Director: Daniel C. Levy

Privatization of Public Colleges in South Carolina

(Submitted by Kevin Kinser)

PROPHE Summary:
Motivated by a desire to reduce costs and improve accountability in the public higher education sector, the Governor of South Carolina proposed allowing public colleges and universities in the state to become private institutions if they do not wish to be under the control of a strong new governing board. The state would transfer ownership of all buildings and property as long as the institution agrees to decline any future appropriations and always charge a lower tuition to South Carolina residents. The proposal must be approved by the state legislature before taking effect.

For the full story see the Chronicle of Higher Education, December 8, 2003. "Governor of South Carolina Offers to Let Some Public Colleges Go Private," by Peter Schmidt.

PROPHE Observation:
Many legally public institutions in the United States have long been private-public mixes regarding income as well as other matters. In recent years, they have received a decreasing proportion of their funds from the state, but without a reduction in regulations and mandates . Indeed, the direction has been toward more accountability and reporting requirements. The South Carolina proposal is the first time that a state has offered to give up regulatory authority over a public institution of higher education in exchange for eliminating the state subsidy to that institution. This is a radical form of privatization-a common one internationally in fields such as banking but extremely rare in higher education-that would involve the wholesale transfer of a public resource to the private sector. The public university that becomes private would be deregulated, but at the cost of 20 percent or more of its budget. Rather large tuition increases would be needed to make up the difference, and the current political environment is highly critical of such actions -taken by public or private institutions. Whether or not any institutions in South Carolina accept the deal, it is likely that some institutions in other states would appreciate having the option made available to them.