ANTHONY H. CATANACH JR. is an associate professor in the School of Business at Villanova University, as well as the Cary M. Maguire Fellow at the American College Center for Ethics in Financial Services. His professional experience includes five years as an audit manager with KPMG and six years in the financial services industry. Dr. Catanach has received numerous awards for his publication, teaching, and curriculum innovation efforts. He has authored numerous articles on a variety of accounting, finance, and management issues, as well as several business education texts..
The great experiment in public higher education has failed. Over a century ago, states created public universities and supplied much of their financial support. The idea was to develop the intellectual prowess and skills of the citizenry, so that they might contribute more to the marketplace and public interest. Today, the dream is dead and we wonder what the impact will be on the accounting profession.
Public higher education used to depend on state appropriations; today those appropriations fund only a small percentage of a school’s total operating budget. As Tamar Lewin wrote in The New York Times, “… state colleges and universities, supported by tax money, have long been a haven from the high cost of private education. But tuition bargains are fading as the nation’s public universities undergo a profound shift, accelerated by the recession. In most states, it is now tuition payments, not state appropriations, that cover most of the budget.”
In addition to the recession, states increasingly have to deal with ballooning pensions and a variety of entitlement programs. Indeed, watching state legislatures at this time of year creates a certain pathos. One feels sorry for governors and state legislators given the pitiful condition of their budgets, even though most of the pain is self-generated. Many states have been spending beyond their income and politicians often have promised beyond their financial capabilities. No wonder former Michigan president James Duderstadt said, “It is a misnomer to call schools like the University of Michigan ‘state universities.’” These organizations are looking more and more like private schools.
Penn State is another example. In academic 1971-1972, 62% of the general funds budget was furnished by state appropriations and 32% by tuition and fees. By 2010-2011 things changed considerably: state appropriations supplied only 14% of the general funds budget while tuition and fees made up 78%. And the future likely will include more reductions in state appropriations.
We don’t see a reversal of this trend any time soon as state economies are facing monstrous problems in their economies and social commitments. While we expect few universities formally to forsake public charters in favor of private charters, the continued erosion of state support will accomplish this result nonetheless. Tuitions likely will skyrocket and new scholarships won’t make up the gap, causing some students to forego college. And many students and their families already have borrowed to the hilt; they do not have room for more debt and are defaulting on the loans they currently have.
Students simply won’t be able to afford a private education. We cannot predict how many of our young people will be denied a university education, but it might be just enough to jeopardize the existence of some colleges and universities. After all, there will be fewer students. This may not be bad as higher education today has a much greater capacity than justified by the current demand.
And what will happen to the accounting profession? After all, accounting firms rely on universities to supply their junior accountants. The first thing we expect is that the much-discussed impending shortage of faculty will improve in the short run. Some faculty who had planned on retiring will postpone doing so given that their retirement accounts are not fat enough, particularly with the major risks facing the American economy, including the threat of inflation. However, in the long run, the faculty shortage will exacerbate as fewer people seek a doctoral education in accounting as higher education markets contract.
As for the student body, we expect fewer and less diverse students. Many lower income families will simply be unable to afford higher education. And there are not enough sources for new scholarships to make up the difference. Alternatives might become more attractive, such as online education or technical schools.
What this means is that the accounting profession might have to look to other candidate pools to fuel its needs for new associates. For example, students at more affordable online institutions might become attractive to the accounting firms. The situation is further complicated by the fact that many private school students don’t find the accounting profession a suitable job choice…after all, accountants provide services to their wealthy parents.
We do not have the data to make projections, so we cannot quantify the effects or the timing of these transformations. What we do know is that state budgets face severe structural problems, and these problems will not be easily or quickly addressed. State support has blown away like sand in a sandstorm and, de facto, public universities are turning into private schools.
This essay reflects the opinion of the authors and not necessarily the opinions of The Pennsylvania State University, The American College, or Villanova University.
J. EDWARD KETZ is an associate professor of accounting in the Smeal College of Business at Pennsylvania State University. He has a bachelor’s degree in political science, a master’s degree in accountancy, and a Ph.D., all from Virginia Tech. Professor Ketz has been a member of the Penn State faculty since 1981. He also has taught at the University of Connecticut and the University of Maryland. Professor Ketz has authored and edited 17 books including Hidden Financial Risk (Wiley, 2003) which examines the corporate culture and the institutional setting that engendered recent accounting scandals. Dr. Ketz has been cited in the popular and business press, including The Wall Street Journal, The New York Times, The Washington Post, Business Week, and USA Today. He also has appeared as an accounting commentator on CNN, National Public Radio, and Bloomberg Radio.
Unfortunately, I agree with most of what you’ve written here. But why do you state that “higher education today has a much greater capacity than justified by the current demand?” I’m not sure I see this. Degree requirements for various careers are only increasing, and applications and enrollment for both undergraduate and grad programs continue to rise. The trend you discuss will mean an increase in student loans and a decrease in diversity (as you note) but I don’t think the firms are going to run low on recruits any time soon.
Is Your Money Better Spent On University Learning or Online Learning?
Students today have a plethora of options when it comes to getting a post-secondary education. Community colleges, technical schools, universities and online learning are all potential opportunities for today’s student. There are many advantages and disadvantages to each. In this article we’ll specifically look at what makes online learning so appealing over traditional university learning.
We’ve all been there: Three hundred students in a huge lecture hall, one professor trying to explain complex accounting concepts using an overhead, or worse, a chalkboard. What a nightmare. Universities are not built for the modern student and still employ many older teaching methods. In an online learning environment, you’re always using the most recent technology.
When you’re learning online you’re also utilizing the same skills you will need in your future career. In today’s business world you will likely interact with clients and co-workers that are located all over the world. You’ll need to interact with them over email, intranets and proprietary management systems. Online learning utilizes these same systems and methods of a collaborative team environment. This means you’ll be in a much better position when you embark on your career.
Or how about this scenario: You’re in a small discussion class and one student has question after question, occupying all of the professor’s time. You can’t get a word in edgewise and are constantly having to visit the professor’s inconvenient office hours. Online learning doesn’t have this problem. Students can log on anytime they have a question and get a response from the professor. No need to wait for office hours or battle with the talkative classmate, everyone has the opportunity to weigh in and get answers to their questions. Whether you’re using an online discussion forum or emailing the professor directly, you’re going to get your questions answered.
It’s not just about the availability of your professor or building your skills, it’s also about an education that’s designed for you. Students learn best at their own pace, especially when dealing with complex accounting concepts and standards that will be presented on the CPA exam. Being able to log on to an online learning course 24 hours a day, seven days a week, ensures you can study when it’s convenient for you and can spend more time on the topics you need most. Most accounting courses build on knowledge and concepts you’ve already been taught, so not spending enough time on those initial concepts can hurt you in the long run. Take advantage of online learning and study at your own pace. Overall you’ll retain more information and be able to apply it easily to advanced concepts later down your educational journey.
One of the most frustrating parts of college life is scheduling classes. Traditional classes are only offered at set times and days and often conflict with other classes you need, or want, to take. Online learning doesn’t have that issue; you aren’t beholden to an arbitrary schedule set by the university. You can take the classes you need and attend them when you have time in the day. Not a morning person? No worries, don’t log on in the morning. You can take your class at the time of day that fits with your schedule and optimum learning time. This works especially well for students who have to prepare for national licensing exams like architects or accountants who for example need additional cpa review course before they take their exam.
Everyone learns differently. Some are visual learners and others are cognitive. Online learning gives you all the options to learn at your pace and style. Prefer to hear a lecture? Play one of the online videos. Need to discuss accounting concepts with other students? No problem, just log on to the discussion forums and pose your question. No matter your preferred learning method, online learning has it. Don’t settle for what the professor wants, learn how you want.
Online learning also encourages other non-traditional students to participate. As such, online learning classrooms are often more diverse than you’ll find in a traditional university setting. Working professionals, military, contractors on assignment overseas and others all trend toward online learning. This can make an online learning environment a wealth of information in itself. Each of these students brings real-world experiences which enhances your education and helps you apply complex accounting concepts to real-world examples.
Finally, online learning can reduce your overall expenses. Many online learning environments utilize e-books, which are traditionally cheaper than college textbooks. No waiting in line for obscure textbooks at the local story and no over paying for used textbooks. Never worry about making the deadline to return the book or sell it back, online learning eliminates those worries. Get access to your e-book copy and read it at your leisure.
As with anything in life, online learning is as good as you make it. Without the distractions of unruly students, environments without modern technology or a lack of access to your professor, you have the opportunity to make your online learning experience the best possible experience.
Ed and Tony,
I agree with most of what you say. keep in mind, though, that a few of the many state boards of accountancy don’t accept credits from on-line courses as satisfying the education requirement to take the CPA, or to be licesned. I think of Texas and California.
Consequently, it will take brick and morter graduates to staff future accounting firms.
Dave
Point taken, but reduce the number of undergraduates nationwide by a large enough number, and these boards will accommodate the large accounting firms.
Amazing article. Spot on w/ the analysis.