State university systems cost taxpayers a great deal of money, but might that cost be lowered if states had two or more competing university systems?
That is the question that caught the interest of economist Charity-Joy Acchiardo in today’s Martin Center article.
In particular, she focuses on Texas, which has six university systems and North Carolina, which has just one. Does Texas gain from that? Or would the state be better off if it merged its six into just one or two?
She writes:
Certainly F. A. Hayek would agree that multiple systems foster innovation, as each strives to move ahead in the discovery process, experimenting with new models in a dynamic educational landscape. George Akerlof might argue that each system and its individual institutions build a distinct brand and reputation over time, which serves as a crucial signal of quality to students and employers.
Among her findings: “North Carolina’s instructional cost per student is higher than Texas’s, and its administrative costs are higher still, meaning the ratio of administrative to instructional costs is higher in North Carolina.”
Acchiardo suggest that a possible reason is that because North Carolina’s system is older, it has had more time to build up administrative bloat.
Looking to the future and possible cost reductions through AI, she writes:
In the context of administrative costs, advances in artificial intelligence could provide an avenue to streamline some tasks. Communication, forecasting, course scheduling, financial-aid management, compliance, and reporting are just a few of the areas where AI excels. However, I foresee a few hurdles before cost-saving measures such as these are fully implemented. While creative destruction is hailed as a necessary driver of sustained economic growth, as its name suggests it leaves a wake of destruction in its path. Older technologies become obsolete, those working in dying sectors must be retrained in different ones, and new technologies must be adopted and learned.
In any case, she doubts that universities will do much to lower their costs so long as taxpayers are covering most of the expense.