Skip Navigation

Premise

Premise

Universities are a cornerstone of our economic and social prosperity and the key to realizing the American dream. A college degree is worth about $1.5 million more earned over a lifetime.

The period from 1945-1980 was a Golden Age of higher education, defined by rapidly growing enrollments and increased investment from states and the federal government (e.g., GI Bill). From 1980-2008 was a period of relentless public disinvestment and steadily increasing tuition. We are now in a new period that continues these trends and is further defined by worldwide competitive forces and consolidation due to demographic, fiscal, and technological factors.

Systemic concerns have developed over that same time period. These can be generally divided into fiscal concerns, changing demands for services, and a reliance on stopgap measures to confront a changing marketplace:

 

 

  • Tuition and fees at U.S. public institutions increased 310% from 1987 to 2019. These increases far outpaced inflation and cannot continue at the same rate.
  • State funding of public institutions retrenched and shows no signs of rebounding. Constant dollar public appropriations per student is 8% lower than in 1992, and 20% lower than 2001. State appropriations fund ~10% of the Norman Campus operating budget today, in contrast to 1982 when they accounted for 42%.
  • Personal debt that individuals have taken on to afford higher education. Two-thirds of students borrow today versus less than half in 1990, and the average constant dollar debt among borrowers has doubled to over $25,000.
  • Student loans are the second-largest segment of consumer debt, accounting for $1.5 trillion (~11% of consumer debt). Student debt increased 250% since 2007.
  • Universities have built and expanded programs and services without corresponding cuts or incremental revenue gains. Institutions have more liabilities, higher debt service, and increased expenses without the revenue or the cash reserves to support them.
  • Compliance burden and student services have grown drastically. Controlling for inflation, system-wide costs of student services have increased 19% from 2008-2020. Premise (cont.)
  • As demographics change, college enrollments are predicted to decline by 15% between 2025 and 2029. The states of Texas and Oklahoma are somewhat buffered, with projections of growth until 2026 before modest decline. Oklahoma projects 45,400 graduates in 2025, decreasing to 43,000 by 2029. Regional and national competition in our core markets will continue to intensify (e.g., North Texas).
  • Intensifying competition for students will limit OU’s pricing power.
  • Social and economic forces will increase demand for advanced degrees and credentials.
  • The market for higher education is segmenting. Closures and consolidations will increase nationally. Public consolidations and closures focus on smaller schools, often in low-growth areas. Value and premium brands may continue to thrive.
  • Mounting challenges in the Oklahoma system of higher education have been staved off by stopgap measures (such as concurrent enrollment and Section 13 offset programs that subsidize otherwise financially at-risk institutions). Ultimately, the current system is unsustainable. Change is inevitable.
 

 

OU’s strategy must choose among market segments. We must develop a brand premised around it. Impactful research is integral to brand value and will be core to OU’s future.

It is essential that we focus on the most distinctive characteristics of the OU experience, both locally and nationally.

Differentiated and financially sustainable public institutions do the following:

  • Focus strongly on providing the highest quality education at the lowest possible cost, and on improving student outcomes and reducing student debt at graduation;
  • Leverage athletics and medical campuses to generate income and brand awareness;
  • Grow revenue through philanthropy, corporate partnerships, economic development, and other non-traditional approaches;
  • Align strategically with the state to leverage investments;
  • Streamline overhead and reduce administrative costs;
  • Free up capital in non-core assets;
  • Receive differential, strategic investment from the state; and
  • Strategically invest in innovative and disruptive models.

Brand strength and economies of scale must be realized at the enterprise level (i.e., across all OU campuses), and there must be trust and alignment between roles and accountability. We must balance shared governance practices with a level of agility to react to opportunities and challenges.

Our Strategic Plan must garner understanding and buy-in from relevant constituencies. In academic institutions, success requires a culture of excellence measured by agreed-upon institutional standards calibrated to achievable, aspirational targets. We must avoid false economies which cost us value in the long run.

A bold, honest and clear-eyed strategy must be adopted that allows the institution to flourish.