It’s the study that many higher-ed watchers are talking about but that few have actually seen: an analysis by Vanderbilt University that asserts the institution spent about 11 percent of its budget, or some $150 million, complying with federal regulations in 2013-14.
The findings feature prominently in the American Council on Education’s report on the burdens of red tape and have been reported by numerous news organizations, including The Chronicle. Vanderbilt’s chancellor and a co-chair of the task force behind the report, Nicholas S. Zeppos, also discussed the findings during a Senate hearing in February.
And U.S. Sen. Lamar Alexander, chairman of the Senate education committee, quoted the “startling $150 million” figure this month in a Wall Street Journal op-ed. He also repeated a finding from the study that said the cost of complying added more than $11,000 to the cost of each Vanderbilt student’s $43,000 in tuition.
The $150-million figure is eye-catching, but according to several consumer and student groups and university leaders, it also has the potential to distort the debate over the future regulation of higher education and student aid. That is because the number that Vanderbilt cites is inflated by costs unrelated to those regulations, including accreditation. It also includes costs of regulation that would apply to any employer, not just colleges.
Vanderbilt discussed the study publicly on Tuesday at a meeting of the National Academy of Sciences, where it acknowledged, apparently for the first time, that the federal government reimburses it for as much as 20 percent of the federal-compliance expenses the analysis identified. The university later shared a copy of its presentation with The Chronicle, but Vanderbilt officials declined to share the full report.
Senator Alexander, Republican of Tennessee, has made clear that his “principal goal in higher education is to deregulate it,” an aspiration that warms the hearts of many red-tape-weary higher-education officials. But that rhetoric has also raised concerns for advocates who fear that the deregulation campaign will defang efforts to rein in colleges that mislead students or curtail the kinds of disclosure requirements on loan defaults and other key measures that some higher-education leaders have worked hard to enact.
‘Some Science’ Behind the Talk
Vanderbilt, located in Nashville, is one of the most prominent universities in the senator’s home state. Asked whether the study was initiated because of the senator’s interest in the issue, Brett Sweet, Vanderbilt’s chief financial officer, said in an interview on Tuesday that the university had taken on the time and expense of the initial study, and now a follow-up involving additional institutions, “to put some science behind what a lot of people talk about.”
Vanderbilt went public with the conclusions of the study in February, when the $150-million figure was included in the ACE report and discussed at a Senate hearing on the impact of federal regulations on colleges.
Since then the university has declined to make the details of its study public or to discuss the specific methodology behind it. It rejected The Chronicle’s request the day of the hearing and again on Monday of this week.
The Chronicle also requested a copy of the report from ACE and from the co-chair of the task force, William E. (Brit) Kirwan. Both referred a reporter to Vanderbilt. A spokeswoman for Senator Alexander said the office did not have the report itself and referred the reporter to the ACE report, and Mr. Kirwan and Mr. Zeppos.
Vanderbilt has also rebuffed requests by other reporters, but it did provide a partial explanation for the figure to the Hechinger Report’s Jon Marcus. According to that account, published this month, Vanderbilt said $117 million of its regulatory costs were associated with the expenses of its vast research enterprise, and an additional $14 million was spent complying with rules on antidiscrimination, immigration, and other issues.
It said the $14 million was attributable to “higher education” regulations but also acknowledged that $9 million of that was for the costs of accreditation. Colleges must be accredited to receive federal student aid, but many institutions also pursue additional accreditations for particular programs and schools, matters that have nothing to do with federal rules. For the record, the itemized costs add up to $145 million.
The university declined to provide further details to the Hechinger Report concerning its costs for accreditation. Nor would it specify how much of the $117 million was actually covered by other federal funds that Vanderbilt received from the government in the form of overhead payments on the federal research it conducts. The answer to that question came to light on Tuesday: $20 million to $30 million, according to Mr. Sweet, who is also Vanderbilt’s vice chancellor for finance and administration.
Broadening the Study
Mr. Sweet disclosed the figures during a presentation at the National Academy of Sciences, where more than 18 officials from leading research universities were meeting about federal research regulations and reporting requirements. Mr. Sweet and Tejus Kothari, a principal at the Boston Consulting Group, showed slides with some findings from the original study and about an extension of the study that they had conducted with an additional 12 institutions, including a community college and a for-profit university. (The consulting company also did the work on the original study.)
Questioned about research-cost findings, Mr. Sweet acknowledged that with the overhead rate the university charges on all federally financed research, “I could make the argument that $25 million of the $117 million is paid for by the government.” He then described the amount as $20 million to $30 million.
In an interview on Tuesday, Mr. Sweet said that of the $9 million in costs for accreditation, only about $3 million was associated with regional accreditation necessary for student-aid eligibility.
In other words, of the $146 million it describes as compliance costs in its presentation, the university is reimbursed for $20 million to $30 million, and an additional $6 million is for accreditation activities that have little to do with federal regulations.
Vanderbilt expanded its study to the 12 other colleges to test its methodology and to see if it could draw further conclusions about the costs of federal compliance across a more diverse array of institutions. Those at the meeting expressed skepticism about that approach, at least for the focus of their interest: the costs of research. If anything, they contended, Vanderbilt’s estimates about the costs of complying with federal research regulations were too low. They also questioned whether it was realistic to generalize about expenses when considering so many different kinds of institutions.
Mr. Sweet, who, along with Mr. Tejus, spent the day in meetings in Washington accompanied by a Vanderbilt lobbyist, said that the figures about Vanderbilt made public in the presentation on Tuesday represent “a much more refined version” of what the university shared with the task force in November.
One of those slides describes two kinds of costs: centralized costs and “marbled” compliance costs, described as those carried out by various personnel throughout the institution. The presentation also showed that a disproportionate share of the cost — 17 percent — is associated with research and that nonresearch-related expenses make up 4 percent of the university’s nonresearch spending.
He said the university would not provide The Chronicle the detailed information it used to develop the figures in the presentation. “As a private institution, that’s proprietary information,” he said. But he noted that Vanderbilt was working on a “communication plan” that would involve the release of further information about the costs of compliance. The university, he said, would be sharing the information “that best addresses the question.”
Goldie Blumenstyk writes about the intersection of business and higher education. Check out www.goldieblumenstyk.com for information on her new book about the higher-education crisis; follow her on Twitter @GoldieStandard; or email her at goldie@chronicle.com.
