In Praise of a Very Bad, but Very Necessary, Bill

HB 351 — a very blunt instrument. Yet indispensable.

A bill to cap in-state tuition at Virginia’s public universities is gaining traction in the General Assembly, reports the Richmond Times-Dispatch.

HB 351, which would cap tuition for the next four years at the 2017-18 rate, was reported 15 to 4 out of the House of Delegates Education Committee and will be heard next in the House Appropriations Committee. The bill, sponsored by Del. David Reid, D-Ashburn, also would limit increases in room-and-board charges to 90% of that of the Consumer Price Index, and would cap the number of out-of-state students at the current number.

I have many problems with this bill. The remedies are arbitrary, and they violate the spirit of autonomy and decentralization which has made Virginia’s four-year colleges one of the best, if not the best, undergraduate systems in the country. But I also understand Reid’s frustration with the stubborn refusal of many of Virginia’s colleges and universities to heed the pleas of middle-class families who are finding the cost of attendance — not just tuition, but fees, room and board — to be increasingly out of reach.

There are times when subtlety and nuance don’t do the job. Sometimes, you have to reach for a cave-man club.

The insensitivity of Virginia boards of visitors toward the concerns of the taxpayers, parents and students who are paying the bills has created a political climate in which people begin calling for sledge-hammer solutions. Higher-ed has brought this upon itself.

To my mind, HB 351 is a bad bill. It would place price controls on college tuition, room and board (yet, for some unfathomable reason, leave fees untouched). Throughout the economic history of man, price controls have led to little but misery. For recent examples, look to Zimbabwe and Venezuela.

Price controls on Virginia college tuition won’t lead to hyper-inflation, as in those two countries, but it will create distortions. Controls will reward those institutions that have increased tuition most aggressively in recent years by locking in those charges at a high plateau. At the same time, tuition caps will punish those institutions that have worked most assiduously to control costs and charges but may need the flexibility to raise rates modestly in the future. Also, one can predict from history that institutions will engage in accounting gamesmanship, reclassifying costs in capped categories (tuition, room, board) as student fees or some other kind of miscellaneous charge, the end result of which will be less price transparency than ever.

The cap on out-of-state enrollment also is problematic. Indeed, the enrollment cap is at odds with the tuition cap. Out-of-state undergraduates pay thousands of dollars more in tuition than in-state undergrads. Indeed, they pay more than they cost to educate, in effect subsidizing in-state students. Increasing the number of out-of-state students to increase is a safety valve that helps institutions hold down tuition increases. The bill would take that option away.

But the bill’s worst sin is that it addresses symptoms, not underlying causes. It does nothing to ameliorate the hidden drivers of rising tuition costs, such as:

  • The hunger for institutional prestige, which pits university against university in an ever-escalating arms race for superstar faculty and high-SAT students, with the attendant quest for the glitzy buildings and resort-quality amenities that it takes to recruit them.
  • Metastasizing administrative staff arising from federal regulations and higher-ed obsessions with diversity, sexual politics, economic development, community involvement, and other non-academic priorities.
  • Declining faculty productivity, in which tenured professors enjoy lighter teaching loads so they can spend more time on writing and research, while the grubby task of teaching undergraduates is offloaded to a cadre of untenured instructors, graduate students, and adjunct faculty.
  • The growth of R&D programs, in which undergraduate tuition subsidizes an ever-expanding apparatus not only of research professors but graduate students, specialized laboratories and equipment, and administrative support whose job is to seek research grants.

Another cause of rising tuition, as we all know, is the cutback in state support for higher education. But budget cuts, as I have explained before, account for maybe 30% of the overall increase in the cost of attendance at college.

The causes I bulleted above are poorly understood. Higher-ed accounting systems are opaque. Even college administrators themselves may not fully understand what they’re grappling with because, focused on other issues, they don’t compile the metrics or have the accounting systems to answer the kinds of questions that should be asked. And why would they trouble themselves? They would offend powerful internal constituencies if they dared try to reform the system.

I maintain that part of the solution is greater transparency into higher-ed accounting. Rather than impose arbitrary caps, we should pry open the system’s inner workings for all to see. We need keener insight into who pays for what, and we need to compile and track productivity metrics that reflect the cost drivers. Once the underlying problems are illuminated, boards of visitors can compel college administrations to act upon them. Alas, accounting transparency is missing from the reformers’ legislative agenda this year.

Fortunately, there are bills that would partially advance the goal of openness. One would require boards of visitors to allow the public to provide input on planned tuition increases. Another would define the prime responsibility of university board members as to the public, not to institutional advancement and the ceaseless, Quixotic quest for higher rankings.

Despite its flaws, the Reid bill does serve one useful purpose. When faced with the prospect of the sledgehammer — tuition and out-of-state enrollment caps — perhaps the higher-ed lobby will decide it can live with greater openness and a few tweaks to the governance system. If higher-ed refuses to budge on any of these issues, it runs the risk of destroying what little public trust it still enjoys. I’ll have more to say about that in the next blog post.

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6 responses to “In Praise of a Very Bad, but Very Necessary, Bill”

  1. LarrytheG Avatar

    one thing that might be done is to require higher-ed comparative audit report like is required for counties and towns.

    I also remember an ill-thought law a few years back that applied to K-12 and it mandated than a certain percentage of money had to be spent on “instruction” … as if things like bus drivers, maintenance workers, cafeteria, janitors, etc were “excess” employees…

    If you might actually get the transparency desired… what would you do next? go through and try to analyze how many and what kind of employees they had then tell them what they should have in your view – instead?

    This would be akin to requiring VDOT to be “transparent” or the State Police then we’d have lay people suggestion that they have too many of some kinds of workers… as if lay people actually had an idea of how many other employees besides actual state police should be hired…

    I just don’t think such “transparency” leads anywhere unless the critics actually do have some knowledge of how many and what kind of employees Higher Ed should have. But that is where the comparative report idea might help.. just comparing different institutions in the various categories of “overhead”.

  2. Lots of issues here and it came about when Gilmore deregulated public higher education and stopped investing in Virginia’s young. He gave the leadership far more power than they had before in exchange for reducing state support and letting the institutions gamble with federal promoted and insured loans. So with no regulation spending went wild. (As Secretary of Education and Sup of Public Schools back in the 1980s I know that things were far more regulated than they are today including compensation for coaches and presidents.)
    And, it was true around the nation. So now two decades later the national student loans total #1.5 trillion and growing. Institution owe hundreds of billions in dollars for non academic facilities-sports, recreation and posh housing.
    So colleges and universities have followed the national trend in housing, military spending etc. Spend lots now and don’t worry about it til later.

  3. LarrytheG Avatar

    I always ask .. is Virginia much different from other State’s higher Ed…s?

    Does Virginia charge higher tuition, room and board? How about loans… do Va students have more and higher loan debt?

    1. djrippert Avatar

      That graph is like asking which of Jim Jones’ dead followers drank the least Kool Aid.

    2. Agreed. If you are killed already, it doesn’t matter how much poison did it. JWG blames the relaxation of State regulation beginning with Gilmore; but I think we would be in somewhat similar straits no matter what happened back then. As this map illustrates, the problem is nationwide and Virginia is by no means the worst offender. IMHO the problem is simply the way we go about promoting higher ed as an essential component of getting ahead, a sine qua non for any young adult today, something parents ought to be ashamed not to push their kids to get — then expect the kid to pay for it out of loans and/or his parents’ pockets. Sure there is substantial taxpayer support for higher ed, but compare the public/private percentages with how we support: (1) secondary education, (2) health care, (3) housing (including everything from the Projects to the remaining mortgage deduction), or (4) transportation.

  4. djrippert Avatar

    UVA = VDOT

    VDOT taxes gas which makes the users of roads (and buyers of gas) pay the majority of the costs of roads. UVA charges tuition which makes the users of college (the students) pay the majority of the costs of higher education.

    When governmental entities are badly run it is incumbent upon the legislature to mandate reform. This is true even if the state government caused the problem in the first place.

    Any of Virginia’s public college and university professors or managers who don’t like being held accountable by the people’s representatives can go find employment elsewhere.

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