Interested Party Testimony Submitted to the Ohio House Government Accountability & Oversight Committee on House Bill 384

Jan 19, 2016

By Greg R. Lawson

Thank you, Chairman Brown, Vice Chair Blessing, Ranking Member Clyde, and members of the Committee for the opportunity to testify today regarding House Bill 384. My name is Greg R. Lawson. I am the Statehouse Liaison at The Buckeye Institute for Public Policy Solutions, a free market think tank that believes low taxes and limited government regulations will lead to a more prosperous Ohio.

House Bill 384 wisely extends the Auditor of State’s (AOS) authority to conduct state agency performance audits for Ohio’s higher education institutions. Ohio spends approximately $1.9 billion of general revenues on the state’s higher education system, so it makes sense for the AOS, which already performs similar audits for other state agencies, to offer its expertise and analysis to higher education institutions.[1]

The AOS office is uniquely situated to discover a wide range of potential efficiencies and savings. Indeed, as the AOS has testified, its performance audits of and recommendations to eight other state agencies could yield nearly $100 million in savings for Ohio taxpayers—a significant savings and an important discovery for the General Assembly as it considers future state budgets and how to invest limited state resources.

These types of audits and reviews of higher education could not come at a better time. It is always prudent, of course, to find new ways to save money for Ohio taxpayers, but it is becoming increasingly important to find ways to curb the costs of higher education. News headlines detail the bank-breaking student loan debt that casts a pall over the otherwise bright future of today’s college graduates. U.S. student loan debt now outpaces the country’s car loans. The Federal Reserve just reported that as of September 2015, students owed more than $1.3 trillion in student loans.[2] That is “trillion”—with a “T.” To put that in perspective, MarketWatch analyzed the Federal Reserve’s data and found that the nation’s student loan debt is rising by $2,726 per second.[3]

Such a massive debt burden has profound social and cultural consequences. Studies show that student loan debt hampers savings, affects spending habits, and can even delay decisions on home-buying and matrimony. But recent college graduates are not the only ones facing these challenges. The Associated Press reports that student loans are still held by many people in their 40s, which in turn restricts or prevents them from paying for their children’s future education—and thus perpetuating the cycle of crippling student loan debt.[4] According to the Associated Press study, the average college-educated head of household under 40 owes $404 per month in student loans—slightly less than the average family’s grocery bill.

Failure to address this problem today will exact a serious economic price tomorrow. As graduates struggle to pay off debt, they will save less and invest less. Those lost savings and investments will mean fewer new businesses providing fewer new jobs. Higher education performance audits will not solve this problem—at least not alone. But they will help find cost savings and efficiencies that can make higher education less expensive.

Eventually, we will need to address the perverse economic incentives in the student loan system itself—incentives embedded in virtually all government subsidized sectors. But every journey begins with a first step, and allowing the Auditor of State to look for savings and efficiencies that might help lower the price of Ohio’s higher education is a good one.

Thank you for your time and I welcome any questions that the Committee may have.


1. Legislative Service Commission, “Budget in Detail, HB 64- 131st General Assembly,” accessed January 15, 2016, http://www.lsc.ohio.gov/fiscal/bid131/budgetindetail-hb64-en.pdf

2. Board of Governors of the Federal Reserve System, “Consumer Credit Outstanding- November 2015,” accessed January 15, 2016, http://www.federalreserve.gov/releases/g19/current/#fn11b

3. Berman, Jillian, “Watch Every America’s Student Loan Debt Grow $2726 Every Second,” MarketWatch, accessed January 15, 2016, http://www.marketwatch.com/story/every-second-americans-get-buried-under-another- 3055-in-student-loan-debt-2015-06-10

4. Boak, Josh, “America's crushing surge of student debt has bred a disturbing new phenomenon,” Associated Press, October 5, 2015, http://www.businessinsider.com/americas-crushing-surge-of-student-debt-has-bred-a- disturbing-new-phenomenon-2015-10