Pooling the substantial buying power of state community colleges into a joint purchasing consortium could save the state nearly $2 million over the next seven years, according to state Rep. Julia Howard, House chairwoman for the state Joint Legislative Program Evaluation Oversight Committee.
“That bill is alive and well and ready to file,” the Davie County Republican said of the pooled purchasing measure.
The oversight committee also is exploring the possibilities of community college mergers, privatizing some community college operations, and consolidating work force training programs across state departments, Howard said. Fiscal conservatives have applauded the committee’s efforts, while some state officials and Democratic lawmakers question the potential savings.
Dallas Woodhouse, state director of Americans for Prosperity North Carolina, a nonprofit, grass-roots organization advocating economic freedom and limited government, lauded the efforts of the oversight committee as “really good steps.”
“I think we have a new political will in Raleigh that is more willing to do more difficult things than we have in the past,” Woodhouse said. “I’m optimistic, but it’s hard because, as we see, eliminating even one job in state government causes an enormous squawking from the left and from the established bureaucracy.”
A subcommittee could look at privatization in the 58-college system, the nation’s third largest, as early as next month.
“AB Tech in Asheville already does that … with their custodial services,” Howard said, “and they’re saving about $500,000 a year.”
But state House Minority Leader Joe Hackney, D-Orange, is not as enthusiastic about privatizing government operations.
“Many times when you do that you simply get somebody to do the work that’s not providing health insurance or something like that. That’s not a good solution,” Hackney said.
“And then you get the people who bid low to get the first contract, and then after you let all the people go they let their rates go back up,” he said. “I’m a skeptic that that really saves any money.”
David Wyatt, chairman of the three-campus Asheville-Buncombe Technical Community College Board of Trustees, hails its privatization efforts at its Enka and Asheville campuses. Its smaller Madison County campus employs one staff custodial worker.
“We’re pleased with the service that we’re getting and with the savings that we have incurred,” said Wyatt. “When we converted to contract, each person had an opportunity to transfer” to another job elsewhere at AB Tech or was offered a job with the contractor, he said.
“We’re trying to take care of the personnel and not just throwing them out on their own,” Wyatt said. “A good many of them” took advantage of the offer.
“We continue to look at things where we can be … cost effective and efficient,” Wyatt said.
Scott Ralls, president of the North Carolina Community College System, said member institutions long have practiced privatization.
“Most bookstores are privatized in community colleges,” Ralls said, and most campus police duties have been turned over to private security firms or contracted to local police and sheriffs’ departments.
Those areas, plus maintenance and custodial services, can be privatized more easily because county and local funds pay for them, Ralls said. Most state funds go toward teaching and work force training.
The oversight committee is “making a lot of people nervous,” Howard said. Speculation about its activities has increased since it directed the state Program Evaluation Division to study the potential cost savings of merging up to 15 of the smallest community colleges and creating a joint purchasing consortium.
“If the General Assembly adopts both recommendations, potential cumulative savings after seven years are estimated at $26.2 million,” said the report, released in June.
The report concluded smaller community colleges generally have much higher per-student education costs.
“The issue of perhaps merger of some of the community colleges still lies there,” Howard said. Community colleges “would never lose their identity or name” under a merger, “but instead of paying three administrators we would pay one, and he would have three schools.”
“I know that there was a skirmish or two about merger of some of the administrative units back during the session,” Hackney said. “I think we’ve got to be careful to make sure that people locally would feel like they have a choice in these decisions.”
Should a merger bill be introduced, Hackney envisions a vigorous debate.
“There’s a lot of opposition to it,” he said. “Community colleges in North Carolina have a tremendous reservoir of good will and support. If they think it’s a bad idea it probably isn’t going to pass.”
Ralls said community colleges are “pretty administratively lean” and disagree with the merger cost-savings analysis. He said the state formula failed to take into account the significant transition costs one college would incur to absorb others.
Further, all 58 community colleges are now accredited as individual campuses. There would be sizeable expenses to reaccredit the restructured colleges as multi-campus colleges, Ralls said.
Even if the $5.1 million in annual savings projected in the report were to occur, “that’s a pretty big consequence for that amount of money,” Ralls said, both in terms of jobs lost and intangibles such as loss of leadership in a community and the vibrancy that comes from having a freestanding, economically viable community college.
As a spinoff of the merger study, the oversight committee directed state staff to examine the costs of work force development programs at community colleges, and then expanded that to include still more departments.
“One of the things that makes community colleges a little different than the whole landscape of work force training” is that they provide “the vast majority” of federal job training programs, Ralls said.
Still, Howard said, there are so many programs that the oversight committee wanted to determine “what are they doing, who are they serving, what are they costing, where does the money come from, is there an overlap in programs?”
Work force development encompasses programs at the Department of Labor, the Division of Services for the Blind, Council for Women, and the Commission on Indian Affairs, Howard said.
“We have Education, we have Human Resources, we have Commerce,” she said, and the executive branch has several work force training ventures.
“We’re bringing in each of the departments that administer to any degree a workforce development program and get the best information we can” to determine if some should be consolidated or all are fine where they are, Howard said.
“We’re about halfway through” the factfinding to determine “what’s in the best interest of the taxpayers,” Howard said.
She said the joint purchasing consortium is “a no-brainer” government reform that harnesses the muscular collective buying power of community colleges to drive discounted prices for all campuses.
“I think we’re such a conglomerate now, so big that people don’t look at simple things that save nickels, dimes and quarters,” Howard said.
“That’s always a good thing to look at,” Hackney said of pooled purchases, and members of the Appropriations Committee make such cost-savings searches a priority annually.
Ralls said community colleges have a strong track record of joint purchasing.
“One of the best examples” occurred some 10 years ago when the system created the largest college information technology infrastructure in the United States, through which all 58 colleges operate. That saved “hundreds of thousands of dollars,” Ralls said.
Dan Way is a contributor to Carolina Journal.