Heavy Lifting - thoughts and web finds by an economist
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Monday, December 11, 2006
Tuition increases are a great political football - nobody likes them and politicians can promise "relief." My contention is the politicians should admit they are reducing the state's subsidy to higher education, thereby leading to increases in tuition rates without a like increase in per-student spending. Moreover, most increases in spending on campus do not seem directed toward the classroom, but rather to administration. Indeed, many campuses spend more on administration than they do on instruction.
The principle-agent problems in academic administration are more troubling than in private sector firms because there is no well-defined residual claimant. Who holds the CEO of UT Austin accountable? There are "stakeholders" but not "shareholders" and that makes a big difference.
We seem to witness this lack of accountability in the new computer systems many schools are introducing. I wasn't around for the first wave of computer systems, created using clunky Fortran programs without Graphical User Interfaces and so forth. The new systems, one by PeopleSoft, one by SAP, along with a few others, are nightmares and are very expensive.
This Chronicle of Higher Education article describes an ongoing nightmare at the University of Minnesota:
Campus officials had expected to spend $28.6-million to switch from their current software -- which is outdated and no longer supported by the company that made it -- to a newer system. But after factoring in some additional costs, and acknowledging that it may take a year to phase the new software in, the officials are now anticipating a $45.7-million price tag.My university of 25,000 students has an operating budget around $300m per year. The changeover at the U of M is approaching $100m. Does this sound reasonable?
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