Sunday, December 16, 2012

Whither public higher education?

On Saturday the Wall Street Journal ran an article that uses the sticker shock faced by parents of a CU Boulder freshman to illustrate the broader financial pressures on U.S. public universities and their students.

Who Can Still Afford State U ?
By Scott Thrum

Public-college enrollment exploded after World War II and the adoption of the GI Bill. As recently as 1951, more Americans were enrolled in private universities than public ones. Sixty years later, more than 15 million students were enrolled at the nation's 678 public colleges and universities, nearly three times the number attending private ones…

State subsidies for these public colleges and universities fell 21%, on a per-student, inflation-adjusted basis between 2000-01 and 2010-11 … Over that same period, tuition at two- and four-year public colleges rose an inflation-adjusted 45% to $4,774 in 2010-11, according to the association. At public four-year colleges this year, tuition averages $8,655, according to the College Board.

But education experts say wrenching decisions on the state level about how to allocate limited public resources are having a very big effect.

"Over the last 25 or 30 years, public higher education has lost out in the competition for state funds with Medicaid," says Cornell University professor Ronald Ehrenberg, director of the Cornell Higher Education Research Institute. "There's so much pressure to spend money on other things."

State funding for the University of California system has fallen 25% over the past decade, to $2.4 billion from $3.2 billion, triggering tuition increases and student protests. At the University of Michigan, state funding has fallen 26% in the past decade. The state now covers 17% of the university's budget, down from 33% in 2002-03.

"The state obligations in Medicaid, prisons and K-12 education are just swallowing up state budgets," says John Vaughn, executive vice president of the Association of American Universities, a group of 62 research universities, public and private.

The financial pressure on CU isn't expected to subside soon. A 2010 study by the University of Denver, a private school, projected that Colorado, given its other funding obligations, might run out of money for colleges and universities within a decade. "We think it's sooner than that," says CU President Bruce Benson.
The article highlights a phenomenon long-visible here in California. When it comes to politicians getting elected to state office — whether measured by popular votes or campaign donations — public higher ed is near the bottom of the list, after transfer payments, K-12 teachers, prison guards, general state bureaucrats, even home care workers. At the same time, administrator salaries (and non-instructional spending more broadly) has been exploding at these universities.

As in other states, CU is pushing politicians to limit the cap on foreign students, so they can aggressively recruit full-fare enrollees at the expense of state residents. I suspect such a philosophy this would be anathema to those who founded these public universities or the national Morrill Act land grant college system that made many of these universities possible.


Kenneth M. Kambara said...

I think that article obscures many facts and obscures many of the most important issues with respect to the industrial organization of higher education. I think we agree that the business is top heavy, but that's about it.

A subsidized tuition distorts price. Period. The University of California has undergraduate enrollments with 25% of students being from households earning over $100K. Why should there be a subsidy for students who have the ability to pay a higher price? Set a market price for in-state and out-of-state tuition and allocate grants and scholarships on the basis of need. If an argument can be made with empirical support that a subsidy for the upper middle class and above generates more spillover effects, that should be explicitly stated. I don't think that's very likely.

I also think that there should be surcharges for certain majors that are impacted and with higher income potential. The idea of offering up a cheap alternative to private schools with a pricing scheme that encourages free riders in this economic environment is irresponsible.

fredsbreakfast said...

This is interesting ~

And this ~

Kenneth M. Kambara said...

Shhhhhh, Fred, you're getting too close to the root of the problem. While I don't believe there is a normative model for higher education, I think that most institutions are misconfigured and inefficient. I think this persists because of the "credence qualities" of what is being offered and a huge question is what's the value-added of higher education. I think many in libertarian circles think that higher education at current prices isn't worth it. Is that a good reason to subsidize the sticker price for the upper classes? Sounds like "treats" to me and I've seen the rhetoric that it has spillover effects, but I haven't seen any hard data on this.

I think new models (like those in TX and FL) are in order that factor in learning styles and emphasize outcomes. I think this can be done with a leaner infrastructure and with less reliance on financial aid (again, more treats). I think eventually competition will rationalize the market, but this will likely take time. I'm not in favor of huge subsidies that distort prices, but I am in favor of delivering value with a reconfigured "production" model. Campus politics and academic culture would make this unlikely outside of a new or small institution or division.

I think the land grant model was horrible for quality and some would argue are a manifestation or a product of big government thinking.