Revenue/cost pressure and the performance obligations for expense accountability and the affordability of access are related phenomena, and the latter two arguably could have been omitted from Table 1 since they intersect any discussion of revenue/cost pressure.  But to do so would have removed price and unit cost from a coherent list of ongoing, publicly visible mission performance obligations and tainted them with the perception that they are only externally imposed financial concerns coming from a few misguided policy makers who do not understand the traditional social compact with higher education.  Policy makers are calling for price (affordability of access) to be addressed as a function of unit costs (expense accountability) and the two to be addressed simultaneously with the subset of the remaining four performance obligations in Table 1 that are relevant to an institution’s mission.  This external expectation of simultaneity was clearly stated internally in the NCAHE report and the cited speech by Faulkner.  Is it reasonable?

Improving academic measures of quality while simultaneously reducing unit costs has not been the norm for innovations in higher education over the years.  Most institutions have used grants, both internal and external, to seed innovations responsive to some of the four non-financially stated performance obligations in Table 1.  Faculty and program development grants, for example, have targeted the improvement of student learning and the timely, market-responsive development of new programs.  As ubiquitous access to personal computers, Internet connections, and course management systems was evolving, institutions began to channel such faculty and program development investments into the development of online and hybrid courses, programs, and services.  With a few important exceptions (which will soon be portrayed), these investments did not directly seek to reduce long-term unit costs and/or dampen spiraling tuition increases, and, not surprisingly, did not do so, whether they used technology to enable innovation or not.  They accordingly did not pass the innovation test of the NII report—increased productivity—but instead either added to long-term operating expenditures or proved unsustainable after the loss of special funding. 

There have been exceptions to the norm.  For example, technology has been used to accommodate enrollment growth and improve learning while also reducing unit expenses via a strategy that increased not only total revenues, but also the average academic outcome and “profitability” of each new enrollment.[10]  A few specific examples will illustrate this and other proven strategies.