What You’ll Be Spending in 2014, Part II


State agencies virtually always ask for more money than they had last year. That’s what they do – even, or especially, when their purported functions are producing lackluster results or failing altogether. Consider South Carolina’s public and higher education system.

K-12 Education

In total, the Department of Education is asking for a $178.8 million increase over its previous budget of $3.89 billion. Below are some of the items the agency has asked for.

Instructional Materials for New Common Core and Other Standards: $50,040,469. Since the state recently adopted new Social Studies standards, nationalized Common Core standards for English-Language arts and Mathematics, and will soon adopt new standards for Science, new instructional materials must be purchased for use in the classroom. The department is asking for an additional $35.9 million from the General Fund and $14 million in EIA funds, in addition to the recurring $20.9 million.

More Money Directed to School Administrators, Not the Classroom: The department is asking for $129,000 for the SC School Leadership Executive Institute. School administrators would receive these funds through “effectiveness training services.”

Other Increases

  • $70.2 million in capital reserve funds to purchase school buses and for the IDEA Contingency Reserve.
  • $5 million for technology and broadband expansion for the K-12 Initiative.

Our current government-run K-12 education system, which takes up over a third of the General Fund budget and roughly a sixth of the total state budget, has not produced the kinds of positive results that would warrent further budget increases. There is no evidence, indeed, that that past increases have produced better results in South Carolina public education.

The poor outcomes of our state’s education system have much more to do with the lack of choice than the amount of funding. Despite the grassroots push for real school choice, the legislature has done almost nothing to change the status quo. State government chooses where children must attend school and chooses which schools and programs get funding – and much of this funding goes to school administration and education bureaucrats rather than directly to the classroom. The implementation of Common Core has only compounded this problem by taking even more power out of the hands of parents and local school districts and giving them to multi-state “consortiums.” While other attempts to reform our school system, for instance TransformSC, may attempt to create more of a creative atmosphere in classrooms and more flexibility for teachers, the intended end results are highly unlikely since the heart of the problem – a lack of freedom – has  not being addressed.

Higher Education

To say higher education is a “big money” industry would be an understatement. When accounting for state agencies involved with higher education, university public service agencies, and the universities themselves, South Carolina’s higher education industry is asking for a $773.3 million (or 17 percent) increase over its recently passed collective budgets of $4.53 billion.

“Fair Funding”?

University of South Carolina President Harris Pastides has offered the General Assembly an offer it probably won’t refuse. Put bluntly, the offer is: Give us more money and we won’t raise tuition. Specifically, Pastides is asking for an additional $10.13 million in General Fund revenue for the next fiscal year for its eight campuses statewide ($7 million for USC-Columbia), in addition to money to cover mandated pay hikes and health care benefit and utility rate increases. In exchange, students won’t pay higher tuition next fiscal year (starting July 1).

The offer is a bad one. USC is sitting on over $347 million in “unrestricted net assets,” an amount that would cover this additional $10.13 million increase if requested each year for over 34 years.

USC isn’t the only university gaming the system at the expense of taxpayers. Universities time and time again threaten to raise tuition in their budget requests if they don’t get new state money for the budget items they’re requesting. Coastal Carolina University, for example, is requesting more than $3 million to fund 40 new full-time employees. The request states, “Raising tuition and fees to the student population is a funding alternative. An increase in General Funds will allow Coastal Carolina University to keep tuition flat for in-state students for Fall 2014.” Further, the university states that without additional funding from the state, “the University will be forced to increase in-state tuition in the 2014-2015 fiscal year to continue to maintain the quality education that we are committed to providing.”

If universities are producing value for students, more students will want to attend and spend tuition money there, thus giving the university more money to expand naturally. If a university isn’t producing enough value, fewer students will choose to spend their money there. If this is the case, the university should lower tuition and increase quality. Like retail stores, restaurants, or any other type of company, institutions that produce value for its customers will thrive naturally, while those that don’t will fail. Institutions of education shouldn’t be permitted to opt out of this rule by relying on taxpayers.

Moreover, universities are increasing income from current tuition levels already. State universities must request to spend the money made through tuition and student fees through the “Other Funds” sections of their respective budgets, and many universities are requesting hefty increases to their “Other Funds” budget for next fiscal year. Predictably, USC-Columbia and Clemson are requesting to use the money they brought in from tuition and fee increases this year ($58.3 million and $30.5 million respectively) for next year.

Higher Ed and “Economic Development”

Unfortunately, South Carolina’s higher education institutions have changed their visions and missions to include the nebulous and vastly expensive category of “economic development.” Instead of having the goal of producing well-educated graduates, universities now say they want to produce high-skilled workers for in-state companies.

Consider this request, from The Citadel. The military college is asking for $300,000 to fund its new Mechanical Engineering Program. Its budget request summary states that “The Citadel seeks support for its new Mechanical Engineer program, which will help drive South Carolina’s economic expansion … In discussions with Boeing and other local companies we identified not only the need for additional mechanical engineers, but also the need to locally educate their current workforce to obtain a mechanical engineering degree.”

South Carolina taxpayers have already subsidized Boeing through an estimated $620 million in bonds, grants, and tax incentives. And now that universities are catering to Boeing’s needs, taxpayers across the state are put in the position of both funding  a company that will not directly benefit them, and funding a university program the main purpose of which is to assist that same company. This is as clear an example of crony capitalism as one is likely to find.

Lawmakers will begin working on the budget in January.

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