FEES HAVE GONE UP STEEPLY FOR 20 YEARS BECAUSE DEMANDS ON THE STATE’S GENERAL FUND HAVE INCREASED. AT THE SAME TIME, TECHNOLOGY, BENEFITS, AND MANDATES HAVE INCREASED COSTS WITHIN THE CSU.
UNWILLING TO ADMIT TO THESE FACTS, WE HAVE LET THESE INCREASES FALL ON THE SHOULDERS OF STUDENTS WHO ENTER WHEN LULLS IN BUSINESS CYCLES REDUCE REVENUE STREAMS INTO THE GENERAL FUND.
A RATIONAL FEE POLICY WOULD SMOOTH SPIKES INTO A GRADUAL CURVE OVER TIME, PROJECTING THAT FEES IN CA. EVENTUALLY WILL MATCH FEES ELSEWHERE.
GRANTS AND LOANS HAVE MINIMIZED THE EFFECT OF INCREASES ON LOW-INCOME FAMILIES SINCE 2000. WE CAN DO BETTER STILL. WERE WE TO EDUCATE STUDENTS ABOUT HOW EDUCATION LOANS CAN AVOID CREDIT CARD DEBT AND QUICKEN TIME TO DEGREE, WE COULD OFFSET THE EFFECTS OF FEE INCREASES. WE ALSO COULD OFFSET SUCH FEE INCREASES BY REDUCING BOOK COSTS AND USING HYBRID COURSES TO DECREASE TRIPS TO CAMPUS.
AS STUDENTS, FACULTY, STAFF, AND STUDENTS STRATEGIZE TOGETHER IN MARCH, WE SHOULD ALL THINK OF HOW WE CAN WORK TOGETHER TO FACE FACTS, BUILD BRIDGES, AND SHARE SOLUTIONS.
The CSU is like a low-budget remake of the film, Groundhog Day. We wake up to a radio pitch, ‘Cut more, do lots with less!’’ If you think that you have heard this before, well, you have. We emerge from the warm burrow of winter break to test the weather. We do not dread snow, but we quake at the prospect of a parching wind, a Santa Ana of budgets.
The general causes of drought are clear. Over the years, the percentage of the general fund that supports higher education in California has declined by more than 30%. Increasingly, the general fund (where state revenues collect) relies on a volatile source—personal income tax. At the same time, periodic declines in local property taxes trigger the diversion of general funds to K-14 because of mechanisms in Proposition 98.
The general fund was once a mighty river of revenue. Mammoths like Earl Warren and Pat Brown roamed the west. Since then, we have dammed and diverted the tributaries, sharply decreasing the proportion from tobacco, alcohol, and vehicle fees and taxes. Our financial and ecological crises mirror each other. Damaged services and diseased trees are the records of this age. Our mastery of things but blindness to purpose threatens to poison prosperity.
The story then is not local. Across the nation, over coffee and lunch, faculty weave new verse into the sagas of financial drought, while they recount—for the young—older tales. After the last baby-boomer scampered across the graduation platform, clutching an advanced degree, state appropriations in constant (2004-05) dollars per FTE (full-time equivalent student) began a twenty-five year fall, bottoming in the early ‘90s and again in the early ‘00s. In mirror image, fees/tuition began to rise in four-year public universities. The debt to the GI generation was paid off through their children just when boomers and aging parent re-conceived government as a protector against social evil rather as an enabler of social good.
The saga of decline in California’s support for higher education rarely mentions an important qualifier. Even before financial aid, CSU students pay about 30-35% of total state funding. Elsewhere students in like universities pay 47-50%. Contrary to folklore, California contributes more per FTE students than most other states. In effect, the magnitude of recent fee spikes results from seismic shocks; the fiscal landscape of the far west is aligning rapidly with the continental norm.
YOUR MOMMA WEARS ARMY BOOTS! Unfortunately fighting words and petty jealousies obscure the forces behind fee increases. Faculty and staff rarely look at charts that show how annual increases in funding lag when viewed as constant dollars. Mismanagement, if not thievery, must be what administrators do, they assume.
Administrators blame the unions for undermining effort to manage costs. Their members’ demands to modify information systems so that they mimic old behaviors, for example, cost millions. Further, the unions’ insistence on pay increases but resistance to fee increases show solidarity with students; but the stance is either nutty or naïve, administrators think.
Meanwhile, parents, public, and party officials see more money go to higher education; but they are unaware of how mandates and social costs—like workers’ benefits and poor preparation in K-12—eat away at the money for college-level teaching and learning.
And everyone sees that professors’ salaries have gone up steadily. For ten months of work, public critics sneer. For three days each week legislators sniff. But professors know that increases actually fail to keep apace of costs.
Robert Browning wrote that great artists restrained themselves as the aged. ’Less is more.’’ After fifty years, we in CSU know better; we have solid evidence that more (money) is less (effective).
A NICKEL AIN’T WORTH A DIME ANYMORE: In California we face a special paradox that complicates the politics of fees increases. With nearly the lowest fees in the nation for public universities (including MA granting schools), we also have nearly the highest total cost of attendance. Raise fees, and we raise that total. To lower that total, the state would have to drop gasoline prices, embargo real estate losses and profits (well, forget profits now!), control consumer prices, or cap book costs. Or roll back fees. In the CSU students must approve local fees; they do not vote on gas prices. While elected officials rarely impose price controls on commercial goods, they regard higher education as a public good that is subject to control by the public’s representatives.
Fees have become the principal means to offset two opposing forces:
- down in the share of general fund dollars,
- and up in cost and price of attendance.
Two laws govern CSU dynamics. 1) What goes up goes up. 2) What goes down goes down. Fees must do one or the other.
The chart to the right breaks down the Cost of Attendance (COA). The colored boxes are the components. The middle column totals COA this year, while the right adds 10% for next year. The top five colored boxes factor that 10% by commercial sector. Given the plunge in real estate values, that number surely is wrong; but I am tired of fixing charts.
How do these figures compare nationally? See the chart on the left. Peer costs do not rise to the level of California. Fees are 50% higher elsewhere, but books (reflecting mark-ups, access to used books, etc.) and housing cost less in other states; other categories are =.
Now, return to the California columns above. Were we not in a housing slump, much of the increase in COA would be attributable to cost of occupancy. In fact, that increase would require a $1,660 reduction in fees as an offset. When students say ‘fi’ to fees, do they really mean ‘fo fum’ to COA?
I mentioned the two laws of CSU funding dynamics in this section. Ah, I would be remiss if I did not declare the third; for, we are the Rembrandts, nay, the Emerils, of this law—the law of unintended consequences. Increase fees; does this extend time to degree? Does this sacrifice the college-going to the vocational tracks within the community colleges? Will a progression of fee increases net or lose money for the general fund? Only the sphinx knows.
HELP ME IF YOU CAN: FINANCIAL AID: A rose is a rose is a rose. But is a fee increase a fee increase? Every time the CSU raises fees, it sets aside between 25% and 33% of it for financial aid. At CSUN, as at many other urban MA universities, at least 50% of the students receive federal, state, and/or local aid. So, it is logical to ask whether the system generates enough financial aid money to help those who qualify for college but struggle with mounting costs.
Actually, the federal, state, institutional, and donor funds that are available to write down CSU COA are substantial. True, much is in loans, not grants. But the way that aid is allocated is at least as meaningful as the amount that is available. For the CSU in ’05-06 and each year thereafter, COA exceeded five billion dollars, while fees topped one billion. Enough direct aid was available to cover over 80% of that cost; enough aid and recognized loan programs were available to cover nearly twice that cost, but only one-third of estimated COA. There is the rub. Instead of lowering everyone’s fees, policymakers have tried to reduce COA for some students who meet needy criteria.
Also, state and federal aid supports student at independent as well as public colleges and universities. This seems both prudent and fair; but it does limit funds that public community colleges, state universities, and research universities can access. Without this approach, however, more needy students might flock to the public schools and increase demand on an already huffing and puffing general funds. And students in need are in need, wherever they attend.
This policy directs 33% of Cal Grant funds to independents, although they accommodate 11% of the state’s FTE students. With fees fourteen times higher in independents than in the three tiers of public high education, awards per needy students—and awards per overall FTE—are significantly higher in the independents. Defensible policies have the consequence of limiting aid for CSU students. Because of the power of the independents’ lobby, California is not likely to redirect their aid. This political reality contributes to the pressure to keep down fees in the community colleges, CSU, and UC.
What, then, are the specific effects of aid on CSU students? Take ’01, ’03, and ’05 as a sample, looking at the effect in constant dollars. The left column segregates financial aid by family income (eligibility); the top row sums total fees in each year. Blue columns stratify COA by income, the first grey columns indicate the average grant in dollars, the yellow columns show the relation between grants and fees, and the second grey columns in each year compare the grants to the COA.
By far the largest grants go to families within income under 40k, more than covering fees and biting substantially into COA. The grants decline sharply in amount for families with income in the range of 60-80k>; but 40-60k have nearly all fees covered, and 60-80k have close to half of the fees covered. A sensible policy on tax credits could defray the COA for this income bracket.
What has been the effect of fee increases over time? Fees increased by 32% from ’01 to ‘03 and by 21% from ’03 to ’05. Grants rose noticeably across nearly all stratifications, even though COA fell in ’03. Aid dollars entered the system to offset fee increases.
From ’01 to ’05, the middle income brackets were squeezed. Their fees rose nearly 60% and COA rose 25% in constant dollars. Still, the amount that aid did not cover grew at lower rates than the COA itself.
The CSU reports similar results for the fee increase this year. 74% of students who qualify for aid will not experience the fee increase because of offsets. Those students cluster in the lowest income brackets. Other students have been offered various packages of loans and work-study funds.
Researchers also have looked at the effect of loans on borrowers. Since the late ‘90s, more aid has come into play. Loans, though, bridge the gap. The chart on the right compares fees/tuition and debt for seniors at four-year public state and research public universities in fifteen large GDP states. As of 2005, students graduated in California with relatively low debt. Low fees and available aid deserve the credit, though, if you listen to public vituperation, you would think that the state bit every penny before parting with it. Fees in CSU and UC would need to increase by 30%, while everyone froze, to propel loans to the national average.
Further, as Professor Moore in the College of Business and Economics has shown me, loans actually are under-utilized. In CSU students pay a flat rate for either 6 credits > or < 6 credits per term. The rate for a term of < 6 credits exceeds the rate for a term of 6> units. This also means, for example, that a student taking 10 credits pays more for each credit than a student taking twelve credits pays for each credit. Such information can be an incentive to take more credits, provided people understand the information.
When we inflate fees by 10% every two years and book costs by 3% each year, the penalty for staying in school longer becomes considerable. But wait! On the fee gong show, the penalty is worse than that!
Lost earnings compound the cost of delay. Below, the rightmost columns demonstrate that loans to cover the cost of fees and books in years five, six, and ten allow students to go through college more quickly. Then, according to national data, the B. A. usually increases their salaries by $250 per week Students should view loans for education as an investment. A small investment in a loan leverages an increase in income.
TURNING A RAW DEAL INTO A NEW DEAL: Fees have risen significantly since the late ‘90s. However, the college-going population and the credit load have not decreased . . . so far.
Much of the problem with fees reduces to how students, universities, localities and states deal with them. Enough money is on the table right now to soften the impact of fees and COA. However, we separate our sources of funds into segmented piles that preclude just what we need: integrated solutions.
For example, many CSU students do not use loans effectively to buy an advance on full employment. Yet if they are like college-going peers across the county, they carry nearly $3,000 in commercial credit card debt, with severe penalties for late payment and high interest. Do high subsidies, low fees, and easy credit create a toxic mix? Without doubt Admissions, Financial Aid, Student Affairs, the College Board and Nellie Mae are aggressive advocates of balanced thinking. However, if policy encourages poor behavior, then the best message about economically rational behavior will not get through.
Transportation and housing costs are substantial parts of COA. That is a problem; but the root of the problem is in the Master Plan. That document envisioned the CSU as non-residential. How then do we switch out bonding for garages with bonding for residential buildings so that we can reduce travel and residency costs? We just passed transportation bonding in California so that we do not sink into potholes on the 5. Where is the bonding for the information highway to underwrite the development of virtual programs that can allay congestion and reduce gasoline expense? We need to rethink the basics. Reduce one round-trip each week for 75% of CSU’s students, and we save over $50,000,000 in COA each year.
We all know that retention increases when students attend full-time and that delay to degree multiplies cost. Beyond the break at <6> credits, how can we encourage students to increase credits, so that they graduate more reliably and quickly, reducing their accrued costs, and at the same time opening seats for more students? Perhaps we can consider reducing fees by some ratio above 12 credits while we implement a general fee increase to remain revenue neutral.
If book costs and transportation are increasing COA, why not consider ways of redirecting elements of bonding for parking garages, etc? Instead, create an information highway that transports books and classes in coherent packages to students. For example, can CSU faculty in basic skills courses collaborate on the production of standard texts that beat marker prices? Can we virtualize a sequence of classes that, taken together, are bound to reduce trips to campus for significant number of students? In other words, can we re-purpose funds in order to reduce overall COA? If we reduce overall COA by $300-$500 per year, then we open room for fees to rise.
A BILL OF PARTICULARS: In the OLD New Deal, the Feds tried to bail us out, though the war against fascism energized the economy more effectively. To get out of its long-term financial mess, CSU needs a NEW new deal. Forget Sacramento. We need to solve each other’s problems. Attack COA, we open the way for fee increases, and we reduce our urban footprint.
What can we do specifically? We can consider these changes. I begin with the political feasible. I then move to the possible. The feasible and the possible depend on us, in the CSU, acting. I end the list with the improbable because these items require either wise policymakers and/or political heft that higher education lacks.
- Accept episodic fee increases, realizing that they are necessary but that California is too politically paralyzed and inept to smooth the spikes and troughs.
- Insure that grants and loans are calibrated against need, as happens—for the most part—now
- Run a campaign on how to use loans, aimed at both students and parents.
- Lower the fee for 12> credits.
- Ditto the above; and choke off the charges and counter charges within CSU about greed and corruption that accusers know are either lies or exaggerations. Such verbal venom poisons the public and provides policymakers with a ready excuse to pummel all of us because some of us are or should be penitents.
- But do this sensibly. If we achieve unity by blaming the evil legislature and demanding that they hand over their cash, then we are behaving churlishly and childishly in a crisis; we are not testing the strength of our alliance.
- Recognize that when many people say fee, they mean COA. Undertake a CS-YOU campaign that emphasizes not just the bargain, but the value of the people’s university. Pin CS-YOU badges on every legislator and staffer whom we meet. Then,
- Lobby for graduated tax credits that hold down components of the overall COA. At the least such credits should go against books, transportation, and housing.
- Organize in the CSU to re-conceive schedules or use the web in order to reduce one-round trip per week for students. 415,000 students x 40 mi. x 30 weeks / 22 mi. per gallon x $3.50 per gallon will add up. Bargain with students to trade this for a fee increase that recaptures, say, 50% of what they save. Include an escalator.
- Bargain with students to peg book cost at 75% of the national average, recouping 50% of the savings in fees. Possibly, develop e-texts by GE discipline to this end; or at least threaten publishers with this prospect. Understand that we allow ourselves to be squeezed by two rackets: accrediting groups that sneer at textbooks as signs of scholarly knowledge; and publishers/chains that sell texts at prohibitive prices. If we want fee to grow, among other things, salaries.
- Re-think what we bond for and why? Significantly reduce FTE commuting by a strategic focus on large classes that can be virtualized.
- Create a rational fee policy. Extrapolating from cycles within California and relating them to trends in other like states, plan how
- CSU fees will rise to peers’ average in like states over ten years,
- How tax credits will address COA,
- How CSU will control book costs and transportation,
- Ditto to major points in 1-3.
- Subtract from the grant subsidization of independents and privates dollars sufficient to increase funds for the 40k-80k by at least one third.
Were this essay a script for a Groundhog vs. Feezilla movie, we would end with Groundhog getting his gamma ray gun to work. He zaps Feezilla in the reptilian tummy with such force that he sails out of Tokyo Harbor into the sea. A bevy of state leaders running for governor, who mistakenly burrito’ed themselves in togas for this scene, close the movie. First, they lead a chorus of young chanters; strangely, they all look like Monica Lewinski in a kimono. The singers harp through the lyrics. Like Milton’s stilted verses in Paradise Regained, the lyrics picture what no eyes have seen: a feeless fiefdom freed of term limits, propositions, and hypocrites.
Groundhog’s eyes mist over, the camera closes in. We see in them the faint image of a fertile plain that is nourished by a bottomless general fund.
Run the credits!