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What’s Happening to the PUBLIC in Public Education?

What’s Happening to the PUBLIC in Public Education?

Students feel the effects of tuition hikes as legislative tax-cutting sprees send the nation’s public colleges and universities jockeying for funding.
By Page Boinest Melton

Forget unemployment, income and housing starts as leading economic indicators. America’s public colleges and universities — among the first to feel the effects of the cooling economy — may be the most accurate measure of the states’ fiscal health. Students headed back to school this fall are suffering sticker shock from tuition increases, witnessing cutbacks in planned campus construction projects and hearing tales of frozen faculty salaries.
“When funds get tight, states are often accused of taking it out of higher education’s hide,” says Joseph Marks, the Southern Regional Education Board’s director of educational services.
Sandra Ruppert, a Litttleton, Colo., education consultant, says history bears that out. “Higher education has done better when the economy is good and worse when the economy is bad.” When the economy heads south, she says, “higher education is usually the component of the budget that suffers the most.”
While slowdowns affect each state differently, state institutions from coast to coast are grappling with weakening economic fortunes. More than a half-dozen states are imposing double-digit tuition increases, with raises often varying by campus. Students will pay an eye-popping 15 percent more for tuition at the University of Tennessee, as much as 13.5 percent more in Minnesota and over 10 percent more on some Michigan campuses. Ohio legislators removed the state’s tuition cap, resulting in tuition increases of more than 9 percent. Oregon students will see similar increases.
“It’s hurtful. Fifteen percent, compounded by big increases in the last couple of years, is huge,” says 21-year-old Jennifer McKinnish, a University of Tennessee senior taking a part-time job to help cover expenses.
Other states are grappling with massive budget adjustments in higher education. North Carolina colleges and universities, caught short while legislators worked well into the summer on a strapped state budget, literally guessed at tuition bills, preferring to write refund checks if they guessed too high. California’s energy-triggered budget problems prompted a $98 million reduction in community college spending, halting much-needed construction and technology projects. The Alabama Supreme Court stopped the governor’s plan to shift the bulk of budget cuts to higher education and preserve K-12, saying public schools and colleges and universities should both share the burden. Other states are freezing faculty salaries and hiring.
It’s hard to miss the cyclical nature of higher education’s funding dilemma. In the recession of the early 1990s, states slashed budgets — especially higher education spending — and many raised taxes to cover
revenue shortfalls. During the more prosperous economy of the mid- to late-1990s, when state spending increased overall by more than 6 percent, governors and legislatures shored up campus budgets. Today, with the economy slowing down again, states are planning overall increases of just 3.6 percent for all state spending in the 2002 fiscal year, with greater shares of state budgets consumed by higher costs for energy and Medicaid, according to the National Governors Association and National Association of State Budget Officers .
So far, campuses have not felt the pain they did 10 years ago, and some states are relying on savings socked away specifically for a downturn. Most colleges and universities have not sustained deep cuts to their base funding but instead are receiving little or no increases, usually insufficient to cover higher utility and technology costs. Uncertainty reigns, however. Some states started reducing their revenue estimates during the 2001 fiscal year, and at least a dozen states lowered projections for the 2002 fiscal year, the governors group reports, altering the funding picture for higher education.
“In a surprising number of states, midyear or mid-legislative session, higher education was put on notice: ‘What you wanted and even what we promised you are not going to happen this year,’ ” says Travis Reindl, state policy director for the American Association of State Colleges and Universities.
Headline-grabbing tuition increases are just the most visible symptom of a little-noticed trend: States are paying smaller shares of higher education budgets. That prompts Reindl to wonder what’s happening to the “public” in public higher education. Despite the perception that states have been spending more on higher education — state expenditures hit $60 billion last year — “the reality is that the state investment isn’t keeping up,” he says. In 1992, nearly 42 percent of revenues for colleges and universities came from states, a share that dropped to just over 37 percent in 1997.
Some also worry that the bill is coming due for states that toasted the boom years with massive tax cuts. In Virginia, a dramatic reduction in the personal property tax is costing the state more than $1 billion this year. That payout, coupled with slumping tax collections overall, contributed to a freeze on faculty salaries and some campus construction projects.
“Our college presidents are bracing because they know we’re just getting started” with the belt-tightening, says Donald Finley, executive director of the Virginia Business Higher Education Council, a business advocacy group that represents colleges and universities. “It’s going to be a year of budget cuts.”
Why hit higher education during slow economic times, when a better-trained work force may be essential to recovery? Because that’s where the money is.
“There are infinite demands on state treasuries and only a finite source of money,” says James Palmer, an Illinois State University professor who tracks state support for higher education as editor of Grapevine, a national database of tax support for higher education. What states don’t spend on mandated and formula-driven programs, like welfare, K-12 education and Medicaid, “is left for higher education,” he says.
It’s also easier for governors and legislators to trim campus budget requests because unlike other state services, colleges and universities have their own revenue-generating capabilities. They can charge more for tuition and fees, initiate fund-raising campaigns, attract grants, or raise cash through partnerships with companies for research and economic development
Decision-makers say that kind of thinking leaves them with no good choices. Faced with just a 1.5 percent increase for the new school year, Michigan State University raised tuition nearly 9 percent. Some schools in the state will be charging even more.
“The legislature puts you in a box and forces you to raise tuition,” says Joel I. Ferguson, a longtime member of the Michigan State University’s board of trustees. “They feel universities will figure a way out of it, which is, — ‘Maybe this year we raise tuition.’ “
Ferguson is troubled by the trend, but says parents usually will pay more for college. “They won’t buy something else. They will spend the money for their child’s education.”
Perhaps the biggest problem plaguing higher education is that it’s difficult to gauge the precise impact of the state investment, in good times or bad. Experts say it is sometimes hard to sell the long-term benefits of a college education, especially when one-third of the nation’s legislatures have term limits and most legislatures are part-time. State lawmakers may favor investments that show immediate returns or may not have time to spend on complex funding issues. Michigan State’s Ferguson longs for a veteran education-oriented legislator in his term-limited state. “What we need is continuity,” he says.
Back on campus, students say the rapidly shifting funding issue makes their challenge clearer: It’s time to shake up the historical cycle and ensure that colleges and universities get their due. Students say they are registering voters, visiting state legislators, and flooding governors and lawmakers with mail to argue their case.
Dan Kelly, student government president at the University of Minnesota, says he appreciates the financial pressures but thinks it’s time for stability.
“The university community needs to think about how it reaches out to the rest of the state,” he says. “People must recognize that everyone benefits from higher education.”  

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