There were some positive outcomes from this year’s legislative session. This includes the scheduled closure of two high profile state government corporate welfare funds. Closing these funds removes state government from meddling in the free market where it all too often creates unintended negative consequences.
One of these funds (known as EDGE) will be liquidated, with much of the assets ($150 million) going towards higher education endowment funds. These funds are to match private donations to the endowments. I am a proponent of moving higher education entities away from the appropriated funds model and towards a financing mechanism by which earnings from endowments are used to keep tuition from increasing. I am opposed to efforts to direct endowment earnings into areas not resulting in stabilized tuition costs. Unfortunately, I believe all too often these funds are spent on empire building or are wasted by not driving down the cost of education. One of the first reforms to take place within higher ed should be the channeling of endowment earnings directly to cutting tuition costs whenever possible. The regents should use the EDGE money for endowments funds dedicated to lowering tuition.
The State Auditor must be given the power to conduct performance audits of higher education institutions. In last week’s article I detailed the enormous expansion in higher ed spending and indebtedness over the past ten years. Higher education spending has grown from 2.2 billion to almost 4.1 billion dollars. Had the expansion stayed at the rate of inflation, it would be at 2.85 billion. In response to that article, someone posted on my Facebook page questioning why those funds were not audited. Oklahoma’s performance audit laws are not conducive to frequent audits and I suspect it has been many years since there was a comprehensive performance audit of the higher education system by the State Auditor, if ever.
Many of our government modernization initiatives have been based on performance-type audits. These audits almost always expose major inefficiencies and I am confident that if given the opportunity, the State Auditor would provide us a report with a detailed road map to eliminate inefficiencies within the higher ed system. Without this important tool it is hard for legislators to know which savings initiatives to apply first.
I suspect one of the first recommendations would be to consolidate overhead and administration. I have heard too much anecdotal testimony from those who work at the institutions regarding the massive expansion of administrative overhead and high paying positions within the system. We know that Oklahoma has nearly 30 higher education institutions across the state, and consolidating the administrative services of many of these institutions into a shared administration service should be a priority. Just as state agencies are set to save millions from consolidating, so should higher ed.
I also believe the report would show that many of the institutions are offering duplicative programs. These programs should take advantage of technology and distance learning to be combined across the entire state system.
Higher ed’s powerful lobbying team has been responsible for winning exemptions from government modernization reforms. If these reforms are good enough for state agencies, they should certainly apply to higher ed as well. This is especially true of the IT consolidation effort which already accounts for a projected $30 million of savings to state agencies. Higher ed has aggressively resisted participation in this reform. I believe there are many other opportunities for participation in shared services with state agencies and other higher ed institutions.
Technology should have bent the cost curve of getting a degree just like it has driven down the cost of so many other aspects of life. However, at a time when the application of new technologies have allowed many organizations to reduce the number of FTEs, higher ed has continued to expand. Higher ed can’t hold out forever. Eventually, technology will drive down the cost curve just like it has in so many other areas of life.
Next week I will write about the future of higher education and describe how technology will break the status quo, pop the massively inflated higher education bubble and eventually collapse the cost of getting a degree.
Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.