A Question For Arthur F. Kirk Jr.

What effect Is increased oversight of higher education having on institutional costs?

By AGB    //    Volume 22,  Number 4   //    July/August 2014

The president of Saint Leo University in Florida, Arthur Kirk has extensive background as an administrator and CFO and an interest in seeing that his institution and others run as efficiently as possible. Trusteeship asked him about the high cost of federal regulation.

What kinds of new oversight are institutions facing today?

In the last two months, Saint Leo has learned of the new federal Title IX requirements and determined that we now need yet another position for regulatory compliance. This person will ensure compliance with: Title IX; the new federally mandated state authorizations everywhere we have an online student (all 50 states); and the requirement (based on a court decision) that we register as a 501(c)(3) philanthropy in every state. Last month, I received an email from the U.S. Department of Education (DOE) that read in part: “Today the Obama Administration announced new steps…requiring institutions to comply with new campus safety and security related requirements.” These steps include “specifying requirements for programs to prevent dating violence, sexual assault, domestic violence and stalking, including prevention, awareness programs and campaigns.” We will not only have to plan, promote, and conduct these programs, but we will also have to report to the DOE as well. I am not saying these initiatives do not have value, but who is to do all of this?

You’ve used the term “administrative bloat.” What does that mean?

It refers to the growing number of professional employees at colleges and universities who do not teach. They could be vice presidents, academic advisors, fundraisers, compliance administrators, or “other professionals.” The concern is that non-teaching professionals, loosely and often incorrectly perceived as administrators (some are, many are not), are growing in number (increasing 39 percent between 1993 and 2007, according to a 2010 Goldwater Institute study), while full-time faculty numbers grew at a much slower rate (18 percent). A more recent study at the University of Texas at Austin found that most of the “other professionals” broadly categorized as administrators by the Goldwater Institute study are not, in fact, administrators, and the majority of these professionals are engaged in teaching and research activities. I admit I see some bloat at some schools, but we are constantly finding the need for full-time compliance and other professionals.

How can our sector promote smarter regulation?

Four U.S. Senators, two Republicans and two Democrats, formed a Task Force on Government Regulation of Higher Education that is meeting throughout 2014 and hopes to issue its report next year. We need to make sure they hear from all of us. The task force, chaired by William “Brit” Kirwan, formerly of the University System of Maryland, represents every sector of higher education. We need for Congress, the task force, and the administration to understand how costly and burdensome the regulatory load has become and that, unchecked, it will continue to grow. These regulations add to the cost of higher education.

What should board members know about this new regulatory environment?

Boards need to understand how the institution is meeting its major regulatory responsibilities. One example is the DOE’s “Financial Viability Ratio,” a flawed measure of a college’s financial position requiring a minimum composite ratio score that must be met or the institution’s eligibility to offer Federal Title IV financial-aid funds will be compromised. A substantial decline in the stock market for two consecutive years causing large losses in a strong college’s endowment could by itself trigger, at minimum, a requirement that the institution post a letter of credit to continue to award Title IV aid. The feds also publish the list of institutions that fell below the required ratio the prior year, which does not help the institution’s reputation.

Second, boards need to understand the scope of these burdens and that their costs add little or no educational value to our students. Third, boards need to understand that university budgets contain very few resources over which leadership has real discretion. Costs for utilities, insurance, debt service, tenured faculty, etc., fix the overwhelming portion of a university’s budget. Regulatory compliance impinges on already limited discretionary resources at a time when all resources are scarce.

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