University Coalition Bereft of New Thinking

va_higher_edby James A. Bacon

Virginia’s higher ed lobby is brandishing a new economic-impact study as it pushes an agenda for more state spending on… higher education.

The state’s $10.8 billion system of public colleges, universities and affiliated hospitals is an economic engine of the commonwealth, contends a new report issued by the Virginia Business Higher Education Council. As a VBHEC summary puts it, the state investment in higher ed “more than pays for itself.”

  • For every tax dollar the state invests in public higher education, the result is more than $17 in increased economic activity (GDP).
  • For every tax dollar the state invests in public higher education, the result is $1.29 in new state tax revenues.

Unsurprisingly, the Council uses these findings to bolster an array of state spending initiatives. Among the proposals that explicitly call for more state dollars in the Council’s “Grow by Degrees” policy agenda:

  • Provide state funding for college-level programs that emphasize leadership skills, character development, personal and business ethics, and civic engagement.
  • Provide enhanced state grants to reduce third- and fourth-year tuition costs for students who attend two years of community college, earn an associate degree and complete their bachelor’s degree at a four-year college or university.
  • Provide incentive funding to enable Virginia’s public colleges and universities to give students the option to purchase four-year tuition guarantees.
  • Provide state funding for student work-study programs as part of student financial aid packages.
  • Reduce student debt by increasing state support of financial aid targeted at middle-income students and families caught in the “middle-class squeeze.”

Meanwhile, here’s the university agenda for restructuring, cutting costs and making higher education more affordable:

[crickets chirping]

That’s right. The universities are proposing nothing. In a word, they want more state money so they can continue doing the same thing, the same way. Pathetic. The industry is in the midst of its greatest upheaval since the founding of higher education in America, and it’s business as usual. The political establishment and business community are so supine and unquestioning — Governor Bob McDonnell and the two candidates for governor, Ken Cuccinelli and Terry McAuliffe, all issued statements indicating that they are on board — that the higher ed lobby doesn’t even feel the need to provide a fig leaf of self-reform.

With such herd thinking, no wonder Virginia is losing its mojo. Sad, sad, sad.

Law of Diminishing Returns. Let’s get back to that economic impact study. There is no question that higher education makes a positive contribution to Virginia’s economy. It is an essential institution. However, the study never grapples with the law of diminishing returns — a concept I learned in Economics 101 at the University of Virginia but which appears to have gone forgotten in the hallowed halls of academia.

While it’s entirely possible that the first $1 billion dollars of state support generates an extremely high economic and social Return on Investment, it’s likely that  expenditure of each successive $ billion generates a lower return. There is nothing in the study to support the notion that the expenditure of millions of dollars more on the likes of “character development” and “work-study programs” will generate a 17-to-one return.

Questions not asked. Equally important are questions that the higher ed lobby don’t ask: What would be the economic return if colleges and universities (a) trimmed top-heavy administration, (b) reformed the tenure system, (c) restructured academic offerings to weed out outdated disciplines, and (d) used technology and online learning to more aggressively restructure the 500-year-old practice of organizing classes around professors delivering lectures in classrooms?

Why is the onus on the taxpayers to cough up more money? Why isn’t the onus on the universities to innovate and restructure?

This “Grow by Degrees” initiative represents the raw self interest of complacent educrats dressed up as economic development, and nothing more. Members of the “Grow by Degrees” coalition — a Who’s Who of Fortune 500 companies, CEOs and former CEOs — should be ashamed of themselves for serving up this self-serving pabulum. And citizens should be alarmed that Virginia’s education-industrial complex can think of nothing more creative to advance the condition of higher education than calling for another raid on taxpayers.

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11 responses to “University Coalition Bereft of New Thinking”

  1. Les Schreiber Avatar
    Les Schreiber

    The 17 for 1 claim looks a little high to me . I would like to see the methodology that came up with that result. Much of the economic justification for education is based on the effects of the “route 17” model around Boston.That area is covered with exceptional universities Harvard and MIT among them. Mayor Bloomberg in NYC is bringing in a tech center run by Cornell in an effort to diversify the economy away from Wall Street. Remember Governor Allen put an engineering school at VCU in an effort to attract Motorola.Where is that plant,anyway.Much of this discussion is really about the role of higher ed:are colleges and universities trade schools or do they serve a wider social purpose and what is the wider role really worth.

  2. well sure.. 17-1, no problem… 🙂 :

    Steven T Dekosky University of Virginia, vice president, dean and professor, School of Medicine $650,000

    Irving L Kron University of Virginia, professor, Department of Surgery $561,100

    Robert F Bruner University of Virginia, Dean and Charles C. Abbott Professorship in Business Administration, Darden Graduate School of Business $518,900 University

    Teresa A Sullivan University of Virginia, president $485,000 University of

    Michael Strine University of Virginia, executive vice president and COO $450,000 University of Virginia 0 Details

    William V Lazor University of Virginia, football offensive coordinator $425,000 University of Virginia 1 Details

    Brian H Annex University of Virginia, professor, Department of Medicine, Cardiovascular Medicine $420,000 University of Virginia 3 Details

    Carl P Zeithaml University of Virginia, dean and F S Cornell Professor of Free Enterprise, McIntire School of Commerce $408,000 University of Virginia 14 Details

    LEONARD W SANDRIDGE Special Advisor to the Preside $370,240 University of Virginia 44 Details

    HARRY HARDING Administrative – Professor $370,000 University of Virginia 2 Details

    JAMES T REID Asst Coach, Football – Defens $356,000 University of Virginia 1 Details

    BRADLEY E HAWS Administrative – Lecturer $355,000 University of Virginia 4 Details

    MICHAEL O THORNER Professor $350,300 University of Virginia 34 Details

    JOHN S LAZO Professor $350,000 University of Virginia 0 Deta

    check your own school:

  3. Breckinridge Avatar

    Let’s see what JLARC has to say on Monday. There will be a highly anticipated report on the impact of auxiliary enterprises on the cost of education at a Virginia public university. I agree, very little new or creative in the set of proposals you linked to. And the move toward performance based funding, as originally outlined in the TJ 21 legislation, has largely been a bust because the universities really don’t want it. Unless the money really is linked to performance, that’s just political blather.

    The big headline four years ago was “100,000 more degrees” and that is on track, but it is a fair question whether the trend line was already there before the goal was set.

    I am becoming convinced that the universities will charge whatever they can and spend the money on whatever they want to, because demand still exceeds supply in this arena and there is no down side. Governor Allen put a freeze on tuition increases but that went away, and now we are in a spiral down scenario where the General Assembly is providing less in real dollars per in-state student giving the schools plenty of cover for price increases, which only encourage the Assembly to tighten further.

    I’ve got no problem with the E-school at VCU.

  4. reed fawell III Avatar
    reed fawell III

    I could not agree with you more, Jim –

    Is this all you folks can come up with? Are not taxpayers, kid, and parent already paying enough? Assume all your new programs are totally needed.
    Are there not others that might be fixed, or improved or eliminated? Is there no end to escalating costs for education? What is going on here?

    Whenever Private Public Task Forces – whether advocating on behalf of airports, or universities, or research organizations, or whatever – whenever such “a concerned group of business or education leaders” for example, issues a study that tells you that every dollar your state (that is you the taxpayer) “invests” will result in more than $17 (or whatever) in increased GDP (or whatever), you had best throw their study in the trash.

    Why? Because more likely than not, that study its worse than worthless. It’s a lie. A lie that has been dressed up as an fancy glossy study full of prognostications and numbers designed to achieve per-selected conclusions concocted for the purpose of taking more money out of taxpayers’ pocket.

    Here this study proposes to feed every more public money into an already bloated and corpulent Jabba the hutt system of higher education. Since 1985, the consumer price index has risen 115% while the college education inflation rate has risen nearly 500%. And all these “concerned business and educational leaders” can come up with to fix the problem is feed the beast every more of other people’s money, public monies, to feed bad habits.

    Why? Because far too often it’s going into the pockets of those doing the study, either directly and/or in far too many cases indirectly as well. Does this always happen? No. But far too often it does. It’s a growing trend of often self appointed groups of special interests in Virginia operating under the guise of selfless public service, coming up with studies, schemes, and programs, to promote their own interests at vast public expense and waste.

    It’s one of Virginia’s thriving industries – the task force study and their hired hands, our best and brightest in academia, writing bogus reports reaching results dictated by the client, their bosses who demand the “right” results. And where does the cash come from for all these studies? Mostly from the taxpayer of course, the very same group whose money is the study’s target.

    1. reed fawell III Avatar
      reed fawell III

      One wonders why so many boards, committees, and councils so often fail to tackle the hard problems that are staring them in the face, and instead make easy popular decisions that compound the problems and ratify the bad habits of those institutions they are responsible for. Hence such boards, committees and councils chronically avoid their responsibilities, making things worse.

      Edmond Burke explained the phenomena this way:

      “We live in a world where everyone is on the catch, and the only way to be safe is to be silent, silent in any affair of consequence …”

      Another words, don’t ruffle feathers, go along and get along. Otherwise you might not be invited to stay on the board, or get favors when you need them. So do the easy thing, hand out public monies to make people happy.

  5. I think we pay too much for K-12 and for Higher Ed but I think we are responsible for it.

    We want WAY MORE for K-12 that most of the other OECD countries themselves provide. They focus primarily on core academic and let parents seek out additional things for their kids – and pay for them. We have curricula a mile wide and an inch deep – eschew rigorous academic structure and instead want “amenity” electives.

    And this continues in College where many degrees are not really substantial enough to garner the really good jobs in a global economy.

    and we encourage it in K-12 and we encourage going into debt big time for flimsy degrees as long as they are at a “name” school with a big time sports program.

    but we blame others. we blame teachers. we blame administrators. we blame higher ed… HELL we blame the MEDIA.

    we refuse to take personal responsibility for at least our share of the problem

    Breckinridge has it right. They are selling a product for which there is an insatiable demand and they have no reason to sharpen their pencils.

    This whole exercise is like blaming the cellular and cable TV companies for their “outrageous” fees.

    We are a herd. We make bellowing and belching noises at things that alarm us but we remain – a herd with all the instincts of a herd.

  6. reed fawell III Avatar
    reed fawell III

    Imagine a state educational establishment that spends its money and hype on a campaign to convince its citizen that its institutions of higher learning are such great businesses for the state that each dollar taxpayers spent on their institutions earns a $17 return on Va.’s Gross Domestic Product —
    And, yet these very same Institutions REFUSE to test its students annually to prove, what if anything, these institutions are teaching our children?

    And tell me, how does a college or university system earn for the state or anyone else $17 on each taxpayer dollar “invested” when:

    1/ half of its students never graduate or graduate illiterate, or graduate after 6 years with staggering personal debt, and,

    2/ a majority of all students spend up to six years getting grossly inflated grades to the point that no one, neither student, parents, taxpayer or any potential employers have the foggiest notion what that student learned?

    The powerful message (and it’s powerfully subliminal in this particular instance), is that these institutions of higher learning see themselves first and foremost a collections of BUSINESSES that: 1/ serve the business of themselves, 2/ the business of their boosters, 3 and business of the state.

    If they were about educating our students, they would test their students annually and publish the results if only to insure they were doing their jobs, and earning the right to taxpayer monies and students tuition.

    Instead, such a thought apparently never occurs to them. Rather, they act like they are some speculative business venture that has to convince investors that they are going to earn $17 on every $1 invested. That of course is absurd. Any investor, save a damn fool, would laugh out loud at such a claim. And never invest in such a snake oil operation.

    1. reed fawell III Avatar
      reed fawell III

      If taxpayers want to get rich, then they must send their hard earned money to Professors, and double their Professors’ salaries, and double the number of professors, and build for them ever more buildings and labs and otherwise subsidize all their research so that Professor, and private companies in collusion with Professors and their universities, will be able take your taxpayer money and rip off any profits for their own benefit.

      Believe me Mr. and Ms taxpayer, if your do that you will be rich and live happily ever after.

      And by the way, you have just paid thousands of your own dollars to receive this message from your betters, those who are far wiser and far more clever than you, the professors and those who hope to make money off of them and off of their schools that you the taxpayer pay for lock stock and barrel.

  7. re: institutions spend money to prove their worth. pretty much par
    for the course….. many public and private institutions pay folks to do PR and lobby in Richmond also. If the law were changed, they’d just go to alumnus for the money – maybe already do.

    with higher ED, the US clearly has the best institutions in the world – for the people who want to pursue the tougher, more advanced degrees – brings folks from all over the world to get that level of education.

    the idea of “testing” higher ed seems to be a real conundrum … as we really don’t have national standards – a real way to compare – say a Degree with Math from VaTech with say Phoenix or Podunk U somewhere (which may be BETTER than tech but has a limited curriculum and no big time sports).

    I don’t think a lot of folks go to college JUST for a GOOD degree. They go for all manner of reasons – often do NOT take the more difficult courses of study AND don’t want to go to a school that does not have a big time sports program.

    The Universities know this. They have a “market” and they’re making sure that people know their “brand” and that their brand looks “good”.

    to be sure – USN&WR publishes an annual rating of colleges that is considered to be credible by many.

    I think Obama has proposed some kind of a rating system:

    the article worth reading IMHO, of course.

    the conundrum as I see it is that institutions are naturally going to self-promote themselves and without the govt, will not agree to standardized metrics that could be used to compare the “worth” of their products.

    I not that USN&WR has provided SOME data for free but if you want more, you have to pay for it – which does make sense as they are paying people to produce the information but there is information the colleges will not provide and UNSWR cannot compel them to.

  8. “I not that USN&WR has provided SOME data for free but if you want more, you have to pay for it – which does make sense as they are paying people to produce the information but there is information the colleges will not provide and UNSWR cannot compel them to.”

    Actually, US N&WR coerces institutions to prepare data for them and then adds limited value to those data. You and I have already paid for those data as they are supported by state subsidies, Pell grants, and federal loans. Which is kind of the same argument USN&WR uses to justify why institutions should provide anything they request.

    Institutions argue that testing is not needed is that the real test is the employability of their graduates, especially in times of academic downturn.

  9. Meanwhile back at the Accreditation Ranch…….

    Regional accreditation agency to investigate NSU

    so I’ll ask a question –

    should accreditation include something about “value” or “fiscal fairness” ?

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