Financing State Colleges and Universities: What Is Happening to the "Public" in Public Higher Education?

By Reindl, Travis; Brower, Dana | College and University, Summer 2001 | Go to article overview

Financing State Colleges and Universities: What Is Happening to the "Public" in Public Higher Education?


Reindl, Travis, Brower, Dana, College and University


From time to time, policymakers and analysts are reminded that paradox and unintended consequences are integral parts of the nation's policy landscape. A prominent and timely example of this presents itself in the realm of elementary and secondary education, where policies designed to alleviate teacher shortages (e.g., alternative/emergency certification) are in many cases further compromising the quality of classroom instruction. As a result of this unintended consequence, the paradox emerges that one of the most educated nations in the world is weakening its own educational infrastructure.

These phenomena are at work in the world of public higher education, and in a similarly troubling fashion. At the very time that postsecondary education in the United States is reaching all-time highs in significance as an economic and social good, the public higher education enterprise is gradually being privatized. In recent years, a combination of economic, political, and philosophical currents have contributed to a shift away from public funding of colleges and universities (i.e., federal and state appropriations) and toward private funding of these institutions (i.e., student tuition revenues, external fundraising, and entrepreneurial activities). This shift is not without consequence, as the financing of any public enterprise, including higher education, is as much about societal values as it is about dollars and cents. Such a shift also poses a number of difficult policy questions, all of which revolve around the central question: How "public" should public colleges and universities be in the 21st century?

This article aims to: a) examine how the financing of public four-year institutions has changed from the late 1980s to the present, with a special emphasis on public comprehensive institutions; b) analyze these changes and discuss their potential ramifications for different stakeholders; and c) look ahead to the future of public higher education finance and assess proposals to significantly change the currently prevailing financing structure.

The Paradox: Rising Public Expectations, Shrinking Public Support

Over the course of our nation's history, the view of higher education as a central part of our economic and social fabric has enjoyed broad acceptance. Articulation of this view dates back to Thomas Jefferson, who wrote:

"I think by far the most important bill in our whole code is that for the diffusion of knowledge among the people. No other sure foundation can be devised for the preservation of freedom and happiness" (AASCU 1998, "Public Higher Education...").

More than two hundred years later, the United States is a vastly different place than when Jefferson championed the concept of the public university. The centrality of the university in our nation's social and economic fabric, however, has remained unchanged. In fact, our increasing dependence on knowledge and information has only increased the stock of colleges and universities as the generators and purveyors of that knowledge and information. Noted higher education observer Robert Zemsky (1996) aptly articulates this sentiment:

"In fact, higher education has never been more important to society-as an enabler of individuals, an engine of economic transformation, and a source of community cohesion and national awareness."

Others expand on that reasoning, asserting that a college education is quickly becoming the sine qua non of full participation in the economic and civic life of the nation (NCPPHE 2000). The intuitive logic of this line of argument is buttressed by the following considerations:

* Virtually all of the academics, campus administrators, and government and business leaders responding to a 1998 query by Public Agenda agreed with the statement that "A strong higher education system is key to the continued economic growth and progress of the u.s." (Immerwahr 1999).

* A majority of the ten occupations (including the four fastest-growing) expected to post the fastest growth from 1998 to 2oo8 require an associate's degree or higher. …

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