Reinventing Higher Education Finance: The Impact of  Information Technology

Introduction

Higher education is changing dramatically because of the rapid introduction of advanced information technology (IT). IT is opening new options for the delivery of higher education, changing the traditional roles of faculty, and reinforcing the increasing emphasis on learning outcomes-based education. As higher education changes, the financial structures used by states to fund colleges and universities are under increasing pressure to adapt. States need updated financial policies for technology infrastructure investments, distance education, student costs, and course accounting. The implications of advanced information technology on state higher education funding are explored in this issue of Policy Insights.

HIGHER education funding is based on a set of assumptions that until recently have gone unchallenged. States and institutions assume that instruction will be delivered by faculty, that it will be packaged in semester-long blocks, and that students will attend classes on campuses. They assume that operational costs are directly related to the number of students enrolled, and that the infrastructure is primarily buildings on campuses.

These assumptions are starting to change, especially because of the introduction of advanced information technology (IT) to higher education systems. For example:

  Both states and institutions are grappling with how to fund information technology, which until now has been an add-on expense justified as a quality enhancement. More and more, technology investments are expected to pay benefits in terms of increased productivity or reduced operating costs.

  Technology is increasing the pressure to improve the instructional productivity of faculty.

  States are paying more attention to the growth of technology-based alternative higher education systems, such as private for-profit institutions and the Western Governors University.

WICHE is conducting a project called Information Technology and Higher Education Finance to help state policymakers better understand the issues related to the expanding use of information technology in higher education, particularly its effects on state and campus budgets. The Commission expects this project to yield recommendations and guidelines that can be implemented by states through higher education funding formulas, capital outlay planning processes, and institutional budgets. This issue of Policy Insights explores the issues addressed by this project. These trends are also described in greater detail in the WICHE paper The Transformation of Higher Education through Information Technology: Implications for State Higher Education Finance Policy, which is available on the WICHE Website at www.wiche.edu/IT&Finance.htm

This issue of Policy Insights was prepared by Dewayne Matthews, Senior Program Director at WICHE.

Policy Insights is a series designed as a companion publication for WICHE's recently published fact book, Policy Indicators for Higher Education: WICHE States. Drawing on the indicators contained in the fact book and information from other sources, Policy Insights examines current issues in higher education from the perspective of policymakers at the state level and on the campus.  Paper copies of any Policy Insights can be ordered electronically though the WICHE Publications Order Form.  There is no charge for paper copies of Policy Insights.

The Western Interstate Commission for Higher Education -- WICHE -- promotes and facilitates resource sharing, collaboration, and cooperative planning among western states and their colleges and universities. This includes communicating research information and policy analysis on vital issues in higher education to education and government policymakers. Member and affiliated states are: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming.