It wasn’t always that way. In the late 1980s, eight of the top 25 national universities in the U.S. News rankings were public, compared with three today. Much of that change is not attributed to a decline in quality of public universities, but to the formulas used by many of the rankings systems — formulas that reward wealth. And on that measure, private universities have been pulling away from public schools for years.
At the beginning of last decade, college students who went to public universities paid for about one-third of their education. Today, in more than half the states, they pay for most of it. In that time, the College Board has found that the average price of tuition, room, board and fees at public institutions has risen more than 60 percent, to $20,770. Research by Douglas Webber, an associate professor in economics at Temple University, has found that colleges raise tuition by about $300 for every $1,000 in funds cut by the state.
The rapid disinvestment by states this century in public higher education happened not because of one event, but a confluence of factors that has made it more expensive for students and their families to attend most state colleges. First, funding levels failed to keep up with the influx of students to public campuses last decade because of the rising numbers of high school graduates. Second, the Great Recession of 2008 decimated state budgets. While after previous downturns higher education eventually recovered those dollars, not this time. In only six states have higher education budgets returned to or surpassed their pre-recession levels; in 19 states, expenditures per student are at least 20 percent lower than before the recession.
At the same time, spending in other parts of state budgets started to crowd out higher education. Public colleges and universities have long been known as the balance wheel in state budgets. Lawmakers know, for instance, they can always raise tuition for students and their families to pay for higher education, but they can’t do the same for prisoners when it comes to corrections. In the last decade, lawmakers used higher education as a bank for other needs, mostly state and local public welfare programs. “State Medicaid spending is the single biggest contributor to the decline in higher-education funding at the state and local level,” according to Webber.
Today, higher education accounts for about 9 percent of state spending, about half as much as what states spend on Medicaid, the health program for low-income Americans. Since 1990, Medicaid’s portion of state budgets has nearly doubled, while higher education’s share has fallen from 15 percent.
Much of this shift in spending happened over time and under the cloak of lengthy state budget proceedings. And while public perceptions of higher education, as measured by opinion polls, have moved downward in recent years, few people voted to lower state funds for higher education and to hike tuition. Indeed, if anything, complaints about college costs have only grown louder.
But state lawmakers now see higher education as a private good that should be supported by students rather than as a public good underwritten by the states. Many years ago when I was covering a budget hearing in Oregon, a lawmaker compared rising student debt levels to the price of a new car. Of course, when I asked him afterward how much he paid for college, he told me he attended the University of California for free during the early 1960s. It’s very unlikely we’ll ever return to those days given the tax policies in the states and growing demands on their budgets.
More than anything, the trends in state spending on higher education over the last decade have led to greater unease among students and colleges. It’s very difficult to put together a financial plan as a family or as an institution when states decide annually at the end of a budget cycle how much money to give to higher education. That’s why many public universities have chased out-of-state students and international students — who pay higher tuition rates — to provide budget relief from cuts in state appropriations.
This is no way to run a world-class public university system. The demands on state budgets from Medicaid are only going to increase in the coming decade, while the relief valve provided by tuition is likely to close sometime soon as students and parents push back against ever-higher tuition bills. The flow of out-of-state and international students is already starting to slow.
A new model of public higher education is needed. At least twice before in American history, public higher education has been reinvented. During the Civil War, land-grant colleges were established to focus on the training needs of the Industrial Revolution. In the middle of the last century, states built community colleges and expanded regional teachers’ colleges to serve growing numbers of students who needed a college degree in an information economy.
Now, as we enter the third decade of the new millennium, rather than use higher education as a balance wheel in the state budget, lawmakers working with college officials need to develop a new model of public higher education. In doing so, they must decide the missions of their institutions, whom they should serve, how they should serve them and, most of all, who should pay for them.