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Fall 2018 - Stepping Up
As manufacturers face an unprecedented shortage of workers—skilled and otherwise—Enterprise Minnesota’s Bob Kill asks Devinder Malhotra, Minnesota State’s new chancellor, how his system of universities, colleges and tech schools will confront the challenge of educating and training manufacturing’s next generation.
October 2018

I’m not sure all our readers fully understand the breadth and scope of what the Minnesota State system brings to our state. Could you start by describing the system that you oversee?
We are a network of 37 institutions, with 54 campuses spread across the state. We have a little over 250,000 students enrolled in our programs. Almost 375,000 students utilize our services every year, with about 120,000 of them for non-credit basis like continuing education or customized training. We’re also the most diverse higher education provider in the state of Minnesota: We have 63,000 students of color and 84,000 students from low-income families. 

How many graduates do you have in the state? It has to be a huge number.
They have declined a little in the last few years because of declining enrollment, but we still had 38,000 students graduate in 2016. Our 2017 data has not been fully formulated. Out of those 38,000 graduates, two-thirds of them graduated from one of 30 colleges. And a third of them graduated from one of our seven universities.

I would say about two-thirds of college graduates are in career and technical education programs. That’s close to 19,000 to 20,000 graduates a year. Eight percent of them are taking manufacturing programs. 

Enterprise Minnesota’s Bob Kill discusses the challenge of educating manufacturing’s next generation with Devinder Malhotra, Minnesota State’s new chancellor
Enterprise Minnesota’s Bob Kill asks Devinder Malhotra, Minnesota State’s new chancellor about confronting the challenge of educating manufacturing’s next generation.

Our annual State of Manufacturing® survey shows us that workforce issues permeate everything manufacturing executives are thinking about. They understand that better strategic planning and continuous improvement are essential to everything they do—not just talking about it, but really doing it. In that sense, the Minnesota State system is by far the most critical asset we have in developing the workforce. How do you see that changing? We’re hearing a lot about how you are trying to consolidate the power of your individual campuses across the state, making it truly a system rather than a loose federation of a bunch of campuses. 
We are an integrated system. We can meet the workforce needs at any level called for by the economy. We can provide skills at the technical level; we can provide professional education at the baccalaureate level; we can provide engineering degrees at the master’s level. And similarly, the landscape of our learning is also spread out. We have traditional modes, but we also have project-based curriculum. For example, Minnesota State University–Mankato offers a four-year engineering program on the Iron Range in collaboration with Itasca Community College, and others. That’s a great example where students are not in the classroom, but in the workplace. And, we create a curriculum for them through the projects they are working on. They can learn all they would have learned in the classroom while actually doing hands-on work under the stewardship of an industry mentor, along with the faculty mentor. 

So, we have a whole gamut of curricular designs by which we promote and deliver education. And, in that regard, you’re right. We are the major player.

The other aspect is that the knowledge content of all occupations is increasing as we speak. Today’s economy is very different than what traditionally was referred to as the industrial economy. There is no such thing as a low skill; 74 percent of the emerging jobs in Minnesota will require some post-secondary credential, half of them will require a baccalaureate degree. 

Now, add two other salient facts: One is our demographics are declining; as a state, we are becoming an “older state.” At the same time, we’re becoming more diverse. We will be drawing students from populations that have had historically low participation rates in higher education and are economically fragile. In other words, their ability to pay for education is also severely constrained. That’s why those labor-shortage numbers are increasing so dramatically.

Manufacturing executives told our pollster that one solution to the skills gap would be for colleges to “enroll more students.” That may sound wonderful, but it’s fictional. How would you respond to them? What are some things our clients might embrace that are already occurring in their own communities?
I don’t think they necessarily mean enroll more students; they probably mean they would like to see more graduates or more credentialed individuals coming out of our colleges and universities. These businesses have to realize there is a problem of size in terms of the shortage, but there is also a problem of composition. They need to ask themselves what kinds of skills do they currently have within their workforce, what kinds of skills will they need, and what is the timeframe in which that mismatch needs to be rectified for businesses to thrive? Then they should look at their existing workforce—the element I refer to as the incumbent worker—and identify the opportunities for their existing workforce to readapt and retool their skill portfolios at the individual level, and stay with the company for a longer period of time through that changing adaptation. Then they have to ask themselves how the composition of the shortages matches the remuneration levels. 

I love that you’re asking companies, “What are you doing to invest in your current workers?” Sometimes we think too much about attracting workers and not enough about retaining them. Customized training is often part of that solution. Can you talk a little bit more about that? That’s not something that’s very well known as one of the resources the system can provide.
Customized training and continuing education is one component of our over-arching workforce development strategy. In the customized training and continuing education arena, we had 37 institutions each doing their own work, and some of them doing a very, very good job meeting needs at the local level. But each institution left on its own could not meet the whole gamut of needs because there are only a finite number of curricular designs they could carry in their individual portfolios. So as part of our three-year effort to charting the future, we asked ourselves, collectively, “What if we pool all 37 portfolios and use that aggregated, integrated portfolio to meet the needs of businesses, no matter where they are located in the state?”

Minnesota State is a network of 37 institutions, with 54 campuses spread across the state.

Let’s say there’s a business in Hibbing, and Hibbing Community College does not have the capacity to deliver what they’re asking for. However, South Central in Mankato does have that capacity. What we can do is put together a collaboration between South Central and Hibbing College to make sure the Hibbing business gets what it needs. And so, it is in this regard, that we developed the regional model. We created a governance structure and a strategic approach that can meet the needs of the whole region. Suddenly the whole is greater than the sum of the parts. Ultimately, the individual institutions deliver the work, but we make sure that the information flow is effective and that needs are met, no matter where the business is located. 

It’s a really powerful opportunity for the private sector to connect. Manufacturers in the private industry struggle with too many boundaries. All of a sudden, those boundaries are shrinking away.
Exactly. The private sector could, in some ways, connect with just one person, no matter where they are. They’ll say, “I need this,” and within 24 hours we will match them to where those portfolios exist. So, those conversations can start occurring and the curricular designs can emerge to meet their needs.

Has this structure already rolled out?
Last year was the first year. We are still putting the structure in place, but I think, hopefully in the next few months, that structure will be completed. When six entities are pooling their portfolios, there are a lot of different things which need to be worked out logistically and otherwise. I’m thrilled with the progress we are making, and I think it will be a game changer. It’s very clear to us that the need for customized training and workforce solutions, in general, is bound to rise. And we want to make sure that we as a system have sufficiently augmented our capacity to meet those additional needs as they arise. 

But you talk about charting the future. I probably should have asked the definition of charting the future right up front, because clearly you have a vision and a plan over the next, you said, three years, so explain it as you want. But what it really comes down to, it sounds like, is there’s a lot of work going on with visibility, to get the system more recognized across the state. Could you comment on some of that?
Given the impending worker shortages and the changing environment in which higher education operates, we knew that our future would be very different. Out of that came a strategic framework that said, “Providing extraordinary education at affordable cost to all Minnesotans.” Then second was to be the partner of choice with businesses and the economy; and third, obviously, was to also adjust ourselves to the emerging budget realities.

We asked ourselves what we should do differently in order to get to that point. And that’s where charting the future came in. We used eight different teams to work eight different areas, including comprehensive workforce solutions, and gave credit for prior learning while also validating the learning that occurs in the workplace. Those eight groups came up with 42 recommendations. Then the colleges and universities came to the table, and we identified 21 that we will ramp up for work.

Devinder Malhotra, Minnesota State’s new chancellor
 Devinder Malhotra, Minnesota State’s new chancellor

So, the future has been charted, but now we are in the midst of navigating the future, because the future is here. And in that context, we focused on three important areas over the last year, and they all have workforce implications. One is student success in its holistic sense, which means not only graduating the student, but also making sure the student is appropriately placed in relevant employment. Another is diversity, equity and inclusion, because of changing demographics; and finally, financial and programmatic sustainability.

We are aligning to the changing needs of the learners, and the changing needs of the economy and workforce; we are aligning to changing demographics, and we are aligning to the new budget realities before us.

How does online training fit into this?
Actually, online training is also expanding quite a bit, especially in the last five to seven years. In fact, I think almost a quarter of our programs are online. Online today is very different than what online was even 10 years ago when we were still mimicking the old correspondence courses, just sending it digitally. Today, these classes have interactive chat rooms—interactive! Students can talk to faculty all the time, and in some sense, there is more interaction in online classes than in face to face classes because the student is anonymous; so, they are not intimidated by the sage on the stage. My dream is that there is a student who works in St. Paul and lives in Minneapolis and every day takes the green line from downtown Minneapolis to downtown St. Paul. It takes 53 minutes. Many of our classes are 50-minute segments. Ken, using his earbuds and iPhone, can, interactively, take a class in real time, where he asks a question and interacts as if he was in the class. So, students can take a class while going to work, take a class while going back to work, and suddenly they have two classes under their belt. We have the technology today to do that. What we need is investment. 

Let’s talk about budgets. How do declining budgets constrain the progress of some of the programs you’re talking about?
We cannot be overwhelmed by our budgetary stresses, as severe and challenging as they are. We will not be defined by our constraints, financial or otherwise. We will be defined by the innate potential and promise we deliver to the state of Minnesota.

It’s a difficult problem, but we are attacking it. A couple of things have happened. Higher education has responded to 20 years of disinvestments by increasing tuition, and this is happening nationally. The cost structure itself of our deliveries hasn’t altered that much. To some extent, we have become more efficient over time because we have had fewer resources. But in our case, we don’t have the option of increasing tuition either, because most of our students—84,000 low-income students—come from economically fragile backgrounds. For them, $500 or a $1,000 will make or break whether they stay in the college or the university for that semester.

I’ll give you an example: When I was at Metropolitan State, we sent a letter to all the students who hadn’t come back in the last three semesters, who were in good academic standing and who were within 30 credits of finishing their degree. We sent them a plan by which they could graduate within a year and receive a $500 tuition scholarship. 

That was a great ROI. For $500 I was putting one additional credentialed individual in the workforce.

Because of economic fragility and various other reasons, we are losing almost a third of our incoming class between their first and second year. Now, if our student success metrics go up, our enrollment will go up, and our revenues will go up. And so, our strategy to promote student success is not only a great strategy for the students and for the economy, it’s a great fiscal strategy for us. Right now, for example, in the seven universities in the Twin Cities, we as a system capture only 30 percent of the students who want to go on from a two-year college to get a four-year degree: 14 percent go to Metropolitan State and 16 percent go to other universities. Let’s say we start capturing 50 percent. And these are students in our own institutions where we can capture them. Our persistence rate, from first to second year, goes up from instead of 70 percent moving into the second year, to, let’s say, 80 percent. Our fiscal problems are solved.

So, the internal dynamics of the institutions provide some hope. However, we need serious investments in order to create the shock absorbers, so we can keep these students in there. The students don’t necessarily leave because they are having difficulties in academics; they leave for a lot of other things. Just to give you one statistic, at Minneapolis Community and Technical College, one out of every ten students, at some point during the course of his or her academic career, will be homeless. They’re that close.

And so, therefore, there are elements of food insecurity, there are elements of homelessness. Life happens. Because most of them have a job and are raising a family, the average age of the student is higher. So, initially we need certain additional investments, but then if those investments are being made by the state, we can move out of that.

Talk about investment. The Frandsen Family Foundation recently offered to cover tuition, fees, books and supplies for any student from Rush City High School who would attend Pine Tech. Could that be a model to energize manufacturers in certain regions to rally around?
Sure, in two ways. In one model somebody comes and says, “We will fund your tuition for the next two years if you go to a post-secondary institution.” The cost of receiving the education goes down dramatically and the benefit stays the same. So, if at the individual level, the student is making a choice whether he or she should go or not, suddenly the cost/benefit ratio is much higher than otherwise would be the case, and there’s a greater incentive for him or her to go.

As manufacturers face an unprecedented shortage of workers—skilled and otherwise—Enterprise Minnesota’s Bob Kill asks Devinder Malhotra, Minnesota State’s new chancellor, how his system of universities, colleges and tech schools will confront the challenge of educating and training manufacturing’s next generation.

The second great example is workforce scholarships, and Pine has done a wonderful job there, too. The Legislature gave us $1 million aimed at four sectors of the economy that are in high demand, and manufacturing is one of them. So, we created 400 scholarships of $2,500 each, about half the cost of tuition for the year. Our presidents then went to their business partners and their high schools, and asked, “Would you match this?” Suddenly $2,500 became $3,500 or $4,500. We are closer to covering the whole tuition, and there is a greater chance the student will finish if he or she has that kind of support.

We hosted a parent focus group in Lakeville cosponsored by the local chamber. But the parent focus group was much more positive about the value of technical education than we anticipated. We came away thinking that the bias toward the four-year degree path might be coming from teachers and guidance counselors. We still think we could do more to promote the great careers, not just jobs, available to people who get two-year technical degrees.

It takes a village to educate a student, and it takes a village to take care of the economy. We need a concerted effort. Labor force is not only a scale issue; it’s also a composition issue. There are skill shortages at all levels, and in fact, I can think of five, six areas of endeavor where a two-year degree creates a better income profile over a lifetime than a four-year degree. It’s a composition issue.

Peggy Kennedy, one of our former presidents, told me she was sitting in a plane next to a physician from the Fargo/Moorhead area. He came to know she was president of Minnesota State and said, “One of my sons went to your Moorhead campus and got a two-year degree.” Another son went to Vanderbilt. Guess who’s making the most money? The one who went to Moorhead.

There’s great work that occurs even with a four-year degree. We need skills at all levels. But I think what we need to do is create stronger partnerships with our K-12 institutions and create an information set and an educational program with industries that lays out the whole gamut of choices open to a student coming out of high school. I’m confident, if that happens, this mismatch issue will go away.

I notice you’ve brought on seven new presidents in just the past year. How has their role been evolving?
Changing circumstances will bring changes at the system level in terms of our focus and our approaches, but they will also bring changes at the internal, operational level. This new, changing environment requires different types of leadership traits. Today, I tell our presidents they not only lead their institutions, but they’re also leaders in their regions. They have to be at the table in shaping the economic, social and cultural agendas of their regions. We are not only stewards of the academic experience of our students, we’re also stewards of the communities from which we draw our students, and where our students go back and work. That kind of approach means they’re leaders at the system level or at the enterprise level, as well. What they need to do is manage this tension of individual autonomy and partnership with other institutions so that we can provide a much more augmented capacity to meet the needs of the down shortages Minnesota is going to face. 

This kind of leader is somebody who is adept at developing strong partnerships with K-12 and other institutions within the system, with the broader, higher education at the national level, and with the businesses at the regional, state, and national level. 
When I meet with new presidents and we talk about their stewardship of the communities and their role as leaders at the enterprise level, I tell them to always remember one thing. If we have to summarize our rationale for our existence as a system and as institutions, it is simply to rid higher education of its elitist and insular character. Reach out there. Learn. Remember, learning doesn’t only occur in classrooms. Learning is occurring all the time. Validate all learning, no matter where it occurs. 

Enterprise Minnesota is part of a national system. We get to hear about the power of partnering with colleges and technical schools. 
Approximately eight percent of our graduates are in manufacturing. There is a lot of emphasis on manufacturing, even in our four-year sector. Our universities also fully recognize that precision manufacturing is an important area in which they need to stay engaged—and that manufacturing today is very different than what manufacturing was 30 years ago.

We’re updating our laboratories all the time. Just to make the point, the integrated science and engineering laboratory at St. Cloud State University and the new lab at Minnesota State University–Mankato, have both been actively designed so that the industry researchers can come in there, too, and work jointly with our faculty on industry problems.  

Devinder Malhotra was named the chancellor of Minnesota State in March 2018. He had served as interim chancellor since August 2017.

Malhotra has served in leadership positions at other Minnesota State universities. He was interim president of Metropolitan State University from 2014 to 2016, and provost and vice president for academic affairs at St. Cloud State University from 2009 to 2014. Previously, he served as the dean of the College of Arts and Sciences at the University of Southern Maine from 2005 to 2009 and as associate dean of the Buchtel College of Arts and Sciences at the University of Akron. He also served as a tenured professor of economics at the University of Southern Maine and the University of Akron.

Malhotra holds bachelor’s and master’s degrees from the University of Delhi and a doctorate from Kansas State University. He has also completed the Management Development Program of the Harvard Institutes for Higher Education.

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