That’s a really bad question to ask as a Jersey person. Michigan is a money machine, while NJU (sorry…Rutgers) has dug a hole $250M deep since joining the BIG 10.
Oh, there’s no comparison. Rutgers sports is a money pit, with not much to show for it.
But I was genuinely curious about Michigan because of the discussion above, that’s all.
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While not news or surprising, this is a fundamental wrong. My own state’s public flagship sinks so much student and taxpayer money into unprofitable athletics that are not advancing its educational mandate. Why? Its a disgrace. Just imagine how much it could do if every one of those dollars went to academics and research, and if 100% of the administration’s focus was on academic excellence.
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what ? There’s an academic mandate? Not having a great football team mandate so the alumni can come and party and students will apply in droves.
They are but they often run a deficit. Just two years ago they were $50 million in the red. It’s all fungible.
Anomaly, the stadium and arenas were near empty, because of ticket rationing due to the Pandemic. And contributions and the B1G media payout were much lower as well.
Heck, I was busy waiting in line for “Toilet Paper Tuesdays.” One roll please!
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Are there any capital expenses, non-operating expenses,… that the university is incurring to maintain an athletic department and its facilities and equipment, that might not have factored into the “balanced” operating budget of the athletic department?
Do universities have leeway in what they classify as departmental operating expense, by which on-paper profitability can be controlled. (Not a rhetorical question, I honestly don’t know.)
I appreciated this reaction to the WSJ and many of its commenters from one of my colleagues:
"They love free market competition.
They have long argued that colleges should act like businesses.
They hate paying taxes to provide public education.
AND
They now non ironically despise the very system those attitudes have created."
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My favorite are the folks who have argued for decades that colleges need “professionalism in their financial management”.
So the colleges go out-- hire a CFO-- and these folks whine “why do they have to pay a CFO, why can’t the department heads develop their own budgets?”. The board outsources the endowment to a professional endowment manager and the same folks whine “why are they paying for an endowment manager-- isn’t there anyone on the finance faculty that understands portfolio theory?”
Etc. Really, you can’t win. Sadly- it costs money to hire professionals in the “business” functions.
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Most of these universities make enough revenue to run a small country. And they have football programs that dwarf NFL teams. Austin doesn’t need an NFL team when they can fill a 100,000 seat stadium every other week. It’s for one capitalist principal…market share and notoriety. That’s a huge payoff, especially when their football team is winning. That’s a reason to spend money. The notoriety brings in student revenue, which fuels alumni donations, so on and so-forth. UT’s “little brother” UTSA discovered that principle 10 years ago, and petitioned grants for some huge upgrades, and the school tripled in size.
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Note that public university tuition levels are greatly affected by state funding. During recessions that cause reduced state tax revenues and higher use of state services, state budgets need to be balanced by cutting “less essential” items, which often include higher education. But during periods of economic growth, state funding is stable or increasing, so the state universities can avoid tuition increases, at least for in-state students (some may choose to raise out-of-state tuition if the demand from out-of-state students is high enough).
Yes, I think it makes sense to look for how economic cyclicality can influence university financial conditions.
That said, part of what I find so interesting about these charts is that publics and privates show the same inflection point circa 2016-17:
That doesn’t mean the underlying financial mechanisms are identical, but it does imply whatever is happening in recent years found a way to happen through both the public and private channels.
I think the danger in this discussion is the use of generalizations and the loss of segmentation when discussing “trends”.
There is a thread running now about school closures…RIP: college closings. For every dollar spent at a Power 5 public university, there are multiples more spent at smaller institutions. If we focus on Pennsylvania, Penn State is the immediate target… but there are 58 public colleges and universities in PA.
I haven’t studied this, but it appears to me that those smaller schools have reached the point of price sensitivity where they have to compete financially to stay alive. The go-go days of expansion are over. People are asking if a degree from a small, unknown, public college in central PA is worth 4 years and $20k…or more… of debt. The math has turned, and people are starting to say no more than ever.
So I think the charts you show reflect that, while the conversation is understandably but erroneously focused on the Power 5 flagship schools.
Trends for all colleges in this discussion provide cover for the larger institutions that continue to exceed the average, by leveraging the struggles that many schools are having just to stay open.
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Penn State is not a great example to use in the article, as it is not a state school…it is state-related. State funding for Penn State (and Pitt, Temple and Lincoln) is a fairly small percentage of the overall budget. I have heard that Pitt has considered going back to being a private university.
Here’s an interesting map - at least for directional purposes. The AZ schools are aggressive for high stat kids, especially tucson, and I’ve read b4 where they were last - so not sure how that correlates.
So here is what the WSJ reported for the median flagship university only:
From the top, that is books, supplies, and other; room and board; and tuition and fees.
And so far, that looks basically identical to the same lines in CP-9.
What is missing from the WSJ chart is Grant Aid, which would then give you the versions of those lines net of grant aid, including net cost of attendance.
But I am pretty skeptical flagships are not participating in the same grant aid trend. Indeed if anything I would think it might skew toward them not away from them.
Now if you dig further down to individual flagships, I am sure you get more variation.
That said, we did a little informal look at Michigan above, and College Factual allows you to look up specific schools. So here is Michigan:
From what I can tell, that is not adjusted for inflation. In any event, it is showing the same general sort of downward trend, in their case since at least 2015, in net cost.
So . . . it does not appear to me this is likely limited only to lower-ranked publics.
As before, I think it is interesting to compare privates. To make this at least sorta random, I chose the last private I visited with my S24, WUSTL:
Very similar again to Michigan in terms of curve shape, and I believe both also would be very similar to CP-9 and CP-10 respectively if adjusted for inflation.
If someone really wanted, they could use these tools to provide averages or medians in any market segment they liked. But so far, it does seem to be pretty consistent.
I came across this one recently regarding WVU
and this one regarding Dickinson
Both schools are facing budget shortfalls. The prediction is that there are many more schools that will be facing a similar situation with the predicted eligible college cohort shrinkage expected for 2026.
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By 2016, public universities had gotten the memo that most states were going to continue starving them even in economic good times, and they had to swim in the same marketplace waters as their private peers.
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This image compares the the inflation in college tuition compared to health care, housing and other costs . Pretty much sums it up. How the spending on building, athletics and administration is driving the tuition up. The federal governments funding of the education has played a big role in students and families having the ability to borrow money.
Interestingly, that image appears to cut off right around the 2016/17 inflection point we have discussed at length above. Although if you look right at the end, you can see that inflection point beginning to take effect, which makes sense as apparently it goes through Q3 2017.
Anyway, using the BLS CPI website, it looks like from July 2016 to July 2023, the CPI measure of college tuition and fees (what is being reported in that chart) went up about 14.33% total. All Items went up about 27.04% in that same time period.
So over this most recent time period, the green line would have outpaced the blue line by nearly twice as much.