Complying with federal mandates probably costs Barton Community College $1-2 million a year, college officials learned recently.
Mike Johnson, chairman of the BCC Board of Trustees, asked for information on the true cost of compliance, which includes adding personnel for record keeping and paying for unnecessary audits. The answer was found in a report presented in February 2015 by the Task Force on Government Regulation of Higher Education.
Thirteen higher learning institutions across the United States were assessed in a study, which found the cost of federal compliance varied from 3 to 11 percent of total operating expenditures at each institution. The median was 6.4 percent.
Based on that information, the cost of compliance at Barton was $800,591 at the 3 percent level or $1.88 million at the 6.4 percent level, based on 2014-2015 operating expenditures of $29.4 million.
Barton officials can easily find costly examples of compliance costs. President Dr. Carl Heilman commented that there are over 7,000 polices for distributing federal financial aid dollars, which is why the number of employees in the Financial Aid Department continues to grow.
Dean of Administration Mark Dean cited another example: The college audit must include an actuarial study, which costs $5,000, even though BCC doesn’t pay pensions. “There is zero benefit to this institution to do it,” he said.
The number of mandates on the college grows with each partnership or federal program, and there are benefits as well. But for every new compliance officer, there are added expenses.
Congress is also aware of the cost of federal compliance. In 1995 it passed the Unfunded Mandates Reform Act. Overall – not just in higher education – the Office of Management and Budget found aggregate annual benefits were estimated to be between $261 and $981 billion in 2010 dollars, while costs were between $68 and $103 billion.
It would be great if the government could find ways to streamline its mandates. Our local taxes might be lower if the college could cut $1 million from its budget, but even more would be lost.
Even so, there comes a tipping point where mandates cost more than they are worth.