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The
Virginia General Assembly has taken up the
“chartered university” proposal that could
restructure the relationship between the state and
its public colleges and universities. Chartered
universities would be able to make many important
decisions on campus instead of waiting for decisions
in Richmond. Most importantly, chartered
institutions would control tuition.
This
frightens many people who fear that rapid tuition
increases will close classroom doors on students
from lower and middle income families. This fear is
misplaced. The state’s current mechanism for
financing higher education is what constrains access
to higher education. Under the charter proposal
access likely will broaden.
The
briefing materials from the November Senate Finance
Committee retreat paint a clear picture of the way
Richmond currently views higher education finance.
The state has developed very sensible procedures for
calculating the costs of providing higher education,
and they have set two funding goals on the basis of
these benchmarks. The first is a cost-sharing goal
for in-state students. The state would cover two
thirds of the costs, with tuition revenues
supporting the remaining third. Secondly, the state
has set a goal of meeting at least 50 percent of
remaining student need (the need after other grants
and scholarships).
The
Senate Finance Committee staff says the state will
be roughly $200 million short of meeting its cost
sharing goal by the end of the current funding
biennium. Yet this actually represents major
progress. In last year’s budget the “base
adequacy gap” was almost $400 million. The
forecasts are not as sanguine on the financial aid
goal. The Senate Finance Committee staff estimates
it will be able to meet 34 percent of the remaining
need in the 2005 fiscal year and only 31 percent in
2006.
These
two funding priorities affect students and their
families very differently. The cost sharing money is
a general subsidy provided to all in-state students.
It is what permits in-state tuition to cover such a
small portion of the cost of higher education. This
general subsidy benefits a large number of students
who have no financial need. The money behind the
second goal provides a targeted subsidy because it
finances need-based aid given to students who meet
state-defined criteria. Targeted subsidies of this
type clearly increase access to higher education
because they go to students who would not otherwise
be able to attend.
The
General Assembly clearly is very interested in
meeting the goal for the general subsidy. Their
current two-year budget closes half of that deficit.
At the same time they are falling further behind on
their goal for targeted subsidies. This is not a
sensible public policy if broadening access to
higher education is an important social goal.
How
would things change if these financing decisions
were made by the institutions? Two pieces of
information are critical, what the institutions say
and what the institutions have done.
First,
what have they said? The charter proposals are all
based on finding the revenues to meet the state’s
own formula for the cost of higher education. The
funds to do that will come either through state
appropriations or through tuition. Additional
tuition increases would be used to close the state
funding gap only if state appropriations failed to
do so. The universities also commit themselves to
increase the percentage of financial need that they
cover for admitted Virginia students.
Second,
what have they done? In the last fiscal year,
Virginia’s public colleges and universities raised
tuition under authority granted by the General
Assembly in order to reduce the base adequacy gap.
The Senate Finance Committee reports that this year
10 institutions set aside $11.3 million of that new
tuition revenue for student aid. By contrast, the
state’s own budget contains only $3 million in new
aid money per year. These institutions took money
that they could have used to make up more of the
base adequacy funding gap and used it to meet the
needs of an important target group of students.
Based
on what they say and how they have acted,
Virginia’s public colleges and universities have a
much more sensible notion of how subsidies are best
arranged than does the General Assembly. Those who
are interested in student access to higher education
have more to fear from leaving decision making in
Richmond’s hands than they do from chartered
universities with tuition authority.
--
January 17, 2005
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