Declining financial resources make for difficult decisions in U.S. higher education

    The National Center for Public Policy and Higher Education (NCPPHE) released its annual Measuring Up report yesterday, which examines the strength and progress the U.S. system of higher education relative to the systems of thirty democratic countries across the world. Using indicators including overall enrollment and the percentage of young adults holding associates degrees or higher, the study concluded that the United States has slipped in overall competitiveness with international systems.
    "Despite our historical successes in higher education, the preeminence of many of our colleges and universities and some examples of improvement in this decade, our higher education performance is not commensurate with the current needs of our society and our economy," said James B. Hunt, Jr., the chairman of the NCPPHE's Board of Directors, in a statement released alongside the report.
    The findings of the report are a sobering addition to the host of worries about the U.S. higher education system, including its high costs and disparities in access. As the economy continues to behave unpredictably and schools both private and public face declining resources, one state university system is showing signs of the kind of strain that may weaken the ability of individual systems to close the gaps indicated by the report.
    Two weeks ago, the University of California system announced that it would be cutting enrollment by 10,000 students in light of budgetary problems. A press release accompanying the announcement explained that a recent $66 million dollar mid-year funding cut, coming after a $33 million dollar cut over the summer, had forced the system to impose an enrollment cap of 343,000 students for the fall 2009 semester.
    Associate professor of economics David Garman, whose field of expertise is the economics of higher education, explained that this action is rooted in a simple problem that all colleges face.
    "Tuition does not cover expenses, and so colleges lose money if it is not made up somehow," Garman said. "For state colleges and universities, that money has to be made up by subsidies from the state."
    Garman said that the University of California system's announcement is a final and extreme step after a long series of budget cuts.
    "Over the past 20 years, most states have cut subsidies to colleges and universities. There's not a lot of slack in adjusting to new budgets," said Garman, indicating that the cuts are not a direct response to any single cut or circumstance, like the current economic crises.
    Given declining resources, the system faced a tradeoff between education quantity and quality.
    "At some point, the administration has to draw a line in the sand and say that if we keep accepting students without adequate resources, we're going to be doing a poor job of educating all of our students," Garman said.
    Dean of Admissions Lee Coffin is concerned that systems like that of California could be entering an unfortunate cycle.
    "Many families will explore state universities as a more affordable option during the down economy, but those options may become more limited as a result of the same economic conditions," he said.
    Garman said that schools have several options when responding to budget cuts, including increasing class sizes, cutting learning resources and degrading the quality of students' education. "At some point, they have to ask if they are delivering what they've promised to deliver."
    Garman believes that the enrollment cut is a short-term response to a political problem.
    "I think the administration [that] considered this and the president who proposed it are trying to take a political stand in defense of higher education," he said.
    According to Garman, though, the reality of the system's decision is that it may have sacrificed enrollment while keeping other programs, like athletics and graduate studies, afloat. "[Athletics and graduate studies] are all big, expensive programs, and I'd like to see more debate and discussion about what academic priorities are."
    Garman said that while any state facing cuts in education budgets may find itself having to take steps similar to those taken in California, private colleges face a different set of financial issues.
    "Private schools that rely heavily on endowments are going to experience a drop in revenues," Garman said. "But since private schools have experienced growing endowments over the past 10 years, they're not as starved as public colleges and universities are. It's possible that they can ride this out."
    Coffin said that Tufts will not be forced to change enrollment for the 2009-2010 academic year.
    "As usual, we are planning to enroll a freshman class of 1,275 to 1,300, as well as 50 transfer students, for the fall of 2009," he said, adding that the number of transfer students will be adjusted according to the number of returning upperclassmen.
    Garman said that the fact that Tufts' budget is based largely on tuition funds, which will not fluctuate as endowments or state budgets have, will lend some stability to Tufts as it navigates the financial crisis.
    While enrollment at Tufts will remain stable, Garman says that declining resources, both as a result of the recent economic crisis and of the long term public funding decline, will force all colleges and universities to take a hard look at the best use of their resources.
    "This is a critical juncture for colleges and universities to examine their priorities," he said.