NCGA asks UNC system to put a price tag on its value to the state

The UNC system is conducting a study to quantify its return on investment for students and the state to comply with a provision in last year’s state budget.

Kimberly van Noort – Senior Vice President of Academic Affairs and Director of Studies at UNC System – describes the study to the UNC Board of Governors Wednesday. She pointed out that assessing the cost and value of the entire 16-university system is a big undertaking.

“That’s, oh, about 1,800 programs we’re talking about,” van Noort said.

The system hired three consultants – Deloitte, RPK Group and the Burning Glass Institute – to use data on college finances and career outcomes to evaluate college degree programs based on their effect on students, the state and universities as a whole.

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The law requires that the study’s final report include an analysis of seven data points:

  • number of students in each program
  • number of faculty and other staff employed for each program
  • the related costs necessary for the operation of the degree
  • a correlation between the degree of education and the results and career possibilities
  • a detailed analysis of the return on investment for each program
  • an analysis of the return on investment of government funding expenditures
  • an analysis of the return on investment of student spending

Van Noort broke this down into factors that impact the financial burden on students as they pursue and earn degrees.

“We’ll look at initial and lifetime earnings, observed career outcomes, tuition, financial aid, and overall cost burden,” van Noort said.

The study will also measure the public cost of universities.

“We will be looking at total staff compensation, including faculty and benefits, other related expenses, including overhead,” van Noort said.

She added that the study will also look at student outcomes, saying, “How many degrees are awarded and how many students are actually impacted by these programs?”

At its core, the study is a cost-benefit analysis. And it will also look at the overall benefit of the UNC system to the state.

“Does the supply of talent provided by the system meet the labor demand of the state? Van Noort said. “What are the costs of the system, compared to aggregate revenues and the impact on state tax revenues?”

Converting the value of a university to a dollar sign

“I have visions of a newspaper article that has an institution and a number, and it will be so damaging to boil something down to a number like that.”

Anna Spangler Nelson, Board Member

Board member Anna Spangler Nelson said she fears the value of a university will be reduced to single digits based on the earnings of its graduates.

“I have visions of a newspaper article that has an institution and a number, and it will be so damaging to boil something down to a number like that,” Spangler Nelson said. “Any model that will use as a return the net present value of a person’s income will undervalue a teacher, a government employee, a volunteer, a full-time parent, and so on. All those important people who make our state what we are and what we need.

Board member Art Pope said he “wants” the project and also said he agreed with Spangler Nelson’s concerns.

Pope is a businessman, one of North Carolina’s most prolific donors to conservative causes, and a former state budget writer under former Governor Pat McCrory.

“If on a raw number, a given degree program on a particular campus is poor, the first reaction shouldn’t be to condemn that program or abolish it, but look at what the costs are,” Pope said. “And we can reduce the cost of that, so the return on investment is better, both for the students and for the state.”

The constraint to lowering the costs of higher education is that the largest expense in a university’s budget is usually the salaries of professors and other government employees.

For example, salary and benefits account for more than half of the total expenses for the new UNC-Chapel Hill center. all funds budgetservices and scholarships come next in the head of expenses.

The study will begin with case studies from NC State University, North Carolina A&T State University and UNC-Greensboro, with the first results to be released in August. A final report on the 16 public universities is expected in November 2023.

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