Monday, July 28, 2014

Purdue Brings A Politician's Face to Cost Cutting.

"It was the first of many steps (former Indiana Governor) Mr. Daniels has taken as he seeks to reorganize Purdue's sometimes-antiquated systems. A year and a half into his tenure, Mr. Daniels has frozen tuition (for the first time in 36 years), cut the cost of student food by 10% and introduced volume purchasing to take advantage of economies of scale." Wall Street Journal 

Since the biggest piece of a college's expenses are for salaries and benefits, it's laughable that making administrators purchase office supplies at Costco and cutting food costs will make any difference to the skyrocketing costs of college education.  Freezing tuition, other things equal, just means that the endowment gets eroded to make up the difference, or the college incurs more debt.  This would make perfect sense to a politician.  

Having a look at my own undergraduate alma mater, one sees a huge, bloated academic and professional infrastructure, some of it mandated by Federal law and much of it mandated by empire building Presidents who are in arms races to build shiny, new facilities and to outdo their predecessors with capital campaigns.  

Since university financial statements are as useful as municipal statements, with lots of funds lying around invisible to the outside eye, it is nigh impossible to subject universities to the same level of scrutiny to which corporations are accustomed.  I invite readers to try their hands at their own universities and share what they come up with. One reporter in California reports that City College of San Francisco spends 92% of its budget on salaries and benefits. 

We bemoan student debt loads without asking why these debt loads were incurred.  Although the reasons may be manifold--duplicative and unproductive departments which grant few degrees, bloated administrative staffs, deadwood tenured staff--the universities are not delivering value to the students for all their federal and state subsidies.  They are selling a subprime product at superprime prices. In most markets, like food, finance or healthcare, this would provoke outrage, but in education, it's all about the future and that's good enough. 

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