It was the belief of some of the participants that the budget pressures would push some states toward greater centralization, in an attempt to control costs. In the private sector, the argument for decentralization appears to have been won, given the results of reengineering over the past decade. Two basic reasons are given for the inefficiency of centralized administrative systems in the private sector. First, they become bureaucratic and stifle initiative. Decisions are made at ever higher levels in the organization, by people who have the least information and direct stake in the outcome.
Decision makers get only indirect feedback about the results of the decision.
As a result, change is slow and difficult to accomplish. Second, even though centralized systems may be put in place to be lean and efficient, and to consolidate operations, they tend to grow with few checks and balances. While these services may well have some value, they do not necessarily represent the most pressing needs of the organization. If we run counter to the trend of decentralization that is working so successfully in the private sector, we should clearly understand the risks. It would seem, given the very high level of education and commitment of university faculty and staff, that decentralized administration would work exceptionally well in higher education.