By Jason Murphey

The Regents of Higher Education recently approved a new round of tuition increases including an approximate 8% increase at the University of Central Oklahoma (UCO).

You may have noticed that those who are supporting these increases are asserting that higher education revenues originating from appropriated tax dollars have declined, thus justifying the increases. They point to the University of Oklahoma budget and say that in 1980, 38% of OU's budget came from appropriations while today, just 18% originates from appropriations.

It is true that appropriated tax dollars make up a significantly less percentage of higher ed budgets than in past years. But there is much more to this statistic that those who favor tuition increases probably aren't saying.

Consider the following fiscal data from the 2001 - 2011 time period. During this time the amount of your taxpayer dollars appropriated each year to higher ed increased from 816 to 945 million dollars. In both cases this figure represented 15% of total state appropriations. Appropriations increased and Higher education's share of the appropriated money did not decrease! Actually, payments to higher education from the state's governmental activities fund increased from 835 million to over one billion dollars.

So if appropriations actually increased, why did the percentage of the universities' budgets originating from appropriations drop?

During the 2001 - 2011 time frame, spending by higher ed increased from 2.2 billion to just under 4.1 billion dollars. Total net assets (accounting for massive amounts of depreciation) increased from 1.9 billion to 5.8 billion. Expenditure per student served increased from about $10,000 per student in 2001 to approximately $16,000 per student in 2011.

The amount of debt increased from 293 million to 1.2 billion. Interestingly, higher ed now has more debt on the books than even the Turnpike Authority. In 2001, the Authority owed 1.3 billion and at the end of FY 2011, they owed just over 1 billion. The amount of higher ed incurred capital lease liability was at 64 million in 2001 and now stands just shy of 1 billion.

This massive increase in spending has fueled an extensive bureaucracy. In fact, there are now an estimated 32,000 full time positions within the higher ed system. To put this into perspective, consider that the remainder of state government agencies contain about 37,000 positions. With our modernization and streamlining efforts, I expect the day is soon approaching when higher ed will have more employees than all of state government.

Where did the money come from for all of this extra spending if it was not appropriated?

A few years ago the Legislature gave away its power to stop tuition rate increases to the Regents of Higher Education. This huge mistake has resulted in significant tuition increases just about each and every year. This, combined with fees and fines and perhaps federal funding, have driven up budgets, thus making them much less reliant on appropriated dollars.

It is especially ironic for Higher Ed to now blame the Legislature for the tuition increase by erroneously claiming the Legislature has failed to fund higher ed.

Those who point to the ratio of appropriations to budget are camouflaging a massive expansion within the higher education bureaucracy that I believe is mostly unmatched anywhere in state government. Worse, they are justifying the fact that the burden for paying for this expansion has been placed on the backs of Oklahoma students who must go deeper into debt to pay for their education.

The Legislature should reclaim the ability to stop these increases. The Regents clearly do not have the will to put a stop to the out-of-control tuition hikes.

Suggestions For Lowering Tuition Costs

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. 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.