College President Says System Bureaucracy is Less Efficient for Taxpayers

College President Says System Bureaucracy is Less Efficient for Taxpayers

Dr. James Shemwell, President of the Arkansas Northeastern College in Blytheville, testified Wednesday, September 14, 2016, before the legislative Higher Education Realignment Task Force, making a case against the consolidation of Arkansas’ independent community colleges on the grounds that the independent colleges have proven more cost-efficient than system community colleges and produce higher-earning, higher-employed graduates.

Others testifying against the proposed university realignment were: Dr. John Hogan, president, National Park College; Dr. Evelyn Jorgenson, president, Northwest Arkansas Community College; Dr. Eric Turner, president, Black River Technical College; Dr. Barbara Jones, president, South Arkansas Community College; and Dr. Richard Dawe, president, Ozarka College.

Shemwell cited two national measures of efficiency published by the National Center for Education Statistics that were recently chosen by the Institutional Funding Task Force of the Arkansas Department of Higher Education as primary efficiency measures for the new outcomes-based funding model. The first measure, the Core Expense Ratio, is a ratio of student-
related expenditures (instruction, academic support, student services, and public service) divided by administrative costs. The higher the ratio, the more efficient a college is in devoting its resources toward students. The second measure, the Faculty-to-Administrator Salary Expense Ratio, is a ratio of instructional salaries divided by administrative salaries. The higher the ratio, the higher the amount of resources devoted to teaching as opposed to administration.

Both national measures from the 2013-14 year revealed that Arkansas’ independent colleges, on average, produce greater spending efficiency than do Arkansas’ system colleges. The Arkansas Northeastern College leads all Arkansas community colleges in spending efficiency per both national measures.

Shemwell detailed how system features that previous witnesses put forward as efficiency advantages, such as cost-sharing of system lawyers, accountants, and legislative liaisons, actually result in increased taxpayer costs because, in an independent college configuration, they are either unnecessary, represent duplication of cost, or are more expensive than available alternatives. “That is the nature of bureaucracy. The bigger that the bureaucratic structure becomes, the more administrative overhead that is necessary to support it,” said Shemwell.

Shemwell also challenged the efficiency of savings that previous witnesses have touted regarding the University of Arkansas system’s cooperative purchase of the Blackboard learning management system. “We use an alternative system that costs a fraction of what Blackboard does and is every bit as effective in terms of facilitating student learning. Buying something on sale that is still much more expensive than comparable alternatives is not efficient and does not save money for taxpayers.”

Shemwell presented information showing that graduates of Arkansas’ independent colleges experience better employment outcomes than do graduates of system colleges.

Act 852 of 2015 passed by the Arkansas General Assembly established the creation of the Economic Security Report, designed to provide prospective students, families, and the public at-
large with vital statistics related to employment and earnings after college graduation. The Arkansas Research Center and the Arkansas Department of Workforce Services publish this report using actual Arkansas wage data of graduates of all Arkansas colleges and universities.

The 2016 Economic Security Report indicates that graduates of Arkansas’ independent colleges, on average, experience higher employment rates and higher average full-time wages by nearly $4,000 in their first year after graduation.

The Report also provides data showing that ANC leads all colleges and universities in Arkansas in terms of the average full-time wages for associate degree graduates with an average full-time wage of $43,854 during students’ first year of employment.

Shemwell pointed out that the average full-time wages for associate degree graduates of both ANC and the College of the Ouachitas are higher than the bachelor degree full-time wage averages of all public universities in Arkansas except for the University of Arkansas for Medical Sciences.

During the first year of employment, the average full-time wages of ANC’s associate degree graduates exceed the average full-time wages of bachelor degree graduates from the University of Arkansas at Fayetteville by almost $4,000 and graduates of the Arkansas State University in Jonesboro by over $9,000.

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