Want more say over UC? Pay up

The lawmakers outraged over tuition hikes are partly responsible for them by presiding over a sustained decline in public support for higher education.

December 22, 2010|By Gary Fethke and Andrew Policano

As The Times notes in its Dec. 17 editorial, California legislators -- who increased state funding to the University of California system this year in exchange for greater control over finances -- are incredulous over the university's recent tuition increases. Their outrage is ill-informed.

While they complain about rising costs, they fail to recognize that what has changed dramatically is not the cost of higher education but rather who pays -- the student or the taxpayer. Some realities:

The real cost of educating a student in the UC system has declined by nearly 20% over the last decade.

The portion of the cost for a student in the UC system that is paid for by the state has fallen from 78% to 46% over the last decade

Any qualified applicant to the UC system who is a California resident and whose family earns below $70,000 can attend for free.

Certainly, public university students have seen an increase in the sticker price of higher education. But list prices are not the prices paid by all students; at least two-thirds of attendees receive financial aid.

That said, the real confusion lies in the distinction between price and cost. Tuition represents the price to purchasers of education, not the full cost of providing that education. The cost of higher education is measured by spending on faculty and staff compensation, the facilities and libraries, information technologies and many other student services. This cost per student has actually been declining in real terms across the UC system, largely, but certainly not exclusively, because of rapid enrollment increases. Tuition and fees have risen not because the cost of delivering education has risen, but because the portion of expenses paid for by the state per student has declined.

It is paradoxical that the very individuals who have contributed to the rise in tuition by budgeting less public money for higher education are now complaining about the effects on students and parents of tuition increases. What, did legislators think they could decrease their share public education funding by more than 50% and not have an effect? How does the Legislature think the UC system should react when such a large hole is left in its budget?

In their defense, state legislators did provide a boost in funding this year; they became annoyed when the California State University and UC governing boards raised tuition, assuming that the larger appropriation should have restrained, not encouraged, subsequent fee increases. While the increased appropriation is certainly appreciated and needed, it restored a level of per-student state funding that is still significantly below historical trends. With a smaller state appropriation, the university is left with three choices: Decrease costs by improving efficiency; increase revenue from other sources; and/or decrease quality. The UC system has done all three.

Lowering the real cost of an education is truly a remarkable achievement, especially in the face of increases in costs all across the board -- energy, facilities, maintenance, salaries, increased investment in technology and many other areas. The UC system has also become more entrepreneurial by adding new programs, operations and services that charge self-supporting fees; it has also raised substantial funds from private donors.

Unfortunately, these initiatives have not been able to offset the cuts in state funding. The reality is that the UC system pays a major price by having to reduce quality via larger class sizes, increased reliance on part-time instructors and less attention paid to the individual needs of students. Most of these effects vis a vis educational quality cannot be seen immediately, but their impact will be clear in the future when the UC system experiences competitive decline.

There is no question that students and parents will be asked to pay more for one of the best educations in the world; indeed, this trend is taking place all across the globe. Look at Great Britain, where a dramatic increase in university fees has sparked protests in the streets of London. The ability of great public research universities to sustain their quality in the face of declining public support is the primary concern, not whether these universities have failed to contain expenses, even though we agree this an important continuing matter.

The Legislature and university must determine together the level of quality that can be supported using the available combination of private and public funding. In the end, if the Legislature truly wants to participate in a discussion about higher education, its members need to consider seriously whether or not they will continue to play a diminishing role in funding a high-quality university system.

Gary Fethke is a professor of management sciences and economics at the University of Iowa's Tippie College of Business. Andrew Policano is dean of UC Irvine's Paul Merage School of Business, where he is also a professor of economics. They are writing a book entitled, "Public No More: The New Path to Excellence for America's Public Universities."

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