Arts United States. Congress. Senate. Committee on Labo.

Education's impact on economic competitiveness : hearing before the Subcommittee on Education, Arts, and Humanities of the Committee on Labor and Human Resources, United States Senate, One Hundred Fourth Congress, first session ... February 2, 1995 online

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compete effectively in a global economy. As part of this, we need
to look at technology.

It is imperative that we give our teachers and instructors the
tools and training necessary to better use technology in the learn-
ing environment. Only then will we achieve a satisfactory level of
student comfort and proficiency with technology, which will be the
driving force in the Nation's future economy.

The business community is here, able and willing to assist in the
restructuring of American higher education. But truly, we must ap-
proach this as a team — ^the education community. Government, and
business.

Thank you for holding a hearing such as this to focus the Na-
tion's attention on these issues and the critical need for affordable
and quality education for our future work force.

Thank you for the opportunity.

Senator Jeffords. Thank you very much, Mr. Dionne. We will
hold our questions until after we have heard from Governor Kean.

[The prepared statement of Mr. Dionne follows:]

Summary of Prepared Statement of Joseph L. Dionne

Most people believe that business is the engine that drives society. It's not. Edu-
cation is. Education is the engine of growth that allows the economy to perform. If
the United States is to maintain its competitive edge in the world economy, we must
address the current crisis in higher education now. It is incumbent upon us as citi-
zens, educators, business executives, and government officials to work together ob-
jectively to assess the situation, identify practical, equitable solutions and to facili-
tate their implementation.

Ours is an education system — envied and consumed by the world — that is based
on the very precepts of this nation: freedom, openness, egalitarianism and equal ac-
cess. Unfortunately, the course that the higher education system is following today
and the economic pressures that are coming to bear threaten that heritage — and
more importantly, the future.

We have much to be proud of, but we have much more to do as we face this cru-
cial turning point. This hearing today is an important step. My colleagues and I rep-
resenting the business community have lessons to share. The last decade has seen
Corporate America facing many of the same challenges that today affect higher edu-
cation. We were called upon to examine processes and operations, re-engineer to im-
prove productivity and quality, and reduce costs.

As we look out on the landscape of higher education today, there are a number
of issues that clearly need to be considered. In order to insure that new education
funds are spent wisely, we need to re-think how we are using the current $200 bil-
lion national investment in higher education.

— We need to examine administrative and governance issues regarding univer-
sities, specifically as they relate to overall productivity. For example, we need to
evaluate internal university governance issues, suc?i as department or "silo" deci-
sions that impact overall university performance and external issues such as unfair
administrative burdens imposed by the government.

— We must encourage investment in the infrastructure of our academic institu-
tions if they are to remain viable.



88-005 0-95-2



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— Equal access for all students who wish to attend college is critical. We need to
make sure that high school students are adequately prepared to enter college and
that entrance to college is based on ability and not afduence.

— On the technology front, it is imperative that we give our teachers the skills
necessary to better use technology in the learning environment, and to facilitate stu-
dent comfort and proficiency 'vith the technology which will be so crucial to the na-
tion's economic future.

The business community is here to support the efforts of higher education and the
government to successfully adapt to the dramatically changing environment. I be-
lieve it is imperative to the health of this nation that we take action now to insure
the accessibility of quality higher education to all Americans if we are to have a
well-prepared, competitive workforce. Prepared Statement of Joseph L. Dionne

Good morning Chairman Jeffords and to your fellow subcommittee members. On
behalf of McGraw-Hill, I welcome the opportunity to come before you today to par-
ticipate with my distinguished colleagues on this important panel and to share with
you my perspective on the importance of education to the economic security of this
nation. I commend you for showing the leadership to help focus national attention
on this very important issue.

As Chairman of McGraw-Hill and co-chair, with former Governor Thomas Kean,
of the Commission on National Investment in Higher Education, I am here today
as a business leader who both personally and professionally has been committed to
serving and helping to improve our nation's education system for decades.

Founded in 1888, McGraw-Hill, Inc. is a leading multimedia publishing and infor-
mation services company, serving global markets in education, business, industry,
the professions and government.

Although as a knowledge company, we have a significant interest in education as
a market — K-12, vocational, higher education and lifelong learning — our college
publishing arm represents only two percent of our business.

As a corporation, we have a heritage of supporting the principles of strong edu-
cation policy. As a member of the Business Roundtable's Education Task Force and
the Association of American Publishers, I have worited for education reform at the
K-12 level. Additionally, each year we at McGraw-Hill honor three outstanding indi-
viduals who positively influence the field of American education through our Harold
W. McGraw, Jr. Prize in Education. Harold McGraw has dedicated himself to im-
proving education and has laid the foundation of McGraw-Hill's support of education
issues.! note that Senator Pell, who serves as the ranking Minority Member on this
Subcommittee was a prior winner of the Prize, as was Secretary of Education Rich-
ard Riley.

Having said this, more than a publisher of major educational, instructional and
test materials, I am here as a consumer of the end product of our higher education
system — employees. And as such, McGraw-Hill depends on this nation's educational
system to provide us with employees who have the skills, intellectual rigor and cre-
ative thought processes to keep us ahead of the competition. Without that intellec-
tual capital we cannot compete effectively.

As the makeup of this panel reflects, business leaders have recognized that we
must prepare our children to meet tomorrow's challenges. As a nation, we must
have well-educated human resources in our companies and organizations who are
well-prepared to meet the competitive challenges in this global village. This goes to
the very core of how we survive and thrive as a nation. And, we as business leaders
are here to help.

You have heard from Joe Gorman and Alan Wurtzel the importance of preparing

Saduating high school students for higher education and gainful employment. I will
nis today on the critical need to reform and re-engineer the nation's higher edu-
cation system; to control its costs and improve its productivity; bolster its crumbling
infrastructures; and assure equal access and quality in higher education. The re-
sults of a concerted and successful effort should be a more comf)etitive America.

EDUCATION IS THE ENGINE OF GROWTH

Most people believe that business is the engine that drives society. It's not. Edu-
cation is the engine of growth that allows the economy to perform. If the United
States is to maintain its competitive edge in the global economy, we must address
the current crisis in higher education now. It is incumbent upon us as citizens, edu-
cators, business executives, and government ofTicials to work together objectively to
assess the situation, identify practical, equitable solutions and to facilitate their im-
plementation.



31

K one needed convincing about the econoniic magnitude of higher education, Fd
like to share with you some salient and brief statistics that Vartan Gregorian, presi-
dent of Brown University, recently cited:

— ^At the present, U.S. higher education is a $200-biilion enterprise, accounting for
about three percent of our nation's gross national product.

— U.S. hi^er education employs 2.5 million individuals, including 800,000 fac-
ulty, more people than the automobile, steel and textile industries cornbined.

Ours is an education system — envied and consumed by the world — that histori-
cally has been based on the very precepts of this nation: freedom, openness, egali-
tarianism and equal access. Unfortunately, the course that the higher education sys-
tem is following today and the economic pressures that are coming to bear threaten
that heritage — and more importantly, the future.

We have much to be proud of, but we have much more to do as we face this cru-
cial turning point. My colleagues and I have lessons to share from the business com-
munity. The last decade has seen Corporate America facing many of the same chal-
lenges that today affect higher education. We were called upon to examine processes
and operations; re-engineer to improve productivity and quality; and reduce costs.

I am not here today with all the solutions, but to help focus the national agenda
on the need to rethink how this money is spent; how to get the most out of the
human resources devoted to higher education; how to maintain equal access to qual-
ity education for our future employees — and not just for the most affluent; and now
to help institutions of hi^er learning to take "^est practices" of management
leamea from businesses which have restructured in the 1980's to become more com-
petitive.

This is also why I agreed to serve as co-chair of the Commission on National In-
vestment in Higher Education, which Governor Kean will be discussing in greater
detaU. I commend to your attention a paper on Investing in American Higher Edu-
cation: An Argument for Restructuring , prepared by Judith Eaton, President of the
Council for Aid to Education. It serves a valuable role in providing a benchmark
for the Commission's discussions.

The following are a few issues I want to raise today for your consideration.

RE-ENGINEERING

We need to foster re-engineering of the higher education system — just as we have
done in the private sector in order to maintain competitiveness. We need to evaluate
how we are currently spending our monies, how to maintain the aging infrastruc-
ture at our academic institutions, how to strengthen the return on investment that
Corporate America gains from its contribution.

More appropriate and ultimately more helpful is an attitude on the part of busi-
ness that comoines serious concern and reaainess to share experiences, on the one
hand, with the recognition that business practices may not translate directly into
academic settings. Perhaps, a more helpful role for corporations — the chief employ-
ers of higher education's graduates and partners with higher education in national
and localeconomic development — is to align our policies, pronouncements, and prac-
tices regarding higher education more closely with our expectations concerning edu-
cational effectiveness and efficiency. And, while we in business contribute a signifi-
cant amount of financial support — nearly $2 billion in 1993 — we must recognize that
even a dramatic increase in corporate contributions, private support, and funding
from tuition increases will not alone impact the higher cost needs of colleges in the
future.

Additionally, it is not prudent for higher education institutions to take for granted
the financial commitment the business community already has shown — particularly
if Corporate America views the university community as being unresponsive.

supply/demand

The restructuring of higher education is a classic example of supply and demand
theory. Right now, the demand for education is far outstripping the supply of re-
sources available to satisfy that demand. To effectively balance this equation, we
need to either reduce the demands, which may happen as fewer and fewer students
can afford the prospect of higher education, or increase the resources we are able
to bring to the problem. To achieve this we can do one of two things: we can in-
crease our cash intake by attracting more students able to afford a higher education
from outside our borders. Our education system already is recognized as the world-
leader and it's not a hard sell. These students are more likely than in the past, how-
ever, to return to their native countries, and use their knowledge and skills to com-
Sete against us. Alternatively, we can lower the costs, build enrollments by U.S. stu-
ents — and, in turn, maintain U.S. competitiveness — by re-examining the productiv-



32

ity of the administration of higher education. Essentially, with successful restructur-
ing, administrative productivity should increase leading to a decrease in operating
costs and, ultimately, to greater accessibility. To begin, we must evaluate how effi-
ciently we are using the dollars we already have.

I would go so far as to say, not nearly enough. One area where this is a strong
similarity between Corporate America and the administration of universities is the
"silo" decision-making that goes on to the detriment of the whole. Not unlike cor-
porations, individual departments within universities have evolved to have the lati-
tude to make autonomous decisions and run as separate entities. This often is not
the most efficient way to operate — as Corporate America discovered in the '80's
when it re-engineered itself and became more Tiorizontal.' There are economies of
scale to be gained and resources to be maximized when universities can operate as
a 'whole' and not the 'sum of its parts.' Corporate America discovered that years ago
and is willing to share lessons learned which may be applicable to higher education.

As you also are aware, more and more corporations are entering into R&D part-
nerships with particular departments of higher education institutions. While these
are excellent investments in learning which generally produce valuable solutions for
business, another unintended outcome is drastically disparate levels of funding
within departments of universities. We must explore ways to share within institu-
tions these investments in its parts for the good of the whole.

We also should look at the disparity in corporate giving to institutions — we must
not continue on the path towards an elitist educational strata. There should be in-
centives to encourage corporate giving to a broader array of colleges and univer-
sities.

REDUCE GOVERNMENT REGULATION

As if internal pressures were not enou^, the efficiency of university administra-
tions is further threatened by, as Vartan Gregorian observes, "a new willingness on
the part of government to limit the traditional freedom from central control that has
given the American university so much of its historical edge." Specifically, he has
pointed out: "Regulations — 7,000 individual items governing financial aid arose from
Title rV alone — have become a major administrative burden." To quote him further:

"Whether intended or not, the impact of thousands of regulations is to homogenize
and bureaucratize our institutions and to dampen the creative spirit of our univer-
sities. Worse, many regulations command compliance but do not provide the means,
further compromising an institution's already limited financial resources and aca-
demic priorities."

I urge you to work with the higher education community to explore which regula-
tions are most essential, streamline them and eliminate the unnecessary ones.

INFRASTRUCTURE ISSUES

We must invest in the infrastructure of our academic buildings. Significant invest-
ments in new technologies, computers and smart labs will be wasted if physical
structures are crumbling and wiring is insufficient. In the most literal sense, we
must continue to build upon the foundation we have laid.

There exists an opportunity, here, for government to assist. It is often the expecta-
tion that a wealthy individual only will donate funds for a building if it carries his/
her name. Through accounting incentives there should be a means to encourage the
investment in the maintenance and updating of our educational facilities.

EQUAL ACCESS

Equal access for all students who wish to attend college is critical. We need to
sustain our historic national commitment of financial support to higher education
to insure entrance into college is based on ability, not affluence. We as a nation
should focus on how to make college affordable, with a reasonable expectation that
the output — that is, the graduating student and future worker — has the skill sets
required to compete effectively in the global economy. This expectation should be the
same for a student graduating from Harvard or Yale, the University of Vermont or
the University of Rhode Island. We should not expect only the best- educated stu-
dents to be produced by the higher cost institutions.

This means we as business, government and congressional leaders, and citizens
must join with the higher education administrators to address the cost and infra-
structure issues. We must halt the current trend toward a higher level and quality
education being made available only to the wealthy.



33

TECHNOLOGY

In the business community when we look at updating operations, we look at plant
and equipment among other things. I already nave addressed the need to take a
hard look at our plants or academic buildings, now I am suggesting that we look
at the equipment — or more specifically — the technologjy. On the technology front, it
is imperative that we give our teachers the tools ana training necessary to better
use technology in the learning environment. Only then will we achieve a satisfactory
level of student comfort and proficiency with the technology which will be driving
the nation's economic future. I again agree with Mr. Gregorian when he says: "We
cannot allow our students — to become 'technopeasants,' modem-day serfs, nominally
free but disenfranchised by ignorance and fear of prevailing technologies."

CONCLUSION

The business community is here — able and willing — to assist in the restructuring
of American higher education. But, we truly must approach this as a team — the
education community, government and business. This is not a call for more regula-
tions or mandates on the part of government but rather for the government to use
its "Bully pulpit" to focus the university community's attention on this urgently
needed change. If we do not make changes now we will end up with an
underprepared workforce unable to meet the challenges of an increasing competitive
global economy.

We ask that you in Congress and government join with us to spotlight the need
for change. We encourage you to continue to hold hearings such as this to focus the
nation's attention on these issues, and to encourage university administrators to
provide affordable and quality education to our future workforce. We urge you to
work with the higher education community to explore other creative, but
unintrusive ways for government participation.

I ask my fellow business leaders to join together to create and maintain a forum
for sharing "best practices" learned from our management experiences, periiaps
something like a privately funded American Productivity Center where best prac-
tices can be shared, shaped and applied to higher education.

Thank you again for this opportunity to discuss these matters today. I look for-
ward to working with you, Mr. Chairman, and your colleagues in Congress and gov-
ernment, the leaders in the higher education community and business to grapple
with and find solutions to these critical issues. We simply cannot wait any longer
or we will risk jeopardizing America's economic future.

Joseph L. Dionne, Chairman and Chief Executive Officer

McGraw-Hill, Inc.

Joseph L. Dionne is Chairman and Chief Executive. Officer of McGraw-Hill, Inc.
He was named Chairman in 1988 subsequent to his appointment as Chief Executive
Officer in 1983.

Prior to his current position, Mr. Dionne was appointed President and Chief Oper-
ating Officer of McGraw-Hill in 1981, remaining President until 1993. In 1979, he
was named Corporate Executive Vice President, Operations. He also was appointed
President of McGraw-Hill Information Systems Company in 1977 and Senior Vice
President, Corporate Planning, in 1973.

Mr. Dionne joined McGraw-Hill Book Company in 1967 as Vice President for Re-
search and Development at Educational Developmental Laboratories. A year later,
he was appointed General Manager of California Test Bureau and became a Vice
President of McGraw-Hill Book Company in 1970.

Prior to McGraw-Hill, Mr. Dionne s experience included teaching, educational ad-
ministration and consulting work on a number of experimental education projects.

He is a Director of The Equitable Life Assurance Society of the United States; The
Equitable Companies, Incorporated; Harris Corporation; and Alexander & Alexander
Service Inc. He also is a Director of the Academy of Education Development, the
Waveny Care Center, and Advanced Network & Services, Inc., a non-profit organiza-
tion dedicated to the global advancement of education and research using high-
speed communications. He also serves on the Board of Trustees of Hofstra Univer-
sity and The Conference Board.

Mr. Dionne is Chairman of the 1995-96 United Way Tri-State Campaign and
serves on the United Way of Tri- State Organizational Board of Governors. He holds
B.A. and M.S. degrees from Hofstra University and he earned an Ed. D. in edu-
cation at Teachers College, Columbia University. He was bom in Montgomery, Ala-
bama.



34

Senator Jeffords. Governor, welcome.

Mr. Kean. Thank you, Mr. Chairman and Senator Pell.

I might begin, if I could, with a word of praise, because this is
a political climate I think that too often rewards soundbites and
quick solutions, and this is an issue that does not have easy an-
swers. It is difficult and yet very important. So I commend your
committee for taking it on.

My focus today obviously will be on higher education. I have seen
that issue from any number of perspectives. When I was Governor
of New Jersey, higher education was one of my priorities. We made
a lot of investments and a lot of changes in higher education, and
frankly, I think some of the strength of the economy of the State,
I can trace back to some of those investments that we made in
higher education. We created jobs.

Now I have a chance to see it from the other side, in a sense,
from the inside out. For the last 5 years, I have had the pleasure
to serve as president of Drew University. We are a small liberal
arts university. We take great pride in the quality of our student
body and the high standards we set for them. I also take pride that
the number of minority students attending has doubled since I be-
came president; we now have about 20 percent of our student body
who are minority students. We have actually increased the number
of minority stuaents and increased our standards, which again is
a subject I take pride in.

But as much as I am pleased with our success at Drew, it is very
difficult for a great number of our students. I have open hours for
every week, when I ask, because we are a small place, students to
come in with anything that is on their minds. And very often, in
their minds is whether they can continue. The stories they tell
about what has happened to their families because of layoffs or di-
vorces or deaths is incredible, and often, they see it as denying
their chance to complete their college education.

And they are not just minorities — some of them minorities — and
they are not just from cities. These are students in the middle class
who are having deep problems and do not know whether they can
continue to pay those college bills, and all of a sudden, all those
dreams they had about being productive citizens are suddenly
brought into jeopardy.

And I think any college president could tell you similar stories.
These are not just hard luck cases. The situation illustrates what
I look for as a looming crisis. The American people in every poll
I have seen for the first time are indicating that they do not believe
that higher education is necessarily going to be available to their


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Online LibraryArts United States. Congress. Senate. Committee on LaboEducation's impact on economic competitiveness : hearing before the Subcommittee on Education, Arts, and Humanities of the Committee on Labor and Human Resources, United States Senate, One Hundred Fourth Congress, first session ... February 2, 1995 → online text (page 5 of 15)