Colleges Urged to Produce Better Information on How They Spend Money

A number of university trustees, faculty and staff members are calling for more transparent financial data that they can access about their schools in the wake of a Wall Street Journal investigation that highlighted large spending increases at 50 state flagship universities.

Some contacted the Journal, after it published its article Thursday, asking for information that would give them a better understanding of spending patterns at their schools. That’s in part because some universities provide only minimal information to those with oversight, for instance handing trustees pie charts or high-level summaries rather than detailed budgets, as the Journal’s investigation found.

“The fault lies with governing boards,” said Marty Kotis, a trustee at the University of North Carolina at Chapel Hill since 2021 who previously served on the oversight board for the UNC system. When he first started seeking financial information about the system a number of years ago, he said, he struck out with university administrators. Instead, he had to track the figures down with the state auditor.

“They’d just never been asked this before,” he said, adding that without that pressure, universities’ finance offices are less likely to produce detailed, digestible reports. 

“Prior boards were merely ceremonial. If you’ve got a board that never asks about financials and just wants to talk about winning the next game or when the cocktail party is, they are not going to get a lot done,” he said.

Kotis urged boards to step up their oversight and take their fiduciary responsibilities seriously and said school finance offices need to scrutinize budgets more closely. Specifically, he said, they should review how they handle funds left over at the end of the year, as some policies encourage departments to spend every last dollar—whether or not they need to—for fear of not getting that same allocation the following year. 

In response to the Journal’s reporting, some schools defended their spending habits.

Justin Schwartz, the provost at Pennsylvania State University, one of the schools highlighted in the Journal’s article, released a statement on the school’s website Thursday saying Penn State has “curbed tuition increases aggressively.” Moreover, state funding, which he said the school uses to reduce in-state tuition, has dropped dramatically over the past 20 years. 

“We strive to provide students with the highest quality education as cost-effectively as possible,” Schwartz said. 

The Journal reported that Penn State’s University Park campus was the most expensive state flagship in the 2021-22 school year for in-state freshmen, even after accounting for scholarships. Those students paid an average $26,747 in tuition, fees, room and board, according to Education Department data. The Journal also found that the school received far more new tuition revenue than it lost in state support over the past two decades. 

The requests by university officials for information were also a result of the poor quality controls for financial data that the Education Department requires colleges to report. The Journal found that survey data published in a public data tool called Integrated Postsecondary Education Data System were riddled with errors and inconsistencies, making them impossible to analyze with certainty.

For example the University of Mississippi reported in the government system that it spent $2.2 billion in 2019, down from $3.8 billion the prior year; its audits contain vastly different figures and show that spending actually grew. A spokesman for Mississippi didn’t respond to a request for comment. 

The Journal’s investigation turned to audited financial reports, available for some years on school websites. It was also supplemented with additional data requested directly from the schools as well as from other public sources, such as state auditors.

The Education Department says it is aware of the problem and taking steps to improve the financial data collection. 

A spokeswoman from the National Center for Education Statistics told the Journal earlier this summer that the Education Department unit is developing a working group to help improve its federal data collection efforts. She said that NCES relies on self-reported data and doesn’t have the authority to collect audited financial statements for comparison. NCES said Friday the group expects to begin meeting later this year.

Robert Kelchen, an education professor at the University of Tennessee at Knoxville who has advised the Education Department on how to improve its data collection efforts, said even small tweaks to its annual survey can take years. Because the reporting places a burden on colleges, changes must be cleared by the Office of Management and Budget, he said. 

“The intent is to provide more useful, usable data,” Kelchen said regarding the department’s Integrated Postsecondary Education Data System. “Traditionally IPEDS has focused more on the colleges as stakeholders, but as a piece like [the Journal’s] shows, there is a lot of broad interest in better finance data.”

The Journal also found that some flagship campuses, such as the University of Tennessee at Knoxville and the University of Colorado at Boulder, didn’t create their own audited financial statements, which were published only at the system level. 

Mary Fischer, an accounting professor at the University of Texas at Tyler and a former college finance officer, said that it comes down to a simple reason: money. Colleges would have to pay more auditors.

“In some areas the only data you can get is at the system level, highly aggregated and you simply can’t drill down to the information. I would like to see any institution be responsible for posting their financial statement on their webpage. State law could make them do that,” she said.

Write to Andrea Fuller at [email protected] and Melissa Korn at [email protected]