Commandment #3: Incentivize Key University Leaders to Reduce, Not Increase Costs

Commandment #3: Incentivize key university leaders to reduce, not increase costs

By Daniel Bennett

The higher education establishment has been the benefactor of a remarkable amount of resources (with tax-free status) from a wide variety of payees (government transfers, corporate sponsorships, alumni gifts, endowment growth, tuition, etc.), yet its fiscal irresponsibility is topped only by our impeccable friends in Congress. University officials have had every incentive to continually squander massive amounts of money to "improve" everything on campus except for education by engaging in a humorless game of follow the leader -- each vying for a coveted top 25 ranking.

This has propelled an arms race of lavish spending on everything except perhaps education. This reckless empire-building has resulted in devastatingly high tuition for students with nothing meaningful to show for it, unless of course you believe that bureaucratic armies, sports arenas and giant climbing walls actually contribute to the advancement of knowledge.

The preferential treatment of colleges by allowing them to receive impervious resources with next to zero accountability has enabled this game to grow exceedingly out of control, with tuition rising at nearly 2.5 times the rate of inflation each year for the past decade. This fiscal mismanagement needs to end -- students, parents and the public are outraged with the perpetually rising costs. University leaders need to be provided practical incentives to not only control, but to cut costs.

First up on the chopping block are the bloated administrative bureaucracies. Administrative staffs have increased at an average rate of about 4.7 percent over the past 10 years, a rate that is roughly double the rate of enrollment growth. At doctorate/research universities, 10% of these employees are paid an annual salary in excess of $100,000! Not only has the mere size of the bureaucracy exploded, but the salaries are exorbitant as well, especially without a incentive system in place that rewards the right kind of objectives--ones that improve educational outcomes, increase efficiency, reduce costs and make college more affordable.

Other notable items that could be rewarded include increasing facility/classroom utilization, privatizing costly non-core activities, increasing faculty productivity, reducing time-to-degree, improving completion rates, etc.