Monday, January 18, 2010


Ask the Administrator: Charter Colleges?

A longtime reader writes:

Here in [unnamed state] state support for higher education is shrinking fast. Some of this is cyclical, but those cycles can't mask a longer term, downward trend. Where once the state provided support for about 65% of our operating budget, that number has fallen to around 17%. I'm writing from a four year university, and don't have comparable numbers for community colleges. They are funded through a separate state agency.

There still remains a substantial overhead structure for the [unnamed state] state universities, and second guessing and restrictions on activities, tuition/fee increases and the like. And, to a limited extent, there are some joint operating arrangements - mostly in terms of legacy information systems.

Though most of my colleagues hope we can just hold our breath until times get better, I am more pessimistic and don't expect any windfall increases in state funding once the recession cycle is gone.

So - is there something we can learn from the charter school movement in primary and secondary education? Should our university work to become more private and less public - at least in terms of organizing our educational process? If we could gain the higher education equivalent of charter school status, could we free ourselves from self-limiting regulation? Anecdotally I'm aware of some state-sponsored schools that look more private than public, so the model is not brand new.

I'm an economist so worry about fixed and variable costs and the like. I'm not sure there is enough cost savings if we could "shed" the burden of state administration. Presumably we could keep, at our option, any joint purchasing/operating arrangements with the other schools. The major advantage that could come from this arrangement would be more strategic flexibility, and perhaps, over time, more buy-in from our own faculty for innovative, cost reducing processes.

Honestly, I'm conflicted on this one.

Certainly, the direction of things is an accelerating pace of cost-shifting from the taxpayers as a group to students individually. Your state isn't alone in that. Last week IHE had a story about somebody proposing a new public college in Philadelphia, which struck me as odd since Temple University is already there. The story mentioned that Temple is "state-related," as opposed to "public." That was a new one to me. I don't know the particulars -- Pennsylvanian readers are invited to clarify that in the comments -- but it struck me as similar to what you're proposing here: greater autonomy in exchange for less funding. (I think UVA, in Virginia, did something similar a few years ago.)

The arguments in favor of this boil down to making a virtue of necessity. If the funding is drying up anyway, why not acknowledge the fact, get ahead of the curve, and at least gain some operating autonomy for your troubles? If he who pays the piper calls the tune, then stiffing the piper means you have to shut the ()&^^ up. I've noticed in my own state that the state's share of our budgets is dropping like a stone, but its demands in terms of restrictions, reporting, and all flavors of 'accountability' keep growing. Presumably there will come a point at which the trade-off simply isn't worth it.

That said, though, most of the reforms I think would help couldn't really be implemented on a single campus. Movement away from a time-based measure of learning ("credit hours," "four-year degrees," etc.) is an absolute necessity for long-term cost control, but it would only work if it were done on a large scale. If my cc decided unilaterally to move to credits based on, say, demonstrated competencies, then our students would be in for a series of nightmares when they tried to transfer. Financial aid, which is largely federal, would get even more complex than it already is.

It gets worse. Even if the states pulled back, the feds would still be involved through financial aid. We'd still have all the compliance costs of the various pieces of federal legislation, and the omnipresent carrot-and-stick of federal funding and oversight. In some states, too, community colleges draw local funding as well as state funding, usually from counties. If the state pulled back but the county didn't, the potential for local county political shenanigans would be even greater than it already is. In states that fund cc's through 'millages' -- dedicated property taxes passed by referendum -- the voters would be given a free pass never to support millages again. (Alternately, we could theoretically see incredible disparities in funding from county to county, just like we do from school district to school district. This strikes me as a terrible outcome.)

Then, of course, there's the basic issue of fairness to low-income students. Financial aid is great, and it helps, but most of the increased cost to students would come in the form of loans. Student loans are a nasty deadweight cost when you're just starting out in the workforce, especially when the workforce is shrinking.

Yes, there are some costs involved in rules unique to the state, but they're a pretty small part of the overall picture, at least from here. And the structural issues that create the cost spiral and that stand in the way of real improvement don't come from the states. I won't deny the existence of some quirky rules that don't help, but they're not the real problem.

All of that said, though, I concede that I'm no expert on the charter school movement in the K-12 system. Is there a magic bullet that I've missed? Alternately, is there something unique to higher ed that makes "public but self-supporting" a better model? I'm hoping that my wise and worldly readers can see something that I don't.

Have a question? Ask the Administrator at deandad (at) gmail (dot) com.

Charter schools have a revenue stream that isn't present in the higher-education system, AFAIK. Each charter school student brings along part of his/her "share" of school tax revenues (in my state, 66%). That's why public schools tend to oppose charters, since each student in a charter means a direct hit to the public school's budget.

There's no tax to directly support college tuition, so there's no dedicated revenue stream available for a college that wants to go charter, so to speak. What distinction would there be between a "public but self-supported" college and a private one?

Public universities that have a measure of independence usually buy it with grant money or corporate partnerships, but that's not the same thing as the charter-school model. Rather, the school staffs traditional core functions on state-supported lines, and then fills in all the bells and whistles with the revenue from grants and IP transfers. However, those revenue streams generally have little or nothing to do with students, so they're not very "charter-y." What sorts of money sources are we talking about?
What being a 'charter school buys?

As a former CC full-timer and a former charter school full-timer I've got to say that both operated on a shoe-string budget.

A few points about charter schools--which are public (YMMV by state):

*The are responsible for teaching all of the same standards and content as regular public schools.

*The students take the same state exams (the NCLB ones) and are held to the same standards.

*The most important freedom that they get is that they can have longer school days and longer school years.

Most of the rest of the differences seemed to be about scale and trust. A small administration that trusted teachers meant that there was a lot more autonomy and 'do what you think is right' than many of my traditional public school colleagues felt.
"I'm an economist so worry about fixed and variable costs and the like. I'm not sure there is enough cost savings if we could "shed" the burden of state administration."

Where I am, charter schools save money primarily by paying teachers less (while simultaneously requiring a longer day and year). They're also not typically unionized, which allows them to bypass the teachers' unions and ignore tenure in favor of retaining younger, less-expensive teachers (who are often, but not always, most up-to-date on their teaching methods anyway).

I recently spoke with a charter school teacher who works in a charter in Chicago where he makes $18,000/year less than he would if he were on the normal union schedule for Chicago Public Schools, and he works a significantly longer day and year. I believe he was a 5th year teacher. (Looks like a teacher with just a bachelor's makes $54,499/year in CPS in his 5th year.)

Charters are also very uneven in terms of effectiveness. The Stanford study showed that around 46% got the same results as public schools; 37% did worse; only 17% did better.

My district just approved a charter school last Monday.
Both you and the questioner seem deeply confused about charter schools, which (in our state) do not charge tuition. They get their funds from the same kind of per-student allocation that the state gives other public schools. Unlike private schools, they cannot discriminate on the basis of race or religion.

Charter schools may be free of some rules, but they must follow state standards, give the state standardized test, and their performance under NCLB is made public. In contrast, private schools are never evaluated under NCLB (and anecdotal CC placement information says some of our local ones are as bad as the worst public schools).

That said, my interpretation of the underlying idea is an interesting one. What if the state gave exactly the same amount of money to each university and college on a per-student basis for 100 and 200 level students (and a different amount for 300 and 400 level, the 000 pre-college level, not to mention a preposterous amount to subsidize medical school)? That would vastly improve the formula we operate under at our CC.

BTW, what the writer asks about already exists in PA. Penn State gets a tiny fraction of its budget from the state in exchange for more operational freedom (i.e. sky high tuition). They were happy with this until they found themselves cut quite a bit during the current depression.
Only somewhat related, but the former University of Oregon President, Dave Frohnmayer, wrote a report recently advocating that Oregon's biggest three public universities - OSU, UO, and Portland State - be allowed to become public corporations (like Oregon Health Sciences University in Portland already is) as a response to declining state funding. The report can be found here:

A short-term response from AFT-Oregon, who has locals at all three universities:
Washington State is currently dealing with proposals from the state universities to be granted full tuition-setting authority. While this is scary, in terms of rising costs to students, it seems to mark the move toward more 'charter-ish' funding.

At my CC, we are faced with the common double-whammy of decreased state funding and increased enrollment. Worst of all, the decreased funding did not come with an attendant decrease in enrollment requirements, i.e. we must teach the same number of students for less. Certainly do-able when faced with a 5% cut, hard-to-do with a 10% cut, but-not possible when faced with the current 20% cut.

Our solution is to offer more and more courses that are funded through a self-supporting continuing-ed sort of model. We keep all fees charged (a portion of tuition normally goes back to the state) and use them to pay course costs. Of course, this only works if we still have sufficient enrollment to meet our state-mandated targets too. I don't know what the heck we are going to do if (when) enrollment goes back down.

Its not a charter school, but more funding for our school is off-loaded onto students.

FYI, we actually do have something very akin to a charter school. WA state has a Running Start program, where high school students enroll in CC courses and their high school funding from the state follows the student to the CC. Typically, a high school student takes only one or two CC courses, so a portion of the funding comes to us - but we started a 'full' Running Start program, where students take all their classes here as a cohort. If all goes according to plan, these students get a high school diploma and an AA on the same day.
Washington state has it one better than that, even, because in a couple cases Running Start kids are going not to community college but to full universities; in Pullman, for example, there are dozens of kids taking full or nearly-full schedules from Washington State University. The ironic thing, thoug, is that neither side is happy with the arrangement; the high school is getting less money than it would were those students going to the high school full-time, while the university grumbles that they get dramatically less from the state for these students than they would if those kids were paying tuition.
On PA:

The bona fide state universities are the 13-14 original normal schools. Penn State, Temple, Pitt and Lincoln all have the special designation of "state-related" university, meaning in some cases they are a public university (gaining state tax dollars) in other instances they are a private university (not covered by open records acts).

It's why the state normal schools (Edinboro, California, Cheney, Mansfield, Millersville, Lock Haven, Kutztown, West Chester, Indiana, East Stroudsburg, etc) tend to disproportionately draw working class kids...since the tuition is pretty affordable (to this day). Penn State, Pitt, etc., are ungodly expensive by comparison. But they serve a very different class of Pennsylvanian.... So while PSU claims to be THE Pennsylvania State's really not.

How's that for policy incoherence in higher ed?
Higher ed today is where housing was ten years ago. We have a lot more capacity than we need, so we're desperately trying to corral more customers for a product that they don't really need and from which they'll get no economic benefit. Think subprime mortgages. New financial models for colleges won't change the underlying economics.

The "magic bullet" is to dramatically shrink capacity in higher ed to bring the resources in line with more realistic demand. We are not presently building an economy that needs more college graduates, so we don't need all these colleges and universities.

It's a shame, really.
Heh, we're not presently building an economy of any sort.
The amazing thing about charter schools is that they take the most motivated parents with the most supported students, work their students much harder, and consistently achieve below average results.

How does that work?
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