What Happened to the Great State Universities?

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According
to a new report released by the American Association of University Professors, the
gap between the salaries of faculty at private and public universities is
widening.  The “Annual Report on the
Status of the Profession” found that at the public institutions, full
professors averaged $118,054 and assistant professors $69,777, while at the
privates full professors’ average salary was $157,282 and assistant professors’
$86,189.

Even
while the rest of the economy struggles, the last decade has been a flush time
for private institutions, with endowments surging an average of 19.2 percent in
2011 and 11.9 percent in 2010, according to the National Association of College
and University Business Officers. Meanwhile things have gone steeply downhill
for public colleges and universities as legislatures across the country have
cut back on appropriations for higher education and, at the same time, have
imposed ceilings on tuition increases. 
The financial squeeze has taken a toll on the quality of instruction
offered at some of our best public institutions.  Unfortunately, the situation is likely to get
worse in the years ahead, given the condition of state and federal budgets.  

But
current financial pressures have only brought out into the open a process that
has been ongoing for several decades:  public institutions – especially the so-called
“flagship” institutions – have been losing ground to private colleges and
universities since the 1970s.   

Holding Their Own
with Harvard

There
was a time not so long ago when elite public institutions, such as the
University of California (Berkeley), the University of Michigan, and the
University of Wisconsin, more than held their own against competition from
Harvard, Yale, Princeton, Stanford, and other elite private institutions.  Berkeley’s reputation for academic excellence
in the 1950s and 60s was unsurpassed; indeed, in the 1960s many experts considered
Berkeley to be the finest university in the world.  Flagship universities in Michigan, Wisconsin,
Illinois, Minnesota, North Carolina, and Virginia earned rankings in the top
ten or twenty universities in the country.  
Admission to these institutions was widely sought after by out-of-state
students willing to pay premium tuition for high-quality education.   With
enrollments in excess of 30,000 students, these institutions dwarfed the
privates in scale but delivered a great deal of educational “bang for the
buck.”   

Today
the situation is vastly changed. There is not a single public institution
listed among the top 20 schools in the 2012 ranking by U.S. News and World Report. Berkeley ranks 21, while Virginia comes
in at 24 and Michigan at 29.   The Forbes ranking, which takes into account
the both cost of the college and the quality of its educational program, does
not list a single public institution in the top 30, and lists just seven in the
top 50 – certainly an indictment of the quality of instruction offered at the
less costly public institutions.  In that
survey, Berkeley comes in at number 50, while flagship universities in
Michigan, Wisconsin, Illinois, and Minnesota do not make the cut at all.   For
the first time private institutions – and not just the Ivies — dominate the
roster of our top colleges and universities.

Too Slow to Tap
Private Wealth

There
are undoubtedly many causes that one might cite to account for this far-
reaching development in higher education.  
Public universities in the Midwest have been forced to cope with
population changes and the decline of auto and steel industries in their
states.  At the same time, private
institutions have benefitted disproportionately from the stock-market boom of
the last three decades that has provided them with the resources to recruit top
faculty and students while expanding their research and educational programs.  Public universities, long in the habit of
relying upon legislative appropriations, have only recently begun to tap into
this expanding spigot of private wealth.    

Yet
there is a more fundamental cause behind this reversal of fortunes in higher
education.  Put simply, big government is
killing – has killed – the elite public university.

In
the heyday of the flagship universities in the 1950s and 1960s, state
governments spent the bulk of their funds on just a few functions – primarily
transportation, public safety, welfare, and higher education.   During this period, flagship universities
had few competitors for state funds and, indeed, with their alumni well
represented in the legislatures and the “baby boom” generation headed off to
college, they were well positioned to lay claim to a rising share of state
budgets.  Across the nation, between 15
and 20 percent of state budgets flowed into the public universities at a time
when public-employee pensions, health insurance, and K-12 education were still minor
items in state budgets.   For a brief
time, the political environment favored generous investments in elite public
education.

That
is no longer the case.  The expansion of
state governmental functions since the 1960s has created a most unfriendly
political environment for the flagship universities. According to a report by
The National Association of State Budget Officers, Medicaid and K-12 education
together accounted for 44 percent of state government spending in 2012, while public
pensions (which claimed less than one percent of state budgets in the 1960s)
now account for 11 percent of state expenditures.   By contrast, higher education now lays claim
to less than 10 percent of state expenditures, or roughly half the share
allocated to this sector in the 1960s.   In the scramble for public dollars, the
flagship universities must now contend with public-employee unions demanding
funds to pay for salaries and pensions for their members, court orders and
referenda directing ever more public funds to K-12 education, and the lure of
federal matching funds for Medicaid, welfare, and other federally subsidized
programs.   

The Sprawl of Many
Campuses

On
top of this, the flagship universities today must share public appropriations with
an expanding complex of regional campuses and community colleges that barely
existed in the 1950s and 1960s.  California created its elaborate and expensive
three- tier system of research universities, regional universities, and
community colleges in the early 1960s just as the University of California was
reaching a pinnacle of influence and prestige. 
Other states expanded in parallel ways. 
Michigan now supports 45 distinct institutions of higher learning, all
in financial competition with the state’s two flagship institutions.  All of these second and third tier
institutions have representatives in the legislatures demanding their share of
state higher education dollars.  In
addition, more and more teachers at the lower tier four year universities and
community colleges are leveraging their power by joining unions that bargain and
lobby in their behalf.  Professors at
elite institutions have so far resisted the pressures to unionize out of
professional loyalties and convictions about promotion through merit and
competence.      

All
of this has had the predictable result of forcing flagship universities to look
for other sources of financing through federal grants, private philanthropic
support, and tuition increases that increasingly are paid for by student debt.  None of these strategies is likely to
succeed.  While federal spending on
higher education has skyrocketed in recent years (largely by increasing
appropriations for Pell Grants), these funds are divided many ways among the
3000-plus colleges and universities across the nation and the expanding
for-profit sector of higher education.  Private
philanthropy is now seen as a source of funds for institutions like the
University of California, the University of Virginia, and the University of
Michigan, but this sector is not large enough to fill in for declining public
support for these institutions.  Private
donors, moreover, have always been skeptical about funding state universities
that, when all is said and done, are still largely controlled by state
legislatures.  As for tuition increases
and student loans – those two sources of revenue long ago passed beyond the
threshold of affordability. 

Does
any of this matter?  For all their flaws,
flagship public institutions in the post-war era provided hundreds of thousands
of working class and middle class Americans with a quality education and an
affordable avenue of upward mobility.     

They
have prepared generations of leaders at the state and national levels.  The great state universities are not going to
disappear and many will maintain a standard of excellence, but in an age of
lumbering and inefficient governments trying to do all things for all groups
they will not have the resources to perform at their former level or to compete
with high-performing private institutions.

James Piereson

James Piereson is president of the William E. Simon Foundation and president of the board of directors of Minding the Campus.

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