The Dangers of Creeping College Privatization

By Peter Galuszka

Virginia residents have long enjoyed a special advantage with higher education. Tuition at some of the country’s best-rated public universities — the University of Virginia, the College of William and Mary and Virginia Tech — is relatively modest. The schools offer a great deal for parents and students compared with nationally ranked private colleges.

But this advantage is unraveling. The process began seven years ago, when the General Assembly agreed to a deal whereby it would pay not as much for top public universities. In exchange, the schools would get more autonomy, including more freedom to set their own tuitions, capital spending programs and curricula.

The result? A creeping privatization that threatens to undermine the very
advantages that make Virginia’s top public schools what they are.

To be sure, state education bureaucrats and legislators call it not “privatizing” but “restructuring.” This euphemism means the schools will
gradually demand tuition closer to what is charged at the top national, private institutions but won’t have to go through the hassle that true privatization would entail — such as the selling of public property and making good on repaying decades of public investment.

There is some logic to this approach: If Virginia’s elite public colleges
start approaching market rates for tuition, the thinking goes, state money could be freed up to spend on lesser institutions. More financial-aid money would become available. The state could use those resources to reach for its goal of 100,000 more students earning degrees. Since 2005, when the concept was formalized in General Assembly legislation, Virginia Commonwealth University added itself to the list of schools willing to trade funding for autonomy.

The same year that “restructuring” was approved, John T. Casteen II, then the president of U-Va., announced an ambitious campaign to raise $3 billion through fundraising. Most of that has been collected, although the effort to raise so much private money at a public school raised eyebrows. More recently, Taylor Reveley, president of William and Mary, proposed
bringing his school’s tuition levels to market rates
, which, for a nationally rated private institution, would be about $45,000 a year for tuition, room and board. Out-of-state W&M students now pay $44,854 a year, while in-state students pay $22,024.

Reveley notes that Richmond provides only 13 percent of W&M’s funding,
which is way down from the 43 percent of 30 years ago. This trend has been even more pronounced at other elite Virginia public colleges. At the University of Virginia, the state pays less than 8 percent of what the school needs. At Tech, the process has been slower. In 2000, the state provided 58 percent of the school’s needs; today it’s 28 percent.

Reveley argues that if more in-state parents or students paid full freight,
then his school could offer more generous financial-aid packages to middle- and lower-income students. He also believes that as top schools become more self-sustaining, a second tier of Virginia schools could be given more state funding and raise their own academic standings. These would include Old Dominion, George Mason, James Madison, Radford, Longwood and the state’s community college system.

But there is cause to worry about this argument. At present, many complain that lower-income Virginians have been forced to compete with an increasing number of deep-pocketed out-of-staters, whose higher tuition helps to balance the schools’ books. As those schools look to capture more revenue via in-state tuition, they will face strong incentives to accept a greater portion of in-state students with the means to pay all or most of their own way. And even with increased aid, worthy but less affluent students will confront barriers. Some will simply opt for less expensive, less competitive schools; others will emerge from school more deeply in debt.

Such an uneven playing field is contrary to the spirit of a state-funded
higher education: Why should a kid from affluent Fairfax have a better chance at attending U-Va. or W&M than someone with the same grades and test scores from Big Stone Gap?

I’ve noticed this kind of elitism beginning to appear in “Virginia” magazine,
published by the school’s alumni association. Its pages are filled with four-color advertisements hawking multimillion estates mostly in blue-blood
horse country. The message that’s suggested? “If you can’t afford these kinds of properties, then maybe you don’t belong at Mr. Jefferson’s University.”

Privatization is thought of by Virginia conservatives and even some moderates as a panacea for addressing the state’s budget woes while adhering to the state’s dominant anti-tax ideology. Tax hawks, for instance, constantly dodge the need for higher taxes to pay for highways by tossing the problem over to public-private partnerships. But applying the same thinking to public higher education risks undermining the very purpose of such institutions — building the highly educated middle class needed to keep Virginia competitive nationally and globally.

A straight sell-off of state schools isn’t likely. What is possible, says
James Alessio, chief of higher education restructuring at the State Council for Higher Education, is a steady series of tuition hikes in the 5 to 7 percent range. “Within maybe 40 years, you’ll see tuition at the public schools go to $40,000 or $50,000,” he told me.

Once that happens, the stealthy, half-privatization of Virginia’s academic
jewels will be complete, and probably irreversible. One possible solution comes from the University of California at Berkeley, which announced this month that it will cap tuition at 15 percent of what “middle class” families make, defined as $80,000 to $140,000 a year.

Virginia could try something similar. Otherwise, on its current trajectory, the state is fast moving toward a two-tier public college system heavily based on income — the exact opposite of what public higher education is supposed to be.

First published in The Washington Post

14 Responses to The Dangers of Creeping College Privatization

  1. Peter, what we need in Virginia is a study of each public college and universities similar to the studies and reform plans offered by the State of Texas. According to a write-up of the Texas situation (http://www.popecenter.org/news/article.html?id=2618),
    “Jeff Sandefer, master teacher at the Acton School of Business and former instructor at the University of Texas at Austin, introduced ‘Seven Breakthrough Solutions’ for reform of higher education. These solutions aimed at making higher education more effective by measuring teaching effectiveness, recognizing extraordinary teachers, splitting research and teaching budgets, requiring evidence of teaching skill for tenure, establishing contracts with students for accountability, giving state aid directly to students, and using accrediting agencies that measure not only inputs but outputs.”
    The article continues: “All of these solutions worked toward the end of serving students and found favor in both conservative and liberal publications. The New Republic (“Rick Perry Is a Higher-Education Visionary,” August 25) and National Review (“Faculty Lounge,” October 31) endorsed these solutions because they aid students.” What I read is that many colleges and universities have a large mismatch between compensation and the amount of faculty production in terms of instruction or research. Some make a lot of money and deliver little, while others produce much, but are not compensated well.
    Not surprising, those in higher education have been fighting for the status quo. What would we find in Virginia? Do we have many small producers with big paychecks? Should Virginians know what is really going on before we send more tax or tuition dollars to public colleges?

  2. TMT,
    I am not against cost-benefit analysis for administrators and professors under certain conditions. It shouldn’t be turned into a McCarthy style ideological purge as Cuccinelli is doing regarding global warming. Let’s throw in sports coaches who make even more than presidents and top administrators.
    PG,

  3. Peter, we are largely on the same page. I think the money spent on college sports is absurdly high. I would like to see studies that are unbiased and calculate units of performance and units of input. Make the results public and let the discussion begin. Who produces what; how much; what is the compensation. I think we’d see a lot of changes, hopefully, those not producing leaving, making much less or working harder, with some unheralded performers making more.

  4. I think many (not all) colleges as currently exist are anachronisms … zombie dinosaurs for the 21st century.

    they’re too expensive, many are infested with sports mania and are de facto farm teams for the pros, and worst of all – people no longer understand the difference between an education that will get you a job and education for your own edification and pleasure because massive loans are being taken out regardless of whether your education has a prayer of paying it back when used in a job.

    the problem we have with higher ED in Va is the same problem we have with any tax-funded “benefit”.

    I’m NOT in favor of the govt getting involved in what or how higher ED does as a requirement of money-provided.

    That would bring a deluge of Cooch-like despots to then use that as a way to control education much like the Church used to in Medieval days.

    I just think govt should get out of Higher Ed because Higher Ed has learned just like the housing industry did – how to convert govt incentives and loans into profits to fund things that the public should not be paying for in the first place.

    the only thing the govt should help with are clearly identified needs in the job sector and everything else is the business of the University and whoever want to pay for courses that do not have a nexus to the economy.

    I’m IN FAVOR of higher ED for personal enrichment but I think that is a personal responsibility – not the responsibility of tax payers.

    there are dozens, hundreds of places of higher ED where you don’t have to give and arm/leg for tuition ..

    there are places of higher ED where you work in the dining hall or bookstore of RAs, maintenance, cleanup to “earn” your education.

    I do not know what has happened to us.

    It used to be you went to college and you got a part time job during the school year and a full time job in the summer and you did what you had to do to make the bucks whether it was flipping burgers or putting mulch around shrubbery…

    Now days… we pay 10 times what it should cost for “ED” AND we don’t want to earn our way through school…we want a subsidized loan… that will put us in deep hock before we start our first work day at a job with a salary.

    at the same time – we go bonkers over the College Sports programs which have become a disgusting parody of what should be important to us.

    Most of us know far more about College Sports teams than we know about Social Security and Medicare …and don’t really care – even though those programs face serious challenges that will directly affect all of us and our kids and yet – the nature of the Bowl Games reins supreme.

    We Americans have lost our focus on a number of things but there is no more example of how really wrong we’ve gone than Higher Ed.

  5. (Blogger’s note: The following is a comment from Rick Williams of Apison, Tenn. He is a 1966 College grad of U.Va. and is my first cousin. PG)

    You have far too much time on your hands. You noted the advertisements in the Alumni Magazine for prime properties in Albemarle County; they have always been a staple of the magazine as far as I can remember. The local realtors association has probably been paying the printing costs for the mag for years, which is more than the “state” of Virginia has been willing to do in recent years. Without the endowment and the fund raising, I expect that the Grounds would be little more than Mr. Jefferson’s academical village on the Lawn, certainly not more than when I attended. Unfortunately, the great bargain, as USN&WR calls it, has been placed in jeopardy by the idiots who unashamedly have taken the taxpayers money in the form of salary and benefits and say they are the democratically elected representatives of the people, but fail to define which people they mean. Like most states today, neither Virginia, nor the universities, may have little vision of what education should be for the future needs of the new industrial revolution; unfortunately, the feds don’t either.

    Personally, I agree with your basic premise. In the Tennessee systems (the University and Regent Systems), the average tuition and fees increases over the last 5 years are in the 5 to 9% per year range, and this is with a true state- run education system. We don’t have a state income tax; just the exorbitant state and local sales taxes, so the burden falls on the potential students, their families, and the state lottery funds which are becoming suspect, vulnerable to the economic situation and the rapidly rising costs. Like Georgia, the state is looking at redefining who’s eligible to try to stop the bleeding. It would appear that ultimately education will become the privilege of the “upper class” (the 1%), not the 99%.

  6. As those who read this blog know, I have no patience with the government of Virginia. None. However, I think that blaming the state is misplaced in this instance. The University of Virginia is a legend in its own mind. It has steadfastly resisted any effective control by our elected representatives, it has allowed the cost of tuition to escalate by far more than inflation and it has met a stunning rise in applications with an admissions growth rate equal to half the population growth rate in the state of Virginia. All of this has occurred as UVA accumulated a $5.24B dollar endowment. At 5%, the interest on that endowment would pay for over 10,000 in-state tuitions. Again, that’s just the interest on the endowment.

    Please spare me the liberal tripe about the poor universities and the mean, selfish government. The public universities in Virginia are massive corporations in their own right, run by wild eyed egomaniacs who would make any Fortune 500 CEO blush. They control multi-billion dollar endowments and complain that the state doesn’t give them enough money. Meanwhile they run a horrible operation as they let costs escalate out of all proportion to inflation.

  7. how about this. The state (taxpayer) “aid” to higher Ed is made available not to the universities but to students as vouchers and in order to qualify – you have to have the grades – then let the Universities compete for the money.

    something needs to change from the Universities asking for more and more state money and then turning around and raising tuition increases.

    this money, taxpayer money needs to have strings attached rather than it being essentially a giant slush fund that the Universities fight to get their share of.

  8. Virginia is not the only state experiencing this problem. Read this WaPo article about the public ivies. What’ s missing from that article and from Peter’s commentary — but alluded to in the comments above — is the mission creep, administrative bloat and stagnant productivity of higher ed. Asking taxpayers to pony up more money is not a solution. Any tuition relief will be temporary. Higher Ed needs a fundamental re-think.

  9. we don’t agree – hell , we don’t even have a conversation as to how much higher ed should be spending in the first place.

    we only have a fuzzy idea of that “mission creep” and “administrative bloat” not definitive data as pointed out by TMT.

    Conservatives make the point that we should limit things like entitlements to a certain percent of the GDP.

    well the first thing you’d have to agree on is what that percent OUGHT to be and that’s the problem we have in Va with higher Ed – as well as other things like transportation and K-12 Ed… etc.

    so we have all these activities that consume tax dollars and every year they try to get more by saying that they “need” more ..and then they give the list of reasons why.

    they don’t care if their wants/needs get satisfied by increasing taxes or by diverting money from other functions. that’s not their concern.

    this is why I suggested we make taxpayer money to higher ED in the form of vouchers to do “in theory” exactly what the Conservatives say will work for health care.

    Higher Ed and K-12 Ed are among the last vestiges of the economy to continue to insist that “more” is the only acceptable outcome for them.

    at some point – we have to say “no” – “you keep your own fiscal house in order and live within your means”. Big Daddy is not going to increase your allowance because you want more goodies.

  10. Mr. Bacon,
    Doing a right-wing ax job to higher ed on “costs and efficiency” isn’t really the point of my commentary. What I am saying is that we’re heading down a road towards partial privatization that is utterly contradictory to the concept of public colleges. It will promote classism and elitism based on ability to pay. You don’t address these things, just knee-jerk into the usual conservative mush about how everybody (except, presumably, CEOs) is overpaid.

  11. “Higher Ed needs a fundamental re-think.”

    I 100% agree. I would suggest the best place to start as far as reform goes is with the people who consume the product – students and parents. Are you really getting what you pay for?

    In most cases, the exception being highly technical or in-demand degrees, consumers are paying a whole lot more than they should.

    Access, classism, and elitism are important considerations moving forward, but the fundamental question facing students going to college is one of perceived value versus actual value, IMO.

  12. Peter, you dinosaur! To think that in your youth, you went to Woodstock and protested the war in Vietnam. Now you’re a dogged defender of the status quo – albeit a very different status quo than the one you once protested. Now you seek to insulate institutions, like academia, that enshrine your liberal beliefs from the winds of change. Did you ever imagine that you’d wind up such a reactionary?

  13. Jimbo,
    Your logic and tactics are as twisted as Bavarian pretzels.

  14. Isn’t it true that, when an entity’s costs and prices increase year-after-year at rates exceeding inflation, that the entity is likely very inefficient? Take a look at the Texas investigations of public higher education. I would bet Virginia’s public colleges and universities have comparable numbers of relatively high-paid professors who don’t teach or conduct research at levels where their pay is justified. The “Prima Donna” costs are likely very high and should be cut. Professors who are great instructors, as proven by their teaching, and/or great researchers, as proven by their results, should be well compensated. Those who aren’t should be fired or their pay reduced.

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