We know little about some fundamental questions. Are the students at the University of Colorado learning more than those at the University of Kansas? Are they learning more now than five or 10 years ago? These and other schools are either clueless as to the answer, or if somewhat knowledgeable, they typically keep the findings a secret. Public comparison with peer schools is considered bad form by the university presidents I know. Trustees are usually part-time cheerleaders for the institution, not hard-nosed representatives of the public demanding accountability, efficiency and transparency.
University enrollments fell in the closing academic year nationally for the first time in more than a decade. More and more individuals are questioning the value of American higher education as it now exists — the benefits seem to be stagnating, while the costs are rising.
Some new university leaders get this, and believe higher education needs to be leaner, more adaptive to change and include performance-based rewards for achievement. The best example is Mitch Daniels, the president of Purdue University. While still governor of Indiana, Daniels chatted with me about how to devise a presidential contract that tied compensation to achievement of goals. The Purdue board adopted such a system, cutting Daniels’s pay compared with his predecessor’s, yet including provisions allowing the president to earn significant performance bonuses. Daniels has already frozen tuition fees for two years — and also has frozen salaries for most administrators.
Universities are nonprofit institutions that get special privileges, such as government subsidies and tax exemptions, based on the assumption that they are good stewards of the public trust. Big corporations pay their leaders more, but those institutions pay taxes that partially benefit universities. They have a bottom line as well as stockholders and corporate boards that often fire leaders who perform poorly.
University presidents aren’t corporate executives. If higher education wishes to maintain its privileged position in American society, it needs to contain its spending. A good place to start is at the top.
Richard Vedder directs the Center for College Affordability and Productivity, teaches economics at Ohio University, and is an adjunct scholar at the American Enterprise Institute.