prime usefulness has already passed, and that those states which wish to use unit costs for allocation and program purposes have already developed systems (in some cases the NCHEMS model) for these purposes. Illinois, in 1964, was doing what the NCHEMS procedures would have other state systems do in 1974. National standards in some states will call for major revisions in both the reporting and accounting systems of the state institutions. Are the resulting standard data going to be worth the trouble and cost? Also, some state systems have built into their cost procedures sets of assumptions which are contrary to, or at least at major variance with, the NCHEMS model. Do those states wish to adopt different assumptions? 8. Moreover, the Commission states that the standard unit cost procedures now available apply only to the state colleges and liberal arts institutions, and not to community colleges nor to the complex university. It has taken over three years to develop the procedures now available from a base of experience going back 20 years. It seems unlikely that there can be agreement on the allocation of costs in the complex university. Different value systems and perspectives-not technical problems-have prevented such agreement until the present time, and no new avenues leading to agreement are suggested by the Commission. Assuming that unit-cost procedures could be developed for community colleges, would it be worthwhile setting up national standard unit costs for all institutions save the universities? What again of the possible changes in reporting and accounting procedures, and the comparability of them across all institutions for state purposes? 9. Lastly, on this point: Unit costs may not be particularly useful in the next decade or so when enrollments are dropping in many institutions. Falling enrollments will mean rising unit costs, but generally, knowledge of those costs are unlikely to determine whether a program or an institution continues in existence. Rather, political and social determinants will decide that issue, just as they do now where unit costs are already known. Too, the new modes, means, and technologies available for instruction raise many questions as to what a "unit" really is. Also, the growing number of extended and nontraditional programs, integrally part of an institution's operation, create problems in validly converting such experience to credit hours by various proxies (not the real thing) and fictions. The allocating of faculty direct costs to the fictional unit, and then allocating overheads to direct costs, becomes an exercise in futility. These trends are already upon us and seem destined to make a greater share of postsecondary experience little amenable to unit costing, using current "standard procedures." The Commission states in its reservations about the use of unit costs that "the comparable program and activity data needed to complement and help interpret per-student cost data are not now available and probably will not be for some time to come (p. 325)." What position should institutions and states take on the federal adoption of standard procedures for reporting unit costs? THE NATIONAL INFORMATION CENTER FOR POSTSECONDARY EDUCATION 10. The earlier drafts of the Commission report kept open the question of where the Information Center would be located-in or out of the government. The final report does not mention the several options listed in the early drafts, but says that "It is not important that this center be public or private, a new agency or one that exists now." The Chronicle of Higher Education reports that the OE has already made a contract with the Rand subsidiary in Santa Monica to carry out certain undefined duties. What are they? Is this in itself not a policy issue which should have discussion and public determination? It may be that the contract is only temporary and that the issues will be public, but the report does not say so. I believe that the nature, location, and powers of the center would be of considerable interest to SHEEO (state coordinator) members, as well as institutional leaders. Mr. H. REED SAUNDERS, TECHNOLOGY MANAGEMENT INCORPORATED, Deputy Assistant Commissioner of Planning, Budgeting, and Evaluation, U.S. Office of Education, Washington, D.C. DEAR MR. SAUNDERS: Technology Management Incorporated (TMI) was asked to evaluate the conceptual soundness of the analytical model described in Chapter 7 of the report of the National Commission on the Financing of Postsecondary Education. This letter, our oral presentation on February 25, 1974, and the briefing outline of the oral presentation, Attachment A, comprise TMI's evaluation of the analytical model. Attachment A outlines our evaluation. The important points in our evaluation are: For the limited purpose of examining the impact upon postsecondary enrollment and costs of incremental changes in net student charges (tuition plus compulsory fees minus aid), the model is conceptually acceptable. One can raise technical objections, but for the limited purposes for which the model is useful, the objections would not alter the major results. From a public policy point of view, the model itself is insignificant and it received far more attention in the report than it deserves. What is significant, if true, is the data from economic research studies which, according to the parameters in the model, state that enrollment in the broad institutional categories of postsecondary education is quite insensitive to changes in the net student charges. Page 442, footnote 2, lists these research studies. The model was improperly used to examine the enrollment and cost impact of large changes in net charges to the student without any caution to the reader of the report. Neither the linear model structure nor the data in the model justify such a use of the model. The analytical model is simple and inexpensive to construct, but appropriate to its limited purpose. It is an ordinary model to be expected in the support of a Commission such as this. The Commission did not really understand the role of a model as evidenced by its naive view of an "ideal" use of a model, by its overemphasis upon the model. and by its failure to identify the research results, i.e., the enrollment impact of net student charges instead of the model, as being significant to public policy. The description of model purpose, structure, limitations, input data, and output results did not meet standards for publication in a professional journal. I recommend the following: The model be removed from any computer system to prevent its use by people who lack understanding of models and their limitations. A report describing the model in detail be written and a listing and machinereadable source code be stored in the archives of the National Commission. Research into the determinants of student enrollment be continued and existing results be confirmed or replaced. This was a most interesting assignment. We trust that the evaluation will be of use to you. Very truly yours, Enclosure. CARL V. SWANSON. ATTACHMENT A OUTLINE Review of the Analytical Model from Report of the National Commission on the Financing of Postsecondary Education I. The Analytical Model and the Analytical Framework described in the report are separate and very different. II. Descriptions of the Analytical Model 1. Simple representation of how student enrollments by 11 income classifications change with net charge to students in 9 different categories of postsecondary education. However, the table on page 256 lists only 3 income categories. 2. Linear representation of price impact on enrollment implies that the model can be used only for incremental analysis, i.e., to examine the enrollment impact of modest changes in the net charge to students. While I can't defend the number without further analysis, modest seems like $300 or less to me or up to $500 for high tuition schools. 3. Steady state model-the 1977 and 1980 representations are misleading. 4. Limited Purpose a. investigate enrollment and institutional cost impacts of alternative financing plans. b. incremental financing program change. c. broad category analysis. 5. Data on effect of net charges is apparently satisfactory (from a limited sample), but impact of work-study and loan programs upon enrollment is unknown. 6. Postsecondary institutions are represented in 9 broad categories which do not examine considerable differences in student body, finances, or purpose among the institutions that make up the category. III. Overall Evaluation With one exception, the model is conceptually appropriate for its limited purpose given the objectives of the Commission and the limited knowledge and data available on the impact of alternative financing programs upon the many elements of postsecondary education. A. Major Criticisms 1. The model is not properly used for testing the enrollment impact of major changes in net costs to students. It was used to do this in evaluating Plan A and in developing generalizations about financing alternatives especially Figure 7-A, 7-B, 7-C, and 7-D. The assumption that enrollment change is proportional to the net charge to the student is probably not supported by data and certainly not by logic for large changes in net charges. 2. The model received far too much attention in the report and is likely to be the focus of far too much criticism. a. The Model is a limited purpose tool to perform some simple computations. b. The model examines only enrollment changes-yet the impact of alternative financing plans cover all of the criteria for measuring achievement of postsecondary education listed in Chapter 2 of the report. c. There is no comment on the impact of alternative financing plans upon the range of schools within a single category. 3. The Report of the Commission showed that it does not understand the proper role and use of a model in decision and policy analysis. a. Description of role on pages 249 and 250 does not incorporate what we have learned about models and their use in the past decade. b. The purpose of the model was not explained clearly and it was given too much attention. c. The data input and output were nor formatted clearly so that the reader could check the model and draw his own conclusions from the data. 4. The research-derived fact (??) (Miller & Radner) that enrollment is insensitive to changes in net charges to the student is the important point, yet it never receives the focus and the attention it deserves. B. Major Result of Model 1. The model points out in an unambiguous way the consequences of the insensitivity of enrollment to changes in net charges to students. 2. The model can be a powerful communications means. a. It shows consequences in a unified, logically consistent manner. b. Its assumptions and logic are precise and unambiguous. c. If properly used the model can be a powerful facilitator of communication about the insensitivity of enrollment to changes in net charges to students. Improperly used it will obstruct communication. C. Minor, Technical Criticisms 1. A student flow model is conceptually more appealing. 2. Runs first for 1977 and then for 1980 are inconsistent with a steady state model. 3. The sequence of computation shown in the equations, although they may not exist that way in the code, is unclear and would produce small errors unless the equations are solved simultaneously. This can only be resolved by looking at the code. 4. A clear description of the model does not exist at this time. 5. The results of the model should have been presented more clearly than they were as should the assumptions underlying the model. IV. Action Recommendations 1. Have the model described in a report complete with computer listings. 2. Encourage the model and the results of the evaluation with it to be published and debated in the professional literature. 3. Store in the archives of the National Commission the source code for the model in machine-readable form along with listings. 4. Take the model off any computer system to prevent use by persons who do not understand the model, who do not understand models, and who do not appreciate the limitations of this model. |