Bacon's Rebellion

John Pierce, a Bristol resident and gun-rights activist, stepped into an elevator in the Capitol complex Monday and overheard a remark by Sen. Richard Saslaw, D-Springfield, the senate majority leader. The Bristol Herald-Courier quotes Pierce as follows:

Every year the National Association of College and University Business Officers (NACUBO) compiles and ranks the endowments for higher educational institutions in the United States. Last year was a good year for investors, and higher ed endowments performed quite smartly.

By my calculations, between fund raising campaigns and investment returns, endowments of all Virginia colleges and universities grew by nearly $1.7 billion last year, or 15.8 percent. That’s after accounting for what the endowments paid out to support university building and operations.

(To view larger version of this table, click here.)

Here’s my question: What are universities doing with that money — besides letting it pile up, I mean? As we all know, affordability is a major issue in higher education. One thing they’re NOT doing is making tuitions more affordable. Despite amassing ever bigger endowments, universities have been jacking up tuitions at a rate consistently higher than the Consumer Price Index.

Colleges and universities raise money from alumni and other supporters because they can. They hike tuitions because they can. They coax more money from the General Assembly because they can. They’re not accountable to anyone.

Take my alma mater, the University of Virginia for example. I love dear ol’ UVa dearly, and I take pride in its success. But look at the numbers. UVa increased the size of its endowment by more than $750 million last year! That compares to $190 million in state support budgeted for fiscal 2009. Look at it another way: That’s $36,700 for each of its 20,400 students! Can someone explain again why UVa had to boost its tuition this year by 8.3 percent this year? (See “What Would T.J. Say?“)

As the economy flirts with recession, Gov. Timothy M. Kaine has conceded that he needs to revise revenue forecasts downwards in the next two-year budget. He will present his new projections to the General Assembly money committees in February, reports Jeff Schapiro with the Times-Dispatch.

Kaine’s decision validates criticisms that Republican legislators leveled in December against his previously announced spending plans, such as a $1.6 billion bond issue for higher education and an expansion of pre-K funding. The Governor’s revenue forecasts were too aggressive, they said, especially for fiscal 2010, the second year of the budget.

While Virginia faces painful choices, our situation is nowhere near as dire as in some other states. According to Washington Post columnist Neal Peirce, of the 21 states that have already made estimates, 14 expect revenue shortfalls totalling $29 billion in the next fiscal year. In California, Gov. Arnold Schwarzenegger proposes across-the-board cuts of 10 percent to nearly all programs, from K-12 education to public parks. To address New York’s looming $4 billion deficit, Gov. Eliot Spitzer is toying with the idea of securitizing future state lottery proceeds. In Massachusetts, Gov. Deval Patrick wants to count some $900 million in license fees from three new casinos that the legislature hasn’t even authorized yet. In New Jersey, Gov. Jon Corzine wants to issue up to $38 billion in bonds to be paid for by higher road tolls.

We see our share of budget gimmickry here in Virginia — all worthy of mockery — but our lawmakers, both Republican and Democrat, are paragons of restraint compared to their peers in many other states. The appetites of our big-spending liberals are far more modest. Our fiscal conservatives have more backbone. It could be worse…. much worse.

And…. one more set of poll questions from CNU’s Center for Public Policy. The highest priority issue facing the General Assembly, according to Democrats and Republicans alike, is “changing the law to stop people with a history of mental health problems from purchasing guns.” Three out of four respondants gave issue that a “highest priority” rating.

Number two on the list, with 68 percent rating it as a “highest priority”: “Require gun purchasers at gun shows to undergo the same background check required for guns purchased at gun shops.”

Number three, scoring 54 percent: “Cracking down on businesses that employ illegal immigrants.”

Poor Tim Kaine. The Governor’s proposal to expand funding for pre-K programs logged only 30 percent rating as a highest priority.

More good stuff from CNU’s Center for Public Policy polling: Virginians harbor ambivalent sentiments about illegal immigrants. When asked if they favored cutting public services to undocumented workers, even children, 53 percent said yes. And 55 percent agreed that police should have the authority to stop any driver they suspected of being an illegal alien to check their legal status.

Del. Robert Marshall, R-Prince William, is tweaking liberal noses again. This time the object of his outrage has nothing to do with sex (except indirectly, if you consider this). He has submitted a bill that would require the College of William & Mary to have a majority of its 17-seat board of trustees elected by alumni, not appointed by the Governor. Reports the Daily Press:

Marshall’s proposal calls for the next nine members whose terms expire to be replaced by members elected by alumni. He said he modeled it after Dartmouth College’s governing board system, which includes members elected by alumni.

Said Marshall: “A board composed mostly of alumni would be on top of things a little better because they’d have an emotional tie to their alma mater.”

Predictably, the W&M administration disagreed: Michael K. Powell, the college’s rector and a 1985 alumnus, responded that “alumni are a critical constituency and letting them have some input in the selection process has merit. … But I do not think having a set number of seats controlled exclusively by one segment of the college community is wise or workable.”

I’m no more a fan of W&M President Gene Nichol than Marshall. I, too, would like to see the guy run out of town on a rail. But I’m not sure that letting politicians tinker with the university’s governance structure is the answer. If a conservative Republican governor were making the appointments, I suspect Marshall would be perfectly happy with things the way they are. Governance structures should be based on underlying principles, not political expediency.

The final financial reports have come in for the 27th senatorial district campaign last year. Spending for all candidates, including R’s, D’s and I’s and primary candidates, totaled $3,623,431.19, according to the Winchester Star. That campaign, in which Republican Jill Holtzman Vogel emerged victorious, was the most expensive in Virginia senate history.

I’m old enough to remember when statewide gubernatorial campaigns didn’t cost that much!

I’ve long argued on this blog that there’s not a dime’s worth of difference between Republicans and Democrats when it comes to many of the crucial issues facing Virginia today. But education does seem to be a topic where a glimmer of daylight appears between the two. With Democrats, the answer is simple: mo’ money. Republicans often chant the same mantra, but they occasionally deviate from the more-money-solves-all-problems orthodoxy.

Reflecting the differences in philosophy, here are two examples from two e-mails that I have received in the past couple of days. The first comes from Sen. R. Creigh Deeds, D-Hot Springs, who has submitted several bills and budget amendments relating to education. One bill, SB 267, stands out for creating an open-ended financial commitment. It would require that the average salary of a Virginia teacher be equal to or greater than the national average. Virginia, notes Deeds, currently ranks 31st nationally in teacher pay.

Gee, Mr. Deeds, while you’re at it, could you please submit a bill requiring Virginia writers and journalists be paid more?

Seriously, should the state be setting arbitrary minimums for teacher salaries, which vary widely according to local supply, demand and cost of living? If recruiting teachers is a problem for some localities, why not let them adjust compensation as they deem necessary? Does this do anything other than transfer money directly from taxpayers to teachers and reward the Virginia Education Association, a steadfast ally of the Democratic Party?

Another e-mail comes from Lt. Governor Bill Bolling, who supports the so-called “65% Solution,” as embodied in HB60 submitted by Jeffrey M. Frederick, R-Woodbridge. As Bolling explains, only 60 percent of Virginia’s educational expenditures on average make it to the classroom; the rest gets soaked up by administrative overhead. Frederick’s bill would set a goal for school systems to direct 65 percent of their educational dollars to the classroom. If they fall short, they would have to create a plan to increase instructional spending by 0.5 percentage points the following year.

Statewide, achieving the 65 percent standard would funnel an extra $400 million into higher teacher pay, smaller classrooms or other classroom priorities that schools boards selected.

The Deeds approach: Mo’ money, no accountability. Just open up your checkbook. The Frederick approach: Restructure top-heavy school administrations and spend more money where it counts. I know which approach I prefer. How about you?

These General Assembly days, one can’t get past any newspaper without another idiotic attempt to somehow disenfranchise foreigners or foreign-born Virginians. Some 100 laws are now proposed to “restrict” undocumented foreign residents. If successful, no “illegal” immigrant (and perhaps some legal ones) could go to a state school, get a drivers license, work for various cities or counties or get stopped by a cop without getting patted down.

You could get fired from your job for “not speaking English” or you could lose your business license if you knowingly or unknowingly hire foreign-born individuals (most likely dark-skinned”) whose papers are not entirely in order with the State Department or Immigration and Customs Enforcement. According to State Sen. Richard Saslaw, some of the laws “are the most mean-spirited” proposed in recent memory.

So, it is indeed curious to read the left-hand leader in Sunday’s New York Times. Foreigners, it seems, are buying or making huge investments in U.S. firms at a massive level. Kuwaitis, for instance are taking a $9 billion share of Dow Chemical, separate groups from United Arab Emirates and Singaporeans now have a a big chunk of Citigroup and Britain’s AstraZeneca has a whopping $14.1 billion stake in Medimmune.

Last year, foreign investors poured $414 billion into U.S. firms, the Times reports. The reason? The stocks markets in the U.S. have taken deep dips in recent weeks over recession fears. There are plenty of bargains. The U.S. dollar is weaker than it has been in a long time. Although reeling from the mortgage meltdown and tight money, U.S. companies are still regarded as excellent investments.

To be sure, the foreign spending spree is likely to bring on protests by the more xenophobic “patriots” in the U.S. The same thing happened in the late 1980s when Japanese firms, just before their real estate bubble burst and their economy shrunk in a decade-long, deflationary implosion, were buying up New York landmark real estate properties with a vengeance. The outcries were huge. The same spirit forced one of China’s biggest oil companies to back away from a major U.S. investment a few years ago.

Still, the investments are good news because they bring U.S. money back into the good ole U.S.A. The growing globalization of thw world economy may have its downside with shuttered manufacturing towns aroud in the Great Lakes or textile South, but the cross-investments are likely to create jobs, some of which might replace the ones lost.

If anything the trend towards cross-investment will continue. Foreign stock markets such as Euronext are merging with ones on Wall Street. The U.S. Securities & Exchange Commission, mindful of the convergence of trading, has made it easier for foreign firms to list their stocks in the U.S. and is working towards reconciling different corporate accounting systems. In fact, serious trends are underway that would dump the accounting system used by U.S. firms in favor of a more international one that was started in Europe and is used already by most countries in the world.

Ratcheting our focus down to the Virginia level, you would think it is still the 1950s, when old-style, white-run corporations and governments held sway with their traditional and peculiar ways and mores. Those dark-skinned guys working the lawns and flower beds had better stop speaking Spanish or whatever the immigrant “underclasses” use. And if Virginia lawmakers have their way, they’d all better have all paperwork signed and sealed with all the “Ts” crossed, even though ICE is many months behind in procesing legitimate attempts by foreigners workers here to get themselves squared away.

Ironically, the lawmakers leading the charge tend to be from Northern Virginia, which is the most internationalized part of the Old Dominion. Once again, as I have written before, this state seems to be a kind of parallel universe where what happens elsewhere is irrelevant.

Globalization won’t be irrelevant forever. I can’t wait for the day when one of thse yea-hoo, xenophobic, would-be American patriots and lawmakers confronts his boss for not speaking English and is promptly fired.

Peter Galuszka