The “Public” Universities Will Never Become Totally Private

Why the “Public” Universities Will Remain Partly Public

In the previous blog post, we provided evidence for why the financial privatization of public higher education since 1984 was unavoidable—due to the aging of the American population.

And while those demographic forces still exist—meaning that for the foreseeable future, a majority of voting households will still not be able to benefit directly from public higher education, and won’t want their taxes raised to send someone else’s son or daughter to college—those same demographic forces are not great enough to generate the political decisions necessary to drive the State share of PASSHE’s operating budget down to zero percent, to make the “public” universities totally private.

As shown previously, one obstacle to zero state funding is Section 14 of the Commonwealth of PA Constitution: “The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth.” (Emphasis added.)

But the Constitution isn’t the only obstacle to making the “public” universities totally private, financially speaking.  There are at least two others as well:

Growing Public Pressure to Maintain At Least Some Level of State Subsidy

One of the key ways in which public and private universities differ is the way in which they are funded.  As the name implies, “public universities” get direct state appropriation, which allows them to provide a subsidized education to their students, meaning that those students face a lower tuition—thanks to the subsidy—compared to private universities with no subsidies that must then charge higher tuitions. To students and parents, a key attraction of public higher education has always been the “tuition bargain.”

But as state subsidies to public higher education plummeted over the past 30 years, public university tuitions have skyrocketed to compensate for the loss. Specifically, as the State share of PASSHE’s budget fell from 63% to 27%, the tuition share grew from 37% to 73%! 

Although the above percent changes are effective in showing how our elected officials have shifted the public university burden away from the State and onto the Students, the shift in constant 2013 dollars per FTE student is even more telling. Between 1984 and 2013, State appropriation/FTE Student was cut in half (from $7,386 to $3,679), while the Tuition/FTE more than doubled (from $4,347 to $9,864)!

The tuition bargain that public higher education once represented has eroded even more quickly than have the State’s subsidies.  One obvious consequence of that erosion has been the explosion in student loan debt in recent years, the total of which now exceeds the sum of all credit card debt in America!  

Should the state subsidy be allowed to shrink to zero, the student loan debt bubble may burst, leading to massive loan defaults together with the prospect of serious social unrest.

The potential magnitude of that unrest could be huge simply because the numbers are huge.  Recall that nearly 80% of the 21 million students who attend college in America today attend public universities. 

If shrinking state subsidies and their accompanying tuition bargains were to disappear, What would public university students do?

It is clear that, under a scenario with zero State subsidies, the tuition bargain would also disappear, and millions of public university students who are already struggling with too-high tuitions and pre-existing student loan obligations, would be forced out of the college market entirely.

Fear of such an outcome suggests that some small level of public university subsidy will always remain. 

The Funding Patterns of the Other States

The State Higher Education Executive Officers Association (SHEEO) has published a report for the 2012 fiscal year which lists the share of State support—as opposed to net tuition support—that is funding the public universities across America.  That report lists a number of critical observations, including:

·         The State share of PASSHE’s budget in 2012 was 30%.  (By 2013, it had fallen further to 27%.)

·         45 states provided a larger share than PA, and only four (4) states provided a smaller share.

·         The state with the smallest share was Vermont with 14.9%.

·         The state with the largest state share was Wyoming with 86.2%.

·         The average across America was a state-share of 53%. 

Note that: The average share of State support for the 50 states was 53%; the lowest share of State support recorded was 14.9%; and only one state out of 50 fell below the 15% threshold for State support.  Taken together these facts suggest that 12% to 15%  might represent a future “floor” with respect to the lowest adequate percent of public support for public higher education in America.