Efficiency Audit Legislation Advances to Finance, Government Operations Committees

Category: Higher Education

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Legislation that would initiate a process for “efficiency audits” to be performed on public higher education institutions advanced this week, as amended, in the House Education Administration and Planning Committee with a 7-5 vote. The legislation is expected to be heard in the House Government Operations Committee next week before heading to the respective Finance Committees.

The efficiency audit proposed by the bill would be conducted by an outside entity and would include recommendations, including for legislation, on strategies to improve the efficiency of public universities. The Senate version of the bill, sponsored by Senate Education Chair Dolores Gresham (R-Somerville) exclusively lists the University of Tennessee campuses, the University of Memphis, and Tennessee State University for efficiency audits. The Senate version also stipulates that the efficiency audit be used by the legislature to determine if institutions have “unnecessary course offerings of little benefit to students or the public.” Public universities across the state are particularly concerned about this provision of the bill and how it may play out with proposed legislative action on curricula, and how that may impact institutions’ accreditation if passed into law. The House version abandons both of these provisions.

In the House Education Committee this week, several members voiced concerns that this audit would be both redundant and costly to the state. Public higher education already undergoes annual financial audits and regular performance audits as required by state law.

Rep. Martin Daniel (R-Knoxville), the bill’s sponsor, pointed to the Iowa Board of Regents System as an example where efficiency audits were used. In 2014, Iowa’s Board decided to hire Deloitte Consulting to undergo a $3.2 million efficiency audit, which resulted in a recommendation to cut 250 jobs, drawing fire from organized labor groups. House Education Committee member Rep. Craig Fitzhugh (D-Ripley) highlighted in the hearing that the Iowa example wasn’t a perfect one—pointing to a lawsuit being brought by Deloitte on the Iowa Board of Regents in order to protect records the company views as “confidential, proprietary, trade secret information which would cause harm to Deloitte Consulting” if released.

Ultimately, the conducting of an efficiency audit of Tennessee’s public universities is expected to cost in the millions. The legislative Finance Committees will ultimately determine the fate of the bill from a funding perspective.

The University of Tennessee has made efficiency and effectiveness a top priority, recently identifying over $15.2 million savings in recurring funds.

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