Big Spending, Little Results

A new study raises questions about the much-vaunted excellence of North Carolina’s higher education system.

Ohio University economist Richard Vedder and a graduate student, Andrew Gillen, don’t conclusively answer the question raised by the paper’s title, “North Carolina’s Higher Education System: Success or Failure?” They do, however, raise some doubts about its success.

In a data-filled paper encompassing topics from tuition, debt, and enrollment to administrative staff per student, one message stands out: North Carolina taxpayers spend more for higher education than in most states, but North Carolina has fewer adults with bachelor’s degrees, per capita, than the U.S. average.

Specifically, North Carolina’s state government appropriates $7,153 per student (that is, per full-time equivalent student). The U. S. average is much lower — $4,871. And North Carolina’s figures are well above those of its nearby states. Georgia appropriates $5,760 per student, Tennessee, $4,721 per student, and Virginia, $4,576 per student.

In spite of this high appropriation, only 25.6 percent of the state’s adult population had a bachelor’s degree in 2006, according to the U. S. Census Bureau. This percentage is less than Virginia’s (32.1 percent) and Georgia’s (28.1 percent), but more than South Carolina (22.6 percent) and Tennessee (22.0 percent). It is below the national average of 27.2 percent.

In other words, North Carolina’s state government spends 50 per cent more than the government of Virginia on higher education but has fewer adults with college degrees. The state’s relatively low figure seems especially surprising because many well-educated people are drawn to North Carolina from other states.

Furthermore, a slightly smaller percentage of North Carolina’s 18-24-year-olds is enrolled in higher education than the national average, although the percentage is higher than for North Carolina’s neighbors. The growth in enrollment between 1980 and 2005 lags behind the national average as well as Virginia and Georgia.
Graduation rates for the state are 50.3 percent over 6 years, slightly below the U.S. average of 52.9 per cent.

These facts do not necessarily condemn the state of North Carolina; for example, Virginia’s figures are undoubtedly affected by the growing penetration of the federal government spreading from Washington, D.C. But they do raise puzzling questions.

Most of these figures come from the extensive information supplied by the Department of Education in its IPEDS collection of statistics . The national statistics give the paper heft (and data well worth exploring), but the paper does lack local information. For example, the paper concludes with fifteen steps the university could take to cut costs (such as increasing reliance on community colleges). It does not acknowledge that the university is working on at least four of them.

Much of the paper is devoted to statistical information about costs. Perhaps the most interesting graph reports the relative costs of instruction at different campuses.

Both UNC-Chapel Hill and N.C. State are considered “flagship” schools. Yet UNC-Chapel Hill spent $22,876 on instruction per student while N.C. State spent only $9,787 in 2004. That is, Chapel Hill spent well over twice as much on instruction as did N.C. State. Instructional costs at other UNC campuses were substantially lower than at either of these schools. N. C. Central spent $6,725; UNC-Greensboro, $6,591; UNC-Charlotte, $6,570; and N.C. A & T, $5,231.

What is included in “instructional costs” may differ among campuses (they are self-reported data), but they partly reflect the cost of faculty. Faculty salaries are higher at Chapel Hill (around $85,000 on average compared with $75,000 at State), the report says.

Gillen and Vedder speculate that another important difference has to do with the number of classes faculty members teach. Highly-paid research faculty may be teaching few students, even though their salaries are considered instructional costs. (Federal statistics lack information about teaching loads.)

Finally, the statistics make abundantly clear that fact that students pay a small part of the total costs of their education. When scholarships and grants are taken into account, the average price of tuition to students at a four-year UNC school was slightly under $1,000 in 2004. (The average published tuition in 2005 was $3,631.) The average net tuition at a public community college was about $100 in 2004.

This relatively low price may make North Carolina’s education seem like a bargain. Yet when the recipients of the education aren’t paying the full cost, they provide little check on excessive expenditures. And the taxpayer, who knows less than the student about what kind of value the university is providing, gets stuck with the bill.

Jane S. Shaw is president of the John W. Pope Center for Higher Education Policy in Raleigh.