Outsourcing of Instruction at Community Colleges Thomas Bailey Director, Community College Research Center Teachers College, Columbia University James Jacobs Associate Director, Community College Research Center Teachers College, Columbia University Director, Center for Workforce Development and Policy Macomb Community College Davis Jenkins Senior Research Associate, Community College Research Center Teachers College, Columbia University Senior Fellow, Great Cities Institute University of Illinois at Chicago January 2004 Outsourcing of Instruction at Community Colleges Thomas Bailey Director, Community College Research Center Teachers College, Columbia University James Jacobs Associate Director, Community College Research Center Teachers College, Columbia University and Director, Center for Workforce Development and Policy Macomb Community College Davis Jenkins Senior Research Associate, Community College Research Center Teachers College, Columbia University and Senior Fellow, Great Cities Institute University of Illinois at Chicago January 2004 National Center for Postsecondary Improvement Stanford University School of Education 520 Galvez Mall, 508 CERAS Stanford, CA 94305-3084 The work reported herein was supported in part by the Educational Research and Development Center program, agreement number R309A60001, CFDA 84.309A, as administered by the Office of Educational Research and Improvement (OERI), U.S. Department of Education. The findings and opinions expressed in the report do not reflect the position or policies of OERI or the U.S. Department of Education. NCPI Report Number 7000. Table of Contents Executive Summary..........................................................................................................1 Introduction.......................................................................................................................7 Conceptual Framework of the Study............................................................................11 Community College Use of Outsourcing for Instruction..................................................16 Types of Outsourcing Models.......................................................................................16 The Extent of Community College Outsourcing Instruction........................................17 Reasons Why Colleges Outsource Instruction..............................................................20 Benefits for Vendors.....................................................................................................24 Barriers to Outsourcing Instruction..............................................................................25 Conclusion.......................................................................................................................29 References........................................................................................................................34 Appendix A: Interview Guides......................................................................................36 Interview Guide: Contractors........................................................................................36 Interview Guide: College Personnel.............................................................................39 Appendix B: Case Study of I/Tech................................................................................43 Overview.......................................................................................................................43 Why I/Tech Works with Colleges................................................................................45 Why Colleges Contract with I/Tech.............................................................................46 How Well the Partnerships Have Worked....................................................................48 Relations with College-Credit Programs and Faculty..................................................51 The Future of the I/Tech Business Model....................................................................55 Executive Summary Overview of the Issue The outsourcing of instruction at community colleges to independent firms is a growing but still limited practice, and thus far it has been largely confined to non-credit courses. The “contracting out” of other services, such as food services, has been a longstanding and accepted way for colleges to meet some of their ancillary needs efficiently, but outsourcing instruction is quite controversial, and many factors determine its usefulness. Respondents interviewed for this study present several basic arguments against outsourcing instruction. The first is that it is inappropriate to mix the broad public goals of colleges with the incentives inherent in profit-making companies. Second, opponents assert that outsourcing instruction could undermine the tenure-based academic employment system. Third, they argue that the quality of the education provided by contractors may be lower, since contractors might compromise the quality of their services to meet their primary goal: making a profit. A corollary concern is that the courses provided by contractors are narrower and more limited in content than other college courses, and thus unworthy of being considered equal with those taught by college faculty. And, finally, those who believe that the independence of faculty is paramount are disturbed by the fact that outsourcing may result in a lack of control by faculty over course design, instructional materials, and choice of instructors. Supporters of outsourcing also present cogent reasons for their position. They assert that outsourcing can lead to a more efficient and higher quality education, the result of market forces that reward well-managed companies that sell superior products or services. They also claim that standardized pedagogy and curriculum materials produce predictable and consistent quality. In addition—and of particular interest to community colleges, which operate under severe financial 1 constraints—proponents cite evidence that outsourcing with a company to provide instructors is less costly for colleges than is hiring faculty, even adjuncts. Contractors can also supply instructors who have specialized and very up-to-date knowledge about course content because they are also working in the field, with the result that courses contain not only superior content but that they are tailored to meet students’ specific learning needs. Finally, through their industry contacts, contractors can help students find post-college employment. The Design of the Study on Outsourcing Instruction at Community Colleges While there are, clearly, many different views about outsourcing instruction, little is known about its extent and impacts at community colleges. This report, therefore, presents the findings of exploratory research designed to identify the characteristics of the outsourcing of instruction at community colleges and the forces that promote or block its spread. It is the second in a series of reports by the National Center for Postsecondary Improvement and the Community College Research Center on the relationship between for-profit higher education and community colleges (Bailey, Badway, & Gumport, 2002). The report is based on information gathered from interviews with community college administrators and representatives of contracting firms. We conducted interviews with the persons responsible for managing contracts with outside organizations for instructional services at eleven community colleges. With one exception, all of the administrators interviewed are responsible for non-credit occupational programs. However, two oversee both non-credit and credit programs and three have joint appointments as faculty in college-credit divisions. We also interviewed senior managers from two firms that provide instructional services under contract to community colleges: Alamo Learning Systems and I/Tech. We further 2 conducted an in-depth case study of I/Tech because it is the best example of what we call a full- service contracting model—where the contractor provides a wide range of services to the college—and provides some insights into the potential for the most ambitious efforts to contract out instruction. The Types and Extent of Outsourcing Arrangements Community colleges use a variety of contracting out models. A full-service contractor not only provides curriculum and instructors, but also assists with the marketing, fundraising, and other program management activities. A specialized trainer usually involves provision of the instructor and curriculum by an equipment vendor on topics requiring highly-specialized or proprietary expertise and equipment. The final model, consisting of on-line course educators, provides the curriculum and instruction on-line to students registered through the college. The large number of colleges with which some vendors work suggests that many colleges outsource at least some non-credit instruction. Colleges are far less likely to contract out degree- credit courses, and, as typified by the three colleges in our survey which do so, generally outsource instruction for only a limited number of courses. In every instance, the for-credit courses taught by outside vendors all required highly-specialized or proprietary equipment or knowledge. In all of these cases, the colleges had difficulty finding qualified faculty. We found no cases where a community college contracted out a significant portion of instruction for degree programs. Reasons Why Colleges Outsource Instruction The most frequently expressed reasons are the following: 3 • The need for instructors with specialized and especially up-to-date knowledge, the need to respond to rapidly growing demand for particular programs, or the need to use a wider set of delivery modes than is available in-house. • The availability of high quality curricula whose cost to develop in-house would be prohibitive. • Contractors have greater flexibility in scheduling classes, while colleges are more likely to adhere to the traditional semester-based credit-hour structures. • The promise of a consistent quality of instruction resulting from a standardized curriculum and the use of specially trained and certified teachers. Benefits for Vendors While vendors could market their services directly to students, partnering with colleges can increase the number of customers and generate higher profits for the following reasons: • Lower overhead because colleges usually provide the space and equipment. • Extensive marketing by college, which have ready access to a large pool of potential “customers” for a vendor’s services. Barriers to Outsourcing Instruction Both colleges and vendors have found that some impediments to a mutually productive partnership are insurmountable. The opposition of the full-time faculty is perhaps the strongest barrier to the spread of the outsourcing of instruction. Faculty believe that outsourcing could 4 potentially threaten faculty jobs and weaken the traditional academic culture at colleges and the tenure-based employment system. Other issues are also common. Vendors who attempt to work with a college that fails to market their services sufficiently do not want to give the college a large discount since it will not acquire a large number of customers. Vendors may also have costs resulting from a college’s requirements for instructors and other resources that result in their charging high fees. Colleges, which often must abide by state-determined student tuition limits, simply may not be able to fully offset the services of vendors with student fees; they opt instead to develop courses in-house using adjuncts and commercial textbooks. It is possible, also, that colleges can make a profit from their non-credit programs and want to use the income for other core college missions, not for the services of independent vendors. State regulations and accreditation agencies may also impose insurmountable obstacles to outsourcing, and colleges may not be able to overcome the philosophical objections to outsourcing, reviewed above. Finally, by making use of adjuncts and textbooks prepared for a national market, colleges may be able to gain many of the efficiencies they could through outsourcing, but still maintain direct control over the teaching labor force. All of these barriers are stronger for credit than for non-credit courses. Thus outsourcing of credit courses is extremely rare. It is more common in non-credit courses, but still not widespread. Conclusion As a result of the many difficulties faced by community colleges in their attempts to outsource instruction, and the hesitance of some vendors to become involved in partnerships that might not be profitable, it seems unlikely that the subcontracting of instruction will be used 5 extensively in community colleges, although it will remain a factor in the non-credit sector. However, the underlying factors that make contracting attractive will still be present in community colleges: the difficulty that faculty have in staying up-to-date in their fields, the great variation in the quality of curricula and instruction, and the inflexibility of the conventional approach to teaching and organizing instruction. These factors, more than direct competition from private vendors, are likely to provide the greatest impetus for change in teaching and learning at community colleges specifically, and in higher education institutions more generally. 6 Introduction Outsourcing is a common practice in many industries. Firms and organizations cannot produce all of the services and inputs that they use and, thus, most organizations contract with independent organizations to provide additional needed goods and services. This “outsourcing” often becomes controversial when jobs within firms are threatened by the cheaper labor used by the contracting companies. Some analysts argue that the growing use of outsourcing often reduces the quality of employment as contractor employees earn less, have less job security, and are entitled to fewer benefits (Appelbaum, Bernhardt, & Murnane, 2003). The outsourcing of services at institutions of higher education is more controversial than it is at private businesses. Although various auxiliary services, such as food service, are commonly outsourced at many or even most institutions, outsourcing of instruction is much less common. This involves contracting with an outside firm to teach a course or program, including providing curriculum, materials, and faculty. The course can be taught on the college campus and the student is considered to be taking the course at the college. Outsourcing is part of a broader movement towards the privatization of higher education. Advocates of privatization argue that it leads to a more efficient and higher quality education. If privatization in general, or outsourcing in particular, could lower costs without sacrificing quality, it should be particularly attractive to community colleges, which operate under severe financial constraints. Yet educators are reluctant to outsource instruction because of skepticism about the appropriateness of mixing the broad public goals of colleges with the incentives inherent in profit-making organizations. The outsourcing of instruction could also undermine the tenure-based, academic employment system. 7