Tuesday, October 14, 2008

State Spending on Higher Ed

by Daniel Bennett

The current financial crisis has led some, including myself, to speculate that there will be a decrease in state-level support of public higher education in the coming fiscal year. This appears to be coming to fruition, as the Chronicle reports today. Some of the states that have been, or may be, affected thus far include:

Massachusetts - losing 5.6% of state budget to offset a gap
Pennsylvania - faces a potential 4.25% cut to deal with declining tax revenues
Virginia - 5-7% cut to deal with a budget deficit
Utah - 4% cut in spite of 9% growth in enrollment
Tennessee - potential 3.4% (44 million) cut, on top of a $56 million cut last year
New York - 7% of funds to help ease a decrease in sales, fuel and corporate taxes

There are most likely more states facing higher education budget cuts in the face of a difficult economic period, but this provides a snapshot of a few of the more profound cuts. So how are the public institutions going to make up for the revenue shortfall? Some administrations will automatically decry the budget cuts and make a public plea to accept further tuition increases, which have already resulted in a huge burden on students and their parents. However, this solution is not the most viable and certainly is a worst-case scenario.

Instead, our nation's public institutions need to start behaving like good stewards of the taxpayer. Institutions should conduct an internal investigation of their cost structure and growth plans to find ways to reduce their expenses. The University System of Maryland has take such a vuluntary approach and appears to have made a great deal of progress, much to the satisfaction of lawmakers in the state. It dubs this the Effectiveness and Efficiency Initiative and has saved an estimated $94 millions since 2004 by reducing redundancies, increasing faculty productivity and controlling costs. The eye-opening part of this initiative is that the 11 campus system has managed to reduce its costs in the wake of growing enrollment. Coincidentally, expanded enrollment is one of the common arguments that institutions use to explain an inability to control costs.

Increased enrollment is supposedly causation for exponential growth plans, which often include luxurious student housing, recreation centers and student unions, not to mention the growth in executive-level administrative members. How many assistant provosts and directors are needed, especially in lieu of a declining number of full-time tenured professors and their teaching loads, and the increased use of adjunct faculty to instruct courses? This tactic appears headed for the waste-side as the part-time instructors prepare to unionize and battle years of abuse.

The bottom line is that public institutions need to be held accountable for their actions. It may be a good practice to require cost reductions as a prerequisite for taxpayer outlays - a pay for performance of sorts. This would provide some incentive for institutions to become more effective and efficient.

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