The University of Texas and Texas A&M Should Privatize

June 12, 2012
Ronald Trowbridge & Richard Vedder | Forbes

For the past year and a half an unrelenting firestorm of criticism has been directed at Texas Governor Rick Perry and his appointed regents for allegedly damaging, in a political scuffle for control, the excellence of the University of Texas at Austinand Texas A&M University at College Station.

There is a way for these universities to avoid entirely state political control: privatize.

There are five advantages to privatization.  One, the governor and regents appointed by the governor would no longer be operative in any way.  The universities, as private institutions, would instead select their own regents.

Two, these universities would have the freedom to control their destinies as they wish.  The Coalition for Excellence in Higher Education affirms:  “We believe that a great university . . . also serves as an economic engine bringing in millions in research and development dollars, new businesses and industries, creating jobs and economic opportunity throughout Texas.”  Privatization would enable that engine to run without political hindrance—with the added advantage of widespread financial support.

A countercharge to privatization might be that UT and TAMU desperately need state funding.  We do not for a single moment believe that these two schools could not raise these funds from the private sector.  There are thousands upon thousands of loyal alumni and private-sector beneficiaries who would be willing to support the academic and research autonomy of the school.  If President Powers wants to raise tuition 2.6%, as he argued recently, nothing would stop him from doing so; he would need only the support of the schools’ own selected regents.

As of April 30, 2012, the University of Texas System’s endowment is $20.24 billion, the highest endowment of any public university or system and ranking below only Harvard and Yale, but above Princeton and Stanford.  The National Association of College and University Business Officers (NACUBO) lists the TAMU System’s endowment in 2011 at $6.999 billion, ranking below only the public universities of UT and the University of Michigan.   The money to privatize from alumni and the private sector is out there.

Three, another advantage to privatization is that these universities could avoid the 10% rule. Coming at the expense of the schools’ autonomy, the rule requires the universities to admit all Texas applicants graduating in the top 10% of their high school class. These schools instead would be free to determine their own admissions process and select students on the merits of each student application.  If they wish a holistic approach that enables them to enroll more low-income and minority students, that is their choice.  If they want to enroll pianists or artists or civic leaders or good athletes, that is their choice.

At UT, the issue behind the Fisher v. University of Texas lawsuit would be rendered moot because the school could use any holistic method it wishes in selecting applicants, including race.

Four, this independent autonomy would attract new scholars to teach or to conduct research without fear of government interference.

The money to privatize, as their endowments reflect, is out there—the universities simply need to make their case to these donors about the academic and research merits of their institutions.  This case can also be made to private-sector enterprises served by university research.  As for students, federal Pell Grants and Stafford Loans would still be available.

Five, diminishing state funding, approximately 14% of UT and TAMU revenue, could instead be directed to other schools that draw low-income and minority students.  A recent University of Pennsylvania study is strongly critical of the neglect of these students in the state of Texas.

Only advantages with privatization emerge, save having to raise more funds that are out there.  Harvard, Stanford, Rice and hundreds of other schools throughout the country are private.  The National Center for Education Statistics reports there are 1,543 private four year not-for-profit colleges and universities in the U.S. If they can do it, so can UT and TAMU.

Ronald L. Trowbridge, Ph. D.,  is a Senior Fellow at the Center for College Affordability and Productivity (CCAP), a higher education think-tank based in Washington, D. C.  Richard Vedder, Ph. D., is Director of CCAP, an adjunct scholar at the American Enterprise Institute and teaches at Ohio University.

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