Los Angeles Times
July 10, 2003

HEADLINE: Commentary; For Good of All, Hike Fees at CSU

BYLINE: Shirley Svorny

California State University trustees will vote next week on a 30% fee increase, hoping to ease the pain of state funding cuts. This, coupled with increased financial aid for low-income students, makes sense. For many CSU students, the current fees are not high enough.

Fees are so low at CSU that many students do not take their education seriously and waste state resources.

Also, it is perverse for the state to heavily subsidize students who attend college; this is a group that tends to be relatively wealthy and will have higher-than-average lifetime earnings.

When something is too cheap, people waste it. In California, farmers who have the right to cheap water wind up wasting it, growing -- of all crops -- rice (which is very water-intensive) in a state where urban water uses have a higher value.

The same is true of education. Students waste state resources because the CSU system is so cheap (the state university fee is $1,572 for an academic year; at Cal State Northridge, where I teach, other fees bring the total to $1,966).

Many enroll in classes but do not study or turn in homework assignments. Some fail and, eventually, retake classes at a CSU school or elsewhere or drop out altogether. Much less of this would take place if students paid the true cost of their education.

With the proposed increase, fees would rise by $472 (about equal to students' annual cell phone bills) to $2,044 a year. The cost to the state to educate a college student is closer to $10,000 a year.

This is a hefty subsidy and explains why many students waste state resources: They bear only a fraction of the cost.

Students oppose fee increases for obvious reasons. Everyone wants stuff cheap.

Higher education is provided by the state to many families that are able to afford high fees. Some students come to the CSU from private high schools that cost four times more than CSU. Why is the state subsidizing these families? The fact that higher-income families tend to vote may explain the political decision.

Despite what some say about the benefits of subsidized education, the lion's share of education benefits do not accrue to the state, but to the individual.

Sure, college-educated residents would be better neighbors, better citizens and better parents and would pay more taxes (if they don't pack up, education and all, and leave the state), but these benefits are small compared with the benefits that accrue to the graduates themselves.

If the state is going to subsidize education, why not spend more on kindergarten through 12th grade, where the inadequacies of our system have a much greater effect on society?

Faculty and administrators at public institutions of higher education do not embrace this view. Subsidies to higher education generate faculty and administrative jobs throughout the CSU system.

An underlying concern is that, were fees to increase and student enrollment to decline, administrative and faculty positions would be at risk.

California's free public education has been credited with luring talented individuals to the state.

But a more effective policy option to achieve that goal would be lower taxes and a concerted effort to improve California's reputation as a business-friendly environment. Reducing taxes is the proven way to attract talented individuals and generate jobs.

California's public finances are a mess, given several years of overspending and big mistakes in energy policy management. It is time to rationalize spending.

One way to do this is to examine various state subsidies and reduce those that are inefficient or create incentives to waste resources. Subsidies to higher education fall under this category.

The proposal to raise CSU fees by 30% won't be popular, but it makes sense.

Shirley Svorny is an economics professor at Cal State Northridge.