Opinion: Clarion Call

Call. 53: Colleges Urged to Control Spending

If colleges do not get better control of their spending priorities, many Americans could be priced out of a college education, according to the U.S. Senate Committee on Governmental Affairs.

The committee’s findings resonate strongly in North Carolina, where the cost of attending University of North Carolina campuses has steadily risen in the past decade and university leaders continue to ask for more public funds to offset rising expenses.

The bipartisan committee met on Thursday for a two-day investigative hearing on rising college tuition, The Chronicle of Higher Education reported. The lawmakers rejected the idea of introducing federal cost controls, but said they would like to find government incentives for colleges to keep their costs in line.

According to the General Accounting Office, the average tuition for a full-time undergraduate rose 44 percent from 1990 to 1996, The Chronicle of Higher Education reported. During the same period, the Consumer Price Index rose by 15.4 percent, and median household income rose 13.8 percent. “Are colleges and universities doing everything possible to maximize value for money in education? The answer is no,” William F. Massey, a higher-education researcher at Stanford University, told The Chronicle. “Cost increases could be held within tighter limits.”

Massey said colleges had not applied the business principle of maximizing cost effectiveness to give students the best value for their dollar. “Fearing that they will be left behind, schools spend heavily to attract and keep research stars and for other amenities,” Massey said. He added that while some of that spending is justified, today’s distorted markets push it beyond the point of diminishing returns.

In January, UNC President Molly Broad proposed large tuition and student-fee hikes to raise money for “urgent needs,” which included building construction and faculty salary increases. This summer, a consultant hired by the university identified $6.9 billion in construction and renovation needs. Much of the money would have gone for new construction. Efforts to identify cost-saving measures or to rein in spending, however, have been few.

“Colleges and universities will get serious about cost control when it hurts them not to do so,” said George Leef, Director of the Pope Center for Higher Education Policy. “Congressional hearings won’t do that. Withdrawing subsidies and the rise of competition will.”

This is not the first time a U.S. panel has urged colleges to control spending. In January 1998, the National Commission on the Cost of Higher Education warned that colleges risked an erosion of public trust if their prices continued to soar and colleges failed to report their spending habits to parents and taxpayers. That commission also warned against federal intervention to keep college costs down, saying instead that colleges must heighten efforts to cut costs and keep tuition affordable.

The panel called on Congress to require colleges to disclose more financial information to parents and students. It also suggested that colleges perform “efficiency self-reviews” to identify cost-saving measures and urged the Education Department to release data every year on trends in college costs. But there is scant evidence that colleges have acted on the recommendations in the report, and even panel members acknowledged that they were hampered by inadequate information from colleges and universities in compiling the report.

The commission’s report also warned that the recent “slowdown” in the cost of education would come to an end unless colleges could gain better control over construction expenses, faculty salaries, and other factors that drive up tuition charges – a telling prediction, especially considering the current financial situation at the University of North Carolina.