A Footnote to “Cutting Virginians No Slack”

out_of_state_enrollment

A footnote to my “Cutting Virginians No Slack” post from this morning: I was doing some research for a non-blog project when I came across this chart from a March 2015 Virginia Commonwealth University budget workshop. For all their tuition hikes, Virginia colleges and universities perceive themselves to be experiencing chronic fiscal stress. One strategy for alleviating that stress is to increase the number of out-of-state students, who pay higher tuitions than in-state students.

It’s great money if you can get it, which the College of William & Mary and the University of Virginia are pretty good at doing. W&M, for instance, enrolls 33.5% out-of-state students who account for 61.7% of undergraduate tuition revenue. W&M, I suspect, could enroll more but restrains itself from doing so for political reasons.

But it’s a harder slog for Virginia universities, like VCU, that lack national reputations. VCU enrolls only 11.2% of its students from out of state, and out-of-staters account for only 25.7% of tuition revenue. VCU and other universities in a comparable situation have less pricing flexibility as a result.

— JAB

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29 responses to “A Footnote to “Cutting Virginians No Slack”

  1. I’m shocked – SHOCKED that any self respecting fiscal conservative would not know the RIGHT answer here – and it’s NOT MORE MONEY.

    If your expenses exceed your revenues – then you cut expenses.

    period.

    you can engage in strategic planning to gain more out-of-state students – and when/if you do, you can buy more staff/stuff.

    but until then – you get yourself a balanced budget.

    I can’t believe you went for the stock tax&spend progressive answer here!

    shame! turn in your credentials..

    • I’m not advocating any course of action — I’m just pointing out what’s going on.

      I totally agree, though, universities have got to figure out how to cut costs. The VCU presentation didn’t present much analysis of how that might be accomplished.

  2. I don’t think W&M restrains itself at all. I believe that the in-state / out-of-state split is a matter of state law. However, there is a persistent rumor that students from outside the U.S. are not included in the in-state / our-of-state split. If true, something of a loophole.

    • Yes that would be big loophole and I recall at some point a couple years back that foreign student initiative to raise revenue was highlighted in proposed or considered Sullivan plan.

  3. There are many more education providers players these days than before, in no small part, because the same Federal education loans available to traditional 4yr institutions is available to other for-profit institutions that provide a more streamlined path to a job. They are more oriented to career and tech and they are eating into the pools of potential students for all education institutions.

    and this is having a perverse effect on the traditional institutions as enrollments are starting to dip while their fixed costs for tenured personnel remain the same so they are increasing tuition and fees to make up the difference AND now a new trend – not requiring SAT or ACT cut line scores… for acceptance.

    Note also, that the for-profit providers do not have “tenured” personnel costs – they ramp up or down according to enrollment.

    Also – they are not incurring long-term pension nor health care liabilities like 4year institutions are.

    I think in today’s economy – there is starting to be – a recognition that a traditional 4 year college is a luxury – that cannot be afforded especially if it means graduating with tens of thousands of dollars of debt.

    The traditional 4-year colleges OUGHT to be not filling retirement vacancies and they SHOULD be shutting down low-enrollment courses and majors… and focus on where the demand is.

    Without question – the most bloated and resistant to fiscal cost-effectiveness institutions in Govt beyond health care – is education.

    not just Higher Ed – K-12 also.. It’s not a question of not enough funding – it’s a question of refusing to make the hard choices necessary to be cost-effective. You cannot be a taxpayer-funded service that is all things to all people. Govt is the wrong institution to do that

    I don’t know what State money is spent on for higher Ed but I’m betting a lot of it goes for salaries, pensions and health care for a lot of subjects and courses that are expensive and not cost-effective – not for the institution and not for the students in terms of loan money verses job prospects.

  4. When the ratings chase leads to state institutions losing sight of their purpose (to offer affordable access to higher ed for students of Virginia) then it’s time to go back to basics. In no charter nor mission statement will you find “spend whatever it takes to elevate your reputation so that you can compete for the same students as the Ivys.” Those applicants have myriad options, and do not need Va publics in order to get a degree.

    And you will not find much support for this position among alums–their interest is in having their degrees’ status elevated in ensuing ratings. This is why it’s so easy for BOVs to vote to raise the expense of school. If BOVs were composed of nothing but parents of Virginia high school students, we’d be seeing much different budgets.

    • It’s Govt money at the Federal loan level and at the State funding level that is driving this.

      there is an old saying that if you want less of something then tax it

      and… if you want more of something – subsidize it.

      Higher Ed institutions are becoming just as predatory as for-profit street type education providers.

      it”s a big scramble for the same pool with many more eligible (for Fed loans) education providers.

      the funny thing is – we have no trouble doing everything we can to not put more money into MedicAid – but higher Ed is the golden haired gal – who is now the poster child for irresponsible fiscal behaviors.

    • I agree with Lift that the chase for moving up the ratings is driving most of the increase in costs.

      Larry, you’re in F’burg, right? Explain to me how Eagle Village improves academics. For those not familiar with it, the university, which gets low marks on quality of student life, bought a shopping center and turned it into a huge student center/ shopping area / dining area / and luxury dorms.

      IMHO that is not an academic expense and it’s not a good use of tuition dollars. How much could you cut tuition for the university part of that money? How many kids could you put through apprenticeships for the state part of that money?

  5. When I taught at Governor’s School I would constantly remind students how lucky they were to have access to UVA and WandM as instate students. After many years of seeing the breakdown of in state admissions it seems that these two institutions need to be privatized. Its tough to put a dollar value on the Rotunda or the Wren building bit the proceeds from the sale could be used to aid in the development of the other institutions of higher learning that seem to demonstrate some responsibility to the state that supports them.

    • Can you explain why you think that they should be privatized?

    • 100% agree. It’s past time for U.Va. and William an Mary to privatize.

      If people are serious about “relief” for Virginia resident “ratepayers”, then the following are about as effective as you can get:

      1.) Allow U.Va. and W&M to privatize. Give them a 50 year payment schedule for the school’s assets owned by the state. Thus, you would no longer be giving state higher ed dollars to either of them which could go to lower rates at other schools and you’d be getting a 50 year stream of revenue.

      2.) Completely defund Virginia Tech’s engineering school and move all those dollars to GMU. Quite simply, Virginia Tech’s been a failure from a public policy perspective. The idea for a couple of decades, as Mr. Bacon noted in a post on Roanoke from the spring, is that Tech’s engineering school would lead to prosperity for Roanoke/New River Valley. Simply hasn’t happened. And look at how many NoVa kids trudge out to Blacksburg for 4 years.

      The state would get 10 times the ROI on Economic Development from having GMU being a top engineering school located in the D.C. region than having it in Blacksburg. You look at what Georgia’s gotten from GT being in Atlanta v. economic development gets in Virginia with VT located in Blacksburg. Not even in the same universe. It would also save a lot of money for NoVa families, if they didn’t have to pay room and board for 4 years and just paid tuition to GMU.

      Those are 2 higher ed moves that could truly relieve the financial burden on Virginia parents. If “lowering tuition” is really the goal.

      • These measures would serve only to reduce Virginia families’ access to affordable degrees.

        UVA and W & M must remain public, it is their raison d’etre and and key to the state’s system.

        None of these suggestions involve pressure on administrators to reduce costs, which is wholly the core of the costliness problem. Just like our health care system, moving the payor ball around does nothing to address the fact that it is all just too damn expensive.

      • C’ville, that doesn’t make sense. VT is highly ranked largely on the basis of its faculty, who are people who chose to live near a small city with low cost of living and lots of outdoor activities, rather than in the middle of a huge sprawling metro with high costs and a rather grueling drive to do outdoor things.

        How are you going to force them to move? Gunpoint? And what happens to VT’s ranking when the faculty bail to greener (and more bucolic) pastures?

  6. I think if all you did was designate a University to be the Engineering school – that they’d then use that monopoly position to demand and get more and more State dollars to “save” the engineering school.

    bad idea.

    the fundamental problem is that the State colleges are going to get as many bucks as they can from the state using as many many different excuses as they can conjure up.

    At some point – the state has to draw a line and say – “no more” – “you prioritize the money you get but don’t come back for more”.

    I suggest funding be limited to the rate of inflation and perhaps some metric like overhead costs per student.

    The current approach puts no limits on anything. Every budget cycle – the colleges and their surrogates are out to get as much as they can and whatever they don’t get – they put on increased tuition and fees…

  7. Cville Resident: If your idea of defunding my Alma Mater’s E school is so great why overlook defunding UVA’s (39th) which is a joke compared to VT’s (21st). The whole universe doesn’t revolve around Sabato and the Darden School.

    • If you read my post, I do advocate for state defunding of U.Va. I want zero state funding for U.Va. and allow it to become private.

      Do you disagree with the proposition that if VT’s Engineering School was in Northern Virginia, the ripple effects of economic development would not be multiples greater for Virginia than it being located in Blacksburg? Look at other engineering schools located in major metros and the enormous economic development benefits they have provided.

      Mark Warner’s administration was convinced that Virginia Tech’s engineering school would lead to economic prosperity for Roanoke and the New River Valley….ha ha ha ha ha………yeah, 10 years later take a look at how that worked out.

      Take a look at other public engineering schools (Berkeley, Georgia Tech, and Wisconsin-Madison) and the amount of tech economic development they’ve provided to their cities in that same decade. And then take a look at Blacksburg and Roanoke…..no one can deny Virginia Tech’s been an utter failure when it comes to economic development compared to its peers. I was in Madison in 2000 for a visit, and I visited Madison in 2013. Let me tell you…completely different city….and a huge part of its transformation was having the university and its engineering and computer science programs located there. The city is now swarming with tech companies and startups.

      If Mason’s engineering school had received VT’s resources, I will guarantee that just based on its location, Virginia would reap multiples of the economic development benefits than it has from Virginia Tech over the past decade.

      Football? Don’t watch it. This isn’t some silly sports rivalry post. It’s a public policy post that points out Virginia would receive much greater economic benefit if it’s primary engineering school that received the most state resources was located in NoVa rather than SW VA.

      • I completely agree about the value of a strong E program. And the one at Virginia Tech is the reason the Roanoke and the New River Valley economies have not dried up and blown away. Take it away and they will.

        • I agree with you. I took a weekend visit to Roanoke in May to see an old friend who owns a pretty successful small business in the city. I was shocked to hear that he’s looking to move to Raleigh. He’s been in Roanoke over 15 years.

          He said that with the Norfolk Southern pull out and with Advance moving a lot of key personnel to Raleigh, he’s got serious doubts about Roanoke’s viability ten years from now. He said Virginia Tech and Carilion are keeping the Roanoke/New River Valley area afloat. As he’s a small businessman in the area, I value his opinion.

          Obviously, you bring up a good point…without Virginia Tech, there’s almost no doubt that Roanoke/New River Valley would be in terrible shape.

          On the other hand, I doubt you’d disagree with the point that having a Virginia Tech in NoVa rather than SWVA would probably have much greater economic development implications for Virginia.

      • I do disagree both with the proposition that yet another big engineering school in Nova is a good idea, and with the idea that Tech doesn’t benefit Virginia in general and SWVA in particular.

        Tech is a big part of why Roanoke and the New River Valley are doing so much better than comparable regions elsewhere.

        What you’re suggesting is taking an economic driver away from a region that has very few economic engines, and giving to a region that doesn’t need it, on the theory that the already rich region … is richer? Not following your logic.

        Not a good idea.

  8. It was kind of a snarky comment I made yesterday when I wondered if Cville Resident is really the incumbent Prez at UVA, but after today I’m really starting to wonder. De-fund the VT engineering school? That may be the silliest suggestion on BR in a year. I see another whooping on the football field coming…

    I’m happy I got the chance to go to W&M but I find its obsession with rankings now hilarious. I’ve met some fine graduates of every school in the Virginia system, and some total idiots who went to UVA and W&M. Education is a process, not a commodity, and a degree from any school is worth only what the student put into it. You may believe a Mercedes is far superior to a KIA, but it is all marketing. Same with these schools. Parents: all of the schools can provide an excellent education to a motivated student – all of them.

    But the scam is working and now feeds on itself. And now there are a frightening number of people ready to take pennies on the dollar for the state’s decades of investment, and turn the two schools loose to charge Harvard and Duke-level tuitions and admit mostly out of state. The difference is they don’t have Harvard and Duke-level endowments, (and never will if they have to pay us back for their real estate) so the NET price will be the list price. It is already true that the net price for many privates is similar or lower to our state schools.

    Such a privatization scheme might or might not work but I don’t want to see it tried.

  9. I’m not understanding the logic behind privatization.

    what problem does it solve?

    • That makes at least two of us. Privatization just makes it more expensive to attend. Also I’m not sure why we should worry about saving expenses for NOVA families as Cville suggests.; many of them have higher incomes than those of us in ROVA.

      He/she also didn’t say where the 10-to-1 improvement in ROI economic estimate in moving engineering from VT to GMU came from, as if that is really the reason for having an engineering school is anyway. Silly of some of us who thought the purpose was for an education

      (Disclaimer) I happen to be an alum of both W&M and VT but probably would not have been able to attend either these days without my scholarships and part-time working.

  10. I’m going to throw out a little bit of a radical idea here.

    What if the incentives for state colleges and universities were changed?

    Explicitly forbid expenditures targeted on “moving up the rankings”, which IMHO leads to an expensive chase after fools gold, particularly in the student life criteria.

    Instead, what if we looked at outputs?

    What did kids learn? Were their earning capacities actually increased, as opposed to other options? Were they able to graduate without excessive debt? Were there low-cost options for room and board, including the option to live at home if they wish?

    That might be harder to measure, but I don’t think that anyone can argue, with a straight face, that Eagle Village, and Birdwood, and luxury dorms, and climbing walls, and all the rest of the lifestyle improvements are core academic expenditures that kids should be going into lifetime debt to support.

    If you’re going to separate those out, you need to come up with measurements that look less at “how much fun did I have while I was a student” and more at “how much did I actually benefit from attending.”

    • Applying metrics throughout the degree process and post-degree is indeed an element of needed reform. But academia is highly allergic to being evaluated. Did you notice that Obama removed the component of measuring output from his higher ed plan?

      I know a pre-med applicant to (undergraduate) UVA, VCU, George Washington, Emory, Brandeis. She got in everywhere, and wanted to know which school had the best rate of admission to medical school. Only UVA, GWU, and Emory were able to answer that question. I didn’t believe that it was possible that a school couldn’t answer that question, so I called VCU myself. Unable to provide an answer.

      I’d like to believe that the free market will remedy this (families will back away from expensive degrees and large debt if they sense that they are bad “investments”) but parents and HS students are swept in a frenzy, and spending $60K per year on school has been normalized. In the arms race on behalf of their children, many parents are afraid to say “no,” and leverage their mortgages or their retirement, both of which come with societal risk.

      I see a legitimate crisis in American higher ed, not just a sideshow for the few who are paying attention.

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