Gone are the days when the state was the primary contributor to higher education funding. Ballooning state budget deficits have led to rapid defunding of public universities nationwide. An annual study of state spending on higher education found that state appropriations for colleges dropped 7.6 percent this fiscal year, the largest decline in the last 50 years.
In California, state spending on corrections surpassed spending on universities around 2004. In just one year, from 2010 – 2011, state appropriations sunk 13.5 percent in the Golden State. Just last year state aid to the UC system was cut by $750 million which stands to lose another $250 million if voters do not approve Jerry Brown’s tax measure in November.
Grappling with declining annual contributions from the state, universities are being forced to look elsewhere for financial support.
Following in the footsteps of the University of Virginia and the University of Michigan, two business schools in the UC system are considering “privatization,” although supporters prefer to use descriptors such as “self-sufficiency” and “independently financed.”
Earlier this month the Academic Senate at the University of California at Los Angeles voted 53 to 46 to approve a proposal to change the funding model for the university’s M.B.A. program. If UC President Mark Yudof signs off on the proposal, the Anderson School of Management would convert to a self-supporting system relying on tuition revenue and private support while no longer accepting state funds.
The school’s dean, Judy Olian, said the “proposal is a response to the urgent need to find solutions to campus-wide financial challenges, we must find innovative responses to dramatic cuts in funding while protecting the great engine of research and education we have here.”
According Anderson officials, the change will result in a net savings of $8.8 million a year that can be used to fund other university programs suffering from deep cutbacks. They also argue that the proposal will give administrators more flexibility to set tuition and salaries as well as freedom from the instability caused by the annual budget fight in Sacramento.
UC Davis is also considering a plan to transform its Graduate School of Management to be completely self-financing within 10 years.
Critics of the model argue that removal of state funding from public universities will increase already sky-high tuition rates, limiting the ability of students from middle to low income families to access higher education. California already ranks 41st in the number of college degrees awarded for every 100 students it graduates from high school. Large numbers of high school graduates are crossing state lines in search of cheaper tuition. The Public Policy Institute of California estimates that by 2025 the state will face a shortage of 1 million college graduates required to fuel the California economy.
We’re in a decisive period for public education in America. Universities are going to have to make aggressive decisions and develop innovative solutions to combat continued divestment paired with ever expanding-enrollment rates.
As the state’s financial role shrinks, should California’s public universities be run more like businesses?