Thursday, June 14, 2007

 

Base Rates

According to a piece in IHE, Democrats in Congress are considering establishing penalties for colleges that increase tuition by too high a percentage over any three-year period.

To illustrate why this is a painfully stupid idea, I'll trot out some math. Assume 3 percent annual inflation, which is probably in the ballpark. The cap is twice the inflation rate, or 6 percent per year.


Snooty U: $40,000 this year, 42,000 next year, 44,000 the following year – 10 percent over two years; hunky-dory, no problem.

Struggling CC: $3,000 this year, 3,200 next year, 3,400 the following year – 13 percent over two years; violation.


So Snooty U can go up by $4,000 without penalty, but if Struggling CC goes up by one-tenth of that, it's considered profligate. We uppity cc's need to be put in our place. It sure is a good thing we can heat our buildings for free! Oh, wait...

Snooty U is rewarded for being too expensive in the first place, and Struggling CC is punished for being too affordable. This, in the name of affordability.

(In this context, Gov. Patrick's plan for free tuition at cc's in Massachusetts gets even scarier. What's six percent of nothing? Prepare for the ax, folks...)

The net effect over time, obviously, will be that the wealthiest schools will continue to pull away from the rest, and the schools that are actually open to regular people will erode. It isn't that hard to see. This is especially true when you consider that the most expensive colleges and universities typically have larger endowments, and depend less on tuition for revenue.

Clearly, the only rational course of action for cc's is to pass enormous tuition increases while we still can. Double or triple them now, so the base rates will give us reasonable room to move. It's only a holding action, obviously, but it might buy enough time to try to get a more intelligent bill passed.

In the spirit of constructive criticism, I'll suggest a few alternatives:

Higher ed is caught in a weird bind. Our costs are climbing rapidly, even as we've spent decades (at least in the frugal lower echelons) hollowing-out the full-time faculty. We're hitting the limits of the “adjuncts will save us” strategy, especially when salary and benefits savings evaporate when student attrition levels climb. Yet parents and the public are -- rightly -- concerned about tuition levels.

In this, as in so many things, a basic failure to define our terms is leading to stupid and counter-productive decision-making. If, say, NYU raises its tuition “too much,” why punish CUNY? If the Ivy League has intimidatingly-high sticker prices, why crack down on community colleges? And hasn't anybody in Congress heard of 'base rates'?

Sigh.

I know, I know, Congress is bad at math. But this is really appalling, even for them. I'd offer to run some remedial math courses for them, but I don't have the budget for it...



Comments:
Anytime politicians try to manage something expect the worst. However, the immigration bill is dying a slow and painful death (and everyone seemed to love it at the time), so this too shall pass....like a big kidney stone!

CCs have always been the red-headed stepchild and always will be. I use the immigration bill as an example, and it just hit me; CCs are the immigrants of the higher ed system! We've come along lately to do the nation's dirty work. We educate the poor, the less affluent, the average. More and more state unis are becoming selective, so someone has to educate the average citizen. We help them better themselves finacially. We are asked to do in 18 months what the public schools couldn't do in 12 years (bless their hearts, they have troubles enough without us jumping on them too!).

We don't have multi-million dollar contracts with Nike nor huge arenas with Verizon Wireless. We aren't sexy! But we educate far more people, add to the GNP with more tax-paying citizens, and do it all on far less money.

In my neck of the woods, the state system of unis (AND THE PRIVATES!) got a raw dollar increase in state support while the CCs got a raw dollar decrease!!! Giving more money to the private colleges in the state (which are supposed to eschew state funding) just blows my mind! I'd look for a state friendlier to the CCs but I don't think it exists ;-(
 
Why has the cost of higher education been driven so high relative to everything else? A far greater percentage of faculty is adjunct than in the past. Is it because colleges/universities more sensitive to increases in energy?
 
Is it true that, as you say, healthcare costs are "driving much of the tuition increases anyway"? I'm not 100% sure about that. At my institution (large state u), it's all the ancillary services needed to attract and keep students--computing services, remediation services, advising services, career services, etc., etc., etc.

I teach my students that college is more expensive than it was "back in the dark ages" (late 1970s) when I attended, but that they are getting a different product (wi-fi in all the buildings, state-of-the-art classrooms, AIR CONDITIONING, etc.). All of these changes have been consumer-driven, as far as I can tell. Students want this stuff, and so, to remain competitive, colleges have to offer this stuff.

So if this is all market-based, then why should Congress get involved to cap tuition increases?? As far as I'm concerned, that is pandering.

Jane
 
It works the same way with salary increases in business. Because it's all based on percentages, you give a 5% increase to an exec making $250,000 a year and he walks away with more than $1000 per month increase.

You give a 5% increase to the data entry person making $25,000 per year and he walks away with a little more than $100 more per month. That's $25 extra per week. After taxes, you might be able to buy a cheese pizza with your increase.

But, heaven forbid you should want to give a low level person a higher increase.
 
Nowadays education institutions are not acting as a non-profitable or at least service industry rather than they becomes like corporates..Their most of the focus lying in balance sheet..So there should be a some speed-breaker...
AA Breakdown Cover
 
Posted yesterday on IHE:

Private schools pay the same price for computers and electricity as everyone else, so why not a fixed dollar limit on cost increases?

Our college uses the same logic for faculty pay raises, with part distributed as an equal dollar amount and part as a percentage increase.
 
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