Despite a lot of talk about the need to make more Americans college graduates, the country is spending less and less public money on higher education. Is there a way to fix this problem?

Well there might be, according to a new paper prepared by McKinsey & Company, the management consulting corporation. As the report says:

If the United States wants to hold its position in the global economy and preserve the living standards of its citizens, reaching this goal [producing one million more graduates a year by 2020] is key. How can it be achieved? One answer would be to spend substantially more on higher education. But states have been spending less on higher education in recent years and today’s economic and fiscal circumstances make a spending increase unlikely. An alternative is to produce more graduates for the same investment without compromising educational quality or restricting access to higher education2 —in other words, to improve productivity in higher education….

It’s possible, maybe. Looking at eight college systems, the McKinsey paper estimates that it’s possible to spend exactly the same amount of money, $301 billion on higher education in 2008, but still get those one million new graduates a year.

How? It’s complicated but it basically comes down to improving the effectiveness of college. There are five things that might help:

First, create structured pathways to graduation, so that all students understand what they need to do and how long it will take to graduate from college.

Second, reduce the amount of “nonproductive credits” students have to earn to graduate. Current college students actually earn more credits than they actually need to graduate.

Third, redesign “the delivery of instruction.” This means a lot more online classes. It also could mean changing the academic schedule to offer courses all year long.

Fourth, redesign “core support services.” Colleges and universities can save thousands of dollars per student by improving the efficiency of nonacademic college functions like human resources, information technology, financial aid, career counseling, and libraries.

Finally, the report recommends that colleges “optimize non-core services and other operations” to reduce cost in order to improve efficiency. This means cutting costs by improving the efficiency of things like academic research, public services, and auxiliary enterprises like dinning and fundraising.

This report is very honest about the reality of funding for higher education. There’s less public money available for education and there’s likely to be even less in the future.

That being said, there’s also little reason to think universities can become more productive and deliver services more efficiently. “Productive US institutions show that 23 percent improvement in higher education productivity by 2020 is achievable,” the report gushes. Well sure it’s technically achievable, but is it likely? What would have to change in policy and practice to actually make this sort of thing happen?

It’s important to acknowledge the improbability of new public funding, but it’s it seems almost equally unlikely that schools are going to improve efficiency on their own.

Even the colleges and systems McKinsey studied to prepare the report—Brigham Young University-Idaho, Indiana Wesleyan University’s College of Adult and Professional Studies, Rio Salado College, Southern New Hampshire University, Florida’s Valencia Community College, the fully online, competency-based Western Governors University, the surprisingly effective Tennessee Technical Centers, and the for-profit DeVry University—didn’t take specific steps to become more efficient. These schools have simply been run more efficiently than most other schools for as long as they’ve been around.

The hard part is probably not running a school efficiently; it’s trying to convert an existing school to more efficient practices. How can that happen? Is that sort of mass movement toward greater efficiency any more likely than additional public funding?

Incidentally, McKinsey estimates that “at today’s levels of degree productivity” the U.S. would need to augment educational funding by $52 billion every year to produce one million more graduates a year by 2020.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer