State efficiency study urges universities to adopt business-style metrics and greater financial transparency

TALLAHASSEE — Ben Watkins, director of the Florida Division of Bond Finance, told the Senate Appropriations Committee on Higher Education that an eight‑month efficiency review of the state university system found clear gains from performance-based funding but also opportunities to improve cost management and transparency.

Watkins said the DeSantis‑requested study used audited financial statements, student outcome data and university personnel data to analyze spending and productivity. "Florida has the best public university system in the country," he said, while adding that "there is always room for improvement." He recommended three primary approaches: treat universities more like business enterprises for budgeting and resource allocation, use measurable performance and efficiency metrics over time, and include financial-efficiency metrics in performance-based funding.

The study showed Florida’s in‑state tuition remains low relative to national averages (Watkins characterized the state’s public tuition as roughly 55% of the national average), while reporting a 9.4% increase in degrees awarded over seven years against a 2.4% growth in student population. Job placement and continuing-education outcomes rose roughly 10 percentage points in recent years, and median incomes for graduates increased by about 28%.

On the spending side, Watkins said operating expenses per student have risen and that payroll accounts for about 68% of university operating spending, making personnel costs the primary lever for potential efficiencies. He proposed a "cost to produce a degree" metric — operating cost in a base year divided by degrees awarded — to compare productivity across institutions while acknowledging legitimate cost differences across degree types and institutional missions.

Watkins also recommended trustees require more granular budget and unit-level reporting and suggested research revenue be measured on a per‑research‑FTE basis to assess productivity rather than using gross totals, which are concentrated at institutions with medical schools.

Senators asked whether the study identified reporting gaps. Watkins replied audited financial statements follow GASB accounting conventions and can be opaque for operating analysis, personnel data is unevenly available, and national comparative metrics for total system cost are not well developed. Committee members and staff signaled interest in legislative steps to require clearer, unit-level reporting for oversight.

The committee took no funding votes; members thanked presenters and adjourned.