Tuesday, October 20, 2009


How Not to Balance a CC Budget

Out-of-state students!

According to this article, several state university systems are now considering making deliberate moves to increase the proportion of out-of-state students, specifically to capture the tuition premium. The idea is to replace lost state subsidy support.

I won't address the logic at the university level. But at the cc level, this would be political suicide.

In most states, out-of-state students pay higher tuition at public colleges and universities than in-state students do. This holds true all the way from the flagship university to the community colleges. (In states where community colleges are based in counties, out-of-county students usually pay a rate in between in-county and out-of-state.) The idea is that the taxes they've paid by living in that state have subsidized the cost of education there, so in-state tuition is a form of payback. Out-of-state students haven't subsidized that state's colleges, so they pay more.

The idea isn't perfect, of course. One could easily make a case that to the extent that Federal money is involved, my taxes support higher education in every state. But it's certainly true that my state and local taxes go to my state and local systems in a way that they don't go to the systems of a neighboring state. And to the extent that public institutions are reliant on the goodwill of their taxpayers -- which is to say, for their very survival -- there's something to be said for keeping the locals happy.

The out-of-state premium is supposed to be enough to make out-of-state students at least a break-even proposition. But in practice, many systems treat them as cash cows. They don't have the legislature's ear like in-state students do, and the fact that they're there anyway indicates a certain level of desire. They can even add a certain kind of diversity to a student body, at least in theory, even if in practice they tend to be upper-middle-class or just plain rich.

(The exception to that is undocumented students who are treated as out-of-state. But that's an entirely different issue. There, the students in question are effectively local, often having graduated from a local high school; they're undocumented because they came over as kids. In that case, the issue isn't interstate poaching; it's federal immigration policy, which is much more complicated.)

In discussions I've had with state legislators, the issues that prick up their ears are the number of students who live in their district, the number of employees who live in their district, and the relationships we have with employers in their district. Out-of-state students don't count. And I don't want to have the conversation in which I try to explain why our scarce marketing dollars are being spent out-of-state.

Even leaving the politics aside, there's a basic irrationality to the entire idea. If we simply traded a third of our student body with a counterpart school across the state line, what, exactly, would we have achieved? As near as I can tell, we'd simply shift more of the cost of instruction onto students, thereby effectively licensing our home state to make even more cuts. If the students keep paying, why not? And it's not like those students vote here anyway.

No. It's not what cc's are for, and the long-term cost would dwarf any short-term gains. I get the 'premium tuition' argument -- this week, more than ever -- but some premiums just aren't worth it.

I'm not seeing the problem here. Isn't this just a form of market segmentation? Yes, you may be shifting more of the costs onto students, but you're shifting more of the costs onto students who are either able to pay out of pocket (or more likely, their families pocket) or who are willing to borrow to pay for it. Effectively, then, you're subsidizing students who aren't able to pay with students who are. From the out-of-state students' perspective, their must be something about the out of state institution they value, since they could have gone in-state just as easily; otherwise, they wouldn't be willing to pay the premium price. Who is the victim here?
Lance, if nothing else, there is a limited pool of out-of-state students. *Everyone* is trying to get more OOS students, so there is heavy competition. In California where I, sigh, live and work, we have 23 CSUs all competing for the same pool of OOS as, oh, the AZ, NV, NM, etc., state systems. We won't even talk about international students.

And, Dean Dad was talking about community colleges, which by definition really ought to be serving their communities.
There is also the strong possibility of a political backlash from those in the community who see every seat filled with an out-of-state student as a seat denied to a local student, and moreover insist (usually against all evidence) that the local students subsidize the out-of-state students rather than vice-versa. These views can be poisonous to the overall budget discussion, and lead to arguments for dropping state support still further coming from both ends--i.e., 1) you're getting all this money from rich out-of-state students, so you don't need state funding, and 2) how dare you use state funding to subsidize out-of-state students.

There is no way that I have seen to win this argument.
The costs can be real.

Some years back the University of Michigan got a chunk cut out of its state budget, reportedly because the legislature was unhappy that they have about 1/3 of their undergrads from out of state. More recently, Penn State (27% out of state at the main campus) got stiffed for Stim money by the legislature.

In both cases, the out of state tuition levels ($35,000 at Michigan, a mere $26,000 at Penn State) can help heal those wounds.

To any unbelievers out there, that's just for tuition and fees. You have to add another $10,000 to each for room and board, books, etc.
I see this as part of the trend towards privatization and finding a way to pay for things that state governments are no longer willing/able to. The government is funding cc's at a lower rate -- but it hasn't lessened the same restrictions on in-state students (you still can't raise tuition, etc.). So if you want to balance the budget, you have to find outside funding sources -- and out-of-state students are the obvious source. Of course it's lamentable, but money speaks.
Interesting story as for me. It would be great to read something more about this matter.
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