Thursday, July 20, 2006

Getting More Than We Pay For

Yesterday I attempted to pull a lesson from a Gazette editorial about highway speeds: that caution is wiser than certainty when it comes to our assumptions and intuition about the data underlying public policy decisions. ("Gazette: 'Is Faster Safer?" July 19, 2006).

Today three paragraphs at the end of a Gazette news story caused me to reflect once again on the old adage, "You get what you pay for." Cindy Hadish, "Global Warming Issue Heats Up I.C.," The Gazette, July 20, 2006, p. 4B (also available here). (The story is about an effort of the Iowa Public Interest Research Group, and a law school colleague of mine, Jon Carlson, to urge legislators to back a bill designed to reduce greenhouse gas emissions.)

What caught my eye were the last three paragraphs of the story:

"Ferman Milster UI associate director for utilities and energy management, cited action the university has taken to reduce carbon dioxide emissions.

"Its biomass fuel project replaces coal with oat hulls from Quaker Oats in Cedar Rapids, providing a revenue stream for Quaker and reducing emissions while using a renewable fuel, he said.

"The program has saved the UI more than $1 million in fuel costs."

"You get what you pay for"? Not in this case.

The switch from coal to oat hulls means the UI has reduced its contribution to carbon dioxide emissions, is now using a renewable fuel, depending on what Quaker Oats was formerly doing with the oat hulls it may mean less need for land fill -- and (a) provides more revenue for Quaker Oats, while (b) reducing costs for the University.

I'm not suggesting that we should cut expenditures for social or other programs in the hopes that someone will come up with a way of delivering more for less money. All I'm suggesting is that, far more often than one might suspect, a little focus, and creativity, can produce alternative ways of doing things that can simultaneously increase performance while decreasing costs.

Here are a couple examples, both from education.

There was a thoughtful, best-practices report from The National Commission on the High School Senior Year, about 2001, that concluded much of the last year of high school is essentially wasted for many students. (Sadly, this report may no longer be available on the Web; at least the only sites Google brought me just now (that I examined) no longer contained it.) It proposed a number of programs school disticts could adopt that would similtaneously generate more student enthusiasm, provide a higher quality of education, while reducing class size, dropouts, the need for increased capital costs (building more, or expanded, high schools), and (with, if anything, fewer teachers) operating costs as well.

Most districts (sadly, I hate to report, a number that included the one on whose school board I sat at the time) either weren't aware of the report, were aware but didn't read it, or read it but decided the poorer quality education at higher cost was more comfortable and less disruptive than undergoing the changes that the improvements would require of them.

(In the case of my district, parents and other taxpayers decided they'd much rather float a $40 million bond issue, and expand the local high schools, than adopt the changes that would improve quality and lower costs. Moreover, all of this in the face of data suggesting the optimum size of high schools is roughly 650 students when ours, even before expansion, were already roughly two to three times that size.)

This is simply one more illustration of the proposition that there are approaches, to almost anything, that can increase quality while simultaneously decreasing costs.

In higher education there is an assumption that when it comes to university presidents and football coaches it is simply impossible to find a good coach for less than $3 million a year, or a good president for less than something between $400 and $800,000 a year: the more you pay the better quality person you get. I questioned that in a couple of pieces in the Daily Iowan: Nicholas Johnson, "Pricey Presidents' Added Cost," The Daily Iowan, March 7, 2006, and Nicholas Johnson, "When Too Much Is Not Enough," The Daily Iowan, June 30, 2006.

The latter began, "How much is enough? Regent President pro tem Teresa Wahlert said, 'You get what you pay for. You don't get an extremely qualified academic and entice him to stay' with a lower salary,' ("Board eyes more $ for prez," June 22)." It seemed to me that was an assertion worth testing; that it was possible those who come only for the money might very well be less enticed to stay when the next larger offer came around rather than more.

From rolled oats to roiled regents, it's not always the case that "you get what you pay for."

1 comment:

John Neff said...

The State of Iowa is getting "something for nothing" because the Board of Regents (actually UIHC) pays for almost $6 million per year for a substantial fraction of prison inmate health care.

My view is that this is the unintended consequence of a decision made probably 50+ years ago when medical delivery costs were lower because in-patients were housed in wards not semi-private rooms. In the mean time we have to deal with increased medical costs of inmates with AIDS and age related illnesses.

Senator Grassley is very proud of the fact that he lead the effort to suspend Federal social security and veterans benefits for person convicted of a felony. Because most folks in prison are convicted of felonies (if this were not Iowa I would say all prison inmates are convicted of felonies)this shifts part of the cost of inmate medical services from the Federal to the State budget (in our case to the UIHC buget).

The Federal policy is screw the States and the State policy is screw the property tax payers, UIHC patients and the students/parents who pay tuition.