House OK'd major regulatory overhaul last year; bill would give schools more freedom

By WAYNE WASHINGTON
wwashington@thestate.com

A sweeping set of regulatory changes for colleges and universities is making its way through the General Assembly, its path to passage smoothed by a recession that has brought sharp cuts to higher education and placed an emphasis on job creation.

The changes, passed by the state House of Representatives last year and being considered now by the Senate, would give public colleges and universities the freedom to:

• Take their employees out of the state's human resources system and enable schools to write their own, individual rules
• Significantly curtail the State Budget and Control Board's authority over the financial operations of the schools
• Offer free tuition to up to 8 percent of their student body as long as half of those getting such help are in-state students
• Partner with local governments to buy goods and services

The new rules would also require school trustees to take publicly recorded roll call votes if they want to increase tuition and fees.

A separate, companion bill proposes similar changes for the state's technical colleges.

College presidents said many of the changes are needed to allow their schools to operate more efficiently, a must as state funding for higher education in South Carolina has been reduced.

But there are some concerns that the proposed changes, which could be discussed during a Senate committee meeting this week, will provide less oversight for the state's extensive, taxpayer-supported system of higher education.

"It is imperative that we ensure that appropriate procurement oversight remains in place," said state Sen. John Courson, the Richland County Republican who chairs the Senate Education Committee.

College officials have long pressed for the changes. Their requests have found a more receptive audience in recent months, as state legislators have repeatedly cut funding for higher education and as the state's jobless rate has soared to all-time heights.

"During the recent budget cuts and failing economy, it is critical that we have flexibility that will be authorized by regulatory relief," said Shirley Hinson, director of government relations at the College of Charleston. 

"We will be able to operate like a business and get the best bang for the taxpayer's dollar while providing facilities and services that are important to students and their families."

William T. Moore, vice president for finance and planning and chief financial officer at the University of South Carolina, said the human resources changes, still being worked out, are important.

"This is particularly important for us because it would make us more competitive in recruiting professional staff nationally and internationally," Moore said.

Courson, who has appointed a special committee on regulatory relief to review the legislation, has some qualms about the human resources changes.

He said there "some components concerning human resources and procurement that need to be carefully studied. We do not need duplicative human resource systems."

South Carolina has a rigorous - critics say ponderous - system in place to provide oversight to colleges and universities.

If a school wanted to build a new facility, for example, in many instances it could be required to get separate approvals from four entities: the school's board of trustees, the state Commission on Higher Education, the Joint Bond Review Committee and the State Budget and Control Board.

Schools must often get approval from each of those entities before they can pay engineers and architects for design work. And if a school's estimate of what a project will cost is off, it will have to go through the multistep approval process all over again.

College presidents argue the process is too time-consuming and that it leads to higher development costs, as the cost of borrowing and of materials can rise while a school waits for approvals.

Anthony DiGiorgio, president of Winthrop University, cited his school's efforts to build a health, physical education and wellness center as an example of how inefficiency led go higher costs.

The facility was designed in the early 1990s as a $13 million project. But the state's extensive approval process contributed to delays that pushed the project's completion to 2007 - at a cost of more than $26 million.

"Anything that holds construction up is going to cost money," DiGiorgio said.

College presidents are particularly frustrated that, while state appropriations make up 10 percent to 15 percent of their overall annual budgets, the state has total, final authority over big projects.

David DeCenzo, president of Coastal Carolina University, said the current setup costs the state jobs as well as money.

For the past two years, Coastal has had $60 million in the bank waiting for final approval to begin a construction project, DeCenzo said.

"Imagine how many jobs I could have created if we could have gotten started," he said. "This lengthy approval process is hurting everybody."

Even with the current process, colleges and universities have found a way to build rapidly in recent years.

Schools have used affiliated foundations to purchase land and pressed for special legislation to build particular projects.

School officials argue, however, that less of that will be necessary if the current system is changed.

Political considerations often come into play as a school contemplates a large project.

Final say on projects now rests with the nearly omnipotent Budget and Control Board, composed of the governor, the state treasurer, the comptroller general, the chairman of the Senate Finance Committee and the chairman of the House Ways and Means Committee.

Gov. Mark Sanford has been a critic of the way higher education is structured in South Carolina, and he is often viewed as an obstacle to college development plans.

The regulatory changes would reduce the Budget and Control Board's power - and thus Sanford's power - over colleges and universities.

The bond review committee, composed entirely of elected state legislators, would essentially replace the Budget and Control Board's role in overseeing higher education if the legislation passes.

Sanford spokesman Ben Fox said the governor thinks the bill "appears to have two fatal flaws": It cuts out the governor's oversight power as it relates to higher education, and it gives colleges and universities broader authority in establishing what they will pay in attorneys' fees.

"This could potentially increase the cost of litigation for higher ed at the very time our state budget is struggling," Fox said "We've survived with the current cost structure in place, and changing course on this front gives reason for caution."

Reach senior writer Wayne Washington at (803) 771-8385.

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