blueollie

Has Government cut higher eduction funding?

I found this Paul Campos article interesting :

The conventional wisdom was reflected in a recent National Public Radio series on the cost of college. “So it’s not that colleges are spending more money to educate students,” Sandy Baum of the Urban Institute told NPR. “It’s that they have to get that money from someplace to replace their lost state funding — and that’s from tuition and fees from students and families.”

In fact, public investment in higher education in America is vastly larger today, in inflation-adjusted dollars, than it was during the supposed golden age of public funding in the 1960s. Such spending has increased at a much faster rate than government spending in general. For example, the military’s budget is about 1.8 times higher today than it was in 1960, while legislative appropriations to higher education are more than 10 times higher.

In other words, far from being caused by funding cuts, the astonishing rise in college tuition correlates closely with a huge increase in public subsidies for higher education. If over the past three decades car prices had gone up as fast as tuition, the average new car would cost more than $80,000.

Some of this increased spending in education has been driven by a sharp rise in the percentage of Americans who go to college. While the college-age population has not increased since the tail end of the baby boom, the percentage of the population enrolled in college has risen significantly, especially in the last 20 years. Enrollment in undergraduate, graduate and professional programs has increased by almost 50 percent since 1995. As a consequence, while state legislative appropriations for higher education have risen much faster than inflation, total state appropriations per student are somewhat lower than they were at their peak in 1990. (Appropriations per student are much higher now than they were in the 1960s and 1970s, when tuition was a small fraction of what it is today.)

As the baby boomers reached college age, state appropriations to higher education skyrocketed, increasing more than fourfold in today’s dollars, from $11.1 billion in 1960 to $48.2 billion in 1975. By 1980, state funding for higher education had increased a mind-boggling 390 percent in real terms over the previous 20 years. This tsunami of public money did not reduce tuition: quite the contrary.

Campos goes on to point out that colleges are spending a LOT more on administrative overhead. Now there are many reasons for this; some include technology (someone needs to administrate the computer systems), mandates (all of the “learning disabled” students who are entitled to “accommodation”), helicopter parents and, yes, competing for students to stay in business. Obviously, this is an incomplete list.

But Jordan Weissmann published a counterpoint:

To his credit, Campos is at least gesturing towards an important point. Even in years when states increased their per-student education spending, public colleges still raised their prices faster than inflation. And while schools tend to up tuition when legislators cut their budgets, they don’t usually lower it when the subsidies get restored (see the graph below1). Instead, they lock in the extra revenue so that they can spend more per undergrad. Where has that money gone? Here, Campos is more on point. As he writes, universities are spending an increasing share of their budgets on administration. In other words, the bloat really has grown in higher ed, and it’s costing students.

But that doesn’t change the fact that government cutbacks have contributed to the problem. There have been moments when university profligacy has been the major driver of tuition increases. At others, contracting state support has played a critical role. This has especially been the case in these days of post-recession budget austerity. Depending on who’s calculating, states are giving schools somewhere around 25 to 30 percent fewer dollars per student than they were 15 years ago. And someone has had to make up the difference. Namely, college kids.

Now this gets to the crux of the disagreement. When you say “spending on higher education is up” or “spending is down”, what exactly do you mean?

Now of course, we have to adjust for inflation. But do you mean: “amount spent” in terms of dollars? (Campos does) Do you mean “percentage of GDP” or “percentage of budget”? Do you mean “per capita” in terms of a state’s population or in terms of “per student”? And if you mean “per student” do you mean “dollars per student” or “percentage of expected expenses per student”? Which measure are you using and why are you using that one?

To give the Devil His Due: Mitt Romney explained this principle very well in his book when he discussed “defense spending”.

April 8, 2015 - Posted by | economics, economy, education, social/political | ,

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