Slack admissions and low graduation rates cost taxpayers an estimated $440 million annually

NEW ORLEANS, La. – A report from the Higher Education Research/Policy Center, released today, claims that more than one third of Louisiana’s higher education funds are wasted on non-graduating students.

Harry Stille Ph. D., author of “Louisiana: Public Institutions,” believes loose admission standards contribute to an estimated $440 million annual waste – an “enormous cost for little results.” Twenty-nine percent of Louisiana’s freshmen come from the bottom half of their high school class, and Stille believes that these unprepared students account for the state’s embarrassingly low graduation rates.

Eight percent of freshmen at Southern University at New Orleans (SUNO) complete their degree within six years, and the average across the state’s university system is 39 percent. That compares to 54 percent nationally and 53 percent in the South.

Even these numbers may be rosy given grade inflation, which Stille asserts is “rampant on college campuses throughout the United States.” According to the National Center for Education Statistics, the literacy of college graduates in 2003 had fallen from 1992 levels, and the same was true for graduate students.

Louisiana Graduation Rates

The state’s flagship, LSU-Baton Rouge, is the only state institution to outdo the national average, with a graduation rate of 61 percent. However, even it accepts 17 percent of its freshmen from the bottom half of their high school class. Stille, a former South Carolina legislator and professor emeritus of Erskine College, describes this as a “travesty for a research institution,” and a “disservice to the better academically prepared students.”

Stille brought together admissions and graduation data from 1992 through 2009 for 13 of Louisiana’s public four-year degree granting institutions from that period. Only LSU-Alexandria was not included, since it began its four year program in 2003. His data can be downloaded here, along with his commentary on the findings.

His work on Louisiana is part of a broader study of taxpayer-funded higher education across the United States, which includes two sets of state rankings. Louisiana comes in at 39th in terms of admissions standards and 49th in on a broader scale, which also includes rates of completion, affordability, and student preparedness. (Here is the summary profile on Louisiana.)

Upon reflection, he believes “these public [four-year] institutions are the most wasteful agency in any state’s government process,” and he “wonders how the political leadership of [Louisiana] can support such a system with these poor results.” Without performance oversight since the G.I. Bill in the late 1940s, he believes the funding mechanism has incentivized poor results, focusing on the “numbers of students on campus… instead of academic quality in admissions.”

Stille’s findings also place a spotlight on the question of what the purpose of higher education is for taxpayers. Research from the Intercollegiate Studies Institute has demonstrated the inability of universities, even the most prestigious, to teach American civics. The goal of greater employment has also gone unfulfilled. Today, twice the proportion of American adults possess university education than did in 1970, and yet the rate of unemployment is also double what it was. In fact, according to the Bureau of Labor Statistics there are more than 5,000 janitors with PhDs or other professional degrees in the United States. 300,000 waiters and 18,000 parking lot attendants with bachelors degrees further highlight the mismatch between employability and higher education.

Further, America’s student loan debt has, as of September, surpassed its credit card debt – each nearing $1 trillion. “College costs [for individuals] have far exceeded all inflation rates for all consumer goods in the past ten years,” says Stille. “Where does it end?”

He advocates a slimmed down state system of higher education, with more students in two-year, technical colleges. These institutions are “not as wasteful as the [four-year] system,” since they do “not have all the frills,” such as tenure, ranks of faculty, and athletics.

The finding could hardly be timelier, given the state is facing its lowest general fund budget since 2006 and is in need of areas to cut. Since 2008, funding for the state’s higher education, from all sources, has already declined by 4 percent.* However, that came after a 23 percent increase in the three post-Katrina years, and Louisiana still ranks ninth in the nation for spending as a percentage of tax revenues. Additionally, Stille’s estimate of $440 million annually going to non-graduating students, on a per capita basis, puts Louisiana third highest in the nation.

Louisiana’s higher education budget has also been expanded by rapid growth in administrative spending. In a study published by the Goldwater Institute, “Administrative Bloat at American Universities,” Jay Greene analyzed spending and staffing trends at 198 top state and private colleges across the United States. Between 1993 and 2007, these universities increased the number of full-time instructors and researchers per student by 18 percent. But at the same time they increased full-time administrators per student by 39 percent, and these administrators now outnumber their teaching and research counterparts.

“At the University of Louisiana at Lafayette, for example,” says Greene, “the number of full-time administrators per ??100 students grew by 44% between 1993 and 2007, while full-time employees engaged in ?instruction, research, and service grew by only 9%.” For the 2007 to 2008 academic year, the most recent with data available, thirty-five percent of Louisiana’s higher education funding went to instruction.

In the last legislative session, Governor Bobby Jindal did sign into law the LA GRAD Act (HB 1171). This goes into effect in this fiscal year 2011 and attempts to address the problem of the incentive for expansion. It allows universities to have greater autonomy, such as flexibility with regard to tuition, in exchange for graduation productivity. Additionally, the Louisiana Board of Regents is planning for slightly higher admissions requirements, although they will not begin until fall 2012, and not completely until 2014.

Stille has collaborated with the Evergreen Freedom Foundation, a non-partisan research organization, to report on how to increase accountability in higher education. The report, “Performance Audit Tools for Higher Education,” came out in September and is available here.

*This point has an edit to clarify that the 4 percent decline does not refer exclusively to the Louisiana state general fund budget, since one reader questioned the accuracy of the original statement. During that period, the decline of state funds for higher education was 13 percent – including interagency transfers and the American Recovery and Reinvestment Act – and 33 percent from the general fund budget. Here is an Excel file with the relevant data for 2010-2011 and the past three financial years.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at, and one can follow him on twitter.