“[W]hat is a cost allocation death spiral, and why does it matter so much to universities at the moment? It’s about management not understanding the limits of their own accounting systems and so destroying their own organisations.” (Mills, 2024)

“Universities’ management systems are not up to that task. They are often made up of ex-academics who have gradually learned to be managers—some good, but others bad. The quality of university leadership is variegated: the nimble mixed with the static, the precise blended in with the clumsy, and the forward-looking cheek-by-jowl with the antediluvian. Public relations, media management, advertising and image-making are not their forte, to say the least. Nor are imaginative or novel blends of courses that might appeal. In this situation, all many universities feel they can do is cut. So they take on the mantle of axe-wielders as if they were Gordon Gecko, the archetypal tough-guy of capitalism, in the 1987 film Wall Street. The effect can be comic, but it’s also deeply dangerous. Universities abolish courses, and whole departments, on the basis that they are not making a big enough contribution to “the centre”—that is, not building up enough of a surplus to pay for the services that make a university run smoothly, from the library to estates through to payroll and HR. By so doing, they gradually undermine their own critical mass and income, until there is little left.” (O’Hara, 2024)

References

Mills, Jonathan (2024) “The Cost Allocation Death Spiral and the University”, Linkedin, https://www.linkedin.com/pulse/cost-allocation-death-spiral-university-jonathan-mills-k5ltf

O’Hara, Glen (2024) “Crash course”, Prospect, https://www.prospectmagazine.co.uk/politics/policy/education/66533/british-universities-collapse-debt-crisis

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