Higher Education in South Carolina: Cut Administrative Costs and Focus on Student Performance

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While South Carolinians can take pride in our state’s higher educational system, costs and tuition have skyrocketed in recent years, even as graduation rates remain below 40 percent. At the same time, South Carolina’s leading universities have been drawn away from their core mission and increasingly become conduits for the Legislature’s economic development plans. The solution is to refocus on student performance, cut administrative costs and look to innovative technology that will improve both access and affordability.

Higher Ed Spending Has Increased 77 Percent Over 10 Years

Overall spending for the state’s 10 public institutions has increased 77 percent over the past 10 years (FY01-2002 to FY10-2011). During the same period, General Fund appropriations have declined from $546 million to $327 million. But combined Federal Fund and Other Funds (derived from fines and fees) appropriations have jumped from $1.35 billion to $3.02 billion – a 124 percent increase. (State Budget Documents)

Tuition rates have also increased rapidly over the past 10 years, with a 133 percent  increase for in-state students and a 110 percent increase for  out-of-state students. The College of Charleston had the highest  in-state increase: 173 percent. S.C. State had the “lowest” in-state  increase at 110 percent. In-state tuition increases outpaced  out-of-state tuition increases at 8 of 13 campuses. (Source: Commission on Higher Education)

Administrative costs have risen substantially, with a 60 percent increase from FY02-2003 to  FY07-2008 (latest data available). During the same period, the  proportion of administrative to instructional spending also increased:  from 15.5 cents spent on administration for every dollar spent on  instruction to 18.0 cents spent on administration for every dollar spent  on instruction. (Source: ACTA and IPEDS)

Debt and capital spending has also skyrocketed. As of FY08-2009, the state’s 10 public  universities and 16 technical colleges had accumulated $1.162 billion in  debt: $354 million in general obligation bonds and $808 million in  revenue bonds and notes. Current and future interest payments for this  debt come to about $500 million. Thus, total higher-ed debt, plus  interest, exceeds $1.5 billion. (Source: State CAFRs)

4-Year Graduation Rate Less Than 40 Percent

The 4-year graduation rate at the state’s public higher educational institutions is 38.8 percent.  The six-year rate is 60.5 percent. Seven schools had a 4-year graduation  rate of less than 50 percent. [1] Five schools had a 6-year graduation rate of less than 50 percent. (Source: Commission on Higher Education)

Lack of Focus on Core Mission

As  mentioned above, spending increases on administrative and capital costs  have far outpaced spending increases in instructional costs. Another  reason non-instructional spending is so high is because schools are  increasingly being used as conduits for government-driven economic  development programs, such as the S.C. Centers of Economic Excellence  (Endowed Chairs) Program. Cloaking economic development spending as  higher-ed funding fosters a lack of accountability and insulates ineffective projects from private sector benchmarks.

Lack of Accountability

The S.C. General Assembly exercises a great deal of influence over the state’s higher-educational  system, appointing 78 percent of higher-ed board trustees at the  state’s public universities and colleges. As such, South Carolina is one  of only three states (along with Minnesota and North Carolina) in which  the majority of public higher-educational board trustees are directly  appointed by the Legislature instead of the governor.

Solutions

As  any university president would acknowledge, higher-educational  institutions should be seedbeds of innovation and creativity. But  innovation shouldn’t be confined to the classroom or the laboratory, it  should also animate university leaders and administrators. Cutting-edge  solutions that would reduce costs, increase student access and bring  accountability to public universities and colleges include:

• Increasing executive authority and improving accountability.  The governor should be granted additional appointment powers over  higher-ed trustee boards. The Commission on Higher Education should also  be given additional oversight over individual boards.
• Investing in distance/virtual education programs.  Doing so would reach more students at a lower cost. Such programs would  also reduce the need for new classrooms, dorms and other facilities.
• Cutting administrative costs. Institution-wide reviews should aim to eliminate duplication and  provide for interdepartmental and intercampus cooperation. According to  the American Council of Trustees and Alumni (ACTA), universities in  several states (North Carolina, Arizona, Pennsylvania and California)  have eliminated redundancy and increased academic offerings by combining  departments into multi-disciplinary units and even forming academic  consortia across campuses.
• Strengthening core curricula requirements.  None of South Carolina’s public colleges and universities requires  students to take economics while neither Clemson nor the Citadel  requires American history. Strengthening core curricula requirements  will elevate standards statewide, as well as help students obtain the  education they need as citizens in a representative democracy.
• Focusing on education – not economic development.  The purpose of the university system is not to create jobs – a  challenge better left to the free market – but to educate students. Cuts  to higher-ed funding should begin by eliminating taxpayer subsidies for  economic development initiatives, such as the nanotech and hydrogen  fuel cell research projects at USC.

Total Spending for S.C. Higher Education: FY2001 to FY2011 (2001 Dollars)

Per Undergraduate Student Spending: FY2001 to FY2010 (2001 Dollars)

Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation.

Copyright © 2010 South Carolina Policy Council

[1]This  is for nine public institutions, as data for the Medical University of  South Carolina is not available. All graduation rates are based on  freshman class entering 2003. The state’s 10 public higher-educational  institutions are: The Citadel, Clemson, Coastal Carolina, The College of  Charleston, Francis Marion, Lander, MUSC, S.C. State, USC, and  Winthrop.