Anderson mismanages resources

Friday, October 9, 1998

Anderson mismanages resources

COMPUTERS: Decision to charge workers per hour in lab poorly
thought-out

By D. Gregg Doyle

I certainly wish there was better management in the Anderson
School of Management. Coincidentally, in the School of Public
Policy and Social Research (SPPSR), the policy is pretty
un-researched.

Last week, as a surprise to most new and returning students, the
Administration – namely the Computer Committee without its student
representatives – announced that students would be charged $3 per
hour when using the SPPSR computer lab. Up until now, these fees
have been included in registration fees and tuition.

Here are a few issues which the powers-that-be should have
considered before setting their creativity to this clever
policy.

First, lest anyone think I am a rabid anti-privatization
advocate (not very popular in hire – oops – I mean to say higher
education these days), let us look at what I will call the
generative issues around the SPPSR computer lab. It seems that the
facility is what our friends at Anderson would call a "cost
center." That is, it does not support itself through its revenues.
Thus, the Anderson School has decided to sort of "privatize" it, so
that users pay the full freight of its costs.

But this cannot be done halfway. "Sort-of privatize" is like
"sort-of pregnant" – it doesn’t really work. And the logic of
SPPSR’s new pricing policy is backward. As an illustration, let us
assume that I was going to start selling pizzas to students for
lunch for six months. After I bought my $13,000 oven, paid rent for
$1500, bought supplies for $1500, and paid labor costs of $10,000 –
for a total of $26,000 – I would sit down to figure out how much to
charge. If I figure that I will sell about 100 individual pies a
week, I could count on 2600 over the six-month period. Okay, then,
I’ll charge $10 each for my individual pizzas, assuming I run a
"non-profit" business such as UCLA.

Great, right? So would you buy my pizza? I doubt it. See, you
could buy the same pie at LuValle or North Campus for $4. I don’t
get to set my price based on the cost of my inputs; the price is
set by what people will pay for it in, yes, the market. That this
simple lesson could be lost on the administration of a school full
of economists is amazing.

What already has been happening is that the consumers – students
and researchers in the school – are running to other options. This
means staying home to work on private machines, buying a laptop,
writing assignments by hand, or just doing less computing. This
does not seem like the intended consequence of a school in whose
name (Policy) is followed by "Research."

Then what should we do – oppose any user-fee based system? Au
contraire, the issues which the new policy was intended to address
are real: congestion during the day, minimal revenues, a
"structural deficit" in the school (which, as nobody mentions in
public, stems from profligate spending to create the "Kennedy
School of Government of the West Coast"). Actually, real
privatization – that is, allowing multiple private computer firms
to compete for our business – could solve these problems and
more.

First, firms would have an incentive to attract our patronage
through competitive pricing and quality service, rather than the
"there’s-nothing-you-can-do" attitude of the current
"provider."

Second, this incentive would lead firms to hire and train lab
assistants who are more often able to – well – assist, rather than
just be nice (but unhelpful).

Third, other forms of innovation – such as more open hours and
new services – could be introduced at any time. Say it with me,
economists: marginal revenue is greater than marginal cost! Who
knows, maybe they’d come up with something worth $3 an hour.

Let us talk now about the distributive issues involved. First
and foremost, every student (and, I might add, researcher) in this
school entered into an unwritten contract that there would be
computers available for their academic work. Instructors assign
work that must be done on a computer. Commuters come to campus for
an entire day (behavior encouraged by UCLA’s parking prices, of
course) and expect to be able to accomplish some work between
classes. Graduate Student Researchers go back and forth between
classes and research every day. For the poorest students, which
SPPSR has tried hard to attract, the computer lab may represent
their only access to a crucial tool for career preparation.

For others, the new policy means merely that those three hours
between classes on Tuesdays and Thursdays are wasted time.

Now, according to the School’s own estimates, each student can
expect to spend an extra $900 or more per year on something that
was previously offered as part of registration fees and tuition. At
the very least, the school should "grandfather" students and
research grants which are already here. To be completely fair, when
implementing such a policy in the future, the school should reduce
fees by $300 per quarter, and then charge users for their use.

What about productivity issues? As I have said, many in the
school are already not doing their work in the Public Policy
Building. This means either wasted time "commuting to compute" back
at home, doing less academic work on the machines intended for that
purpose, and/or developing a paranoia about how long one is on the
"network meter" that oversees SPPSR machines. In any case, neither
the quality nor quantity of work in SPPSR are likely to rise.

The folly of the current pricing policy also overlooks the
transaction costs involved. Put simply, to nickel-and-dime everyone
each time they print an outline or check e-mail is not
cost-effective, and acts as a disincentive to learning and
productivity.

It would be more productive to charge a set fee per quarter –
not unlike America OnLine or other internet service providers – and
perhaps set a (high) upper limit on use, say 150 hours per quarter.
Most municipal water or power departments have figured out how to
curb overuse by levying higher charges on the few users that
consume far more than their share. There is no reason that the
SPPSR, with its many economists and computers, couldn’t figure out
how to charge $50 for 150 hours per quarter, and a slightly higher
hourly fee above that. Assuming one could monitor one’s own usage
level, there would be an incentive to economize on use without
being paranoid or feeling nickel-and-dimed.

What about the intangible benefits of having a shared computer
lab for SPPSR? It may sound a bit too touchy-feely, but the school
does have both "Public" and "Social" in its name. At the current
rate, this lab will soon not exist, and students will be in other
labs around campus, or isolated at home in front of their own
screens. Perhaps this is not unintended? One of the few places,
indeed things, that currently brings the fledgling school together
is the computer lab where master’s and doctoral students – in
policy studies, social welfare and urban planning – come together
to discuss the issues of the day. I would submit that the esprit du
corps that arises from this environment (in addition to allowing
the large-scale student organizing that this issue has
precipitated) brings students a sense of belonging to the young
school (no, that’s not the Young School - aren’t the URL and
all the roads enough?).

To make this mushy idea more appealing to the Administration,
let me put it this way: happy alumni make generous donors. Students
who feel they were misled and nickel-and-dimed don’t make happy
alumni.

In sum, any number of solution to the computing problem must
resolve funding issues with one eye on real participation by the
consumers, and the other eye on maintaining a level of greatness
befitting UCLA and "the Kennedy School of the West Coast." The
current policy won’t even maximize revenues, as there is no
off-peak discounting and both students and researchers are
abandoning the building for computers.

I doubt that the Schools of Law, Management, or even Arts and
Architecture would do very well without a common computer lab or
studio space. That is exactly where the new SPPSR computing policy
is pointing the school.D. Gregg Doyle

Doyle is a doctoral student and researcher for the Anderson
School of Management’s School of Public Policy and Social
Research.

Comments, feedback, problems?

© 1998 ASUCLA Communications Board[Home]