What’s Happening to Public Higher Education?

Where Public Higher Ed Is Heading

Reviewed by D. Bruce Johnstone

Ronald G. Ehrenberg, ed.
ACE/Praeger Series on Higher Education. Westport, Conn.: Praeger Publishers, 2006

The Cornell Higher Education Research Institute has become a significant center of high-quality interdisciplinary research on higher education, with a valuable and much-needed tilt toward applied economics and public policy. The institute was founded and is still directed by Ronald Ehrenberg, professor of economics and former Cornell University vice president for academic programs, planning, and budgeting. The stimulating and timely volume What’s Happening to Public Higher Education? emerged from the institute’s spring 2005 conference on this theme. While I am somewhat skeptical about edited volumes of conference papers (despite having contributed to many), this one contains substantive, timely, and important chapters; is well edited by Ehrenberg; and includes a useful bibliography and index.

Chapters devoted to states (California, Georgia, Michigan, North Carolina, Texas, Virginia, Washington, and Wisconsin) are densely packed with descriptive history and data and rather overwhelm the chapters attending to crosscutting national trends, principles from economics and public policy, and long-term summary predictions. The state chapters contain useful and sometimes provocative insights. For example, a chapter by Gerald Kissler and Ellen Switkes from the Office of the President of the University of California system cite the steady downturn in state budgets since the early 1990s. They illustrate some deleterious effects of that decline on the University of California campuses, but they also cite a number of actions that were genuinely productivity-enhancing and arguably should have been taken in light of the state’s fiscal circumstances, the competing public needs, and the seemingly minimal effects on learning and participation. The chapter on public higher education in Georgia by Christopher Cornwell  nd David Mustard, both economists affiliated with the University of Georgia’s Institute of Higher Education, illustrates the complications that ensue when multiple layers of government use similar tools (here federally administered Pell Grants and state-administered Hope Scholarships) for different ends and with different criteria. They describe some of the unintended consequences that so commonly emerge from such policies— for example, in Georgia, the grade-based requirement for retaining a Hope Scholarship led to decreases in the number of students attending college full time, increases in course withdrawals, and problematic shifts from regular to summer terms. The chapters by Donald Heller, from Penn State’s Center for the Study of Higher Education, and by Michael Rizzo, from Cornell’s Higher Education Research Institute, both illustrate the ironic dilemma posed by higher education’s considerably greater ability to generate its own non-tax revenues relative to other state agencies or to K–12 education, and the perverse effect of this seeming success: it leads states to conclude that universities have relatively less need for scarce state tax revenue.

Economist Sarah Turner describes Virginia’s implementation of a so-called “high-tuition-high-aid” policy, designed to increase tuition revenue from students (or parents) who will pay the higher tuitions while maintaining, or even enhancing, accessibility through the return of some of this revenue in the form of higher need-based grants or additional student loan subsidies. Turner analyzes the considerable variation in tuition price elasticities (that is, the changes in enrollment behavior in response to changes in tuition or financial assistance) by family income and academic preparedness. For example, upper-middle- and upper-income students with high SAT scores, strong academic preparation, and a high level of motivation to succeed academically tend not to drop out, but rather to change to a private alternative as the public flagship tuitions rise. On the other hand, students with low SAT scores and low levels of academic preparedness and motivation are more likely to drop out or not enroll at all. The large center of the American undergraduate student body—those from middle-income families who have average levels of academic preparation and motivation to succeed—tend to exhibit the inelastic demand that makes the high-tuition-high-aid policy “work” —that is, to produce higher levels of tuition revenue with no loss of participation. Such students tend to meet higher tuition costs by reducing living expenses or through increasing borrowing, and earnings from term-time employment.

The introduction by Ronald Ehrenberg and the two concluding chapters by University of Wisconsin system chancellor John Wiley (on why total privatization, even of public flagships, is not just undesirable but impossible) and California State University–Long Beach president King Alexander (on national themes and likely future trends) add to the value of this compendium. Overall, a little more material on the national scene and future directions and a little less material on the recent state histories might have been a better balance.

The long-term trend is unmistakable: public revenue support of public institutions of higher education is down dramatically, whether measured by significantly lower inflation-adjusted contributions to per-student instructional costs, by the declining percentage of state budgets devoted to public higher education, by real losses in the proportion of faculty who are full-time tenured or tenure track, or by average undergraduate indebtedness and increasing term-time employment.

The problem is not simply a political loss in the budgetary priority given to higher education, although that is a contributing factor. Rather, the problem seems to be a long-term perfect storm of coinciding factors: escalating per-student costs, escalating enrollments, limitations on state tax revenues and a myriad of compelling competing claims on these limited revenues, state politics that are dominated by a well-grounded fear (on the part of both political parties) of raising taxes, a deep suspicion of public employees generally and especially of publicly supported faculty, and a growing political ambivalence about the proportion of the young (especially those who are academically unprepared and uninterested) who should be supported in costly public research universities.

What this otherwise fine volume gives least attention to are the powerful cost-side drivers:

• high per-student undergraduate instructional costs, which are affected by teaching loads, class size, and the extensive non-instructional expenses that characterize the American public research university;
• the inflation-plus upward trajectory of these per-student costs, which is attributed to the very nature of instruction (within which the applications of technology and scale seem to add to, rather than diminish, unit costs);
• inflation in student living standards, in which living in old-fashioned student penury seems to have given way to a ubiquitous expectation of a car, a mobile phone, a room of one’s own (with television and an MP3 player), and holiday travel;
• inflation in degree-level job requirements, so that employment that used to require an associate’s degree now requires a bachelor’s degree, and so forth (a costly escalation that may have little to do with enhancing the productivity of labor);
• political insistence that very nearly all young persons need a chance (or two or three chances) at a bachelor’s degree or more at very considerable cost that is inevitably borne by some combination of taxpayers, parents, and students; and
• political fuss and recriminations about high taxes, the terrible burden on middle-class parents, and the soaring debt loads borne by students.

Despite this omission, the contributors to What’s Happening to Public Higher Education? provide excellent discussions of statewide trends in financing public higher education and of America’s increasingly conflicted support for higher education and increasing political mistrust of colleges and universities. They analyze the consequences of the resulting declining financial support upon instructional quality and on public tuitions and fees, and discuss the uneven and imperfectly understood impact of escalating prices on student enrollment behavior and on our disparate notions of social justice.

D. Bruce Johnstone is Distinguished Service Professor of Higher and Comparative Education Emeritus at the State University of New York at Buffalo and former chancellor of the State University of New York system. He specializes in the economics, finance, and governance of higher education in both U.S. and international comparative contexts.

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