College Spending Spree

Durham, N. C.—Every year, when millionaire college presidents and lobbyists go to Capitol Hill in Washington, D. C. to plead for more federal money from American taxpayers in order to educate the public, there is not a dry eye in the House of Representatives among either lawmakers or their legislative assistants. And that’s just on the Republican side.

You get a different story when you actually go to a few college towns. “With the exception of prostitution, academia has been the one place where there has been no productivity advance in 2,200 years, since Socrates taught in Athens,” economist Richard Vedder said at a conference here.

Dr. Vedder tracks the annual productivity growth in higher education at 2 percent over the course of the last century, although he admits that this is difficult to measure. “Nobody knows,” he says.

“Most colleges and universities have no defined bottom line,” Dr. Vedder notes, and “No stockholders who can cause a proxy fight.” A professor at Ohio State University in Athens, he spoke at a conference sponsored by the John William Pope Center for Higher Education Policy.

“We have a huge college dropout problem,” Dr. Vedder told the audience here, and “Academic freedom is less secure than it was 30 years ago.” Dr. Vedder is the author of Going Broke by Degree: Why College Costs Too Much. He has written many studies on issues such as immigration for many groups, such as the Independent Institute.

“The Ohio Legislature was concerned that teaching loads were getting lighter,” Dr. Vedder recalls.

“They are,” he admitted. “We don’t teach that many hours.”

“So they mandated that teacher’s teaching loads would increase by 10 percent a year,” Dr. Vedder remembers. “My school took two years and formed six committees to address the problem and did nothing.”

“When I was testifying at a hearing on pharmaceuticals, a committee member asked me what I was doing to meet the 10 percent standard.”

“I said, ‘Senator, I talk 10 percent faster.’ She was term-limited. I had tenure. She’s gone. I’m still here.” Dr. Vedder calculates that the average full-time college professor makes $100,000 annually and teaches 160 hours a year.

“Since 1980, salaries for full professors are up 50 percent,” Dr. Vedder says. Graduate students, on the other hand, are usually hired at $15,000 a year and teach a full course load.

Meanwhile, the administrative overhead in higher education is staggering. Twenty-one cents of every education dollar goes towards instruction. Small wonder, since the ratio of administrators to students has gone up considerably over the past 30 years. “In 1976, there were three administrators for every one student,” Dr. Vedder reports. “Now there are six.”

Although Dr. Vedder sees some spending restraint and consolidation as well as privatization in state colleges and universities, he does not get rosy about the prospects for reform. He sees too many problems endemic to higher education, specifically third-party payments and rent-seeking.

“Third-party payments propel the price explosion in colleges and universities just as they have in health care,” Dr. Vedder told the lunchtime audience at the Hilton Hotel. Third-party payments are made by people, or more likely, institutions, rather than the consumer of a good or service at the point of consumption.

In health care, insurance companies and government agencies make most third- party payments. In higher education, government agencies and banks foot the bill.

With third-party payments, you usually have groups seeking a share of the cost as profit, or looking for rent money. “Rent-seeking is [people] seeking to redistribute [other people’s] resources,” Dr. Vedder explained. “Some call it theft.”

Malcolm A. Kline is the executive director of Accuracy in Academia.