Testimony of John T. McNay, Ph.D.,

President Ohio Conference of the American Association of University Professors,

Before the Ohio Senate Finance Committee,

Senator Scott Oelslager, Chair,

March 3, 2015

 

Chairman Oelslager, Ranking Member Skindell, and distinguished members of the Finance Committee: my name is John McNay and I am President of the Ohio Conference of the American Association of University Professors (AAUP). The Ohio Conference AAUP is the largest faculty organization in Ohio, representing nearly 6,000 college and university professors at both public and private institutions of higher education across the state. I am also a professor of American history at the University of Cincinnati where I teach courses on the Cold War, World War II, and the Vietnam War. I am chair of the history department at the UC-Blue Ash campus.

I am here today to share my association’s views on Senate Bill 4, sponsored by Senate President Keith Faber. SB 4 would require the board of trustees at each public college and university to submit a plan to the Chancellor of the Board of Regents as to how they will cut in­-state student cost of attendance by five percent for the 2016-17 academic year.

We appreciate President Faber’s recognition of soaring higher education costs. According to a recent Cleveland Plain Dealer article, if tuition, fees, and room and board had kept pace with inflation, their cost today should be just under $9,000. Instead, the cost is just under $20,000. We agree that now is the time to take steps to reverse this unsustainable course.

In order to have a conversation about higher education costs, though, we must first discuss what is driving them. It is widely recognized that the rise of tuition and fees has been caused by two factors: 1) The decline in state support, and 2) Administrative bloat.

Only 12.8% of university funding comes from the state, which is a 13.1% decline since 2002. In fact, subsidies to main campuses have been cut over 14% since 2002, university regional campuses by over 25%, and community colleges by over 22%. In your roles as members of the Senate Finance Committee, we encourage you to take positive steps in the area of state support. There is a direct inverse relationship between state subsidies and tuition; as subsidies have gone down, tuition has gone up. Colleges and universities cannot be blamed solely for the exorbitant cost of attendance. Previous General Assemblies and governors are also responsible for the growing cost to students.

However, since SB 4 calls for internal cost-cutting measures, I will focus the remainder of my testimony on the issue of administrative bloat and other misguided spending decisions by those who run our institutions of higher education.

The problem of administrative bloat begins with our boards of trustees. Trustees are good people who care about the institutions they oversee, but trustee positions are political prizes awarded to friends of, and contributors to, sitting governors. Most trustees hail from the corporate community and know little about the inner workings of colleges and universities. As a result, their inclination is to run a non-profit educational enterprise like a business. This approach has created an inappropriate pro-management model that favors hiring more and more administrative staff at hefty salaries, while devaluing full-time tenure-track faculty in favor adjuncts, many of whom do not earn living wages and do not receive benefits.

The numbers tell the story. Data from the Integrated Post-Secondary Data System (IPEDS) reveals that between FY 2002 and FY 2013, Ohio’s institutions spent, on average, 23.9% of their operating budgets on total instructional compensation (e.g. salaries and benefits). Over the 10-year period, total instructional compensation declined by 4.1%. In other words, our institutions spent less than a quarter of their budgets employing faculty, and the total amount spent employing faculty declined over that time frame.

The myth of the overpaid, underworked professor is just that: a myth. Faculty wages and benefits clearly are not driving up costs or the data would tell that story. In addition, it is discouraging still to be hearing about faculty course work as if professors’ overall workload isn’t already maximized. Workloads are carefully crafted at the college, department, and individual levels based on teaching, research, and other needs. You would be disappointed in the results that arbitrarily increasing teaching loads would have on our institutions: insignificant cost-savings, less time to mentor students, and losing and repelling quality faculty.

Administrative staff now outnumber full-time tenured and tenure-track faculty by a nearly two to one ratio. If you include all full-time faculty, the ratio is closer to one to one. To be clear, our institutions are employing as many administrative staffers as full-time faculty. Research has shown that the ideal faculty to administrator ratio is three to one. There is one administrator for every 14 students, representing an increase of 25% over the aforementioned 10-year period.

These bloated bureaucracies have amounted to a non-value added administrative tax on our students. Our institutions have a number of great administrators that make valuable contributions, but students rightfully expect that the tuition bills they’re paying, and debt they’re accruing, is being spent to employ the best and brightest faculty. We encourage you to tell students you know that less than 25% of their university’s spending goes to employing faculty, and we think you’ll find the same disbelief that we have experienced. They always ask, “Then where is the rest of the money going?”

What is particularly baffling amidst the administrative bloat issue is the money that institutions spend on consultants. We have all of these administrators, yet when important decisions have to be made, high-priced consultants are hired to do the work.

Nevertheless, there are institutions and university systems that have recognized this issue and taken steps to correct it. For instance, over the last nine years, Iowa State University, which is comparable to an institution like Kent State or UC, has made a conscious decision to shrink its administration and hire more full-time faculty. In fact, Iowa State has increased its full-time faculty by more than 40%. Moreover, in the State University of New York (SUNY) system, Chancellor Nancy Zimpher, former president of the University of Cincinnati, has led a charge to redirect five percent of administrative spending to instruction.

The misguided spending decisions don’t end with administrative bloat, though. Many people are shocked when they find out how much universities spend to subsidize their deficit-running athletic programs. Only Ohio State University has a self-sustaining athletics department. In fact, Ohio State athletics makes millions in profit every year. But Ohio State is the anomaly. Every other university in the state heavily subsidizes its athletics with funds from the academic side of the institution, evidenced by the chart below.

We wish we could report to you that most of these funds were going to student scholarships, but a Cincinnati Enquirer article revealed that only about 16% of athletic spending at Division 1 schools like Cincinnati and Miami goes to student aid. The other 84% pays for coaching salaries, facilities and game expenses.

Athletic spending is typically defended by anecdotal claims that sports lead to prestige and exposure that helps advertise and promote the institution. However, the hard research shows that athletic expenditures rarely justify the costs.

If we examine one university, BGSU, the financials reveal that every student, via their student activity fee, is paying approximately $650 per year – or $2,600 over a four-year period – just to subsidize athletics. When the average student debt in Ohio is over $29,000, can we say it’s acceptable that students are paying such hefty amounts to subsidize programs that aren’t self-sustaining let alone profitable?

Even when the BGSU football team performed well, won the Mid-American Conference (MAC) championship and participated in a bowl game, the football program alone lost more than $3 million. In this same year, the university gave $2 million in direct institutional support – money it could’ve used for anything – to the football program. This was also the same time frame that BGSU decision-makers laid off nearly 100 full-time non-tenured faculty because they said they needed to cut costs.

At the end of the last collegiate football season, the University of Alabama-Birmingham announced it would eliminate its football program, citing the unsustainable costs of maintaining it. We aren’t advocating for the elimination of athletic programs, but we do believe that this topic needs to be examined thoroughly and that priorities must be rebalanced with the aim of reducing expenditures.

Furthermore, recent stories in the Dayton Daily News and Columbus Dispatch point to the folly of the “construction arms race.” Certainly, there are times for new buildings and modernization projects, but the seemingly endless borrowing in the name of attracting students has gotten out of control. Our 14 public universities have more than doubled their debt in recent years to $6.5 billion. Of course, the institutions finance these projects by tacking on extra student fees or raising tuition.

As the Dispatch editorial board noted, “Even a small fee tacked onto student loans can snowball. The $110 per-semester student fee Miami University charges to finance its $53 million Armstrong Student Center, opened last year, looks manageable enough. But added to a student loan, at 4.5 percent interest over 10 years, this increases the amount to be repaid by $1,100.”

What all of this boils down to is that SB 4 is asking the same people responsible for poor spending decisions that have siphoned away funds from instruction to now make cost-cutting decisions. Their track record in this area isn’t great. We concur with President Faber that costs can and should be cut, but how that happens isn’t trivial. On the contrary, how that happens is absolutely critical. We need to ensure that colleges and universities are refocusing resources on instruction and research.

Consequently, we believe SB 4 should be amended in a way that ensures stakeholder input. One option would be to ask institutions to form task forces representative of the campus community to submit plans. This would help to emphasize shared governance and cooperation among stakeholder groups.

We also believe the intent of the legislation needs to be made clearer in terms of next steps. What happens after the Chancellor receives the plans? Is there an approval process? Will there be opportunities for genuine stakeholder input before plans are finalized and enforced?

If SB 4 is amended to address the aforementioned concerns, we believe that this could be a very positive step toward seriously confronting college costs in a cooperative manner. If that happens, my association could be supportive of the legislation.

Thank you for the opportunity to testify today. I am happy to answer any questions that the committee may have.