A Budget Cut for Higher Ed

By Dick Hall-Sizemore

I am used to tilting at windmills, making proposals that have little chance politically of being adopted. This is another one of those forays.

Here is a proposal for addressing higher education fiscal issues:

  1. Require all state-supported colleges and universities to reduce their tuition and fees, equivalent to a 10 percent reduction in revenue from those sources.
  2. Increase state general fund appropriations to higher education institutions by five percent.

These actions would have three advantages:

  1. Reduction in financial burden on students and parents.
  2. Nudging the level of state support back toward the level in effect before the 2008 recession.
  3. Requiring higher ed institutions to trim their overall expenses.

This proposal would result in a net five-percent reduction in high ed appropriations and they would squawk loudly. However, I have seen how agencies can absorb five percent budget cuts without significantly affecting their overall operations.

Ideally, the budgets of higher ed institutions would be subject to the same scrutiny as those of other agencies and just as accountable. However, higher ed finance is so complicated that it would take a significant increase in state budget staff to properly oversee higher ed. For example, while I was at DPB, my main assignment was the Department of Corrections, with a couple of smaller agencies thrown in. In contrast, one higher ed analyst was assigned both UVa and VCU for a long time and, for a short time, also had Va. Tech. Each higher ed analyst had at least two major institutions, along with several smaller agencies. Besides, the people in the budget offices of those institutions are the ones who best know where the fat is. Therefore, it would be much more efficient to impose a five- percent cut and let them figure out how to deal with it.

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15 responses to “A Budget Cut for Higher Ed

  1. You do good work here, especially on topics like this where it is purely non-partisan and fact-based and I appreciate it.

    I have to admit just how ignorant I am on many of the subjects you report on – like this.

    I have SOME idea of how the state chooses to fund K-12 SOQ funding for specific positions and then further moderated by the Composite Index.

    But Higher Ed, I have no clue.

    I also would ask if Higher Ed funding is purely for tuition only or other costs like room and board, fees, etc?

    So – the point here – is that the State does not (as far as I know), assign budget analysts to each school district but instead use formula to determine how much they get and then let them figure out how to get it into their budgets.

    Isn’t that a better approach than having some state-paid bureacrat trying to insert themselves in the budget process itself at higher ed?

    Or not…

    • Speaking as the former chair of the finance committee on SCHEV, Dick, I’m not sure the numbers work quite that simply….I’d have to do some research, but many of these schools don’t get much GF anymore anyway. Might take quite a bit to cover that much reduction in tuition and fees….

      But at least you see the problem. When was the last time the GA did something about this, froze the tuition at least? Who was Speaker of the House and a leader on Approps? Kirk Cox.

      I was an UNPAID bureaucrat inserting myself in their budget process for four years, Larry. Worse, a political hack appointee bureaucrat….

      • This is the kind of stuff that can be useful to people trying to understand how the system actually works – BEFORE they form opinions about it!

        Dick and Steve seem to know “stuff” that others could benefit from also knowing!

  2. As you might imagine, Dick, I am very sympathetic to your goal of cutting higher-ed tuition, and I am also sympathetic to your desire to cut tuition by getting universities to cut their costs. My main concern is that I’m not comfortable with imposing arbitrary numbers — 10 percent — to every institution regardless of circumstances. Admittedly, Virginia’s institutions are so resistant to cost cutting that there may be no alternative to an arbitrary, heavy-handed approach. But I would consider such a mandate to be the last resort after all other measures have failed.

  3. Jason Brennan & Phillip Magness, Cracks in the Ivory Tower: The Moral Mess of Higher Education (Oxford University Press, 2019), Chapter 11 (“Answering taxpayers”) provides an interesting, thought-provoking perspective on funding issues in higher education.

  4. re: arbitrary – Anytime, you have the government involved in setting a price… right? or even saying that Higher Ed has to offer “free” basic tuition?

    Does the Govt tell private sector higher ed what prices to charge or what to offer for “free” – as a condition of providing financial aid?

    Does the Govt tell a hospital how much they can charge for a procedure?

    Then why would we say so for higher ed and basically justify it by saying that 10% is “arbitrary” – but some other number is not when it’s the same process of the govt deciding what is “right”?

  5. I agree with the thrust of your proposal. Three recommendations.
    1. I would set a hard requirement for reduction of the costs of administrative personnel – say 20% – in each institution. The 20% to come numerically equally from positions at each pay grade. Thus the ones that have been the most profligate in hiring Deputy Assistant Deans and Assistant Vice Presidents would have to get rid of more of them, and cannot get away with firing all the secretaries. This proposal would generate a lot of money to reduce tuition.
    2. Some provision of your law would need to address the fact that the average tuition payment, either in state or out of state, is not the retail price. The difference is discounts. A student does not need an official scholarship to get some relief from the retail price. I have three grandsons who were just accepted to high quality universities. Large discounts were in the acceptance packages. If that provision is not there, the colleges will lower the official tuition, back off on the discounts, and realize the same cash flow. These discounts are especially true for out-of-state admissions, where there is so much more room for the discounts.
    3. Fees. Money being fungible, a decrease in tuition could be met with an increase in fees. Those would need to be frozen as well.

  6. Reduce non-teaching staff to the same level as 30 years ago, adjusted for any changes in enrollment. Require professors, etc. to return to the teaching loads of 30 years ago.

    Most of us in the private sector, facing vigorous competition, consistently look for more, not less, efficiencies demanded by customers and clients. And it generally pays off. Our small law firm now represents some clients that had previously used large and more expensive law firms because we give them the same services, if not more, for less money.

    What’s the difference? We don’t have tax dollars to rely on. Using other people’s money drives inefficiency.

  7. I do not necessarily disagree with some of the approaches suggested. The problem would the difficulty in implementing them. An across the board cut would be easier to implement and would have the advantage of letting the institutions decide what to cut.

    I have played with the numbers a little and discovered that I was wrong in asserting the proposal would result in a net five percent reduction in appropriations. That would be the result only if the GF and NGF appropriations are equal and they usually not equal.

    My case example is Radford University. The primary budget program for appropriations for administration and instruction for all higher ed institutions is 1000–Education and General Programs (or E&G funding). that is what I would target. In the proposed budget bill, Radford’s E&G appropriation for FY 2021 is $135.1 million divided as follows: $56.7 million from GF and $78.4 million from Higher Education Operating Fund (read “tuition and fees”). After reducing the HEO appropriation by 10 percent and increasing the GF amount by five percent, the total appropriation would be $129.5 million, a reduction of $5.6 million or 4.1 percent. The total would be broken down as follows: GF–$59.5 million (increase of 5 percent) and HEOF–$70.1 million, a decrease of 10 percent

    Admittedly, the percentage cuts and decreases are fairly arbitrary, but they are reasonable.

  8. I haven’t looked at it, but it would be educational to understand what Mitch Daniels has done at Purdue.

  9. The academic-industrial complex has definitely gotten out of hand. Club-Ed needs to go and we need to get back to something more akin the to German model; world class academics and classrooms, but its up to you to find your own housing an extracurriculars.

  10. I agree with you. Across the board cuts, added funding and mandatory reductions in tuition. Let’s be honest – if you give Virginia’s politicians any leeway whatsoever they will dismantle the idea and substitute higher spending, less support and vastly increased tuition. In other words, they will do exactly what they have been doing for the last 20 years.

    You can’t trust Virginia politicians with even an ounce of nuance. It’s the Virginia Way.

  11. I am all for across the board budget cuts. However, we need to address a myriad of reforms. 1) deal with overcapacity, given the declining student enrollments we need to address the fact we have too many colleges and universities 2) reduce the bloated administrative staffs and get to a credible level of teaching/research to administrative cost ratios 3) take a hard look at intercollegiate sports and the cost drain they represent. 4) most importantly, look at 4 year graduation rates and job placements, schools that underperform here should lose their accreditation

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