Time to Sell Off the University System?

Kirby Dyess, vice president of the State Board of Higher Education, stunned her colleagues last week by suggesting that the board sell or close one of Oregon’s seven state universities. The proposal was made in response to ongoing financial problems with the higher education system, caused largely by the skyrocketing cost of employee health insurance and retirement benefits.

None of her fellow board members voted to support the idea, which would also require legislative approval. But they didn’t offer any alternative proposals about how to keep costs in line with revenues. In fact, like most public officials, they continue to think this is just a revenue problem, when in fact it’s a spending problem. There is no way public support can keep up with the cost of employee benefits in Oregon, for either higher education or K-12. Selling one or several state universities to the private sector would clearly address this problem by moving employees out of the public employee benefits system.

Privatization would not necessarily mean an end to public support. The state could actually privatize all Oregon universities but still subsidize students by converting public financial aid to a system of vouchers, redeemable at any Oregon school. This would maintain a public collegiate system, while imposing much-needed market discipline on expenditures.

Ms. Dyess, a retired Intel executive, deserves credit for shaking up the establishment. We need more such ideas if we have any hope of solving Oregon’s school finance crisis.

John A. Charles, Jr. is president and CEO at Cascade Policy Institute, a Portland, Oregon based think tank.

© 2006, Cascade Policy Institute. All rights reserved. Permission to reprint in whole or in part is hereby granted, provided the author and Cascade Policy Institute are cited. Contact Cascade at (503) 242-0900 to arrange print or broadcast interviews on this topic. For more topics visit the QuickPoint! archive.

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