Legislation Requiring Efficiency Audits for Public Higher Education Institutions Passes in Senate; Will Be Heard in House Committee Next Week

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Legislation that would initiate a process for “efficiency audits” to be performed on public higher education institutions was passed in the Senate Education Committee unanimously this week with no opportunity for stakeholder testimony.  The legislation will be heard next week in the House Education Administration & Planning Committee. It is sponsored by Senate Education Chair Dolores Gresham (R-Somerville) and Rep. Martin Daniel (R-Knoxville).

The efficiency audit proposed by the bill would not be a financial audit. Instead, it would be conducted by an outside party to determine inefficiencies and would include recommendations on strategies to improve the institution’s efficiency.  How an “efficiency audit” differs from a “performance audit” already required by law for public higher education institutions is unclear based on the definitions laid out in the bill.

The University is financially audited every year and recently went through its performance audit conducted by the State Comptroller’s Office.  Performance audits look at how well an institution is fulfilling its statutory mission, as well as the efficiency and effectiveness of the institutions management and use of resources.  UT’s performance audit had no findings or recommendations, representing a clean bill of management health.

The University has made efficiency and effectiveness important focus areas and will continue to do so.  Recently, over $15 million in efficiencies and cost savings have been realized across the system.

The legislation creates a new government committee to consider contracting for a private-sector auditor and to drive implementation of any recommendations resulting from audits.  Costs of conducting such audits on all of Tennessee’s public universities are estimated to be in the millions. The Senate version of the bill targets Tennessee State University, the University of Tennessee System, and the University of Memphis as the first institutions to undergo efficiency audits.

The legislation also ventures into areas, such as curriculum and course offerings, that are concerning to colleges and universities across the state.

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