Higher Education

| February 27, 2014

Despite the Great Recession, higher education awash in revenue

In her State of the State address, Gov. Mary Fallin proposed cuts to several areas of government, including higher education.

“Those who like bigger government and higher taxes will say the sky is falling,” she correctly predicted. “Entrenched interest groups and even some agency heads may say the same thing. But guess what? It’s not. The cuts we’ve proposed this year amount to five percent or less of agency budgets, and in total amount to about one percent of state spending. Any business worth its salt can find five percent costs savings without crippling the services it provides. Families have to make the same choices all the time.”

Education in general remains the largest single beneficiary of state tax dollars — and it is hardly the efficient service machine some in education would like to claim it is. From colleges to CareerTech centers to public schools, Oklahoma education is filled with duplication and inefficient allocation of resources. Of the state’s 500-plus public school districts, nearly 400 of them have fewer than 1,000 students, yet they stubbornly resist any form of cost-saving consolidation. In fact they blithely go on hiring new administrators, a 49 percent increase in recent years.

In higher education there are separate colleges and universities scattered across the landscape, each with massive layers of administration, some within just a few miles of each other. And as OCPA distinguished fellow Andrew Spiropoulos noted this week, higher education officials “complain because their appropriations have stayed flat, a little more than $1.09 billion at its height to $1.045 billion last year. What they don’t say is that from 2004 to 2009, we increased higher education appropriations an astounding 27 percent and (rightly, in my view) made it easier for public universities to increase tuition. Even in the face of the Great Recession, higher education spends more than 60 percent more than it did in 2004. Nobody is hurting over there.”

Indeed, as OCPA research fellow Vance Fried has pointed out, some of our “nonprofit” universities are in fact wealthy and highly profitable. “Undergraduate education is a highly profitable business for nonprofit colleges and universities,” he writes. “They do not show profits on their books, but instead take their profits in the form of spending on some combination of research, graduate education, low-demand majors, low faculty teaching loads, excess compensation, and featherbedding. The industry’s high profits come at the expense of students and taxpayers.”

It’s no surprise that higher education officials are lobbying for more government spending. After all, the first business of bureaucrats is to boost their budgets. But let’s hope the first duty of lawmakers remains the protection of the taxpayers.

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