Friday, July 08, 2005


More on Music, Nursing, and Why We're Going Broke

Thanks to everyone who commented on the last entry! Working in the trenches, I forget that from the outside, it might not be clear why (say) we’d lose so much on every nursing student.

It’s easiest to answer by a comparison. Compare, say, a section of Nursing 1 to a section of General (or “Intro to”) Psychology (one of the most popular courses we teach). Nursing 1 requires a student/teacher ratio of no more than 12:1 (and works better below that), a dedicated room, and hundreds of thousands of dollars’ worth of capital equipment (which, luckily for us, can be amortized over each section we teach). So for 12 (or fewer) tuitions, we have to cover equipment overhead, room overhead (specialized labs can’t really be used for any other purpose, so they sit empty when a particular class isn’t meeting), and instructor salary. (Nursing is devilishly hard to adjunct out, for both labor-market and accreditation reasons, so we pay full fare.)

General Psychology, as we teach it, easily runs with a student/teacher ratio of 35:1. (Our flagship state university runs it at 300:1!) It can run in any general-purpose classroom, and requires no special equipment. It’s also easier to adjunct out. So we take in more revenue per section (more students means more tuition), and spend much less to do it (no specialized equipment, any room will do, instructors can be paid at adjunct rate). In the trade, we call these the ‘chalk and talk’ classes, and they help us pay the bills.

In a perfect world, we have enough demand for the ‘chalk and talk’ classes that the profit can cover the losses we incur in the specialized programs. The entire college is set up on the presumption that this will be true. When demand for the specialized programs is relatively modest, it works fairly well.

What’s killing us now is that demand for the specialized programs has skyrocketed, while demand for the ‘chalk and talk’ classes has plateaued, or even dropped a bit. To make matters worse, the pace of technological change in the specialized programs is accelerating, so we get less time to amortize the cost of equipment than we used to.

My colleagues in the specialized program areas like to point out that students in nursing (or engineering, or radiography, or photography) also take some ‘gen ed’ classes (meaning some ‘chalk and talk’ classics, like freshman composition). That’s true, but that was true in the past, as well. That’s part of the baseline. When student demand shifts towards the specialized majors, our overall costs go up.

Most community colleges in the U.S. were founded in the 1960’s. At that point, many of the expensive technological advances in specialized areas hadn’t happened yet. (Some fields didn’t even exist yet in anything resembling their current form, like IT.) The bulk of the teaching was of the chalk-and-talk variety, which is cheap. Since then, we’ve had to keep up with technological advances, but we’ve had to do it with declining public subsidies and low tuition. (All the headlines about skyrocketing tuition refer to the elite schools – community colleges are still quite cheap.) It’s getting harder.

Certainly, new revenue streams would help. To be fair, a few local hospitals do some limited cost-sharing with us, and it helps. But the scale of it is nowhere near enough to make up the difference.

(The hospitals argue, correctly, that they’re being squeezed by the managed care companies. What if we confiscated some of the managed care companies’ windfall profits, and poured that into the service-provider pipeline? Make sure the colleges can cover the cost of educating nurses, raise nurses’ pay, and put the money where it actually does some good? Hmm…)

I’ve written in the past about differential tuition for different majors. While the specialized programs do assess some ‘lab fees,’ the lab fees come nowhere near making up the difference in the cost to the college. In theory, we could decide to stop cross-subsidizing, and charge tuition for each program based on its costs. Psych would get cheaper, and Nursing much more expensive. While I’m broadly sympathetic to this, on the grounds that it would provide a more sustainable revenue stream to the colleges (independent of legislative whims), it’s hard to get around the fact that it would almost certainly reduce demand for the nursing program in a time when we have a shortage of nurses. It’s that pesky ‘mission’ again. If we ‘ran the college like a business,’ it might be an option. But we don’t, because that’s not our purpose. It’s about the music, man; we serve the public good, even at considerable (and rising) cost to ourselves. Keeping a program like Nursing artificially cheap is a way of providing access to upward mobility for students who struggle even to pay what tuition we do charge. (It also prevents an already bad nursing shortage from getting even worse, and thereby driving health care costs even higher.)

Raising nurses’ pay might provide the incentive to make the tuition premium seem worthwhile, but that’s not in our power. We control tuition; we don’t control the salaries that hospitals pay.

On the Bush tax cuts: a quick check of the historical record shows that the tax cuts were sold, initially, on the premise that it was immoral for the government to run a surplus (“it’s your money!”). Give Bush full credit on this one: he solved the ‘what to do with the surplus' issue very quickly. In fact, by the end of Clinton’s second term, economists were worrying about deflation as a consequence of a rapidly dwindling national debt. Suffice to say, we don’t worry about that anymore.

When the recession kicked in (which, in fairness, would have happened under President Gore, too), Bush switched rationales, suddenly becoming a regressive Keynesian. (He later pulled a similar bait-and-switch with the Iraq war. Remember WMD’s?) Bush pushed through tax cuts that take effect in 2007, 2008, and 2009 on the (sudden) argument that they would solve the recession of 2001.

Puh-leeze. The cuts, which really do skew towards the wealthy, have nothing to do with the state of the economy at any given time. They’re motivated by a belief that, in the words of Grover Norquist, the morally right thing to do is to ‘starve the beast.’ (He also had a charming line about ‘drowning it in the bathtub.’) If you disagree, show me the set of circumstances under which Bush would agree to raise taxes. During a boom, to stave off inflation? Nope – he argued for cuts during the Clinton boom. During a recession, to stimulate consumption on the lower end? Nope – he argued for cuts during the recession of 2001. If the cuts had anything to do with economic stimulation, Bush’s support for them would change when the economy did. His support for tax cuts is ideological, not pragmatic. That’s why he’s so willing to change his arguments. He’s a true believer, which negates the need for true facts.

But enough of that. Macroeconomic and political arguments can be found anywhere; my contribution, to the extent I make one, comes from a focus on community colleges specifically.

The long and the short of it is that without a serious change in the prevailing political winds, we won’t be able to count on public subsidies catching up to public needs. If the government kicked in the difference when demand for nursing went up, in recognition that nursing education is truly a public good, the entire issue for us would go away. But I don’t see that happening.

Sorry for such a long post – this topic really touches a nerve for me. If anyone out there has any ideas that might help, PLEASE PLEASE PLEASE share them!

When you point out that "it used to be about the music, man," you've touched on the essential truth. The world has changed and we can't go back, the original funding models can't work in an economy that demands specialized skills. especially when students are responding to that demand in turn.

Loved your phrase "chalk and talk," it perfectly captures those classes. But it almost seems like students have discovered which are the high-cost/high-value classes, and are shaping their choices with that knowledge.

One idea might be to have a major campaign to build a serious endowment for the nursing school, to help with overhead costs. Don't know if that's ever worked at a community college.

Another approach might be to secure targeted state aid for the nursing shortage. Tuition could be repriced upward, but with the increase offset by a program of grants and loans to the incoming students. And perhaps the loans would be forgiven for graduates who practice nursing in-state for some number of years.

I have zero community college experience to share, I'm afraid, but I would suggest market-oriented solutions. When the Republicans are in power, it may pay to think like a Republican (another way of saying that the music is over).

Many of your points on the Bush tax cuts are well taken, especially that the delayed cuts couldn't have had an economic impact back in 2001 and 2002. Still, federal tax receipts as a percentage of GDP reached a post war high under Clinton, and some economists believed that those high taxes contributed to the recession (or at least slowed the recovery). Gore would have almost certainly cut taxes had he become President, because every new President makes tax reform the first order of business. Arguably Gore might have pushed for a different distribution of the tax cut, but that's become much harder as the income tax (in stark contrast to FICA) has become so steeply progressive (the top 10% of taxpayers pay what, 50% of all income taxes? something on that order).
We've discussed the idea of some sort of dedicated endowment. The catch with that is that, in this political climate, any 'excess' reserves are taken as license to cut appropriations. (That actually happened here a few years ago.) If saving is penalized, why save?

Loan forgiveness is a good idea on paper, but it ignores two key factors: the cultural background of some of our students (which rejects debt of any kind), and the reality of attrition. A rigorous nursing program will have a significant attrition rate; this is not a bad thing, since it means that the ones who do make it through are more likely to be competent. If loan forgiveness (of premium tuition)is predicated on successful completion of the program, the students who find themselves overmatched academically are doubly penalized.

On the point about tax distribution, keep in mind that in the 1950's, the top income tax rate in the U.S. was 91%. The Republicans screamed 'socialism' when Clinton raised it to 39%. The trend line is clearly down, not up.
The reason everyone is going into nursing programs is because they know there's a huge demand, and that finding a job is almost a sure thing. (Thanks, baby boomers!) Plus, they know the pay isn't bad. It beats the heck out of what a psych graduate would make, even with an M.A. or M.S. in most cases.

I personally started out towards psych and re-evaluated my decision 3 semesters into it after a visit to the career center, where I took the Meyers-Briggs test (?) and also discovered what the realistic pay was going to be---and that I'd need a PhD to get it. I wanted to do nursing because it would guarantee relative job security, but it wasn't a realistic option for me because I'm just not a science person--I'm more on the art side. That's just the side of my brain that works best, and even though I decided not to do psych I still ended up in a lib arts major, because I had no choice but to do what I liked and had a talent for. My "D" average in Intermediate Algebra didn't help any, either.

So regardless of what the tuition prices are, you're always going to have people who are more inclined to science than to lib arts, and vice versa. My fiance, a pharmacist, could not have earned an English degree if his life depended on it. Lucky for him his talents lead to a career that involves a decent paycheck.

Maybe you could raise the tuition for nursing programs without calling it tuition--call them lab fees or material fees or equipment fees or whatever. Increase the "fees" AND the tuition it would be more spread out and wouldn't seem like any one thing was becoming drastically more expensive. You could do that without lowering the tuition for programs like psychology or English. Or you could raise tuition across the board (all of our state and community colleges did so three times in the last 5-7 years, in MS) and just raise the nursing tuition by a higher percentage than the regular tuition.

I don't know what the answer is, or if you'd even have the power to make it happen if you found a way. Just some thoughts.
Although the trendline for the top *marginal* tax rate is clearly down, that shouldn't be confused with actual tax collections. Almost no one paid those 91% rates, or the 70% rates of the 70s. There were many more tax loopholes and tax shelters in those days.

Asking what portion of total income tax collections are paid by the top 10% is very different from asking what their tax rate is. I believe that their average tax rate (in contrast to their marginal rate) has been pretty stable through the years, while the average rates further down the income scale have declined somewhat. The net result is that the share paid by the top group is, I believe, sharplly higher than it was in the 1950s. That's in large part because the income difference between top earners and the average has grown larger over the years

But although this analysis is accurate as far as it goes, it is flawed, because it does not include FICA, which for many taxpayers is larger than their income tax obligation.

Anyway, I don't have any new funding ideas, but I wanted to say you make a great point about the loan forgiveness suggestion that I never thought of.

Also, excellent post on academic blogging. Blog on!
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