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Ndu Is Not For Sale: Universities Bear Some Component Of The Institutional Cost Of Education: A Need For Reflection

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Higher education competes for resources earmarked for other sectors of the economy. There is a symbiotic relationship between education and the economy. Whereas the economy provides the resources to fund education, the products of education are expected to feed the economy by way of providing manpower.

However, if there is a mismatch, institutional cost of education dwindles while personal cost increases. There is no funding environment where education is Free, Not even in Freetown. Somebody must pay. And tendentially, since there is a push for quality, cost will simultaneously increase, placing more cost on the recipients of education.----John Idumange

Higher education's formidable appetite for revenue, coupled with the slowdown of many economies and thus of tax revenues, plus in some countries a reassessment of priorities, not necessarily to the advantage of higher education, will place universities and other higher educational institutions and the governments that support them in an increasing financial squeeze. Part of the response to this pressure will be an increasingly aggressive quest for non-tax revenue from parents, students, businesses, and donors. The solution to the diverging trajectories of cost and revenues is going to have to come at least as much on the cost side. Higher education must become more productive, through sector differentiation, more attention to the economies of scale, and rigorous cost control that constrains the natural inclinations of higher education always to do more and better, at more cost.

Cost Issues in Higher Education
Higher education is considered throughout the world to be the key to both individual and societal aspirations. For individuals, education beyond the secondary level is assumed to be the way to social esteem, better paying jobs, expanded life options, intellectual stimulation--and frequently a good time in the pursuit of any or all of the above. For societies, higher education is assumed to be the key to technology, productivity, and the other ingredients of international competitiveness and economic growth. Higher education also shapes and preserves the values that define a culture. And it is believed to be a major engine of social justice, equal opportunity, and democracy.

For all of its importance, higher education throughout the world is increasingly troubled by costs that are high and rapidly rising and that seem to be outrunning available revenues. Governments are cutting outlays to universities and other institutions with consequent loss of staff, deterioration of plant and equipment, erosion of salaries, and loss of capacity to expand to meet student demand. Where costs are passed on to students and parents, debt levels are increasing and access is being threatened, if not outright curtailed. Exacerbating the political tensions of the cost-revenue squeeze are charges of higher education's inefficiency and lack of cost-benefit accountability.

The Categories of Cost
It may be useful to view four broad categories of higher educational costs. First are the basic costs of instruction, categorized by American accounting standards as "education and general." These are the costs of faculty and staff salaries, equipment, libraries, administrative and basic academic computing, and certain capital or locational costs such as rent. In effect, this is what it costs the institution to do its mission of teaching and whatever basic research or scholarship its faculty are expected to do absent special grants or contracts.

Second are the costs associated with sponsored research or special activities covered by their own funds or appropriations and that would presumably not be incurred without such specially-designated revenues. Although the costs incurred at a particular university by the conduct of sponsored research and other special activities may be high, these costs to the institution's basic missions of teaching and scholarship ought, in principle, to be low or zero because of the non-transferability of the revenues. Expressed another way, a sponsored research activity should have no cost to the institution because all costs, direct and indirect, should be picked up by the sponsor. Similarly, cessation of the sponsored activity should not benefit the institution in the sense of permitting the expansion of an alternative activity because the revenues would be lost along with the expenditures.

A third category of costs associated with higher education are the costs of student living: room, board, clothing, laundry, entertainment, and other expenses that would be incurred whether or not the individual was a student. In this sense, they are not strictly attributable to higher education. To the student and his or her family, however, they are every bit as real as the costs of tuition or books, and must be met from the same combination of sources (students, parents, taxpayers, or institutional resources) that meets the costs of instruction.

The costs of student living will vary according to whether the student lives at home with parents or with a spouse or in a student flat or dormitory. The costs will similarly vary according to the prevailing standard of student living, which may range from traditional student penury or to a standard of living commensurate with non-student age peers. Finally, the cost may be evident and easily measurable, as when they are paid directly by the student or his or her parents, or quite obscure and sometimes virtually immeasurable, as when the expenditures are in the form of subsidies to canteens and residence halls or tax benefits to the parents.

The fourth category of cost is the cost of foregone earnings (actually, foregone real production) of the student while disengaged from the productive work force. While this is a perfectly valid cost in theory, it presumes productive labor force alternatives for persons of university age, foregone by the decisions of some to be students instead. It is a very real cost in a society with labor shortages and where the loss of students from the work force causes real lost production. It is less relevant where the marginal productivity and employment options of young unskilled labor are minimal.

Cost Issues
The costs of higher education present three mega-issues in virtually any nation (Johnstone, 1991). First, how much of a nationtotal resources ought to be, or can be, devoted to higher education? Essentially, this issue translates to the questions: how large a proportion of any age cohort should go on to higher education (as opposed, presumably, to labor market alternatives), and how long should they remain there, or to what average degree levels should they aspire?

Second, what ought higher education to cost -- per-student or per-degree granted, or per-unit of learning, or per-any other reasonable unit of higher education's output? This issue deals with efficiency and productivity of institutions, in contrast to the preceding issue that dealt more with the total resources that a nation devotes to its higher educational enterprise. The unit costs of higher education are elusive because of the multiple and hard-to-measure outputs. At the most simplistic level, per-student costs (ignoring real learning outputs or any outputs of faculty scholarship) are a function of:

• faculty workloads (class size, course loads, etc.);

• ratios of support staff to faculty and students;

• average faculty and staff salaries; and
• the richness or leanness of libraries, laboratories, and other resources of plant and equipment.

The issue of efficiency or productivity, then, is whether the outputs or products of higher education can be produced with fewer or cheaper inputs, or whether a given monetary value of inputs can yield a greater volume or value of outputs. The search for greater efficiency leads to considerations of, e.g., better management, more effective incentives, consolidations and economies of scale, and more application of technology.

The third mega-issue is how the costs of higher education ought to be shared among the general citizen/taxpayer, parents, students, businesses, and philanthropists or donors? Whatever the costs, and in whatever country, they must be borne by some combination of the following:

• all citizens--through taxes or through the debasement of purchasing power brought on by the inflationary printing of currency;

• parents--through direct payments for tuition or through the direct or indirect support of the costs of student living;

• students--through payment of tuition or living expenses either through term or summer work, depletion of savings, or the assumption of future loan repayments or graduate tax obligations;

• businesses--through the assumption of some or all of the student loan repayment obligations of employees, or through special tax assessments in proportion to, e.g., total payroll or number of graduates hired; or

• philanthropists--through current gifts or the investment return on past gifts.

In fact, the three issues above interact. Higher education as a strictly private expenditure, supported mainly by tuition, may be thought by some to be overly expensive, but that is no more a public issue than the high cost of any luxury good freely purchased by persons affluent enough to pay. The concern with unit costs or even with total spending arises mainly from public expenditures -- that is, to the degree to which the costs of higher education are borne by the general citizen/taxpayer.

Furthermore, it is when the costs of higher education are both large in the aggregate and borne mainly by the general citizen/taxpayer that the equity of the distribution of benefits becomes a public issue. Other claimants on public funds begin to see higher education as a voracious competitor of public resources and not merely as an insignificant fringe activity.

"Who pays" may also have a bearing on unit costs as well as on the social goals of expanded opportunity and equity. Efficiency and equity alone, for example, would suggest that users or beneficiaries -- in this case, students and, to a degree, their parents--should bear most of the costs of higher education, as they do in the private sectors of, e.g., the United States, Japan, the Philippines, Korea, and much of South America, or as they do in those public sectors that have begun covering a substantial portion (say, 20 to 40 percent) of unit costs by tuition as in, e.g., the United States, Canada, or Australia. The reasons are obvious and conventional.

The requirement to cover more nearly the full costs with tuition fees should discourage waste and encourage a reallocation of resources to the most productive uses. The reliance on tuition as a significant revenue source also places a substantial share of the burden on those who benefit (and who are more likely to be affluent anyway) rather than on those general taxpayers who do not so directly benefit and who are also likely to be from less-advantaged backgrounds.

The Way Forward
The Niger Delta University can do a few things to augment the funding provided by the State Government. The management of the Niger Delta University should establish synergy with organized industries to MARKETIZE products of their research. The University will involve more in applied research that may be relevant to the industry. This will generate some money to shore-up the institutional cost of education. Secondly, the University should engage in the cultivation of certain food crops such as cassava and plantain. In Japan and other Asian Countries, students who cannot pay fees even work in those farms to defray their school fees.

This is another source of revenue. Thirdly, establishing partnership with international agencies such as UNDP, UNITAR, UNIDO, etc can attract some funding or development of infrastructure such as the equipment of libraries, building of lecture theatres, etc.

Fourthly, at times of economic recession, universities increase user fees to increase the IGR base of the Institution as this will even this will encourage stakeholders buy-in. Concerted efforts can be made to own a University Publishing outfit so University lecturers can publish their books to generate some income for both the University and for themselves.

University can also intensify the running of programmes such as sandwich, part time, Executive MBAs, short-courses such as diploma programmes on safety, ICT, Project Management and other tailor-made programmes to generate income to cover the increasing institutional cost of education. This way, there will be a health partnership between government and the University to achieve the goals of the institution.

to be contd.
Acknowledging some of the materials used for this write up. A full acknowledgement will be made at the conclusion of the essay.

Disclaimer: "The views/contents expressed in this article are the sole responsibility of Idumange John and do not necessarily reflect those of The Nigerian Voice. The Nigerian Voice will not be responsible or liable for any inaccurate or incorrect statements contained in this article."

Articles by Idumange John