A Piece of the Stimulus Pie

With U.S. government planning massive infusion of funds to spur economy, college groups offer ideas, common and conflicting, for how higher ed can help the country (and vice versa).
December 16, 2008

With the incoming Obama administration contemplating a massive infusion of no- or few-strings-attached federal money to try to stimulate the foundering U.S. economy, you'd be hard pressed to find an industry or interest group not seeking a piece of the action. Health care, biotech companies, -- heck, even librarians have their hands out. No surprise, then, that higher education is lining up to do the same.

Monday, a broad coalition of college associations jointly released a letter urging Congress to "make higher education a critical part of the economic stimulus package," through a combination of increased need-based aid for students, additional relief for student loan borrowers, and grants to states to help colleges pay for the sort of "ready-to-go" facilities that would create jobs and stimulate economic activity.

Today, chancellors and board chairs from more than two dozen major public universities will release a letter (organized by the Carnegie Corporation of New York) arguing that five percent of the total stimulus package should be directed to renovating and building campus classroom and research facilities. Those proposals follow others released last week by the Association of American Universities and an assortment of groups that advocate for students.

What is most interesting about the various proposals, in many ways, is not that they're flowing but how they overlap (or don't) and how closely they hew (or don't) to the principles that members of President-elect Obama's transition team have outlined as their goals for the economic stimulus package, which have emphasized quick-starting infrastructure projects that would both create and sustain jobs and stimulate economic activity. The sponsors of the higher ed plans have worked hard to align them so they will complement rather than crowd out one another, and at their core, they all argue that higher education is too important to the country and its citizens -- and has too much to offer all of them -- for colleges to be left out of efforts to solve the country's financial mess.

"[W]ith millions of students, thousands of laboratories, and outreach that touches countless communities in rural and urban America, the great institutions of public higher education, along with our sister institutions in the private sector, have the capacity to produce the people, ideas, tools, solutions, and knowledge infrastructure our economy needs to regain its momentum and to set a new trajectory," the presidents and trustees wrote in the Carnegie-organized letter. "As Congress and the Executive Branch consider an economic stimulus initiative, it is critical that any legislation include a substantial investment in states and their educational systems, particularly public higher education."

Despite their convergence on rhetoric and overall approach, the proposals differ in some key ways that reflect the nature of the coalitions that produced them. The student groups, led by the Project on Student Debt (one of whose own, Robert Shireman, is playing a key role in the Obama transition on higher ed issues), put their emphasis entirely on financial aid for students, seeking a massive increase (to $7,000 from the current $4,731) in the maximum Pell Grant for needy students, plus significant boosts in Federal Work Study funds and "emergency" loan money to be allocated to colleges that commit to giving significant need-based aid support to students.

An Array of Ideas

In the plan that they outline in full-page ads today in The New York Times and The Washington Post, the public college leaders organized by the Carnegie Corporation, while mentioning and applauding Obama's call during the presidential campaign to bolster Pell Grant funding, focus their attention on asking the incoming administration to direct five percent of the stimulus money ("in the range of $40 to $45 billion) to states to pay to build and refurbish academic facilities (green, where possible, to help meet the new administration's environmental priorities, too).

"Federal funding of much-needed construction and renovation projects on public campuses and on those private campuses that qualify for such investment" -- focusing solely on those that are "shovel-ready" and can be started within 180 days -- "would create hundreds of thousands of jobs and have a direct and immediate impact on economic activity beyond the dollars expended."

The Carnegie campaign got its start before this fall's total meltdown of the economy, when Vartan Gregorian, president of Carnegie and former president of the New York Public Library and Brown University, convened a group of public university presidents to confront what he characterized in an interview Monday as the distressing decline in state support and the deleterious impact it is having on institutions that "represent hundreds and hundreds of thousands of students and thousands of faculty members," "more than who work for the [American] automobile industry" at this point, he noted with some irony.

Photo: Carnegie Corporation of New York

Vartan Gregorian


Public colleges are a "major economic force, an intellectual force, most of all a social force," and should not be "visitors or outsiders" in discussions about how to propel the U.S. economy forward, Gregorian said. He noted, as does the Carnegie letter, that Lincoln and Congress found time during the Civil War to create land-grant colleges and establish the National Academy of Sciences, and that the government created the GI Bill after its most devastating war. "Our public universities, like our public libraries and other institutions, were built as monuments to democracy, and we should turn to them again now."

As is often the case, the American Council on Education, which seeks to be the convening force in higher education policy making, in some ways splits the difference between those proposals in its plan, which was joined by virtually all of the leading nonprofit college groups.

It calls not only for major boosts in financial aid (a $700 increase in the Pell Grant, a boost in the Supplemental Educational Opportunity Grant Program -- which the departing Bush administration has repeatedly sought to kill -- and various steps to ease loan burdens) but also for a Higher Education Infrastructure Block Grant effort, in which all states would receive funds (based on full-time higher education enrollment) to repair or construct academic facilities. ("Athletic, recreational and revenue producing facilities would be explicitly excluded," the groups note, probably to ward off commentators who are likely to envision federal money going to support climbing walls and the other luxury student services items that critics often ridicule.)

The proposal suggests that higher education receive six percent of the total funds in the stimulus package, "corresponding to the percentage of Americans currently enrolled in higher education."

Molly Corbett Broad, president of the American Council on Education, said that the groups' starting principle was that students needed financial help, which "led to an effort to identify ways to address specific and responsible ways to help students go to college and stay in college," she said, "pretty carefully tailored to respond to real life problems." Beyond helping individual students achieve their educational goals, Broad said, the financial aid proposals would "have the additional impact of not overcrowding job markets that are tight at this point," and "the long-term implications are profound and important: to help prepare a more highly educated work force."

If the financial aid proposals emerged out of a desire to help students, the academic facilities plan seems a more direct response to the Obama camp's desire to focus on infrastructure as a way to keep people working and propel local economies. "We think this is a way to provide means that would both permit higher education to expand its services and provide an important multiplier effect" to the economy, Broad said.

The proposal put forward Friday by the Association of American Universities embraces the main ideas of the ACE plan (which the AAU joined) and adds a few specific to the major research universities that are the association's members. To financial aid and academic facilities proposals that mirror those in the ACE document, the AAU calls for $900 million in additional support for federal agencies' facilities programs and $1.8 billion to fund existing programs at the National Institutes of Health and National Science Foundation to "enable research universities to hire more young scientists and engineers for tenure-track faculty positions."

The Likely Reception

With so many parties positioning themselves for a piece of the stimulus package, how will higher education's interests fare? College leaders seem confident that they will get a good hearing among representatives of a soon-to-be-president who emphasized the importance of college in his campaign, and early indications from the nascent administration have reportedly been heartening.

Even some observers who strongly support the idea of a stimulus and the pleas of higher education officials for a share of it, however, believe there are impediments. Anthony P. Carnevale, research professor and director of the Center on Education and the Workforce at Georgetown University, said that help from the federal government may be one of the only methods of blunting the impact of the "substantial disinvestment in higher education" that has unfolded in most states. That disinvestment, he warns, will almost inevitably lead to a "noxious mix of declining access and declining quality."

But Carnevale said that college leaders will face an uphill battle because of a feeling among some elected officials in Washington that "when you send money to the states for higher education, it's good money after bad," because states may take federal money, use it for other purposes, and increase tuitions.

Politicians in Washington who have been prodding colleges to contain their costs and their prices may be loathe to provide a boatload of new money to higher education, Carnevale said, without assurances that they will spend the money wisely, just as members of Congress have sought to tie funds for auto makers to assurances that the companies will change their ways. (Lawmakers might seek to tie the funds to tuition increases or to improvement in student performance or faculty productivity, for instance.)

"There may be a view that if we're going to give higher education more money -- in the interest of students and in the interest of building core mass democratic institutions -- that with money on the table, you can sit down and talk about reform. 'If it's going to be public money, why shouldn't the public interest be served?' " Carnevale said, envisioning the arguments of some lawmakers.

But with a stimulus package, he said, "you don't have time to do the bargaining over the areas where you have policy concerns."

If Carnevale is a sympathetic skeptic, Charles Miller is just a skeptic. The former head of Education Secretary Margaret Spellings' Commission on the Future of Higher Education, asked for a response to the college groups' request to participate in the stimulus, took to it with relish.

In an e-mail, he wrote: "The emergency request for federal funds for facilities by leaders of public higher education has certain ironies and more than a few contradictions from their previous and current positions. In order to justify their place at the fiscal trough and not be left out of the prospective feeding frenzy for more taxpayer money, these institutions now have to plead a case of the very poor condition of our higher education system, especially referring to the serious plight of large, underserved populations and to the declining global position of U.S. colleges and universities. Ordinarily, they would start asking for funds by claiming 'we're the best in the world' and act offended by those who criticize the system.

"Typically, the federal government is given little credit by the academy for the current and historic successes of higher education. However, in this plea for money, there is some acknowledgment of the federal contribution, although not nearly enough. Even today, the federal government provides a third of all higher education funding. But as quickly as that acknowledgment is given, there is a scramble to avoid any accountability or direction by the feds on the one hand and a demand that recipient states not be allowed to consider these funds in allocating their own scarce resources on the other hand.... [I]t also asks for a new kind of financial system where money is no longer fungible.... We will now have federal money for buildings and all the other kinds of money ... at best an onerous complication and most likely impossible to implement....

"Why use all of the current streams of money for capital spending at all? If there is a need for capital projects, why not use federal funds to encourage borrowing a substantial portion of the total -- as is usually and prudently done for long term capital projects-- and therefore give the states some responsibility for paying for the project, an incentive for using the money wisely.

"This rush to get the gravy is not convincing but it is true to the usual stuff of 'we're very important, send us the money and leave us alone.' It's demeaning and not nearly good enough from our best and brightest."


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