The Blue Board

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MrWoodson said...

This is not news, though suggesting PSU was considering leaving is a major exaggeration. For that matter, are you really saying Rutgers and Maryland are the things that make the B10 attractive to PSU? I highly doubt it (no offense BTW to Rutgers or Maryland). Penn State has been pushing for the B10 to expand eastward since they joined. JoePa was the biggest proponent and you can pull up quotes from him on the subject all over the interwebs. Delany's plan has always been to expand the BTN footprint to new markets. The only worthwhile markets that are easily attainable are along the eastern seaboard. Short of adding California or Texas, what is left that we don't already cover? Adding Rutgers and Maryland probably makes PSU feel a little better on the margin, but it is not going to keep them in the B10. Money and general overall "fit" is what keeps PSU in the B10. They are free to leave, just like any member school, whenever they feel their interests are best served by going somewhere else.

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InTresslWeTrust said...

1. State and Federal Grants.

With 11 current AAU members and soon to be 13 AAU members, the Big Ten collectively gobbles up billions of dollars in grants. There are likely more than a hundred people employed within the Big Ten whose sole job is to write grant proposals. In fact, it is a safe guess to say the number of professional grant writers within the conference might number several hundred. Why? Because it is big money. If you can hire someone for $40,000 a year, and they can land you 3 grants worth $15,000,000 then you have obviously come out ahead.

But grant writing is competitive. Each university and often multiple departments within a university are all vying for the same, increasingly limited, dollars. You have to be able to make your pitch better than anyone else, and to do this you want to show the government you are not only stretching those dollars to the fullest by involving the most experts with the best facilities, equipment, and investment in future students. In sum, you are doing the most good with the money entrusted to you.

How do you improve your grant proposal while simultaneously cutting costs? You collaborate. When you collaborate with another university by sharing your findings with one another, you can frequently double or even triple the work force, design better studies, and emerge with not only more creative results but more reliable results.

What could adding another 4 AAU members mean to the Big Ten?

It could mean billions – yes, billions with a ‘B’ in grants. Split 17 ways (including the University of Chicago), each university might take home another $100,000,000 every year. Even if it only resulted in another $40,000,000 a year for each university that’s more than the Big Ten Network athletic payout.

2. Cost Savings If you haven’t noticed, state budgets haven’t exactly been experiencing largesse in the last 5 years. In fact, they have been looking more and more like the Hindenberg as it plunged to the ground in New Jersey following its transatlantic journey. Ohio, Illinois, Wisconsin, Michigan, Minnesota, and Pennsylvania – these are states which were hit particularly hard by the recent recession. They are states in which job growth has not been impressive for perhaps decades, and this means while all the costs for states have skyrocketed…the incoming revenue has not. The net result is during the last two decades the percentages of funding from state governments for flagship institutions has plummeted. We’re not talking a few million dollars here. We’re talking a drop in funding in the range of tens of millions – sometimes in a single year. A few years ago, one Midwestern state dropped its funding for state higher education by over $100,000,000.

When you have a large budget cut there are several ways to balance the books in higher education. First, you can raise tuition. This is normally one of the favorite methods (explaining skyrocketing tuition costs in the last 30 years), but it can only be done so much before students and families choose less expensive alternatives (see the growth of community colleges). Second, you can raise money. Higher education qualifies in most cases as a non-profit entity with the IRS. This means you can solicit donations right alongside the American Red Cross, the Susan G. Komen Foundation, etc. with the same ability to provide a boost to the individual in the form of a tax deduction for every donation. Third (and least attractive to most), you can cut costs. This might mean anything from the elimination of too many copies to the elimination of jobs or an entire academic department which has not been pulling its weight.

How does expansion save money/cut costs?

When you expand academically, you can share resources. Say one university has an international campus which is only used at 80% capacity. The 20% ‘vacancy’ is what separates the venture from being profitable instead of a money pit; solve the problem by inviting a sister school to join and fill out that extra 20% as an ‘academic exchange’ program. Or, perhaps you would like to offer additional degree programs or even have need for extra sessions of a particular class (like chemistry or sociology, etc.). You can hire additional professors for hundreds of thousands or even millions of dollars, or you can share costs with a sister school which has faculty not being used to the extent of their contract at this present time. Even better, each school has a physical imprint. By this I mean, each university has its physical facilities (dorms, power plant, classrooms, administrative offices, etc.). Increasingly it is a problem to have massive physical imprints in an Internet age because classroom space is used perhaps 4 hours a day but forces building upkeep, electric, heating/cooling, etc. (not to mention construction costs themselves). Add to this problem the reality each professor is asked to teach only so many sessions and then expected to devote the rest of their time to research. How do you increase student enrollment (raising revenue), use a classroom facility to its fullest potential, and still allow the professors to research (raising revenue through grants or scientific discoveries which can be patented)? Easy. Partner with a sister institution – such as Maryland. Install cameras and viewing screens in the lectures of both your professors and her professors, and then double the class size by allowing the professor to teach one group in person and the other remotely. Bring in an additional graduate student at full tuition if necessary to grade papers and answer questions on whichever end is being taught remotely, and you just saved the university $100,000 a year while upping enrollment (which is a huge increase in revenue as we will see below. Multiplied 1,000 times over across the Big Ten conference – how much have you suddenly saved in not only basic salary but also benefits? If you figure each additional top end professional might cost you $100,000 at a bare minimum, you just saved the conference $100,000,000 – a year.

3. Future Students (cost for out of state vs. in state tuition)

The Big Ten region has been struggling for a long time and that struggle will only accelerate if politicians do not start adding jobs. Jobs are the key to population growth and population growth is the key to enough students to fund large institutions like those in the Big Ten.

Let me throw out a few statistics for you as this has been coming a long time. In 1950, US population was roughly 150,000,000 and the Big Ten imprint at that time contained 47.9 of them, or 31% of the whole. Many of these were children and young adults with the future looking incredibly bright. Today, the United States population is better than 300,000,000 and the Big Ten region (without the new additions) holds only 67 million residents. That means only 22% of the population is in the Big Ten footprint. Worse, the country is trending demographically to the coasts and the Southeast which means this downward growth spiral will likely accelerate unless the politicians in the Midwest figure out how to attract more jobs to add millions of families.

Why does this matter and what does it have to do with Big Ten expansion? Without young families, your pool of prospective students shrink. If it continues to shrink then the institutions will find themselves struggling to survive with their current programs and resources intact.

All this talk of the Big Ten Network and football obscures where the real money lies. It lies in grants, gifts, and students…

Yes, students. Contrary to popular opinion tuition doesn’t really cover the costs of education for a university, but it certainly helps. Average yearly tuition, fees, and room and board for an Ohio State student is currently right around $20,000 for an Ohio resident and $35,000 for out of state residents. Let’s just say the average reimbursement per student for Ohio State (undergraduate) is $25,000 per year. With expansion into regions with a younger, growing population the Big Ten is not just trying to get network numbers; they are trying to solidify and grow a student base. Instead of trying to figure out how not to shrink in the future, Ohio State (and the rest of the Big Ten universities) are making plans for growth. Instead of trying to fill a $25,000,000 hole when they drop 1,000 students, the leaders of the Buckeye state are trying to determine how they will spend the windfall of 1,000 extra – and mostly out of state – students which represent $35,000,000 per year just as undergraduates and far more (perhaps as much as $50,0000,000) as graduate students.

In sum, all this hand wringing and head scratching about why the Big Ten would invite Maryland and Rutgers and be in discussion with other AAU institutions in growth areas is quite simple.

These institutions are public ivy schools which mesh philosophically while opening doors for collaboration and a true increase in stature and funds which dwarf the Big Ten Network and its value.

Yes, the Big Ten Network is important. No administrator is going to sneeze at $40,000,000 a year for their athletic department, but in reality neither athletics nor Jim Delaney are pulling the strings. Delaney might be negotiating the deals, but the strings are being pulled by the trustees, the presidents, the chancellors, and the money individuals in the Big Ten who see that expansion and collaboration might be worth $100,000,000 and more in profits and savings to each member institution even before athletics are considered.

Personally, I expect the Big Ten to continue this direction, and, as I have predicted for close to a decade now, we will ultimately see the emergence of superconferences which secede from the NCAA to form their own playoff in football – worth billions of dollars. At that point, the payoff in athletics, savings, tuition, and grants becomes even greater for the Big Ten.

Crazy for adding Rutgers and Maryland? Crazy for considering Georgia Tech, North Carolina, Duke, and Virginia?

Yeah, crazy like a fox.

Boomer Sooner!!!!

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MrWoodson said...

The "PSU is toxic" people are idiots. Or they are just trolling for a reaction. The B10 is thrilled to have PSU. It's a great school and a top national brand. And it's in an important state. My point was simply that PSU didn't join the B10 because of UMD and RU and adding those schools isn't going to keep PSU from leaving if it wants to do so. Which means that is not the reason those schools were recently added to the B10. They were added as part of an overall expansion strategy. They are in key markets and are two of a rapidly shrinking pool of available options that fit the strategy. That's why they were added.

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