Tuesday, March 05, 2013
Maximizing Expenditures
The Chancellor of UMass Lowell is Marty Meehan. According to Wikipedia, “Meehan became the chancellor of his alma matter the University of Massachusetts Lowell in 2007. Since becoming chancellor, the university has seen an expansion both in enrollment and in new buildings.”
One might suppose that with the ongoing concern about the high and rising cost of higher education, there would be concern about tripling the sports budget of a state university. But not so, at least in this case.
Non-profit and governmental health care institutions and the publics they serve typically behave in the same way. No wonder it is so hard to get them to reduce their costs. It is contrary to their nature.
Many years ago I authored an article titled The Economic
Behavior of Social Institutions. By
Social Institutions I meant governmental and non-profit organizations.
My conclusion was that whereas, according to conventional
economic thought, commercial companies try to maximize return on invested
capital, social institutions try to maximize expenditures. Actually, they try to maximize achievement,
but the economic consequence is the maximization of expenditures.
I was reminded of that by an editorial in the March 4 issue
of The Boston Globe. It seems that UMass
Lowell, a one-time teacher’s college that has evolved into a part of the
University of Massachusetts system, has decided to “move all of its sports
program to the more competitive Division 1.”
To do that, the University will have to increase its spending on sports
from the current level of about $7 million per year to something more like $22
million per year. The editorial approved, concluding with the
statement “If UMass Lowell can move up to Division 1 without driving academics
down, the River Hawks [the name of the school’s sports teams] will soar to
heights worthy of the school’s growing reputation.”
The Chancellor of UMass Lowell is Marty Meehan. According to Wikipedia, “Meehan became the chancellor of his alma matter the University of Massachusetts Lowell in 2007. Since becoming chancellor, the university has seen an expansion both in enrollment and in new buildings.”
One might suppose that with the ongoing concern about the high and rising cost of higher education, there would be concern about tripling the sports budget of a state university. But not so, at least in this case.
Non-profit and governmental health care institutions and the publics they serve typically behave in the same way. No wonder it is so hard to get them to reduce their costs. It is contrary to their nature.
