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Dude, wheres my teacher? Who will teach the next generation of CPAs?

Just like slide rules and inkwells, accounting educators are becoming a vanishing breed. While enrollment in undergraduate accounting programs has risen in recent years--and increasing numbers of candidates are sitting for the CPA Exam--the number of accounting doctorates awarded annually are at their lowest level in decades.


Only 86 accounting doctorates were awarded nationally in 2002, according to the Hasselback Accounting Faculty Directory. That's a steep decline from 199 degrees awarded on average between 1992-94.

The demand for educators looks to only increase in the coming years as a generation of baby boomer professors retires.

This situation has reached what many in accounting academia believe to be crisis proportions. The Association to Advance Collegiate Schools of Business expects that by 2007, the shortage of business doctorates--including accounting--in the United States will be 1,142; by 2012, that shortage is expected to more than double to 2,419.

As business schools nationwide scale back doctoral programs, "the demand for accounting educators is going to get severe very quickly," says CPA Janice Carr, professor of accounting at Cal Poly San Luis Obispo and co-chair of CalCPA's Accounting Education Committee.

The problem is exacerbated by California's high cost of living and vanishing state budget, which make recruiting accounting educators more challenging for the state's schools.

And as the profession slowly begins to redouble its efforts to attract students to academia, many educators in California's schools are left to wonder: Who will teach tomorrow's CPAs?


Carr has been sounding this alarm for several years at the state and national level, through her work on CalCPA's Accounting Education Committee and on AICPA Council.

Undergraduate enrollment has steadied since its decline in the late 1990s, with the AICPA pouring significant resources in attracting the best and brightest into the profession, "and that's well and good," says Carr. "But if there's nobody there to teach them, we have a problem. As a profession, we've dropped the ball in terms of recognizing the need."

When outlining career opportunities to accounting students, "we talk about becoming an industry accountant, a government accountant or a public accountant. But we haven't marketed academia as an opportunity over the years," Carr says. "We've overlooked it, and it's going to come back to haunt us."

The profession is finally beginning to listen. The AICPA will soon partner with the American Accounting Association, an organization of accounting educators, and the National Association of State Boards of Accountancy to address the problem, says Beatrice Sanders, director of the AICPA's Academic and Career Development division.

And CalCPA is re-instating its doctoral grant program, which was discontinued in the mid-1980s when demand for new accounting educators seemed low. A proposal is being finalized that would award up to three doctoral candidates enrolled in either California or out of state schools a $10,000 annual stipend, for a maximum of three years. The doctoral student would have to commit to teaching in a California college or university for two years after receiving their doctorate as a condition of the fellowship.

While increasing grants and fellowships for doctoral students is a healthy first step, "it's going to take much more than that," Sanders says.


Andy Barnett, director of San Diego State University's School of Accountancy and co-chair of the CalCPA Accounting Education Committee, believes the shortage of new accounting doctorates "is approaching crisis proportions." Specifically, state budget cuts have made educator recruitment efforts more than challenging.

A year ago, Barnett was authorized to recruit a new accounting faculty member. After narrowing the field to two candidates, and on the eve of making a formal offer, authorization was cancelled.

Barnett is not alone. According to the CSU's Faculty Recruitment Survey, business and management schools had the most difficult time attracting new faculty among all disciplines.

Last year, the CSU system filled only 67 of 136 business and management faculty vacancies, a 49.3 percent success rate--the lowest success rate of the 14 disciplines tracked. Not surprisingly, education had the second-worst success rate, at 53.1 percent.

The lower success rate was "partly due to a substantial number of searches cancelled due to budgetary reasons," according to the survey.

More slots are expected to open soon. Of the 15 accounting faculty members at San Diego State, five are expected to retire in the next five years. "But the fact is, I could lose fewer than five people and be in a crisis," Barnett says. By 2006, "I don't know if I'm going to have enough people left to staff the curriculum. This shortage is very near critical mass."

The situation doesn't look to improve. "We are very unlikely to get any funding for a new position for next year," Barnett says. "Our provost has said 'Don't even ask.'"

California's state universities and colleges "haven't had a lot of salary adjustment because of the Legislature," Carr says. "And this is happening across the country. More public schools have to raise their own funds."

Of the 10 accounting faculty members at Cal Poly San Luis Obispo, Carr expects four to retire in the next five years. Beyond shrinking budgets and dwindling supply, "when you lose that much faculty with that much experience that quickly, it's hard to replace them with just anybody," she says.


Even when an accounting department has the funding to recruit, the high cost of living in California and the relatively low salaries offered by the CSU system make recruitment a chore.


Though California's famously sunny skies and breathtaking land-scapes offer some incentive for prospective educators, "I've had several people say that they're sorry, but they can't afford to consider coming here," Barnett says.

The cry is heard throughout the state's school system. Last year, the accounting department at Cal Poly San Luis Obispo made three offers to accounting professors, all of which were turned down. "One of them got on the Internet, looked at the local cost of housing, and turned us down," says Mary Beth Armstrong, accounting professor at Cal Poly San Luis Obispo. "The other two had better offers elsewhere."

This year, however, the university made two offers and both were accepted. But both professors had unique reasons for accepting. Both had better offers elsewhere. Armstrong said--one was even offered a substantial amount more to stay at her current institution--but ultimately accepted simply because they wanted to live in California.

"But I don't know how much longer we can keep relying on the drawing power of California," she says. "The Cal State system simply is not competitive."

In the past, Cal Poly San Luis Obispo would receive more than 100 applications for an open position. "In recent years, we're lucky to get 25," Armstrong says. "It's never been as difficult to recruit as it is now."

Indeed, new accounting Ph.D. grads are highly sought after. If 100 doctorates are awarded in a given year, then educational institutions across the nation "are going after these same hundred individuals," Armstrong says. "California's budget doesn't help, and the price of housing is probably our biggest problem."

But more business doctoral grads are entering private industry rather than academia. Nearly 61 percent of business doctoral graduates took jobs in four-year educational institutions in 2000, down from 76 percent in 1990. Private industry captured 15 percent of business doctorate grads in 2000, twice the number of 10 years earlier, according to the National Science Foundation.


Mike Diamond, executive vice provost and vice president of the University of Southern California and former dean of the university's Leventhal School of Accounting, believes a big part of the problem is vanishing doctoral programs.

Because of the cost to run such a program--including providing fellowships, grants and faculty access--"universities as a whole have begun over the last five years to significantly reduce the size of their Ph.D. programs," Diamond says. "Especially in the public sector and to some extent in the private sector. They just can't afford to have as many Ph.D. programs."

The USC accounting doctoral program "has never been particularly big, and I don't think it's going to grow. It's just too expensive," Diamond says. "We're trying to decrease the number of our Ph.D. programs and concentrate on fewer that are only of the highest quality."

Instead, schools pour more resources into MBA programs, which have become the flagship of business schools nationwide.

"All the business school rankings are based on MBA programs," Diamond says. "But MBA programs do not naturally lead one into further academic study," he says. "It's the end of a pipeline."

The AICPA is taking note. "We've seen over recent years that some programs are just closing, especially because of the budget crunch," says Sanders, who authors the AICPA's Supply of Accounting Students and the Demand for Public Accounting Recruits survey, which tracks accounting Ph.D. programs.

"That's probably the greatest factor driving down the supply" of accounting doctoral grads, Sanders says. She cites a National Science Foundation report as evidence. Only 60 accounting programs produced one or more doctoral grads in 2000. In 1995, 72 accounting programs produced one or more doctoral grads.


As young accounting students turn away from academia, accounting professors are getting older. The proportion of business school faculty 55 and older in North America exceeded 30 percent in 2001, up from less than 20 percent a decade earlier, according to a report from the Higher Education Research Institute.

And it costs more to replace them. According to an AACSB Survey of Faculty Demand, 11 percent of the full-time faculty in U.S. business schools will retire by 2006. With rising faculty salaries, the report says, it can cost up to 50 percent more to replace each retiring faculty member

In the 1950s and '60s, many universities were founded or expanded to keep up with the demands of an expanding middle class who could afford to send their children to college for the first time--an opportunity that was previously perceived to be only for the wealthy.

"And many new faculty members signed on then," says Jim Macklin, an accounting lecturer at CSU Northridge. "All of us baby boomers were a big balloon in the population, and now we'll all be retiring at the same time."

Internal numbers from the UC system bear this out. Almost 30 percent of tenure track, and 38 percent of non-tenure track business faculty are 55 or older, according to Paul Schwartz, a University of California Office of the President labor spokesman.


Macklin, a former Arthur Andersen partner, took an 80 percent pay cut to become an educator 22 years ago. But his business experience has made him and others like him a valuable commodity during a time when schools scramble to fill classes.

Academia refers to Macklin and his peers as "clinical" faculty, non-Ph.D.s whose business experience offers students a real-world perspective. And colleges and universities are hiring more such faculty to fill growing gaps in the curriculum.

An American Council of Education report shows that business schools, with the exception of medical schools, had the highest percentage of full-time non-tenure track faculty, and that part-time business faculty were close to 50 percent of the total in 1998.

The AACSB requires that a certain percentage of business school faculty be full-time, regular faculty (as opposed to adjuncts, lecturers or other clinical faculty designations) for the school to receive accreditation.

"But because of budget cuts and retirements, we're hiring more and more part-timers to cover the classes," Carr says. "And we run the risk of not getting accredited again."

USC's Diamond believes a shift in those standards may be in order. "They (the AACSB) can draw those lines in the sand, but the reality of the market may be very different," he says.

But staffing the ranks with part timers, while it may enrich the faculty roster, is a short-term solution. "We don't want that mix to get out of whack," Diamond says. "Ultimately, it's your tenured faculty that own the academic programs."


There are many reasons one might want to become an educator. Salary is rarely cited as a driving factor. But soon, that perception might change. The lack of accounting doctoral graduates, and the abundance of retiring faculty, has driven up entry-level salaries dramatically in recent years.

Entry-level business and management professors earn the most out of any discipline in the CSU system, with new assistant professors averaging a salary of $77,757, roughly $16,000 more than the next closest division, engineering.

This trend has occurred nationally. The average salaries for new doctorates hired in U.S. business schools increased 11 percent from the 2000-01 and 2001-02 academic years, to $85,900, according to the AACSB.

"It's too bad I wasn't born 30 years later," Barnett jokes. "Salaries are going for 10 times what I was getting. It's a seller's market now and there are tremendous opportunities out there.

"But non-monetary considerations are far more important. It's simply a great career."

Jerry Ascierto is CalCPA's associate editor. You can reach him at
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Title Annotation:Certified Public Accountants
Author:Ascierto, Jerry
Publication:California CPA
Article Type:Cover Story
Geographic Code:1USA
Date:Jun 1, 2004
Previous Article:Hot stuff: CPA profession keeps emerging in proposed legislation.
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