How Trustees Can Slow Down a Freight Train of Cost-Increases

by James V. Koch

College campus

Marcio Jose Bastos Silva/Shutterstock

In “Runaway College Costs.” and two recent posts, we have pointed out that governing boards (commonly called boards of trustees or boards of regents) are the key to controlling college costs. Trustees or regents are legally responsible for their institutions and must approve any significant cost increase on their campuses.

Frequently, however, by the time a cost-increasing proposal gets to the governing board, it is a metaphorical freight train very difficult to derail. Budgetary commitments have often been made and individuals hired in anticipation. Well-rehearsed narratives will be presented to the board that suggest the increase is absolutely necessary to combat the effects of price inflation and/or the campus will fall behind its competition and lose prized faculty if it does not build a certain new facility, or pay its coaches more, or approve a new research center.

What can trustees do in such situations? First and foremost, hire the right president and place appropriate goals and incentives in front of her. Bigger may not be better, and cost containment may be more important than growth. Presidential goals should reflect this. Provide the president with reasons to make the campus affordable — by compensating her for making it so. Yes, this may mean there will be no more granite table tops in student housing, or that faculty will not receive sabbaticals every five years, but it will redound to the benefit of students and their families.

When cost increases are considered by governing boards, the typical administrator is unlikely to want the board to hear from students on the wisdom of the increase. If student comments are allowed, then they are likely to come from well domesticated, personally ambitious, students who can be trusted to parrot the party line. One should not expect to hear the views of a working mother with three children in such a situation, or from one of the approximately 40 percent of students in higher education today who receive a Pell Grant because of their lower incomes. Knowing this tendency, trustees must ensure a wide range of students is heard, not simply full-time, well-spoken 20-year-old students who came to campus from upper income families and attend football games.

Faculty, staff, and the president deserve respect and often are invaluable sources of information. But they are not infallible, and trustees should understand that on occasion their requests may not be in the best interests of students and families. If it turns out that it is not easy for an administrator or faculty member to explain how students immediately will benefit from a change, or what a project will cost five years from today, then trustees should subject it to additional scrutiny. On occasion, trustees should commission advisory student referenda to determine whether students really agree with administrators that a new service is worth the additional cost to them.

In order to avoid repetitive annual cost increase proposals from administrators, trustees should push their administrators to place prices on the provision of major campus resources and services, such as information technology, utilities, motor pools, and space. A basic lesson of economics (and of university operations) is that resources provided free of cost to recipients tend to be overused and sometimes even hoarded. Why turn off the stadium lights or return the university vehicle on time if you don’t have to pay for such behavior? Substantial savings can be derived from implementing an internal campus pricing structure that forces each academic unit to make choices about what is important. When academic units must pay for what they consume, they must prioritize, a practice that helps control costs.

Ultimately, cost control starts at the top with the trustees themselves and the president they hire, and then seeps downward through the campus. Governing boards and the president have the ability to set the campus tone. Over time, they can make the crucial difference.

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