Thursday, April 23, 2009

The College Bailout of 2009

by Daniel Bennett

A new report by Cristin Toutsi and Richard Novak, reveals the results of a survey of how public college are or will be affected by the current recession, according to their governing boards. Of the 90 respondents, 62% perceived a "substantial" impact, while 25% perceived a "modest" and 3% perceived little or no impact. With a decline in state tax revenues, state budget appropriations are a big concern, with 42% of respondents reporting that their state budget was reduced for the current year (an average of 6.4%) and 66% responded that they experienced a mid year cut.

When asked how they plan to respond to this crises, 17% responded that they will not make any changes to their current operating budget, while 49% planned a budget reduction of less than 5% and 30% planned to reduce theiry budget by more than 5% (3%actually planned an increase).

There were no surprises when asked what steps were being taken to cut costs, with the most common themes being hiring and travel freezes, maintenance deferrals, capital spending delays and across the board cuts. These are common short-term answers to long-term problems that have exasperated the rise in tuition in the last decade. Speaking of which, the report indicates that many boards are already planning to increase tuition by an average of 6.7% in the coming academic year, further decreasing the ability of students to afford college at a time when many parents are expected to remain unemployed and whose college savings have been eroded by the crises.

What should be a critical moment in history in which colleges re-evaluate their purpose of providing an education and make serious fundamental changes in how they operate in order to increase affordability, access and the public benefits of having a better educated citizenry, is more likely to be a temporary bump in the road that slows the spending engine down. Uncle Sam has continued to enable the fiscal irresponsibility of colleges with the equivalent of the higher education bailout that is wrapped up in the "stimulus" bill that allows colleges to continue to avoid making difficult decisions that most organizations face.

This is not the last that we will hear of declining state higher ed budgets and the need to raise tuition. In the near future, when states realize that they now have to cough up significant funds to comply with the newly created unemployment entitlements associated with the stimulus bill, they will again have to disappoint the public colleges with a education budget reduction. Not to mention the continual rise of healthcare costs of an ageing population. This cycle will continue to gauge the pockets of students and the taxpayers until we get serious about reforming higher ed.


capeman said...

Daniel, relax, if your boss has his way, everyone will be going to the University of Phoenix and the like, and it won't matter what the nonprofit colleges do.

By the way, if you think higher education is such a ripoff, why did you get a graduate degree at a public university?

capeman said...

Re-reading this, it's even more hilarious than I first thought. Supposedly about "the college bailout". But most of it is about how colleges are cutting costs in the face of declining state funding. Here's the part about the "bailout":

... "stimulus" bill that allows colleges to continue to avoid making difficult decisions that most organizations face

Now this is really a laugh. Trillions of dollars in bailouts for Wall Street, for American businesses. Compared to that, what higher education is getting is a smidgeon. And it's very misleading to call that a "bailout", in contrast to what Wall Street, the banks, the car companies are getting. Which really is a bailout, no doubt whatsoever. The stuff for state and local governments, a little of which is going to public universities, is "stimulus", not bailout. I hope the place where I work gets some, if there has to be a stimulus (as apparently the American people have decided there ought to be). But it's not a "bailout". The joint isn't going to go under if the money isn't forthcoming. We -- the administration -- didn't fly their jets into Washington, threatening to tank the world economy if they didn't get tens of billions, hundreds of billions of dollars. This trope -- the college "bailout" -- is really a cheap shot by the Doc and his wonderboys, and their allies on the lunatic right.