Sifting thru the financial rubble: College Impacts & College Selection

College Search & Selection
1

<p>America’s financial crisis has had/is having/is going to have massive implications for colleges all across the country. Consider the following:</p>

<li><p>The last publicly-available endowment measurements were for 6/30/08. Clearly values for most endowments will be down 25-50% during this fiscal year. For colleges that depend on their endowments for some aspects of their ongoing operations, the negative effect is clear and immediate.</p></li>
<li><p>Financing costs of colleges have increased over the past year, putting further strain on college budgets. Furthermore, lots of building projects in recent years have added to the ongoing financing burden that many colleges are carrying.</p></li>
<li><p>For public universities, state budgets remain under extreme pressure with obvious negative consequences for state contributions to its public universities. California is the most prominent example, but economically-challenged states like Michigan (highest unemployment in the USA at 12.9%) will also be negatively impacted.</p></li>
<li><p>Alumni giving and overall charitable support will undoubtedly decline for most universities. Some colleges use these contributions to help fund some of their annual costs.</p></li>
<li><p>Demographically, the number of students graduating from high school and clamoring to attend colleges has never been higher. This creates further potential stress on the delivery of a quality academic experience.</p></li>
<li><p>Colleges with large graduate programs, particularly in the sciences/engineering/medical fields have high fixed costs. These will be difficult to cut without having real impact on each program’s faculty/facilities/students/research output. </p></li>
</ol>

<p>So what does this all mean for colleges and prospective students? The consequences are far-ranging and will further differentiate the top schools with the best finances from those that have weaker positions and which may be further imperiled by further financial weakness.</p>

<li><p>Class sizes will expand at many colleges due to the combination of more students, likely fewer faculty, and more use of TAs. Some speculate that the changes will even occur at some highly-rated LACs which would mean an important shift in their cultures and their differentiated product.</p></li>
<li><p>Facilities will increasingly differ according to institutional wealth and its institutional priorities, ie, research focus vs teaching focus. Colleges under financial pressure will have less room for new and /or expanded facilities and student amenities like gyms, food options, single rooms will be among the first to go. Expect to see some schools adopt policies that don’t provide 24/7 services for many things that students now take for granted. Expect also to see some colleges renting some of their facilities to private businesses as a way to generate greater cash flow.</p></li>
<li><p>Staffing levels will contract with potentially important results for students. Faculty headcount will shrink, the use of TAs will increase, and the cuts in support services and administrative jobs could be ugly. In particular, things like student advising, career counseling, Study Abroad, Learning Disabilities support are all areas that will be under pressure. </p></li>
<li><p>Class availability will likely be affected as some courses will be cancelled or offered on a less regular basis. This could be problematic for some students’ graduating on time. Colleges will offer increasingly similar academic courses, but the delivery of these will be differentiated. </p></li>
<li><p>The cost of tuition will rise less quickly than in the past, but still higher education is seen by most as a “must-have.” The OOS public students could have it worst. </p></li>
<li><p>Financial aid will be less broadly available. Middle class families will be the hardest hit. Higher education in the USA will become less equitable for the first time in several decades. </p></li>
<li><p>Colleges will have to make more refined decisions about their academic missions. For example, not every flagship public will be able to achieve the role of a Top 20 research university.</p></li>
<li><p>Even college presidents will see major changes in their roles. For several decades, they have served as major fundraisers for their universities. While this won’t change, they will also have to add the role of being effective cost managers. </p></li>
</ol>

<p>My advice is, now more than ever, to learn the financial position of the colleges you are considering, the breadth of services that they now provide (in and out of the classroom) and the outlook for those programs/services in the future along with the other areas of concern noted above. I expect the differences that we see today in the delivery of the undegraduate academic experience to be even sharper in the years ahead.</p>

2

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</p>

<p>hawkette, you continue to peddle this anti-University of Michigan propaganda. The fact is, state funding of public universities varies widely by state. Most state universities get only a fraction of their overall operating budgets from the state, but that fraction varies widely. In some cases it’s as much as 40 to 50%, leaving the university extremely vulnerable if the state has fiscal problems (as almost all do right now). In the case of the University of Michigan, only about 7% of the university’s budget comes from legislative appropriations. Consequently the very severe fiscal problems of the state of Michigan will have only a very minor, almost trivial impact on the University’s fiscal situation—which is why the University of Michigan is one of only three public universities (the others are the University of Virginia and the University of Texas) that continue to enjoy the highest possible blue-chip bond ratings from both Moody’s (Aaa) and Standard & Poor’s (AAA), ratings that were just recently reaffirmed by the bond rating agencies.</p>

<p>[U-M</a> maintains top bond ratings](<a href=“http://www.ur.umich.edu/0809/May04_09/51.php]U-M”>http://www.ur.umich.edu/0809/May04_09/51.php) </p>

<p>The public institutions that will be hardest hit are those that are heavily dependent on legislative appropriations and are located in states with severe fiscal imbalances. These include public universities in California, Arizona, Nevada, and Florida.</p>

<p>As for private colleges and universities, the most vulnerable are those that are dependent on tuition for all or most of their operating revenue, because the economy will force more of their students and prospective students to seek financial aid, throwing their operating budgets severely out of whack, and the loss of even a small number of bargain-seeking students could prove devastating. Next most vulnerable, by my reckoning, are those that depend solely on tuition revenue and endowment payouts, as the latter will also be down significantly, not so much this year (2009-20101) as payouts are typically based on three-year moving averages of endowment assets, but in the next fiscal year (2010-2011) when shrunken endowments will represent two-thirds of the base on which endowment payouts are calculated. (The University of Michigan, by the way, wisely and conservatively uses a 7-year average of endowment assets to calculate its endowment payout, which means the payout in 2009-2010 and 2010-2011 will be down only slightly from 2008-2009 levels, and leaving plenty of time to recover the value of endowment assets before it puts any significant pinch on the university’s budget). </p>

<p>The top research universities are by and large in better shape than non-research or “research lite” schools because federal research dollars are actually expanding under the stimulus and the Obama budget. For the strongest research universities those funds can represent anywhere from 25% to 50% of total operating revenues, funding entire faculties and going a long way toward supporting central administrative services through “indirect cost recovery.”</p>

3

<p>Bc,
Money is a serious issue for colleges in America and the stresses mentioned above affect virtually every college in the land. These are broad observations, but I think any follower of the college/university scene would agree that tracking revenues and expenses and their sources has never been more important and the potential negative impact on the delivery of undergraduate education and services is a worthwhile issue to consider in college selection. </p>

<p>As for the individual college impact, I don’t have the direct knowledge of each college to make that specific a judgment and that was not the point of the thread. The objective is for prospective students to investigate and think more about how their prospective colleges get their revenues and how they spend their money as there could be important on-the-ground adjustments during the next four years. </p>

<p>One simplistic way to consider this and perhaps a starting point is the USWNR Financial Resources measurement. I stress that this is a potential starting point and not the definitive word on a college’s current financial standing. A secondary consideration would be the Faculty Resources measurement which is also likely to be an increasingly challenging metric for many colleges. Information on both for colleges ranked in the USNWR Top 50 national universities and the Top 25 LACs is listed below. </p>

<p>Perhaps you or another poster can suggest additional methods for students to evaluate the institutional financial resources (financial aid?), the current pressures faced by each institution, and what this might mean at the margin for the way that undergraduate education and undergraduate services are dispensed. The effects may not necessarily be immediate for all colleges, but the money issue and its consequences will be real for many prospective college students. </p>

<p>Financial Resources , National University</p>

<p>1 , Caltech
2 , Yale
3 , MIT
3 , Johns Hopkins
5 , Wash U
6 , Wake Forest
7 , Harvard
7 , U Chicago
9 , U Penn
10 , Stanford
11 , Duke
11 , Dartmouth
13 , Northwestern
14 , Princeton
14 , Vanderbilt
16 , Columbia
17 , Cornell
17 , Emory
19 , U Rochester
19 , Yeshiva
21 , Case Western
23 , Rice
23 , Carnegie Mellon
25 , Brown
26 , UCLA
28 , UCSD
29 , U Washington
31 , Tufts
31 , U North Carolina
31 , UC Davis
35 , U Michigan
37 , Georgetown
38 , USC
38 , NYU
40 , Notre Dame
43 , Rensselaer
44 , UC Berkeley
44 , U Florida
47 , Georgia Tech
50 , Brandeis
50 , Lehigh
50 , U Wisconsin
53 , Tulane
55 , UC Irvine
63 , U Virginia
63 , U Illinois
65 , Penn State
70 , Boston Coll
94 , UC Santa Barbara
94 , U Texas
111 , W&M</p>

<p>Financial Resources , LAC</p>

<p>1 , US Military Acad
2 , US Naval Acad
4 , Williams
5 , Wellesley
6 , Swarthmore
6 , Middlebury
8 , Pomona
10 , Amherst
10 , Vassar
12 , Bowdoin
12 , Harvey Mudd
14 , Haverford
14 , Claremont McK
18 , Smith
20 , Hamilton
22 , Wesleyan
22 , Grinnell
25 , Carleton
25 , Davidson
25 , W&L
25 , Colgate
25 , Bryn Mawr
33 , Oberlin
35 , Bates
38 , Colby
45 , Macalester</p>

<p>Faculty Resources , National University</p>

<p>1 , Harvard
2 , U Penn
3 , Princeton
4 , U Chicago
5 , Caltech
5 , Duke
5 , Northwestern
8 , Columbia
9 , Wash U
10 , Yale
11 , Emory
12 , Stanford
12 , Vanderbilt
14 , Rice
15 , Dartmouth
16 , Cornell
17 , Brown
18 , MIT
18 , Carnegie Mellon
20 , Notre Dame
21 , Johns Hopkins
22 , Tufts
23 , Yeshiva
24 , NYU
25 , USC
27 , Brandeis
27 , Tulane
30 , UC Santa Barbara
33 , UC Berkeley
33 , Case Western
35 , U Virginia
35 , Wake Forest
35 , U Rochester
40 , Georgetown
40 , Lehigh
42 , UCLA
42 , Rensselaer
44 , W&M
44 , UC Irvine
50 , U North Carolina
52 , Boston Coll
65 , Georgia Tech
72 , U Michigan
72 , U Wisconsin
81 , U Illinois
90 , UCSD
100 , UC Davis
107 , U Texas
129 , U Washington
129 , U Florida
149 , Penn State</p>

<p>Faculty Resources , LAC</p>

<p>1 , Williams
2 , Amherst
3 , Swarthmore
3 , Claremont McK
5 , W&L
6 , Wellesley
6 , Davidson
6 , Hamilton
10 , Middlebury
10 , Haverford
13 , US Military Acad
15 , Bowdoin
16 , Pomona
16 , Carleton
16 , Vassar
22 , Oberlin
24 , Colgate
24 , Smith
31 , Bryn Mawr
34 , Grinnell
34 , Harvey Mudd
43 , Macalester
47 , Colby
56 , Wesleyan
65 , US Naval Acad
65 , Bates</p>

4

<p>Just two bits of info I remember reading in the last two years:</p>

<p>Swarthmore claimed at the time that it cost them $65k/student/year, much more than COA (they were stating fact, not complaining). </p>

<p>UChicago makes a profit on their undergraduate program. </p>

<p>Both have hefty endowments and seem to be very well managed financially. How do they fit in today’s college financial puzzle?</p>

5

<p>Hawkette,</p>

<p>As far as the “name” state schools in Florida, take a look at these links:</p>

<p>FSU:</p>

<p><a href=“http://www.fsu.edu/announce/May_letter_to_university_community.pdf[/url]”>http://www.fsu.edu/announce/May_letter_to_university_community.pdf&lt;/a&gt; (Kudos to SunnyFlorida for the link)</p>

<p>UF:</p>

<p>From the president:</p>

<p><a href=“http://budget.president.ufl.edu/wp-content/uploads/2009/05/ufbudget20091.pdf[/url]”>http://budget.president.ufl.edu/wp-content/uploads/2009/05/ufbudget20091.pdf&lt;/a&gt;&lt;/p&gt;

<p>More details:
[Budget</a> News - Final Budget Reduction Plan Announced](<a href=“http://budget.president.ufl.edu/2009/05/22/budget-proposal-fy2010/]Budget”>http://budget.president.ufl.edu/2009/05/22/budget-proposal-fy2010/)</p>

<p>Couple of comments. FSU President, after big spread in Higher Education magazine, lobbying for his budget, leaves it to the provost to write the cuts letter as the budget group chair…kind of like the scandal in the the Athletic Department, where, per the NCAA, FSU employees were “facilitating” cheating, but the president balked at penalties because he “didn’t know.” Draw your own conclusions. “If the State (meaning the state legislature/governor, the elected representatives of Florida TAXPAYERS) is not not going to step up” comment in FSU letter is noteworthy along with the sparing of 2% salary reductions for FSU employees (all other state workers are taking the reduction). Are unemployment relief, foreclosure stays, hurricane preparedness and helping fixed income seniors in the state cope with property taxes not as high a budget priority than FSU?!? </p>

<p>Bernie Mac at UF signed his letter and struck a less strident tone. Still, the “we have already been cut” portion (FSU’s letter has a similar paragraph) is irksome, as again this is a statewide problem not going away soon. The budget plan is more detailed, but 3.7 million remain to be “found” and those programs taken off state money (stimulus funded for now?) may be eliminated, one could assume.</p>

<p>One thing about State University System schools, they are subsided “double,” if you wlll. In addition to their budgets they reap state tuition payments through the state funded (Lottery money diverted, not placed in state’s general fund) Bright Futures Scholarships. These are NEED-BLIND scholarships, varying from 75% to 100% of tuition/fee costs for students meeting the requirements: <a href=“Florida Student Scholarship & Grant Programs”>Florida Student Scholarship & Grant Programs;

<p>These are not exactly difficult requirements and the vast majority of FSU/UF applicants meet them…so the schools AND the students are government funded in a state dealing head on with the financial crisis and huge budget deficits. </p>

<p>At what point does some parts of public higher education become too costly, especially when the majority of the state’s population does not directly benefit from it?</p>

6

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</p>

<p>Unfortunately this is completely backward-looking. I believe the financial resources data in the 2009 USNWR rankings—the latest currently available—is based on conditions in the 2007-08 academic/fiscal year, so at best it would tell you something about the financial condition of colleges and universities prior to the recent economic meltdown. That’s pretty much useless as an indicator of the institution’s financial strength going forward, and in many cases extremely misleading.</p>

<p>And it’s bad data in any case. “Financial resources” as US News uses that term is a measure of the institution’s spending per student; it has nothing to do with the soundness of the shcool’s fiscal condition. A school that spends like a drunken sailor will be rewarded with a high mark by US News. A school that spends more frugally will end up further down the rankings, even though the more frugal and fiscally conservative institution may be in far better shape to weather an economic storm than the school that spends like a drunken sailor when its coffers are flush. The spending-per-student measure will also invariably favor the highest-priced and best-endowed institutions, especially those with the fewest students. (On the “highest-priced” point, consider this: a public institution that charges $10K tuition and provides student A with no financial aid is judged by US News to spend $30K less than a high-priced private school that charges that same student $40K in tuition but recycles $30K of it back to that student in the form of “financial aid”—even though the two schools’ net tuition revenues and the student’s net costs of attendance are identical under either scenario). </p>

<p>The schools that spend the most per student are not necessarily those least adversely affected by the recession. Even though their endowments took a big whack, schools like HYPSM will be just fine, in part because the have enormous and well-funded research enterprises that keep rolling merrily along, largely unaffected by the economic downturn. On the other hand, a lot of smaller LACs are heavily dependent on tuition revenue and endowment payouts. There will be a lot of downward pressure on tuition revenue in the current economy; tuition hikes will face massive resistance, and schools with high sticker prices will need to do heavier-than-usual tuition discounting (a.k.a. “financial aid”) even to retain current students, much less to attract new freshmen in an increasingly price-sensitive competitive environment. And most of them have taken a big hit on their endowments—though exactly how much varies greatly from school to school. As I mentioned in a previous post, reductions in endowment payouts will hit more heavily in the second year after the downturn (2010-2011) than in the first (2009-2010), because by the second year their shrunken endowment assets will reflect two-thirds of the asset base upon which endowment payouts are calculated. If tuition and endowment are your two main sources of revenue and you’ve been spending freely and pretty much to your maximum capacity in the flush times that preceded the downturn, you’re facing a pretty grim situation. And that includes a lot of schools that rank very high on the Us News spending-per-student (“financial resources”) chart, unfortunately.</p>

<p>I agree that prospective students and their parents should carefully evaluate the fiscal condition of the schools they’re considering. Just because a school has had a lot of money and spent a lot of money in the past doesn’t mean it’s in good shape going forward; that would be one of the most misleading things you could look at. What should you look at? I’d suggest, for starters:</p>

<p>1) Bond ratings. We all know by now that bond ratings aren’t infallible, but for colleges and universities they represent the considered judgments of professionals who have access to a lot more information about the underlying financial strength of the school than you or I will ever have. </p>

<p>2) For public institutions, I’d look carefully at what percentage of the school’s overall budget comes from legislative appropriations, what percentage cut is being proposed by the governor and/or legislature (noting that a 10% cut from a legislative appropriation that represents 40% of a school’s budget is going to hurt a whole lot worse than a 10% cut from an appropriation that meets only 7% of the school’s budget), and how deep is the structural imbalance between the state’s revenue and expenditures going forward (portending further cuts in future years).</p>

<p>3) For all institutions, what percentage of its operating budget comes from endowment payout, how is the endowment payout calculated (i.e., is it based on a 3-year, 5-year, or 7-year average of endowment assets, the latter being much more stable in a sharp downturn like the present one), and how badly hurt was the endowment by declining asset values (though information here is likely to be sketchy and worthy of some suspicion because it mostly represents self-serving spin by the institution itself). In general, the most endowment-dependent institutions are likely to take the biggest hits in the short term, especially if they calculate endowment payout on a 3-year average, simply because endowment asset valuations have fallen farther and faster than net tuition revenue, outside research grants, legislative appropriations, or other major sources of college and university revenue.</p>

<p>4) How dependent is the institution on outside research grants, and how is the research budget holding up in the current market? In general I believe the heavy-hitter research institutions will be in better shape than less research-oriented schools, because research spending seems to be holding up rather well and in some areas actually increasing, even as tuition revenue comes under pressure for more discounting and endowment asset valuations get hammered.</p>

<p>5) In general, how diversified is the institution’s revenue base? Those with diversified sources of income are likely to have more “bright spots” (e.g., research grants, intellectual property licensing fees, self-sustaining enterprises like hospitals and health systems associated with their medical schools) in their overall revenue picture, and consequently more flexibility to make adjustments for downward pressure on net tuition revenue and short-term losses in endowment asset valuations. Schools dependent on a single source of revenue (e.g., tuition) or two major sources (e.g., tuition plus endowment payout, or tuition plus legislative appropriations) are in most cases much more vulnerable, and have less flexibility in how they respond.</p>

7

<p>Question: which school will be harder hit, the one primarily dependent on a hard-hit endowment (e.g. Vassar, cf. S.A.V.E. Creative Writing) or the one primarily dependent on tuition revenue (e.g. Scripps)? At present, Scripps seems to be much better off than Vassar–continuing with faculty hires vs. faculty cuts–but I wonder if the tuition-driven model will be worse off in the long run.</p>

8

<p>My analogy goes like this:</p>

<p>If you use “Scrubbing Bubbles” for cleaning all the time and it’s $4.35 at the local supermarket, but you can buy it at your Warehouse/Wholesale Club for 4 for $10 (57% savings) and you have the $10 in the bank earning 1.9%, wouldn’t it be wise to spend it and make 57% on your money?</p>

<p>For many colleges with a fairly healthy endowment it’s wise to spend (hire faculty, buy property around campus, build, etc.) when basically there’s a fire sale and people are willing to compromise (unemployed professors, struggling builders, overextended property owners, etc.).</p>

9

<p>Sorry: It’s 43% savings but it still holds.</p>

10

<p>hawkette:</p>

<p>any insights into why Wake Forest has lotsa money (#6 in Financial resources), but has low-ranked Faculty resources (#35) and poor need-based finaid (relative to others)?</p>

11

<p>^^^I think you answered your own question: if you don’t spend money in faculty resources and don’t give much need based aid, the logical result is to have lots of money left over.:)</p>

12

<p>^^^^^^Touche!</p>

13

<p>Blue,
Wake’s comparatively weaker Faculty Resources ranking is most likely a function of the component pieces that make up USNWR’s ranking. They are:</p>

<p>Faculty Resources (six factors comprise this score)</p>

<p>% of classes with fewer than 20 students (30%)
% of classes with more than 50 students (10%)
Faculty Salary (35%)
% of profs with highest degree in their fields (15%)
Student-faculty ratio (5%)
% of faculty that are full-time (5%)</p>

<p>They do well on class size comparisons, but would likely lag in faculty salaries and they only have 90% of their profs with terminal degrees. 41 of the 50 colleges with overall rankings in the USNWR Top 50 national universities have a higher percentage than does Wake. </p>

<p>For Financial Resources, this is less clear to me, but I’m guessing it’s due to what they are counting. Some colleges will include their medical school expenses as part of the overall calculation of university spending and this gets added into the numerator, thus boosting the result of spending per student. Johns Hopkins (# 3 in this category) is another that comes to mind as playing games with this number. Also, I think that Yale plays games with this as their spending per students looks out of whack as compared to what Harvard spends. In one recent USNWR survey (2008?), here is how many top schools compared on this number: </p>

<p>Spending per Student , College</p>

<p>$101,788 , Yale
$89,266 , Caltech
$88,013 , Johns Hopkins
$81,826 , Wash U
$67,108 , Stanford
$63,557 , Wake Forest
$60,875 , U Chicago
$60,139 , MIT
$57,850 , Columbia
$54,537 , U Penn
$53,702 , Vanderbilt
$53,547 , Dartmouth
$51,857 , Harvard
$50,476 , Duke
$49,204 , Emory
$46,891 , Princeton
$40,458 , Rice
$38,085 , Northwestern
$33,957 , Carnegie Mellon
$31,170 , Brown
$30,051 , UCLA
$29,227 , Cornell
$29,167 , USC
$27,599 , Tufts
$27,283 , Georgetown
$27,108 , U North Carolina
$24,342 , Notre Dame
$19,524 , U Michigan
$18,854 , UC Berkeley
$14,179 , U Virginia</p>

14

<p>A question was recently posed to me via pm on the outlook for selectivity for the OOS student at public universities. My view is that the publics will suffer for several reasons.</p>

<ol>
<li><p>Many publics have priced themselves at such a high level that their cost/value vs the top few tiers of privates is not compelling. Most high quality students comparing one of these privates vs the OOS publics will be weighing factors such as class sizes, undergraduate support services, faster/more certain graduation rates, etc. In nearly all cases, there is a difference and the statistical winner is almost always the private college. This doesn’t automatically mean that the private is always the better option, but I think it is inescapable that there is a difference in the delivery of the undergraduate academic experience. </p></li>
<li><p>The political pressure on states has never been greater to take more of their own. No question that most state residents have no idea that the state contribution is sometimes as little as 10%; they feel a sense of entitlement to places at their state flagship even if there are short (higher tuition) and long-run (potentially higher quality workforce in the state) benefits from having more OOS students.</p></li>
<li><p>Financial aid differences have become sharp as many top privates have a lot more money to draw on to attract top students froml lower income families. This makes them much more accessible than was the case even a decade ago. We will see how much this might be altered by the changed financial market picture, but I don’t see many (any?) top privates cutting back on their efforts to provide generous amounts of need-based financial aid.</p></li>
</ol>

<p>Beyond the matter of need-based financial aid, the privates have great scope for using merit aid to attract students and provide a “special” undergraduate experience. Some publics have tried to respond to this with offerings like their Honors Colleges and I think that these can be exceptional opportunities for some students. However, the publics are more limited in their efforts. Perhaps more important is that the public university missions are different and they really need to provide access to higher education for students from all income levels. To the extent that they cannot provide this to all of their students, this makes the offering of merit aid to high quality OOS students all the less likely. </p>

<p>I’m not trying to diminish the publics as I think that they will serve an increasingly important role for IS students and I would expect IS yields to increase in this trying economic time. Furthermore, for some OOS students, the Honors College option within a public can be exceptional as the publics have such large structural resources and thus can provide opportunities that might not be available elsewhere.</p>

15

<p>At the Florida public universities mentioned standards have dramatically increased. FSU has already cut its freshman class by some 1000 students to retain quality: [Budget</a> cuts slash FSU’s freshman class | 10connects.com | Tampa, St. Petersburg, Clearwater](<a href=“404 Not Found | wtsp.com”>404 Not Found | wtsp.com)</p>

<p>Private schools like the University of Miami are also chopping employee benefits, like pension contributions: <a href=“http://www.mcclatchydc.com/economy/story/62303.html[/url]”>http://www.mcclatchydc.com/economy/story/62303.html&lt;/a&gt; Miami is an interesting situation as it is increasingly in competition for state dollars with a growing state university system. Which takes precedence? Public or private?</p>

16

<p>The Chronicle of Higher Ed has a story today saying Florida’s situation “is one of the worst financial catastrophes in higher education today.”</p>

<p>That said, I’d worry a lot less about the flagships in troubled states. It’s the regional publics who are least able to deal with drastic cuts. As bclintonk pointed out, public flagships typically have other funding sources to rely upon. Despite the doomsaying upthread, I’d much, much rather be at Michigan than at some of the other places who are having to slash staff, borrow money (with poorer bond ratings), and chop enrollment.</p>

17

<p>bc,
In time we will find out how powerfully this financial crisis has impacted colleges in America. I’ll be curious to see the statistical changes in some of the undergraduate data, eg, the class size data, the student/faculty ratio, the % use of TAs, the availability of financial aid, etc. Maybe you’ll be proven right that the 2007 data is ancient history and should be completely ignored, but my sense is that the changes won’t be nearly as drastic as you intimate. </p>

<p>In your latest post, you present the view that diversified revenue streams, including significant revenue from research activities, can be valuable cash generators. I agree, but I don’t necessarily conclude that this automatically works to the benefit of the average undergraduate student. Graduate programs are expensive and represent a high fixed cost for many universities. I have seen estimates that the cost per graduate student run 5 to 15 times higher than that for undergrads. The research projects allow these schools to keep the lights on and the graduate/faculty research projects running. How much they actually allow for siphoning money off to support undergraduate education is highly debatable. </p>

<p>Re the situations in Florida and California, I think we are looking at two higher ed train wrecks. I’m not sure how this will impact their flagships at Gainesville and Berkeley/Los Angeles, but I would certainly agree that the secondary state Us are going to be under a lot of pressure.</p>

18

<p>

</p>

<p>“Siphoning off” sounds like there’s something shady going on. ICR is a fact of life, accepted by funding agencies. Whether it flows into GF areas directly related to undergrad instruction (some does; in fact, teaching load or credit hours may be part of the formula for reallocation, on some campuses) or to GF and non-GF areas that are indirectly related, students benefit. Libraries, faculty retention, facilities, IT upgrades, all of that can enhance undergrad education. And it frees up money that can be spent on academic priorities.</p>

19

<p>Good Question by Parent2Noles on Private vs. Public, but The Miller SOM at Jackson is PARTLY state funded because of the one-time dearth of medical schools in the state. However, now with the shortage of funds going on 3+ years, should the state have stopped after building FSU’s SOM? You won’t get an argument against the FSU SOM …there is still a shortage of good doctors in the state. However, this cuts back to the main question Hawkette posed and by extension others: In flush times, all these higher education “bills” were incured. From need blind, easy to qualify for state scholarships to a UC/CSU in every part of California, to Med schools at seemingly every Florida SUS school. Where does it all end? Paraphrasing the US Constitution’s Preamble, general welfare promotion, common defense and liberty are what government is to provide, state constitutions being based on this model. The legal, necessary defense part is handled by the feds, state National Guards being federalized in wartime. </p>

<p>OK, so where in “general welfare” does it say it is “right” that a 4 year state university is 30 minutes from your house? That every kid with a 3.0 gpa and a 20 ACT gets a 75% ride? They may all get a college education of uneven quality, but they won’t get a job in a bankrupt country no matter what.</p>

<p>The publics have to accept and act on reality. Funny, look at the date of the UM news story P2N cited, February 09. UM parents received a series of letters (Yes, signed by UM President Shalala) during that time and the news story doesn’t cover the final letter that SAME month, detailing reduction specifics, most which were milder than first reported. The point is that a private U, in one month (without the public lobbying of the legislature), was able to create and act on a plan to quickly (Gasp!) balance its budget in a weaker economy, while retaining quality.</p>

<p>From a Florida Board of Regents to Governors, it is still the same: No one makes the hard choices to save our GRANDCHILDREN’S MONEY. How about this to untangle Florida’s “Train Wreck”:</p>

<ul>
<li><p>Two full Flagships, UF and FSU, that is it, no more delusions of granduer (or more important, duplication) for the regionals</p></li>
<li><p>Regionals specialize. UCF good with computer tech, great, you don’t need a SOM </p></li>
<li><p>FGCU make into a “Super CC”, merge with Edison. FIU, merged with Miami-Dade College for another “Super CC.” Needed 2/4 year Vocational degrees the focus, both drop other pretensions such as athletics, grad school…main goal is throughput. Kids with higher aspirations needing a state u in area have USF/FAU</p></li>
<li><p>Bright Futures. Lottery money put in general fund to expose just how much this costs and is only need based with much higher standards…no more Joe the laborer in Lauderdale, spending $2000.00 grand a year in lottery tickets (on a hope he can escape his $25,000 a year life) funding Buffy’s 75% Bright Futures scholarship to UF where she can park (If she is lucky) the 370Z Mommy and Daddy gave her.</p></li>
</ul>

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<p>“Kids with higher aspirations needing a state u” My sympathy for Joe Biden has grown. Talk about a bonheaded remark, like getting a BSN at Miami-Dade isn’t hard, rewarding and a gateway to future success (how many Nurse-Practitioners do we need in this country? Try a lot) How about “choosing a different path” </p>

<p>My apoligies</p>