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Budget Justice

Addressing the structural racism of higher education funding.
By Christopher Newfield

Greek column

If we think about higher education over the next thirty years, roughly 2021–50, what change would we like to see? What would a desirable and transformative higher education system look like? When I ask myself that question, I see three threshold features.

The first feature is funding to achieve mass quality and cross-racial equality of educational outcomes. Funding would be equalized—increased—with the proviso that revenues would go to colleges and universities according to the educational and research requirements of their students and faculty, such that institutions with more students from precarious or marginalized backgrounds would likely receive more public funding per student, in a reversal of today’s practice. Colleges would have sufficient funds to upgrade facilities, create new interdisciplinary areas of study, and combine qualitative and quantitative skills, so that graduates of community colleges would have knowledge and capabilities roughly comparable to those of students at Reed, or Duke, or Bowdoin at the end of their sophomore years. This would help undermine the scramble toward premium-brand diplomas that reduce BA degrees to positional goods, which is rotting the sector.

The second feature is funding by the whole society through the tax system rather than through student tuition and debt. Graduation would be debt-free, which as a matter of practical budgeting would mean that associate’s and bachelor’s degrees would be tuition-free. Financial aid would be applied to cover nontuition costs of attendance.

The third feature is democratic self-governance of colleges and universities. Presidents and senior administrators would be elected or selected by students, faculty, and staff. Governing boards of trustees would either be abolished, as relics of a bygone theory of natural aristocracy, or retained but consulted only for their subject-area expertise in finance, insurance, law, media, capital-projects development, public administration, and similar specialties.

These changes would abolish three scourges of today’s higher education system: its function as an engine of inequality, starting with the inequality of learning, which has worsened as a result of this century’s practice of measuring and managing rather than funding it; the privatization of core revenue streams that created the student debt crisis; and top-down, often autocratic governance that blocks collective deliberation and decision-making about complex problems.

It is essential to understand that each of these three changes depends on the other two. Neither major political party has any incentive to equalize funding or even increase it much at the bottom end (feature 1). Politicians, executives, and college presidents don’t favor reversing privatization just because it would help learning, research, and student finances, since taxes would go up and states would have to pay for the share of social benefits now funded by students (feature 2). And neither of these features will change without much greater institutional and political power for educators (feature 3). But self-governance on its own won’t fix anything: many tenured faculty members have come to equate public funding with austerity and decline and often support tuition hikes, so only state commitments to mass quality would wean them from the competitive pursuit of self-interest in a neoliberal scramble for ever-scarcer resources. All three features need to be developed together.

In short, to get out of the current mess, we must be very ambitious. In this article, I focus only on the first feature, funding for equitable educational outcomes. I will make one suggestion for the third, self-governance, at the end.

Two Booms in Attainment

To help structure this ambitious vision, let’s first see how we got here. We can tell the story of US postwar higher education as a tale of two attainment booms, but with different social profiles.

From 1960 to 1990, according to data reported by National Center for Education Statistics (NCES), the percentage of white people between the ages of twenty-five and twenty-nine with a bachelor’s degree more than doubled, increasing from 11.8 percent to 26.4 percent. Black degree attainment increased even faster in this same age group but from a much lower base (5.4 percent to 13.4 percent). By 1990, African Americans had passed the level of BA attainment that white people had achieved in 1960. Still, an increase in attainment of 145 percent was good, and certainly moving in the right direction. (Asian American/Pacific Islander [API] students and Indigenous students are missing from these NCES data.)

Another feature of the first attainment boom is crucially important to understand: its whiteness. In 1976, halfway through the first period, according to NCES data, the white share of bachelor’s degrees was 89.5 percent: nine of every ten degrees went to a white student. The Black share was 6.5 percent, with the Latinx and API populations earning the very small shares of 2.1 percent and 1.5 percent, respectively, and the Indigenous share staying well under 1 percent. College professors now in their sixties, mostly still working today, began their advanced education in an overwhelmingly white college environment.

By 1990, the white share of BAs was still over 85 percent. In other words, the first boom period successfully expanded BA attainment from one-tenth to about one-quarter of the under-thirty population, but without a noticeable reduction in the overwhelming whiteness of the graduating class. Today’s midcareer college professors, just turning fifty, emerged from a higher education sector that was essentially as white as that of their senior colleagues.

The second boom did see a multiracial expansion. From 1990 to 2019, where the NCES data stop, white people increased their bachelor’s-degree attainment rates another 70 percent, from 26.5 percent to just under 45 percent, or nearly half of the population. African American attainment grew 117 percent, from 13.4 percent in 1990 to over 29.1 percent today. Latinx attainment jumped from 8.1 percent to 20.6 percent, a significant 154 percent increase. API students (first appearing in these data in 1990) increased attainment by 59 percent, from a very high 43 percent in 1990 to 68.3 percent in 2019. The boom did not benefit Indigenous students, whose bachelor’s-degree attainment actually fell from 15.9 percent in 2000 to 13.6 percent in 2019.

The second boom ended the white near-monopoly on bachelor’s degrees. White people still earn two-thirds of degrees (63.2 percent), but they began to share the graduation platform with the rest of the country. The Latinx slice of bachelor’s degrees quadrupled, from 3.5 percent to 14.2 percent. The Asian American proportion doubled (4 percent to 8 percent) and the African American share nearly doubled (6.2 percent to 10.4 percent). The degree share of Indigenous students started at 0.4 percent and reached 0.8 percent before falling back to 0.5 percent. The second boom, in other words, increased attainment for everyone other than Indigenous peoples. It meant that a bachelor’s degree would no longer give white economic interests an edge over those of all others. This may explain some of the dampening of white perceptions of the “value of a college degree,” at least as measured in a recent California poll.

But these belated improvements for Black and brown students were achieved on the cheap. The two booms diverged in another way: their material conditions. This divergence is no doubt familiar to Academe readers as their lived experience. Again, NCES data paint a clear picture: The 1960–90 period saw consistent state funding increases, from around $5,000 per student per year to $8,000, with some declines as exceptions to that rule. The next three decades, 1990–2020, saw three multiyear funding reductions coupled with subpar annual gains in positive years. Per-student state and federal funding made it past $8,000 to $9,000 before falling back again. From 1990 to 2015, state funding per student fell by 20 percent. It was still about 6 percent short of 1990 levels in 2019, before the COVID-19 pandemic induced a new downward spiral.

This dramatic decline would have been bad enough were costs flat, but of course they are not. Costs of advanced research equipment, costs of student services, and costs associated with educational quality all rise faster than inflation. Chronic public funding shortfalls, both state and federal, have driven the national crisis in student debt that the new Biden administration will be under sustained pressure to address. Cuts are also the driver of a slow crisis of educational quality.

The state higher education finance data compiled by the State Higher Education Executive Officers Association show only averages within each state. Some specific patterns can be hard to see; case studies, where data can be disaggregated, can show the net revenues that are what control actual operations.

The California Example

In my own efforts to understand the material circumstances of the university to which I devoted the bulk of my career, I worked with a faculty senate group, the University Committee for Planning and Budget, which developed a few measures to identify larger economic patterns. One is to compare the University of California’s funding with state personal income, which indicates the economic health of the broader public. Another is always to tie revenues to student enrollment. This measure is important in a state where college enrollments often grow quickly. A third practice is to look at net rather than gross revenues. This is a basic point—we should focus on what is left over from tuition income after financial aid, for example—but it is almost never practiced in higher education communications. Still another useful practice is to add up full university costs. If the state used to pay for the employer share of a retirement plan and it stops paying, then the university’s net revenues—money that it can use for paying instructors, support staff, and so on—will be less even if the gross revenue is the same.

Let’s see how this works. In California, Democrats have had majorities in both houses of the legislature for nearly twenty-five years and held the governorship throughout that period except during Arnold Schwarzenegger’s seven-year stint. Democratic Party dominance has meant neither strong funding for the state’s very large population of underserved students nor notable interest in the needs and viewpoints of students, staff, and faculty. Why not? Because the centrist, austerity-minded Democrats who control fiscal policy—led after 2010 by Governor Jerry Brown—split budget narratives from budget justice. Fiscal talking points are therefore disconnected from institutional realities as they send their signals of public spending under control.

When prompted by Brown in early 2011 to cut the UC and the California State University systems as deeply as Schwarzenegger had, Democrats found a justification: they argued that UC had made a profit on the previous cuts by hiking tuition.

This assertion didn’t fit with my experience of my UC campus or that of anyone on any other campus I knew. We had all lived through the impoverishing of the educational core, expressed in the loss of department staff, the continuous deterioration of facilities, the failure to upgrade technology to match improvements in the commercial worlds our students were to enter, and the increased use of underpaid non-tenure-track faculty. These familiar effects of public-sector austerity didn’t fit with the politicians’ storyline that we’d made a killing on tuition during a crisis.

The legislative claim that UC had hiked tuition and thus increased profits depended on using gross revenue totals. The University of California returns one-third of gross resident tuition to financial aid. After “return-to-aid” is deducted, the net revenue is two-thirds of the figures used in meetings to describe UC’s tuition wealth. Politicians were wrong about the net tuition revenue that campuses could actually put to use.

Budget details bore most people silly, but they directly affect intellectual and political goals. While the state was cutting or eroding the general fund allocation, it was also forcing the university to cover costs previously picked up by the state. The two biggest cost areas have been capital projects and the part of total compensation known as the University of California Retirement Program.

In contrast to previous practice, UC now has to pay for its own buildings with a combination of university system borrowing, campus borrowing, private donations, and internal operating revenues. The state acknowledged this reality with legislation that allows campuses to use state operating money to pay interest on debt. That isn’t additional money, just permission to use operating funds for debt that the state used to pay. Familiar results include chronic classroom overcrowding, inadequate office and research space, widespread campus disrepair, and reduced net operating funds.

Figure 1 sums up the situation in four lines. Start with the middle line, in blue. This is a benchmark that reflects the annual growth in state per-capita income. Were enrollment growth and inflation both zero, and were university funding to rise in step with people’s actual income, no faster and no slower, UC’s state general fund growth would track the blue line. Actuality appears in the red line. State government, dominated by Democrats throughout this period, gave UC a decreasing share of overall state income.

Of course, neither enrollment growth nor inflation was zero. California’s high school population grew steadily, and so did public university enrollments. Consumer price inflation was low but nontrivial. (Real educational costs grow faster than the consumer price index, since education is not part of the manufacturing sector and also needs to increase quality steadily to meet new challenges in society.) I used the yellow line to show the revenue that would cover both inflation (measured here by per capita income growth) and enrollment growth. After twenty years of Democratic underfunding, UC received a bit under $4 billion from the state but needed, in order to reproduce corrected 2000–01 per student funding, about $10 billion. “UC 2020” had about 40 percent of the equivalent state funding received by its turn-of-the-century version.

But didn’t tuition hikes fix all that, as state politicians claimed? No. I’ve already noted three major expenses that must be subtracted from the gross amount—financial aid, employer pension costs, and capital projects. One plausible calculation formed the green line. It shows the highest net revenues of all the methods I tried and reflects a “best case” for the state’s funding practice.

Even adding in tuition hikes, UC’s revenues did not keep up with the income benchmark, much less with enrollment growth. In some years, net core educational revenues are close to the flatlined state general fund allocation. Even this best-case version of net revenues has the UC system functioning at about 60 percent of its 2000–01 funding. This is quite literally the meaning of the phrase “paying more to get less.”

This budget story is almost completely invisible to members of the general public. They are rightly unhappy with high tuition and high student debt. They would be even more unhappy if they knew that high tuition coincides with lower net revenues, fewer resources, and lower quality for teaching and research. But they aren’t unhappy about that because they don’t know anything about it. Public universities generally deny that budget cuts have hurt quality. But this denial is an exercise in brand management, not in budget education.

The social meaning of the budget story is even less pleasant than this. The second attainment boom got underway during Bill Clinton’s presidency and, in California, Pete Wilson’s governorship. Wilson built 1980s immigration anxiety into a defining racial wedge issue on which he planned to run for the Republican presidential nomination in 1996. He passed ballot propositions denying public services to undocumented residents and banning affirmative action. He and his associates made a continuous fuss about things like the number of Latinx students at UC Berkeley with 3.5 high school GPAs. The 2000–20 period we’ve just reviewed was conditioned by Wilson’s dog-whistled white nationalism and was an important step on the road to the Republican embrace of Donald Trump. And yet, as figure 2 illustrates, when the Democrats started their still-unbroken one-party rule of the legislature in the late 1990s, they did not break the racialized funding pattern in the state universities that Wilson had launched. As white enrollment goes down, the state reduces net funding. The strong Democratic majority has defunded the UC system in direct proportion with its decline in white student share—except when the Arnold Schwarzenegger cuts and Jerry Brown cuts, also bipartisan, made it even worse.

Whatever their intentions, Republicans and Democrats collectively gave less state support to the diverse UC than to the white UC on which both postwar parties had happily spent. They yoked the second boom’s key benefit of major gains in BA attainment for students of color to steady funding cuts that saved money for the state’s white voting majority.

As the Biden-Harris administration settles in, it’s worth remembering that the biggest blue state’s higher education policy has been a textbook case of the systemic racism that became a national byword in 2020.

How Should Educators Respond?

Keeping the next thirty-year cycle in mind, faculty groups—senates, certainly, but also subcommittees in academic departments or self-appointed interested parties—can respond to these trends, first, by conducting research and generating findings similar to, better than, or counter to the ones I’ve offered here. Structural racism is both encoded into American institutions and allowed to stay there because the public analysis, the data, and the narratives that could help people understand what is happening aren’t put into circulation. A country with nearly 4,500 higher education institutions has two general publications devoted to the sector. California, with a population of nearly 40 million, has perhaps a dozen journalists who regularly cover higher education. As newsrooms have lost half their journalists since 2004, campuses have converted staff newspapers, once run by professional journalists, into marketing sites oriented toward donors and branding. Such publications would never run articles on the deferred-maintenance crisis worsened by the construction of unfunded new buildings, or on unjust research cross-subsidies, or on the way “weeder” courses in STEM majors push out first-generation students and students of color. The University of California has nearly 23,000 faculty members of various kinds, 155,000 staff members, and exactly four sources of independent employee commentary, all of which take the form of blogs (Michael Meranze and I have run one of them, Remaking the University, since 2008).

In other words, it’s not as though faculty fought the law and the law won. As a body, they haven’t fought in the first place, at least about the funding of their institutions. This passivity must end. The good news is that it easily can. Faculty senates are good at reacting to administrative initiatives. They should con- vert the bulk of their energies to the real skill of their members—conducting independent research, in this case on budgets and their educational effects.

This research should be accompanied by efforts to set standards and targets that reflect faculty educational ethics and goals. For example, faculty senates could pass resolutions saying, “The university of today, with a minority-majority student body of which we are very proud, should receive the same net funding per student as it did when it was majority white.” Senates should identify plausible timelines and clearly define and then advocate incessantly for the goal of budgetary racial justice. They should promulgate their findings to the press, to students, to administrators, and to parents. They should consistently pressure government relations officers, the governing board, and everyone else within reach to take their findings seriously and find a political path to the funding fix.

Sometimes faculty groups have set standards and targets based on equity goals. A few years ago, a California group called Reclaim the Master Plan wrote a report identifying the costs of making all of California’s public higher education tuition-free, while also replacing eliminated tuition revenues with state revenues. I was one of the report’s authors and experienced the process as a positive example of collaborative work for budget justice: a range of faculty and staff members from different public universities worked together to define what such justice would cost; wrote a report about it; and then circulated the report to administrators, politicians, legislative staff, and the wider public as well as they could.

The website resulting from this research is head- lined, “A College Degree without the Debt.” Under “What’s the Problem,” it states, “Universities looted: Over the last fifteen years, California’s political leaders have taken $57 billion in public investment away from higher education.” The conclusions are clear and direct, and the explanations are accessible. The report’s punchline, The $66 Fix, showed that making the three state systems free for around 2 million students, while also increasing total educational revenues on each of 145 campuses, would cost the median taxpayer $66 per year. This report quantified budget justice and earned endorsements from some unions while trying to get support from the senior administrators in each system. In general, these senior administrators oppose tuition cuts and will not work seriously on rebuilding public funding. As has happened in the past, change for today’s students and faculty will occur in spite of their general opposition.

The main shortcoming of this report was that it was not housed within a large organization that could bring it to the attention of sympathizers in politics and business or elicit wider K–12 advocacy. A related problem was that it wasn’t accompanied by a raft of similar reports quantifying the low cost of proper public-good funding of college. By contrast, there are many reports that recommend tweaking the existing system of high tuition and financial aid—goals that stay well within the known Obama-Biden window of policy possibility. Unfortunately, that narrow policy range has produced the current crisis.

A new funding framework for a transformative 2021–50 period can also come from individual researchers. I’ve tried to do a bit of this myself. I’ve long been worried that free college was being promoted in a cheap version that would cut tuition to zero without replacing its revenues with federal and state funding, which would further impoverish public higher education, in contrast to the methods of The $66 Fix.

How much money should colleges spend on each undergraduate? That depends on a lot of factors, but the discussion needs starting points to get it moving. For one analysis, I picked a private university that achieves a good graduation rate for a student population that is overwhelmingly African American and Latinx—Trinity Washington University, whose long-time president, Patricia McGuire, is also an outspoken advocate for the social justice mission of higher learning and has redirected a traditional Catholic women’s college along these lines.

To get a budgetary starting point, I calculated that Trinity Washington University’s expenditures are around $20,000 per student per year, which is much more than typical expenditures at low-cost public colleges. I found that, in order to meet the Trinity Washington standard from current levels of expenditure, the federal and state governments combined would need to spend an additional $11,000 per student at two-year colleges and an additional $6,000 at four-year colleges, on top of what states are already spending. The annual bill to fund an initial group of 1,100 low-cost colleges would come to $48 billion in new money.

Adding this kind of (fairly modest) number together with others—estimates for extending the investment to all public colleges and universities and to the less affluent private ones and for abolishing current student debt—shows that reconstructing higher education is as affordable as any other national priority. It just needs to be made a priority. The needed political work includes ongoing grappling with a racist culture that naturalizes disparity. But other necessary work involves detailed political economy of higher education, tied to educational practice in the framework of budget justice.

Some work like this is indeed happening. It is done by individual scholars, by faculty senate committees, by union policy analysts, by specific advocacy groups, by research centers, by think tanks. It just isn’t done enough—and what is done is not sufficiently aggregated. In addition, its standards haven’t been taken on by faculty, staff, and students as reconstructive foundations—as the basic budget parameters for a future material basis for reconstructing student and intellectual life.

A major reason for the rarity of faculty work on budget justice is that university administrations treat budget data as their confidential property. Such data flow down on a need-to-know basis, as though they were a trade secret or a question of national security. Rank-and-file professors are excluded, but so is much of the administration. The academic provost may not know the budget of the vice president for administration. Deans may not know the budgets of their kindred deans; department chairs know their department budgets but not generally how they fit with other departmental budgets in their division. In my experience, deans may systematically misinform their chairs as a way of heading off conflict, indignation, or demoralization—or the exposure of structural injustice. Questions of fairness and effectiveness are throttled in the cradle. The terrible cost of this autocratic tradition is that the people with direct experience of instructional and research quality are unable to connect this educational quality to its material condition—their departmental and their campus budgets.

There’s a simple cure for this: converting frequent verbal homages to “transparency” into open budgeting. This idea pops up occasionally in the corporate world, and is pursued by “people’s budgets,” but never survives the dead weight of institutional politics. Changing this won’t be easy to do—many academic allocations are bound up in personnel actions such as retention cases that will continue to be shielded by legal confidentiality. But the basics should be provided:

  1. an all-funds campus budget, including revenues and expenditures;
  2. the all-funds budget disaggregated into academic divisions and departments, so that divisional and departmental data can be compared; and
  3. workload-based revenues and expenditures, also department by department, so that teaching income counts as much as does research income.

Much of the data resulting from such provision will come as a surprise to people seeing them for the first time, meaning pretty much everyone. There will be shock and anger, shouted and smoldering hostility, and a great deal of political conflict. But structured and sustained discussions will help this pass. In the medium and long run, open budgeting would support informed discussion of options and strategy across a much wider segment of the institution than can participate now.

It is particularly important that this discussion happen in academic programs and departments. Ideally, it would include students and staff. To ensure a basic level of understanding, a share of department meetings should be converted into ongoing seminars on institutional operations. The result would be proper financial information for the group in the university that can best describe the gap between what is and what should be happening in the classroom or lab. A department’s highly advanced subject-area experts would be able to join their knowledge of teaching and research quality with knowledge of how quality is financed. This will improve departmental decisions, but it will also allow faculty members and students to work in a focused way on pulling as many resources as possible back to the university’s core. Departments are where abstract resource issues can be translated into real educational effects by working instructors and then explained to administrators and the public.

The first challenge of the next thirty years is to complete the progress toward racial equality in bachelor’s degrees that happened during the last attainment boom. Only a foundation of budget justice will enable racial equality to happen in the educational mode that matters—as equal quality of teaching and research.

Christopher Newfield is the author of a trilogy of books on higher education, the most recent being The Great Mistake: How We Wrecked Public Universities and How We Can Fix Them. A distinguished professor emeritus at the University of California, Santa Barbara, he is director of research at the Independent Social Research Foundation in London. His email address is cnewf@ucsb.edu.

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