Budget problems at public colleges and universities have been published in the press for the past year and a half.  Approximately a year or so ago, I decided to collect articles about the situation and organized them on this blog by state under the title Higher Ed’s Economic Challenges.  As the recession continues to impact the value of residential and commercial real estate (or was it the real estate that impacted the recession?), many states’ tax collections are below the level of three or four years ago. 

Unlike the federal government that is allowed to print money, most state constitutions have a balanced budget requirement.  When taxes decrease, expenditures must decrease as well.  K-12 education and Medicaid are two of the largest mandated expenditures at the state level.  Higher education has never been a mandated expenditure at the state level, so when state budgets have to be cut, higher education has usually been one of the first areas impacted.  Some states in some years increase student tuition rather than cut their higher education expense budgets.

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I read an editorial from the Pasadena, California Star News entitled “Higher Ed Needs a Redo.”  The article discusses the premises, philosophy, and outcomes of California’s Master Plan issued in 1960 and states that it’s time for a revision to a document that is approaching 50 years old.  The article mentions the 30+ percent tuition increase at the University of California and the tuition increases at the California State University System (CSU) that have reached the point where students pay more in tuition than the state pays.  The writer notes that this is a long way from the original Master Plan which guaranteed a free education to anyone qualified for admission.   The editorial notes that during the recession of the 1990’s, CSU’s enrollment decreased by 50,000 and it took the state years to recover.  Lastly, the California House and Senate have agreed to meet to discuss a revision of the Master Plan on its 50th anniversary.  The timing is fortuitous given the budget crisis.

As I read this article, seemingly the 500th that I’ve read about California’s crisis in higher education funding, it reminded me of the data available through the annual State Higher Education Finance report issued by the State Higher Education Executive Officers (SHEEO).  On August 9, 2009, SHEEO issued their sixth report which is for FY 2008.  I highly recommend this report for anyone interested in understanding the funding of public higher education in America.  What’s important to note about this report is that it shows positive progress in higher education (since it’s for the 2007-2008 funding year) but notes that 2009 and 2010 will probably be different given the impact of the recession.  Supplementary tables are maintained by the State Higher Education Executive Officers (SHEEO) on their website at www.sheeo.org.

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It is hard to have a day go by where there is not at least one article in the major media about the high cost of college.  With the recession and its impact on state and local budgets, tuitions are being increased at many public colleges and universities and some institutions are reducing the number of students attending in order to cut costs for next year.  Unfortunately, these actions are not increasing the access and affordability of higher education in the United States.

While access and affordability of higher education have been stated goals of the Spellings Commission, the National Center for Public Policy and Higher Education (NCPPHE) in its annual Measuring Up reports, President Obama, and others, the recommendations for improving affordability are few and far between.  The Spellings Commission stated that colleges need to think more like entrepreneurs and examine partnerships and distance learning as options to improve access and cost.  Many in traditional higher education panned the Spellings Commission’s recommendations although little was said that had not already been identified by many of the other public policy organizations like NCPPHE, State Higher Education Executive Officers (SHEEO), Western Interstate Commission for Higher Education (WICHE), and The National Center for Higher Education Management Systems (NCHEMS).  This past January, I wrote an article for this blog about a survey of college presidents entitled The Iron Triangle: College Presidents Talk About Costs, Access, and Quality.  I was aghast that during a period of economic downturn, most of the presidents surveyed stated that the only solution to improving access was to provide them with more funding at the federal and state levels.  I wonder how many entrepreneurs have succeeded by waiting for more money to pay for a product rather than designing the product to meet the ability of their customers to pay for it.

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