Occupy Someone Else

As public universities raise tuition to cope with state cuts and increased enrollments, administrators wonder why they, not lawmake

December 9, 2011

Their voices have gone hoarse. They’ve broken windows and clashed with police officers. They’ve faced pepper spray and attracted national news attention. The story is the same across the country – students, upset about tuition hikes, are protesting.

And while the images may last, the message has not had much impact on the what colleges are charging. At California State University at Long Beach, where hundreds of students joined by union members engaged in a raucous protest that disrupted a meeting of the California State University Board of Trustees, the trustees still approved a 9 percent tuition increase for the system.

In New York, where City University of New York students were joined by protesters from Occupy Wall Street and other universities on a national day of higher education protest, the university’s board still voted to increase tuition $300 a year through 2015.

In a blame game between lawmakers and university leaders about who is responsible for the rising cost of higher education, students have pointed fingers at administrators. But when state lawmakers cut higher education budgets, as many have for the past three years, public university presidents say they have few tools to bring the spending side of the balance sheet in line with revenues in time to pay the bills. While a president’s power might look vast to people on campus, administrators tend to view their short-term budget options as a dichotomy: cuts (especially of student and academic services and adjunct faculty jobs), or raising tuition.

And most university administrators believe that raising tuition is the better option for students, since the tradeoff, they say, is deep cuts to essential services, which they believe would harm the education their institutions offer. Cutting programs, faculty members, and services currently on the chopping block would disproportionately affect low-income and first-generation students while tuition hikes, as counterintuitive as it might seem, could place a larger burden on wealthy students – the so-called “one percent” that protesters target – if aid policies are constructed properly.

Higher education leaders say they understand students’ frustration, but suggest that students may be arguing the wrong points to the wrong people. If students want to keep tuition low, maintain or improve access, and keep support programs in place, administrators say, they might have more success targeting lawmakers, who have more options regarding how to reconcile budgets and more money to play with, and who are sometimes more responsive to the public. For example, if four California Republican lawmakers had adopted Governor Jerry Brown's budget, which included tax hikes, the state's university systems would likely have been spared looming cuts of $100 million each.

“While there needs to be accountability on the part of everyone to keep tuition increases reasonable, clearly I think that students’ focus and blame is over-oriented toward university administration as opposed to states,” said Dan Hurley, director of state relations and policy analysis for the American Association of State Colleges and Universities.

"I understand why people are frustrated, but a lot of this energy is misplaced," said Robert Turnage, assistant chancellor for budget at the California State University system, in an interview with The Los Angeles Times. "It needs to be directed at people who have decision-making power over taxes."

No Other Options?

Coping with cuts of the magnitude of those of the past three years has not been an easy undertaking. According to the annual Grapevine report by the Illinois State University’s Center for the Study of Education Policy and the State Higher Education Executive Officers, states spent about $4 billion less on higher education in 2011 than they did in 2008, while enrollments increased in most states.

In a survey of college presidents conducted by Inside Higher Ed earlier this year, public college and university presidents overwhelmingly listed budget shortfalls and changes in state support as the two most pressing issues facing their institutions. “We’re in territory that we haven’t been in in quite some time,” said Erik Fallis, a spokesman for the California State University system chancellor’s office. “We have not been funded at this level any time in last decade. You have to go back past 1998-99 to find years where we were funded at current level, and we’re now serving 70,000 more students.”

Student protesters, on the other hand, don't necessarily buy that it's the legislature's fault that tuition has to go up. While they don't absolve lawmakers of responsibility, they say their anger about the hikes is the result of years of poor decisions about who manages the university and what they have done with tuition revenue in the past. "This is a narrative that’s been constructed of having the legislature be the main ones responsible for these cuts," said Artem Raskin, a junior political science major at the University of California at Davis, who has been involved in the Occupy Davis protests. "But that hasn’t been the main reason why we’ve seen tuition go up. The main reason is that even before 2009 the regents and the administration have used students' tuition not as a way to benefit students at the university."

Since most states finalize annual budgets in July, colleges and universities do not have a significant amount of time to adapt to cuts, particularly if they do not know ahead of time what those cuts will total. That problem was even worse in 2009 and 2010, when many legislatures missed deadlines for finalizing budgets and did not complete appropriations until the fall, after many colleges and universities were already in session.

Despite their institutions having large operating budgets and diverse revenue streams, university administrators say they do not have many ways to quickly fill budget gaps when state funding disappears. Revenues from research grants, corporate contracts, and auxiliary operations such as dining and housing are earmarked under statute for certain purposes that rarely include undergraduate education. Endowments, which have been targeted by many protesters (and on Thursday by a powerful U.S. senator), are also often restricted. University administrators are reluctant to dip into endowments, as they are designed to support the institution in perpetuity, not cover short-term losses.

Many of the protests that took place over the past few years have focused on university administrators, whose six- and seven-figure presidential salaries have drawn the ire of several groups. But administrative salaries only represent a small fraction of the university’s overall budget, and at most public universities the amount of state funding cut exceeds salaries by several orders of magnitude.

At the same time that students are protesting tuition hikes, they have also reproached universities that have tried to be too frugal (in some areas). Students at the University of California at San Diego protested in a closed library until administrators agreed to extend library hours, including keeping the main library open 24/7 during finals.

Administrative services and unwieldy university bureaucracy have also been targeted by protesters and administrators hoping to close budget gaps. But cutting administrative services, while politically palatable, doesn't tend to do the trick. When Cornell University, the University of North Carolina at Chapel Hill, and the University and California at Berkeley all hired Bain and Company, a management consulting firm that commonly works with Fortune 500 companies, to look at where administrative savings could be realized, the savings, while significant, didn’t equal appropriations cuts. The changes at Berkeley are expected to save about $75 million a year – a substantial amount of money, until it’s put in the context of the university’s $1.8 billion annual budget.

And implementing such cost-savings initiatives takes time, which institutions don’t have when states cut appropriations. Colleges and universities typically have a year to bring their budgets in line, so deep structural change is often infeasible, administrators say. Though proposed savings at UNC-Chapel Hill, UC-Berkeley, and Cornell were identified in 2009, only about half the savings have been realized to date. The State University of New York system is attempting to generate savings by merging administrations at some of its campuses. The system would then reallocate that money to instruction. But that undertaking is still being discussed, and major changes are not scheduled to be put in place for several years.

For two years, universities tried to reconcile budgets by furloughing faculty members, cutting administrative expenses, and reducing expenditures on travel and books and journal purchases. The survey of presidents found that most public institutions targeted specific academic and administrative departments for cuts to cope with funding shortfalls. But most of the easy-to-implement efficiency measures have been tapped out over that time.

The refrain is the same at governing board meetings across the country: there’s nothing left to cut without causing significant harm to parts of the university, harm that could have long-term ramifications. “Our options are either cut access severely to bring the university in line with what the state is willing to fund or we sacrifice quality,” Fallis said. “And the spiral of sacrificing quality is a perpetuating cycle. If we begin to sacrifice quality, you have a hard time attracting faculty, who don’t want to teach at an institution with a reputation problem. It makes the degrees that alumni have have less weight.”

survey of college and university business officers, also conducted by Inside Higher Ed this year, found that less than a quarter of CFOs at public doctoral and master’s universities, and about 40 percent of finance officers at four-year and community colleges, say their institutions can “make additional and significant budget cuts without hurting quality.”

If it wants to continue making cuts, a university has to target programs and expenditures that be cut quickly and without much hassle. For many institutions, this means cutting adjunct faculty members, who work on short-term contracts and don’t have tenure protection.

If CUNY did not vote to raise fees this year, said Michael Arena, a spokesman for the system, said, “Adjunct faculty in particular would have been in jeopardy. Especially given the huge enrollment increases CUNY has experienced over the past 10 years, adjunct faculty are playing a vital role at the university.”

Cutting adjuncts either results in tenured faculty members teaching more classes or, more likely, larger classes or fewer sections.

Other programs that can be cut include student and academic support services, such as tutoring centers, academic advising, and counseling services, which benefit underprepared students, many of whom come from low-income backgrounds.

Quality vs. Access

The problem with cutting adjunct faculty members and support services is that doing so will lead to a decline in academic quality, administrators argue. If faculty members at research universities are pushed to spend more time working in the classroom, they have less time to conduct research, which could damage the university’s reputation in the long run. If class sizes increase, many argue that the quality of instruction will go down.

Administrators at colleges and universities that have increased tuition over the past three years argue that students, even those who have to pay higher tuition, are better off in the long run paying the extra money than seeing services cut. “One can make a strong argument that access and affordability without quality is meaningless,” Fallis said.

Over the past few years, the California State University’s system approach has been to make cuts to administration, restrict enrollment, and raise tuition by significant percentages each year. In 2007, the university charged $2,772 in annual tuition and fees for in-state students. Next year it will charge in-state students slightly less than $6,000.

“If we were to just open the doors to the university system and not raise tuition whatsoever, given the draconian cuts in state support, students would be getting an education of lesser quality,” Fallis said. “They would not have access to opportunities in research or the equipment they need to know in their future careers. There’s a perception that it’s already harder to find classes. Had CSU not taken action on fees, cuts would be even more extreme than they are.”

While many administrators say that, by this point there is no room left to cut without damaging the academic quality of their institutions, 54 percent of respondents to a 2010 survey by the National Center for Public Policy and Higher Education and Public Agenda said “colleges could spend less and still maintain a high quality of education.” Administrators also hold that greatly increasing the size of the student body would diminish quality, while six in ten survey respondents said “colleges could take a lot more students without lowering quality or raising prices.”

But administrators don’t see it that way. In fact, many don’t believe most students see it that way. “When you go to the campus and ask the question 'Would you rather pay a little bit more this next fall for a higher likelihood that you can get the class you want and have It be taught by full-time, high-quality professor?,' students are going to answer yes, even the low-income student,” Hurley said.

Administrators might be more concerned about quality, and think about quality differently, than students. While students tend to view academic quality through the lens of classroom experience, administrators incorporate research and service into their definition. And many students might not be greatly affected by changes in class size or the elimination of student support services. But studies show that underprepared students, students who come from low-income backgrounds, or students who are the first in their family to go to college benefit the most from small classes and support programs.

Holding the Needy Harmless

Even as tuition prices go up, it does not necessarily mean most students are paying more. One can make an argument that, rather than oppose all tuition hikes, protest groups in favor of access and affordability should push for a combination of high tuition and high financial aid that could result in a more progressive tuition payment structure.

Higher tuition and access don’t have to be mutually exclusive, that line of reasoning goes. Small private colleges, whose tuition prices often run two or three times those of four-year public universities, are often more affordable to low-income students.

They accomplish that feat through a combination of discounting tuition for needy students and providing scholarships and grants. Essentially, wealthy students who pay full tuition subsidize the cost of educating low-income students. At Carleton College in Minnesota, where the sticker price for the 2009-10 school year was $50,205 in tuition and fees, the college only brought in an average of $24,680 for each student after financial aid.

George S. Bridges, president of Whitman College in Washington, has argued in columns and speeches that by keeping tuition low, states and public institutions are essentially asking taxpayers to subsidize a high-quality education for a family that can afford it.

Many colleges and universities have policies in place that increase need-based aid as tuition increases. The University of California and California State University systems direct one-third of the new revenues generated from tuition increases to financial aid.

The system also has programs in place to hold needy students harmless from tuition increases.  UC students who qualify for financial aid and whose families make less than $80,000 a year qualify for the university’s Blue and Gold Opportunity Program, which covers full tuition and fees through a combination of grants and scholarships. Because the program covers full need, tuition increases won’t have an effect on those students.

Other public universities have such systems in place. “At a place that meets full need, there will be that complete cross-subsidization,” said Charles Clotfelter, professor of public policy, economics, and law at Duke University, who has studied the economics of tuition policies.

Several critics have poked holes in the theory that you can increase tuition without burdening low-income students. Clotfelter said that only a handful of institutions meet full need for all students, and even those like the  UC  campuses that try to meet need for low-income student still leave many squeezed in the middle.

“If you want to be as fair as possible, you could charge higher tuition and offer a lot of need-based aid,” said Sandy Baum, an independent higher education policy analyst who consults with the College Board. “As a concept it’s obviously true, and there are places that do that, but the data in the aggregate shows that it doesn’t pan out at most places.”

One problem with the model is that many students who might be needy do not qualify for financial aid, such as students whose families make enough but are not willing to help pay tuition, or students whose families have other financial obligations.

Another problem is that by simply listing a higher sticker price, a college or university might prevent a student from applying.  “When you compare high-tuition states versus low-tuition states, you find lower rates of participation among key demographics, regardless of what aid in those states looks like,” said Jennifer Engle, director of higher education research and policy for Education Trust. Administrators hope that tuition calculators, required by the federal government, will help eliminate that problem.

“If a low-income student reads the newspaper, they would probably say based on stories ‘Forget it. No way. Not going to college. I can’t afford it,’ “ said Ron Johnson, director of financial aid at UCLA. “We want to communicate and convey to the general public and students who are applying to UCLA, that here at the UC system we are maintaining an avenue that will retain affordability.”

The other problem with the high-tuition, high-aid model, some argue, is that tuition and financial aid decisions are not made in tandem. At most public universities, governing boards set tuition rates, and lower administrators apportion financial aid. So while the price might go up, the financial aid budget might not go up accordingly.

Institutions might also apportion a larger percentage of new revenues to merit aid, rather than need-based aid. In recent years, merit aid has grown faster than need-based aid at four-year institutions.

Raskin, the UC-Davis student, said it's not necessarily the college's job to be redistributing wealth. If more is collected in tax revenue and used to subsidize a low tuition rate, then you avoid problems like students not qualifying for aid or squeezing the middle class. "Redistribution should be happening at the point of taxation, not the point of consumption," he said.

What About Revenue?

There are other options for bringing university budgets in line that don’t involve increasing tuition. Several universities, notably flagship public institutions, have worked to attract qualified out-of-state students who pay a higher tuition price and often require less financial aid.

Universities could also try to generate efficiencies by increasing the number of students, which many say won’t decrease the quality of the institution overall and could bring in more money. But in a state like California, where state appropriations, despite cuts, still cover about half the cost of educating each student, adding additional students might actually be more costly, particularly if they do not add much in revenue. “To make that work you have to educate the student bringing in half the dollar amount you need,” Fallis said.

None of this is to say that public university administrators want to follow a high-price-strategy education that more closely resembles private institutions. Many say they are pursuing the strategy reluctantly, as the only way to maintain quality in the face of cuts.

So leaders have to play hardball with state government, an opportunity to help turn the protests in a new direction. In Arizona and California, university leaders publicly backed proposed ballot measures to increase tax revenue. While the measure passed in Arizona, the California measure never made it onto the ballot.

Several universities and systems have pledged to keep tuition increases down if lawmakers are willing to return higher education funding to pre-2008 levels. An abandoned plan proposed by the president of the University of California system earlier this year would have split annual increases over the next five years between tuition and appropriations increases. The state could provide whatever it wants, but the system will make up the rest in tuition increases. It is a strategy that worked for the system in the past, though under a very different state budget picture.

The recent protests could actually benefit administrators if they can direct the protesters’ anger toward lawmakers, not higher education institutions. Whereas in past recessions university administrators might have been reluctant to criticize lawmakers, knowing that the budget picture would stabilize, many of those niceties have been abandoned. Now, Hurley said, administrators are “well past the point of sugar-coating the situation.”

He said colleges and universities will likely employ students in the next round of budget talks. The strategy came up as a major theme that emerged from the group’s recent meeting. “One of the overarching themes was that colleges absolutely need to involve student voices in legislative relations,” he said. “Their voice is remarkably important. Lawmakers are often more likely to listen to them than university leaders.”



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