UNC Can Run More Efficiently

Recently, the National Center for Higher Education Management Systems and the Pew Charitable Trusts released a study on higher education funding on the state level. The study is noteworthy because it questions whether high spending on public colleges and universities correlates with high quality.

Included in the study, “A New Look at the Institutional Component of Higher Education Finance: A Guide for Evaluating Performance Relative to Financial Resources” by Patrick Kelly and Dennis Jones, is a section where the authors discuss higher education spending and results. They focus on two state university systems – Colorado and North Carolina. According to the study, Colorado and North Carolina perform nearly the same on various measures. For example, 70.3 percent of Colorado’s students earn a bachelor’s degree and 68.5 percent of North Carolina students do.

But there are differences in the extent to which the two systems are funded by taxpayers. North Carolina’s higher education institutions receive far more public support than their counterparts in Colorado. The University of North Carolina receives more than $2 billion annually from the state’s General Fund. According to the study, UNC receives $12,366 in state and local funding per full-time equivalent student. In contrast, Colorado taxpayers fund their higher education institutions in the amount of $3,459 per full-time student.

North Carolina outspends Colorado per full-time student, $30,334 to Colorado’s $17,138. That large difference is due in part to the fact that Colorado depends more on part-time faculty members than North Carolina, and operates with significantly fewer administrators per student.

Those findings led the authors to ask an important question regarding higher education funding in Colorado and North Carolina:

“With such lean levels of funding, how do Colorado’s public universities sustain above average performance?”

The authors don’t actually answer that question, leaving it up to policy makers to answer. However, they do make some assumptions about performance, saying that each school’s performance could be affected by outside factors such as high school preparation, population and state resources. They also suggest that money isn’t necessarily the key to quality, writing, “Not all institutions need more resources, some can perform better with what they have, and some can maintain or improve performance with fewer resources.”

This is different from what we are used to hearing out of Chapel Hill. Each year, UNC officials say that they need more money for instruction. They need more money for faculty salaries. They need more money for pet projects at each campus. We also hear that any cuts in funding would cause opportunities for students to be lost and would be devastating to the state’s economy and work force.

For example, back in 2002, former UNC President Molly Broad said that the UNC system was an “asset now at risk,” when the General Assembly was considering small budget cuts. This is in sharp contract to Colorado, which has learned how to make do with considerably less money and yet performs at a level equal to if not higher than UNC.

Maybe UNC could learn something from Colorado as well as from Professor Richard Vedder, who has written a book entitled Going Broke By Degree: Why College Costs Too Much. In the book – and in his keynote address at the Pope Center Conference last year – Vedder argued that higher education costs more than it should. He explains that universities are not very productive and routinely use tuition increases and state and federal funding to fund non-educational programs.

“There are two things that families buy that have been rising sharply for decades,” Vedder said at the Pope Center Conference. “One is health care, and the second is higher education. It is no accident, I think, that both of them are services produced in markets with significant governmental financial involvement and regulation.”

It’s too early to tell what kind of a leader UNC president Erskine Bowles will be. A test will come in May when the General Assembly reconvenes and begins to examine adjustments to the biennial budget. In Board of Governors meetings, Bowles has appeared as someone who could run the system efficiently. He discussed various budget pressures, including how the state’s growing Medicaid budget takes away funding from other areas. That shows that he understands the need to set priorities.

Bowles should attempt to run the system in a way that gets the most educational benefit for the taxpayers’ money. A look at Colorado’s state university system would be a good place to begin.

Shannon Blosser is a staff writer with the John W. Pope Center for Higher Education Policy in Chapel Hill.