What You Need to Know About Funding Higher Ed

State Funding DropsI recently had the opportunity to discuss higher ed funding with someone in an administrative position at a top state university in the University of California system. She told me that total cost of attendance* at this institution is $33K a year for in-state students and over $50K a year for out of state students.

I was a bit shocked and said that those costs sound more appropriate for a private institution than a public one.

And then she dropped a bombshell: she told me that since 2008 state support for that institution has dropped from providing 88% of the institution’s operating expenses to providing 14% of its expenses.

No, the school has not incurred remarkable additional expenses since 2008. It has undoubtedly cut spending in many areas.

Yes, that school, like almost every other institution, public or private, could probably be run more efficiently.

But no, no institution — no business — can keep its doors open if it loses 74% of its income in six years without raising prices (that’s obviously not a correct number, but the correct number will still be very large).

This situation is not the fault of faculty. It’s not the fault of administrators. Both faculty and administrators can respond in their various ways to help the situation, but any business in the country would shut its doors with a drop in revenue this fast and of this magnitude.

So as citizens — and I means citizens, not consumers — you need to understand what is being done to you and why.

The cost of your own and your childrens’ college education is being transferred by state legislatures from the state budget to you, though the federal government, in the form of debt.

This is happening in part because of the financial crisis of 2008, which caused a large drop in state revenues.

But just as you have the right and obligation to ask what your colleges and universities are doing with their money, so do you also have the right and obligation to ask what your state governments are doing with theirs.

And that’s all the more true because it’s not their money. It’s your money. Tax revenue is your money. Don’t forget that. You as a voter have the right to say how it is spent.

Yes, taxes on businesses are often lowered to attract business to the state.

And yes, and in California in particular, voters who are already financially strapped are unwilling to pay taxes. California especially hamstrung itself with the passage of Proposition 13 in 1978, which seriously limited the state’s ability to collect property taxes just as the real estate market was starting to boom.

But you need to understand how this is working out for you: you and your children are becoming debt slaves to finance college. That situation benefits no one but the FIRE sector, particularly the banks and the politicians that the banks pay for.

So the solution to financing higher ed?

I will say that the current solution, which involves cutting faculty to the status of fast food workers (over 70% of your courses are taught by adjunct faculty), does nothing but compromise the quality of education that colleges and universities can offer. I’m not criticizing adjunct instructors by saying so. Most of them are hard working and dedicated. But no one can teach eight classes at four different institutions with no stability, benefits, and health insurance for very long and do a good job in all of their classes. This situation is not sustainable. These cuts make for big savings, but at a very high price, which in this case is the actual purpose of the institution.

What you need to understand is that the quality of your education is exactly equal to how well-supported your school’s faculty are, because faculty are the ones who provide that education. When you or your children apply to a college or university, ask these two questions first:

1. What percentage of your college courses are taught by full time faculty?

2. What percentage of these faculty members have terminal degrees?

If you don’t get an immediate response, don’t apply to the college. They don’t know the numbers, or they are acting like they don’t know the numbers, because they do know the numbers will make them look bad.

However, we need to control costs. We need to start by looking very hard at how much we’re spending on sports, and then cap head coach salaries at $500,000 and assistant coach salaries at 1/4 of that. Almost all sports programs in the country lose money (see also this USA Today report and ESPN’s numbers), and those that don’t are dependent upon student fees to break even.

Yes, your tax dollars are going to pay sports coaches seven figure salaries, who in most cases are the highest paid state employee in any given state.

If we were sane we would drop high cost sports altogether. If the NFL, NBA, and MLB want to use colleges and universities as farm teams, great. They can pay for it. All of those students who only want to go to college to play sports can then play sports without having to go to college — and then we wouldn’t have to worry about athletic departments paying student aides to write papers for high profile student athletes. This UNC incident isn’t isolated. It has been regular practice at many Div. I universities for decades.

We also need to cut administrative costs and impose similar caps on salaries there. While many colleges and universities across the country have been moving toward an adjunct teaching force, spending on sports has increased about 35% per athlete, and we have seen massive increases in spending on administration. From a recent Forbes article:

Between 1993 and 2007, total university expenses rose 35%. But administration expenses rose a whopping 61% and instruction expenses rose 39%. In fact, as a 2010 Goldwater Institute study finds, “universities have in recent years vastly expanded their administrative bureaucracies, while in some cases actually shrinking the numbers of professors.” While enrollment rose between 1993 and 2007 by 14.5%, administrators employed per 100 students rose nearly 40% and spending on administration per student rose by 66%.

This system does not serve students.

Next, we need to face the fact that we can pay for college two ways: through debt or through taxes, unless you’re one of the few who can find a way to pay for college without debt. It’s far better for the economy and for the individual to pay for college — and really, for education in general — through taxation than through debt. Taxation trades current benefits for current and future goods. Your taxes support immediately tangible benefits such as roads, schools, hospitals, and infrastructure. Debt sacrifices the future for the present with no certain payoff.

Businesses, which I understand already feel strapped and over-regulated (and feel that way for good reasons), need to view taxes as an investment in their workforce. Otherwise, you can complain all that you want about the quality of college graduates, but I assure you — you’re getting exactly what you pay for.

*Corrected from “tuition.”

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4 thoughts on “What You Need to Know About Funding Higher Ed

  1. I agree with everything you’ve written (although there is something wrong with the cited tuition number because it’s far less expensive for in-staters to attend either Berkeley or UCLA). There is so much gov’t waste that, if money were more prudently spent, there would be ample funds for education; however, every dollar seems to have a constituency fighting to preserve it so you’re probably right that increased taxation is the only way sufficient funds will be freed up for what should be high priority educational needs.

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    1. The person I was speaking to was from UCLA. I just checked, and the $33K figure isn’t tuition only, but tuition, room, board, and fees — or total cost of attendance — so you’re right, that figure was too high. Total cost of attendance is $56K a year for non-residents. I’ll have to post a correction.

      http://www.admissions.ucla.edu/prospect/budget.htm

      AND DEAR GOD you’re right about waste. I seriously think the military is the worst. I teach many, many students in my online grad classes who are overseas servicemen. You wouldn’t believe the stories they tell. Or, maybe you would.

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  2. Governer Brown proposed 1-2 years ago NEW UNIVERSITY OF CALIFORNIA
    NUC . The proposal was rejected by the Senate .
    NUC was going to accept the certificates of MOOCs as credits after an exam by NUC.
    So there would not be any classroom and any building any teachers .Cost would be nill .
    Just transferred credits from MOOCs .
    Good things are rejected usually .
    Why ?

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    1. Because they’re not good things, Muvafflak (if I may). You tend to ignore the specifics of my responses to you as well as published research data on the effectiveness of MOOCs. They tend to work well for advanced students in specific courses of study, but they don’t and never will work at all for remedial to average students, especially in lower division courses of study.

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