The structure of the American economy is changing. The industrial-manufacturing base that defined Post-World War II America is steadily giving way to an information-technology economy that is more dynamic than any other in the history of mankind. The defining principle of this shift is the substitution of labor with capital and its hallmarks are the speed, smarts, and embrace of change that it requires.

The University of Connecticut’s recent tuition hikes, though, will make it more difficult for thousands of students to rise to meet this challenge.

UCONN’s Board of Trustees voted this week to dramatically raise tuition at the state’s flagship university. Depending on state funding decisions, the price of attendance will rise between 23% and 26% over the next four years. Student fees and room & board charges will also increase. In exchange for the hikes, new President Susan Herbst promised to hire 290 new faculty members, an 18% increase in faculty from the university’s fall 2010 staffing level.

Harkening back to the days of the Thomas Commission at the state government level, earlier this year UConn initiated a strategic review of their operations to find cost savings, dubbed the Strategic Redesign Initiative. The resulting McKinsey & Company report identifies between $53 and $97 million in cost savings from non-faculty operations. Recommendations projected to reduce costs by $6.4 to $10.1 million in fiscal year 2012 are already underway.

The steps are welcome but incomplete unless they can be combined with cost savings from the faculty side of the budget as well. The first step in doing so is to establish a meaningful way to measure faculty productivity. The number of classes taught, competitive grants won, research citations, or other metrics describe how effectively a faculty member does their job and give administrators new tools for assessing performance and, importantly, making budgeting decisions.

A few institutions, most notably the University of Texas, collect such measurements and make them publicly available on the Internet for further study. But like performance measures for other educators, choosing what to measure and how to measure it is highly controversial. Efforts to do so by officials in other states, such as Texas and Florida, struggle to gain acceptance in higher education circles.

A July survey of university CFOs found that increasing teaching loads and eliminating tenure were two of the three strategies preferred for improving balance sheets (increasing tuition was the third, ranking above the elimination of tenure but below increased teaching loads). But neither is cost effective without reasonable metrics to inform the decision-making process.

University administrators and faculty should work together to craft and publish a set of performance measures that objectively evaluate the productivity of each faculty member – preferably before any new hires are added to the mix. The end goal of this effort should be to improve the quality of research and instruction at UConn while at the same time holding the line on future tuition hikes.

Making the current systems of delivering services, like higher education, much more efficient and effective is crucial to competing and winning in the new economy. Tuition hikes, like tax hikes, increase the cost associated with working, living, and prospering in Connecticut while the broader focus of the economy is on driving down costs. As long as this disconnect exists, its going to be hard to compete in this new era.

Heath W. Fahle is the Policy Director of the Yankee Institute for Public Policy and a former Executive Director of the Connecticut Republican Party. Contact Heath about this article by visiting www.heathwfahle.com