Tennessee Trims the Fat

By Jim Coleman

I was pleasantly surprised to read an article today stating that the Tennessee board of regents has embraced some economic reasoning. The reagents plan to begin cutting university programs that turn out few graduates. Vice chancellor Myrick Short explained, "Campuses shouldn't be carrying programs that are not productive, putting resources into them that they could be putting into programs that are needed by the state,"

Mr. Short is right. Not only are underutilized programs costly in terms of dollars, they are also costly in terms of opportunity cost. When universities insist on maintaining marginal programs, they must implicitly give up the chance to use those resources in some more productive way. What sense does it make for universities to host programs that only turn out 1 or 2 grads a year, when a much higher return on investment can be made by moving those funds elsewhere?

Eliminating low producing and redundant programs (particularly at the graduate level where cost per student is highest) is a great way to make universities more productive. However, it is a change that is unlikely to come from the universities themselves. Universities love prestige and like to brag about their exotic undergraduate programs or graduate offerings. To effectively trim the dead weight by cutting programs requires a change in university incentives.

This can be done heavy-handedly, by some central authority, such as in Tennessee’s case, or it can be done in a more gentle fashion by simply making universities directly bear more of the cost of maintaining these programs. If the state refuses to bail out a university which is hemorrhaging money from a program that only produces two M.A.s a year, the school has a strong financial incentive to reevaluate the program and see if those funds can create more value elsewhere.

Ultimately, cutting marginal programs results in a more affordable, higher value education for the students and a decreased tax burden for the public. Let’s hope that in the future eliminating wasteful programs becomes less newsworthy and just business as usual.