Magazine article Diverse Issues in Higher Education

Drastic Measures for Difficult Times

Magazine article Diverse Issues in Higher Education

Drastic Measures for Difficult Times

Article excerpt

Hit hard by the global financial crisis, colleges are cutting their budgets in ways that prompt fears about access and retention for minority students.

Call it the perfect storm for university funding. Just as economic downturns are squeezing state revenues for education, a financial meltdown on Wall Street is moving ahead with unprecedented size and speed. In mere weeks, college endowments have lost much of their value, interest on loans of all types has spiked and credit is much harder to acquire.

Already schools from Howard University to Harvard University are calling for emer- gency spending cuts. Schools are consider- ing layoffs, unpaid furloughs for faculty and staff, hiring freezes and elimination of courses. Some are trying to generate re- sources - Clemson even asked its football team to kick in some of its earnings to help out. Financial aid is in for a big hit, which might make it impossible for many students to continue their education.

Minority-serving institutions, including historically Black schools that have long struggled financially, can expect to be especially hard hit. "I think there is a lag between this meltdown and the real outcome that will be produced," says Dr. Michael L. Lomax, president of the United Negro College Fund (UNCF). "This is moving at warp speed, and we will see this play out much more forcefully in the spring semester."

The Fallout

The crisis is being played out on several levels. State schools are facing draconian budget cuts, and private institutions are seeing donations dry up from graduates who are dealing with layoffs and foreclosures.

Many states including California, South Carolina and Virginia, among others, are caught in budget slumps. California faces an $11.2 billion state budget shortfall, so the California State University system may have to cut its 450,000 enrollment by 10,000 for the 2009-10 academic year, possibly turning away qualified students.

In Virginia, Gordon Hickey, a press spokesman for Gov. Tim Kaine, says the state is facing a $2.5 billion shortfall. "There will be an impact on higher education," he says. "But we don't want to increase tuition or hurt aid, so that leaves administration."

In South Carolina, a combination of lower state tax revenues prompted by an economic downturn and laws forbidding deficit spending slapped Clemson University with a $26 million budget shortfall. Faculty and staff will take a mandatory, five-day furlough without pay, a hiring freeze is in effect, unfilled faculty positions were cancelled permanently, and construction was delayed for an innovation center, a life sciences center and an Academic Success Center.

And school entities outside the usual budget, such as athletics, housing and food, all have to pony up $3 million total, some of it from Clemson's Atlantic Coast Conference football team. "We have to find new ways to generate revenues," says Cathy Sams, chief public affairs officer.

Schools are also being slammed on endowments. Because of the meltdown in subprime lending, stock markets are down a stunning 40 percent in the past year. Endowments, particularly at wealthy Ivy League institutions, are taking huge hits. Moody's Investors Service, a bond ratings agency, has projected that university endowments will decline 30 percent this year.

Spelman College in Atlanta is freezing hiring and delaying renovation projects. President Beverly Daniel Tatum is calling for a boost in private philanthropy to replace private lending since the school's investments have been hurt by stock market downturns.

Other negative fallout will be the extra attention on the compensation paid to some college executives. The pay given to college presidents, some of whom make in excess of $800,000 a year, is under scrutiny Also, according to The Chronicle of Higher Education, as many as five college endowments are considering suing their brokers or investment managers because they have not been able to access money in their accounts, which have diminished in value. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.