Consider the dilemma the State of Oregon is in. It really has no control over costs in its public higher education system. From the Oregonian article “University of Oregon gave pay raises this spring to 1,300 professors and administration workers” by Bill Graves (here):
Oregon faced a $3.5 billion budget hole, its seven universities were to avoid across-the-board pay increases and most university employees worked with pay freezes or furlough days this spring.
But at the University of Oregon more than 1,300 professors and administrative workers got salary hikes. The increases included $2.8 million divided among 578 professors who had tenure or were on track to get it – an average raise of about $4,845, though increases varied widely. The university also boosted salaries for 450 administration workers, which include clerks, and 300 nontenured instructors. These were not merit or across-the-board increases but an attempt to stay competitive by bringing faculty and administrator pay up to levels of comparable universities, according to a report released to The Oregonian on Friday by the University of Oregon.
The report was a response to a Sept. 2 letter from Chancellor George Pernsteiner asking UO President Richard Lariviere to explain why he gave raises to so many people during an economic slump and period of budget austerity.
In its response, the university argues that increases came from money it raised itself – rather than taxpayer money – through tuition, enrollment increases, private funds and research grants. The raises, it said, will compensate its employees competitively and help retain a high-quality faculty.
The UO was able to raise faculty wages from 85 percent to 97 percent of what prevails in similar research universities, the report said.
These "equity increases" went to about 80 percent of tenure and tenure-tracked faculty, 20 percent of non-tenured instructors, and a third of the administration staff.
First, like the housing market, there is a probable bubble in higher education nationally. Cost increases are racing ahead of the underlying value. At some point, it will all come crashing down. But, for now, individual universities, like the U of O, may have to compete for outstanding faculty with other universities. But, also, its bubble may burst.
Second, it is silly to argue about whether the funds to pay for such raises come from state funds or other sources. Cost increases are cost increases. They are the fundamental problem. The Oregon University System has little control over costs, and does far too little in the way of cost accounting to even know what its costs are. If the institutions of the OUS want to stay public, this must change.
Third, I’m for making significant changes in public higher education over time. Let several of our premier institution go entirely private (while retaining some public ownership rights to land and buildings). Shift all state funding to Oregon student scholarships, good at any in-state or any approved online institution. Develop expanded funding of research at Oregon institutions.
Fourth, either let the U of O go more private (and assume more risk for its own future in the face of a probable bubble in higher ed) or censure (or fire) U of O President Lariviere and get costs under control. Do not muddle along with a public higher education system without cost controls.
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