Forbes: Higher Ed's "Mission Corrupted" Education10

September 25, 2014 10:40 AM
Forbes
 
Education10
 
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By Adam Andrzejewski
 

Salary spending is up by $1.6 billion (55%) with additional billions of dollars spent on new pensions and a building binge, but IL student enrollment is flat since 2000. Is this a higher educational system or a jobs farm and patronage pool?

Here is what’s wrong with higher ed.

Over thirteen years, Illinois colleges and universities vastly increased the cost of their payrolls, lavished pensions, and expended billions on construction, but have yet to see a measurable increase in students. Since 2000, enrollments are up just one third of one percent annually (4.28% total).

With tuition rates becoming unaffordable for working and middle class students and student loan debt headlining the national news, many are wondering, “what’s the matter with higher education?

Here are some of our findings from the Land of Lincoln:

  • Student enrollment flat. Enrollment was 542,450 (2000) and 566,198 (2012)- a slight .3367% average annual increase (1/3 of 1 percent per year). Source: OpenTheBooks.com enrollment analysis click here
  • Gross salary spike. $2.794 billion total payroll (2000) vs. $4.32 billion in total payroll (2013)-   payroll grew 13x faster than enrollment. Source: State Universities Retirement System (SURS)
  • $1.335 billion in annual pension payments now flow to 36,435 employees retired since 2000. These new retirees represent a heavy legacy cost on an underfunded system with lifetime minimum 3% annual increases. Source: SURS
  • Binge Building boom. Net assignable square footage was 14.756 million (2000) vs 18.144 million (2012) for community colleges and 37.176 million (2000) vs 45.085 million (2009, last year available) for universities - that’s more than 6x the pace of enrollment. Source: Illinois Community College Board and Illinois Board of Higher Education

A poster bad-boy example of mis-allocation of educational resources is my own community college, College of DuPage (COD). Recently in Forbes, I wrote the piece $26 Million Selfie at IL Jr College” about the excesses at this school. Property taxes and student tuition hikes, $95 million in hidden payment spending since 2009, lavish executive compensation, a wine cellar, an upscale French restaurant, high executive comp and more are amongst the recent headlines.

Is the rest of Illinois higher education is not far behind COD?  The payroll of our flagship University of Illinois campuses increased from $1.123 billion in 2000 to $1.8033 billion in 2013 (61% hike) while student enrollment increased by 14.8%.  Additionally, 11,655 employees retired in the period 2000-13 with their annual pensions amounting to a $43.543 million payout in 2014 (Source: SURS). Currently construction cranes are erecting buildings on the Champaign campus and the tuition, board and total cost ($31,457) exceeds every Big Ten university except Northwestern.

University of Illinois President Robert Easter has pointed out that private donors are funding some large construction projects. Furthermore, much of the system wide Illinois student enrollment growth occurred within the University of Illinois campuses: 14% enrollment increase vs. 4%. The growth in the number of employees at U of I (9%) trails enrollment growth (14%). Read Easters letter here.

Never-the-less, exponential salary and pension growth alongside the construction binge has led to an overhang of student debt, property tax spikes, unfunded pension liabilities, and long-term taxpayer debt obligations.

  • The State University Retirement System (SURS) is under-funded by $20 billion. The Institute of Government & Public Affairs at University of Illinois said, “Each passing day without pension reform threatens the excellence of higher ed...”
  • At most Illinois community colleges, student loan default rates average 18%. Nationally, student loan debt now exceeds credit card debt.
  • Illinois property taxes are now the sixth highest in the nation. Community colleges are 50% or more funded by local property taxes.
  • In 2010, College of DuPage passed a $168 million bond referendum. Because a “bond shelf” was created, generations of taxpayers will pay debt service. Proceeds were used- in part- to build an upscale French restaurant, wine cellar, and hotel.

Until citizens demand better from higher education establishments, the “legalized money laundering” system of salary spiking, construction spending, and padding the legacy pension costs will continue.  The current and next generation of young students will bear the brunt.

Notice:  Adam Andrzejewski is the founder of OpenTheBooks.com a project of American Transparency 501(c)3. This post was updated on Oct. 18, 2014 with information received via FOIA from Illinois State University Retirement Systems.

 

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Here is what's wrong with higher education.
 
Over thirteen years, Illinois colleges and universities vastly increased the size of their payrolls, spent lavishly on salaries and benefits, and expended billions on construction, but have yet to see a measurable increase in students. Since 2000, enrollments are up just one third of one percent annually (4.28% total).
 
Here are some of our findings from the Land of Lincoln:
 
Student enrollment flat. Enrollment was 542,450 (2000) and 566,198 (2012)- a slight .3367% average annual increase (1/3 of 1 percent per year). Source: OpenTheBooks.com
 
Employment explosion. 51,439 system wide employees (2000) to 90,589 employees (2013) -  employment outpaced enrollment by 17x. 
 
Gross salary spike. $1.817 billion total payroll (2000) vs. $4.4 billion in total payroll (2013)- payroll grew 36x faster than enrollment. Click here to see annual totals by institution.
 
Binge Building boom. Net assignable square footage was 14.756 million (2000) vs 18.144 million (2012) for community colleges and 37.176 million (2000) vs 45.085 million (2009, last year available) for universities - more than 6x the pace of enrollment. Sources: ICCBD and IBHE.
 
Read the rest of our Forbes editorial here: click here.
 
Download our SNAPSHOT report today. See how Illinois colleges and universities rate on salaries and pensions: SNAPSHOT Transparency Illinois Colleges & Universities.
 
Stay tuned. OpenTheBooks.com has more cool stuff coming soon! 
 
If you don't live in Illinois, help us bring our SNAPSHOT Spending Report to your state. Please make a tax deductible gift of $25, $50, $100, $250 or $500 today. 
 
Stay tuned. OpenTheBooks.com has more cool stuff coming soon! 
Adam
 
ADAM ANDRZEJEWSKI
Founder, Open The Books
Chairman, American Transparency 
 
 
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