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LA higher education privatization moves desirable

With its announcement of two major gifts to establish an entrepreneurship program taking center stage, it might have been easy to overlook the salutary path taken by Louisiana State University’s E.J. Ourso College of Business towards privatization.

Years ago, prompted by efforts in Oregon to remove state oversight of the operations of the state’s eight public senior/graduate institutions, suggestions were made that Louisiana ought to do the same. As of two years ago, Oregon had set up each of its institutions with independent governing boards, with its three largest also taking over all organization maintenance functions and responsibility for capital outlay. Altogether, only about 10 percent of revenues now come from the state, with the proportion of state funds going to the schools that have gone the furthest in controlling their own business even lower. This compares to about three times that figure for Louisiana schools, not counting Taylor Opportunity Program for Students money that acts like a general fund contribution. 

The Ourso College plans something like that for itself, bolstered by the recent donations. Not counting TOPS money, only 20 percent of its revenues now come from the state. Theoretically, a combination of private giving, tuition increases, and efficiency savings from being able to run its own affairs could bridge that gap, following the path of some other universities’ business schools, some of whom accomplished this years ago.

This college deserves applause for its efforts, but must remain aware of potential obstacles. A recent report delivered by an Oregon task force that surveys the future landscape of public university privatization there points out some problems, mainly over the questions of transfer of assets and how to deal with each school’s share of pension obligations. Like Louisiana, Oregon has a large unfunded accrued liability for its public employees, needing assessments from state agencies to eliminate, so removing the universities from this means passing on their shares that impose greater burdens on others.

A similar privatization drive for Louisiana universities would prove even more difficult, for two related reasons. The overbuilt, top-heavy Louisiana system has about 40 percent more faculty members teaching about 25 percent more students because twice as many proportionally attend a senior university as opposed to community colleges and technical schools than in Oregon. In other words, Louisiana has much more inefficiency baked into higher-cost instruction through its duplicative 14 baccalaureate-and-above schools than does Oregon with its seven such schools (plus one branch campus) and dedicated health sciences university and its more robust community college system.

The political environment as well makes further privatization progress minimal, at least in the near term. Although Democrat Gov. John Bel Edwards had more moderate liberal views than his far-left Democrat Oregon counterpart Gov. Kate Brown, he shares her passion for growing government, so a deliberate paring of it he would resist. But even the replacement of Edwards with a conservative in two years’ time probably would not make a difference, because enough legislators likely would balk at spinning off universities since historically politicians have seen these as patronage sinks and baubles to impress voters with come election time.

So, as a result the strategy of privatizing units holds much more promise. Where possible, as pockets of universities achieve this, the savings will allow the schools to plow money into other priorities.

All it takes now is enlightened leadership both at the unit level where privatization may occur and at the top administrative level which would have to help facilitate such a transition. Whether Louisianans can expect education bureaucrats more versed in complaining about what they perceive as inadequate taxpayer support than in seizing the initiative to create efficiencies to take this course of action remains to be seen. But at least the Ourso College has stepped up to show the way.

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