"A SPECTER IS haunting higher education: the specter of decline and bankruptcy. Experts predict that between 10 percent and 30 percent of America's 3,100 colleges and universities will close their doors or merge with other institutions by 1995. On many campuses the fear of imminent contraction or demise is almost palpable."

With that sober beginning, George Keller--a former faculty member, dean, and assistant to three university heads--launches a chilling, instructive, literate, compelling discussion of te staggering problems facing U.S. higher education and the management strategies required to cope with them.

Now the executive vice president of an institutional planning firm, Keller has studied the issues thoroughly. Based upon extensive research, including interviews with educators and planners plus visits to campuses nationwide, he presents a plethora of facts and observations. Some of the latter will receive mixed reviews on campuses:

"The proportion of highly creative, productive scholar- teachers has seldom exceeded one-tenth."

"Erosion of institutional collegiality is often combined with the long-famous reluctance of most professors to come to closure."

"By 1990 many faculties could be almost geriatric in make-up."

"Higher education has entered a long period of consumer sovereignty.

"More campuses, especially those that do not have faculty unions and those with a greater dedication to quality--and the two usually go together--are moving swiftly away from across-the-board pay increases to raises based on merit."

By many measures, the next decade will be the most difficult era U.S. higher education has ever known, not only because of ballooning costs and shifting academic priorities, but also because of declining birthrates a generation ago. Higher education's pending problems stem from three shortages: too little planning and determination, too little money, and too little sex--at least of the variety that leads to babies.

By the early 1990s, the number of high school graduates in the United States will have dropped roughly 25 percent from the 1980 level; yet, all universities, whether public or private, depend upon enrollment. As enrollments decline, already deteriorating physical plants will deteriorate further, "fixed costs" will rise, and tenured faculty will age and become more expensive.

Moreover, educators and society alike now expect educational institutions to perform better than in the recent past. On this, intuition can be misleading. From 1955 to 1975 was the most prosperous time ever for higher education. As Keller notes, more college buildings were constructed then than during the preceding 200 years; a new two-year college was built every two weeks. Yet, paradoxically, by most reasonable measures academic standards declined more between 1965 and 1975 than during any other time this century. Now, with dwindling enrollments and escalating costs, universities are endeavoring not only to survive but also to improve.

Keller's lament is that many academics remain blithely unaware of these colossal, almost insuperable, problems, or they obstinately hold to antiquated and romantic concepts of management that cannot meet the staggering needs of the '80s.

According to Keller, "Many professors, like Chinese mandarins, have a bias against business and commercial activities. They abhor organizational needs, and they detest bureaucracies. Like blacksmiths, cowboys, and bookstore proprietors, university scholars tend to be in modern society but not really part of it." Keller also criticizes academic administrators. As he notes, despite education's problems, "few colleges or universities today possess forceful, visionary leadership."

The sociology of academe is fascinating, if not altogether rational. On campuses, many people wish to have other people's authority but not their responsibility. Some trustees and state legislatures intrude into curricular matters, and many faculty members and students want to run the institutions. To the uninitiated, it might seem straightforward and efficient if everyone simply would do his own job well: students would study, teachers would teach, and administrators would administer. Universities, however, are unique institutions, combining modern practices with ancient traditions.

By temperament and training, academics challenge authority and question everything. In such an environment, standard management practices fail. Yet, universities have evolved their own modus operandi, one that is quaint and charming but, Keller asserts, inadequate to the forthcoming challenge.

He argues that many myths abound about academic life, one being that a university is close to an Athenian democracy. To many professors and some students, "shared governance" is cardinal to a university and always has been. Although Keller stresses the vital need for campus-wide participation in governance, he demonstrates that many of the utopian models of management championed on campuses either are fantasies or are impractical.

Never again can a university be an ivory tower; it is part of the world around it. The national economy affects its financial health; national demographics affect its enrollment. The challenge now is greater than ever--simultaneously to maintain or enchance quality, respond to society, hold down costs, raise salaries, balance the budget, preserve collegiality--all while enrollments plummet.

As higher education faces hard times, the psychology of scarcity can enter: "I'm poor because you're rich"; "I work too much because you work too little." And clich,es and contradictions already abound.

From professors: "I have tenure but I feel insecure. My morale is low. Protect me but let me share in the decision making." From students: "I provide the revenue, so I should run the institution. Treat me better now, or I won't be a supportive alum. Provide more resources but don't raise tuition." From administrators: "Faculty only work a partial week and a partial year yet they want higher salaries while revenues are declining. Students don't understand costs in the real world."

Passions run so high in academe, it is said, because the issues are so shallow. Nonetheless, higher education is vital: It molds society itself, and its financial problems are real and deep.

The difficulties are not new; they are only growing worse. Even in 1971, a quarter of all private colleges and universities had to spend from endowments to cover operating budgets. And in the '70s, Keller notes, Yale, Chicago, Cornell, and many other major universities ran large deficits. According to Keller, Columbia was forced to take $50 million from its endowment; Brown used one-third of its. Between 1976 and 1983, graduate enrollments at Harvard and Chicago dropped one-third. In 1981-82, Northwestern suffered an $8 million deficit, while the University of Michigan cut $11.6 million from its budget and planned to reduce its staff by 600 in only two years.

What is needed, asserts Keller, is a "rebirth of academic management, one that combines educational policy and planning with financial administration." He hammers the point that administrators must replace their passive role with a more active one; that finance must assume a new prominence; that campus governance should take new forms; that communications should become more open; that the external environment should receive close attention; and, most of all, that "the president must give direction to the college and devise the strategies, make the hard decisions, and allocate the resources."

Significant lessons can be learned here, not just for colleges and universities but for all venerable organizations undergoing change. Whether for institution or individual, tribulation can be beneficial. For academe, it can force the excision of waste and an increase of efficiency. While preserving the best from the past, universities must plan realistically.

And everyone--student, parent, educator, business executive, government official--should remember always that education is not a purchase but an investment. College is not for four years but a lifetime. The student is education's principal beneficiary but not its only one--we all are. Therefore, we all should care.

With resolve and compassion, a university in the '80's must employ sound management. The result can be a financially solvent and academically sound institution, one warranting support, commanding respect, and fulfilling its mission.

Keller's book helps suggest how.