papers in this issue, we also the tensions in the university as an individual rather than a public

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