Some secrets hide in plain sight.  

We often hear that higher ed’s financial challenges lie primarily in cuts in per capita state aid and increases in: 

• Fixed costs (for salaries, benefits, maintenance and operations, and technology).
• Expenditures on expensive emerging and growing fields of study (e.g., animation, gaming, and new media, artificial intelligence, computer science, computational social science, data analytics, and informatics, financial technology, human-computer interaction, machine learning, neuroscience, and sustainability).
• Administrative and student support and student life expenditures.
• Standards of care (the heightened expectations for facilities and services). 

There’s obvious truth to this explanation.  But there’s also reason to think that this explanation is partial, misleading, and disingenuous.  

After all, spending on instruction and faculty has stagnated, subsidized in large measure by the increasing reliance on adjuncts and other contingent instructors.  

Clearly, other factors are in play.

Please note: I am not referring to the usual suspects cited by higher ed’s critics, like administrative bloat or gold-plated amenities and starchitecture.  

Nor am I claiming that this is primarily a product of expenditures designed to enhance student’s well-being and academic success, such as hiring non-tenure-stream professionals, including educational technologists, instructional designers, teaching and learning center specialists, or therapists.

While those expenditures have clearly grown, many are paid for by the students themselves through various dedicated fees.

Something else is going on that merits our attention.

Over the past quarter century, many colleges and universities embraced a new business principle: Grow or die.  Growth may involve increasing enrollment or tapping new markets, but it often entails expanding outside the institution’s traditional core.  That helps explain the various partnerships that colleges and universities have signed, not only with Online Program Managers and technology vendors, but student housing and building partnerships and various kinds of joint ventures, including research parks, research stations, and mixed-use development projects. 

Even as instructional spending languished, institutions redirected additional resources to:

• Development and government relations.
• Greatly expanded online Master’s, certificate, and professional programs.
• Funded research, including new research centers, accelerators, incubators, and innovation hubs, and technology transfer and public-private partnerships – which, in turn, results in more employees on soft money and a greater need to release grant-generating faculty from teaching responsibilities.

Meanwhile, colleges and universities have increasingly relied on auxiliary services – from dormitories and food services to summer programs and campus rentals – as revenue generators.

Sometimes, the shift into new areas is dramatic.  In Texas, the University of Texas at Austin, the University of Texas Rio Grande Valley, the University of the Incarnate Word, Texas Christian University and the University of North Texas Health Sciences Center School of Medicine, Sam Houston State University, and the University of Houston have opened new medical schools or schools of osteopathic medicine.

The number of satellite campuses has also expanded, not just NYU Abu Dhabi or Shanghai or Yale in Singapore but those created by Carnegie Mellon (in Silicon Valley), Cornell (in New York City), Northeastern (in Charlotte, San Francisco, Seattle, and Toronto) or the University of Massachusetts at Amherst (in Brookline).  On a regional level, the University of Houston created campuses in neighboring suburbs in Katy and Pearland and an energy research park in Schlumberger’s former global headquarters.

What leads an institution to expand outside its core competencies?  Is it empire building or brand development?  The desperate pursuit of new revenue?  Is it an effort to diversify, consolidate political support, or promote local, regional, or state-wide economic development?

The correct answer, of course, is all of the above.  

Institutions have adopted a much more entrepreneurial mindset.  The most successful leaders are risk-takers, visionaries, and builders who seize opportunities, forge partnerships, and successfully promote an ambitious growth agenda among donors, trustees, civic leaders, foundations, and other constituencies. 

They’re first-movers, disruptors, and masters of public relations, with an uncanny ability to transform their institution to match their vision.  But for every Joseph E. Aoun, Michael Crow, Renu Khator, Paul LeBlanc, or Michael Sorrell, other presidents overreach, and, like Daedalus, crash and burn and harm their institution in the process.

As a faculty member, I wish that our institutions would invest more heavily in our core enterprise, undergraduate teaching and scholarship undertaken for its own sake.

But as an off-and-on administrator, I also recognize that for colleges and universities to survive in anything like their current form, leaders at all levels must identify new revenue sources, control costs, build public support, and promote their institution’s brand.

There’s a reason why really successful senior administrators are well paid:  They are running operations that are even more complicated than most corporations.  Even small colleges have their own athletic and entertainment complex, development and grant writing operations, health services, libraries, museums, physical plant, police force, and technology infrastructure.  And the politics and level of stakeholder engagement are far more fraught that at even the biggest companies.

Institutions’ ability to survive the current crises and flourish in the future depends on the ability of senor leadership and entrepreneurial faculty to generate the ever-growing amounts of money needed to fund their campus’ academic and non-academic enterprises.  Auxiliary services, grants and contracts, patents and licenses, new markets – all are part of the equation.  

We may like to fantasize that the ivy tower is somehow free from contamination from the economic and political spheres.  But our success is inextricably intertwined with those spheres and we need to embrace the maturity to recognize that no miracle is likely to save our institutions.  That’s up to us.

Steven Mintz is professor of history at the University of Texas at Austin