Thursday, March 03, 2011

 

Thoughts on California

Having entirely too much plane time to think it over, a couple of ideas from the League conference have stuck in my craw. They're both examples of basically good ideas – or at least well-intended ones – gone horribly wrong. The snowballing process is remarkably hard to stop.

The first is the gradual accretion of levels of remediation at community colleges. I'll address that one in a subsequent post of its own.

The second is rampant “reserves” growth at California community colleges.

I hadn't fully appreciated just how badly designed the California system was until I had a chance to overhear an exchange with Dr. Constance Carroll, the chancellor of the San Diego community college district. At this point, I have some sense of why I didn't understand it before, and I can say with confidence that if the California cc system were a stock, I'd short it.

In the states in which I've worked, the community colleges were formed as colleges. They were understood as locally accessible portals to higher education. As such, they were staffed by people from higher ed, and they drew on recognizable higher ed models. For example, tuition and fees are used to support the costs of instruction. This is so basic and so much a part of my world that I simply took it as the way things are.

In California, though – and in some other states – community colleges were initially established with structures and strictures much closer to the K-12 system than to higher ed. (That's why some states have community college “districts,” complete with superintendents – sometimes called chancellors – and campus principals, usually called presidents.) Like the K-12 system, it was initially tuition-free, and its per-credit charges are still improbably low by national standards. Its costs of instruction were initially covered either by the state, or by the state and the local district. Tuition/fees were later add-ons, but the system was not structurally changed. To this day, the colleges send their tuition/fee income to the state, where it gets absorbed into the general fund. (As we used to say in the '80's, it gets sucked into the void.) Funding from the state is allocated by the legislature, which itself works within a largely plebiscitary budgeting system. (When in doubt, pass a referendum.) One outcome of that is that any increase to tuition and/or fees looks, to tax-averse politicians, like a tax increase.

The consequences of this system are several, all of them awful.

First, and most basically, colleges have no meaningful control over their own operating income. Dr. Carroll noted that her district has managed to build up its reserves even over the last couple of catastrophic years; the reason it did that is to cover the four-month stretches during which the state doesn't send any money to the colleges. (I think Illinois does that, too, though I'm fuzzier on Illinois.) The California legislature has a habit of passing its cash-flow problems on to others by simply not paying them for long stretches. Since colleges have payrolls to meet, and people get kind of cranky when they don't get paid, the district has had to build its reserves unusually high by diverting money that could have gone for instruction; the alternative would have been insolvency.

This is madness. In the models with which I'm familiar, tuition/fee revenue has always gone directly to pay the costs of instruction. In the beginning its share of the costs was relatively small; it has gone dramatically higher of late as state subsidies have been kneecapped. But that, at least, offers a survival strategy for a strapped college: tuition hikes. As tuition covers a progressively greater share of the overall cost, a combination of adjunct staffing and enrollment growth can generate enough revenue to offset at least some of the subsidy cuts. Better, colleges in this system can keep smaller reserves and get away with it, since they're less dependent on the state to make payroll. Even when the dollars coming in are too few, these colleges are at least spared the expense of having to build up ever-higher reserves to compensate for ever-longer funding droughts.

Too, colleges in the states I know not only get to keep the money they bring in, they actually get to set their own tuition/fee levels. Over the past few years, as the state has reeled from the Great Recession, we've been able to offset at least some of the state cuts through higher prices. Stripped of that option, we would have had to go the California route and simply turned away thousands of people.

California's tuition level is so low that it actually loses money on a typical adjunct class, let alone one taught by a full-timer. The only option campuses have for solvency is to shrink.

And that's where I take fundamental issue with the knee-jerk equation of low tuition with access.

At first blush, “cheap” and “accessible” seem to make sense together. It's easier for a student to pay, say, $26 per credit than to pay $126. But that's misleading. Pell grants and other forms of financial aid are available for low-income students to deal with tuition increases for the classes they need. But when the class they need doesn't exist in the first place, there's no financial aid for that. Students who get waitlisted or turned away altogether take longer to get their degrees, incurring severe (if unbudgeted) opportunity costs in lost time. When a two-year degree suddenly takes four because classes aren't offered, there's a real human cost to that.

Beyond the existence of the class, obviously, is the quality of it. Having 'access' is only worthwhile if the thing you have access to is worthwhile. Maintaining good facilities, reasonable class sizes, and qualified employees costs money.

I'm lucky to work at a college that charges something closer to reality, and that mostly gets to keep what it makes. That means, among other things, that we've been able to keep running quality programs without turning people away. Yes, we have had to cut costs, and will have to cut more, and that sucks. But there's at least some level of agency at the campus level to make those decisions. In California, the campuses are told what they'll get, and that's what they'll get, unless they don't.

This is no way to run a college, let alone a state system of colleges.

Please understand that none of this is intended as a shot against the people who work in the California cc system. I was impressed by many of them I met earlier this week, and I happily stipulate that there are great and wonderful people throughout. The issue is structural, not personal. The solution has to be structural, too.

With the supermajority requirement for tax increases and a crazy quilt of referenda hemming it in, I wouldn't put much faith in the California legislature to step up. The slow bleed from Prop 13 and the earlier tax revolts has become acute. I'm guessing that the solution is to get away from the state-system model, and to double down on localism and autonomy. Let campuses set their own tuition and fee levels, and let them keep the money. Let them work with local governments and/or taxpayers to establish local funding; after all, folks in, say, Oakland may not care much about a college in L.A., but they'll probably care about one in Oakland.

More broadly, break away from the K-12 model of 'districts' and state dependence. Community colleges are colleges. Let them act like it. Either that, or watch the community college system shrink to irrelevance, and leave the fate of the next generation to the for-profits, who actually understand the concept of a business model.

Wise and worldly readers, is there a cause for optimism that I'm missing?

Comments:
Ahh!!! Dean Dad, you are only partly right about why the tuition is so low and people are loath to change it. You need to see the relationship between the California cc system and the California State University System.

Back in the 1980s, when I went to Grossmont College for a year, the school was half filled with students from San Diego State University. They were taking classes in the San Diego CC system that they could not take at SDSU because bio 101, Spanish 101, Western Civ, Into to Sociology were "impacted" (over-enrolled for semesters in advance).

The only way for SDSU students to graduate on-time (or in 5 years) was to take courses in the CC system, because they would otherwise have to wait until they were seniors to take intro level classes needed to meet their gen ed requirements. Keeping tuition at the CC's low was a way to ease the pain of enrolling in two institutions.

I believe that the CSU system still suffers from this problem and that structural reform the CC level would also require fixing the CSUs. Nobody is willing to pay for it or can kill the symbiotic relationship between the two systems.
 
But DD, can't you hear the screams from Cali that they can't afford the higher tuition? We hear it here in my mid-atlantic state. The Gov runs on tuition freeze and yet our state tuition rates are remarkably low. The "people" get up in arms at the thought of a tuition hike and yet our flagship and most of the other colleges in the state umbrella have had furloughs, layoffs and hiring freezes for the last five years, if not more. Programs are cut, jobs lost and since we can't give merit or COLA people migrate to jobs where they might get a pay raise. So the "people" complain about the lack of fill in the blank. But heaven forbid we raise tuition rates, even moderately. While our state isn't as bad off as CA or most other states, the general assembly continues to cut funding. I'm thankful that our CC system does operate as independent colleges. Otherwise, we'd be stuck in the same mess as CA. Thanks for all the league notes. I had 3 colleagues at the conference and I'm looking forward to hearing their perspective too.
 
The funny thing is that around here (in a Midwestern state where CCs are more like the typical independent colleges), some state legislators are actually talking about turning the CCs into 4-year, bachelors degree granting institutions! Why? Because the CCs have allegedly "shown the way" to achieve efficiencies while keeping tuitions low.

Can you even start to imagine the costs involved with such a change to public higher ed?

Maybe this fits better under your recent "trust us, we're experts" post - but seriously, politicians who don't understand, or maybe don't care, about the ramifications of their proposals on the actual institutions and students, should just shut their mouths and get out of the discussion. Unfortunately, instead, they engage in populist gobbledegook while attempting to blame public workers for the structural problems in the state budgeting process, making it harder to come up with a real solution.
 
As the parent of two college age children. I am getting a little tired of "just get another loan" response to the continual increase in tuition prices.

My oldest daughter just graduate with a debt she will probably take 10 to 15 year to repay. I wonder how much longer it will be before we start off-shoring education so it can affordable.
 
Weighing in from CA, and honestly tuition going to the state is just the tip of the iceberg. How about--we don't know how much money we'll actually be getting from the state until AFTER the fiscal year is over? (We have a pretty good idea by mid-way through the year, but they can pull money back as many as 18 months after the books close on the year). How about--the 50% law that mandates that 50% of our budget be spent on direct classroom instruction, which doesn't include librarians, counselors, or any other support services? Truly, it's nuts. The CCC system is the largest college system in the world (around 2.5 million students) and we're hanging on for dear life.

Despite all that, I love my institution and its mission, and I don't want to be anywhere else. There's too much at stake to "flee a sinking ship," as I've heard some say.
 
Don't forget that the University of California also had zero tuition (but some truly modest fees) back when CCs were created.

In our state, I believe we get our State appropriations on a quarterly basis, at the start of each quarter. Further, although we can (and do) get some of that taken back after part of the year has gone by, we get our tuition as soon as the check clears the bank!

Now we did grow our reserves during the early part of the depression, because our admin correctly predicted what anyone could conclude by reading a newspaper: state tax revenues were falling well behind the fantasy budget predictions and the legislature was going to have to take back a big chunk halfway into the fiscal year. Ignore that possibility and a 5% cut of the budget turns into a 20% cut in the final quarter.

I can't imagine what we would have to do if our tuition also went through the legislature, who could spend it on Medicaid right away and give it to us later on, but at least CA CCs collect property tax that is (AFAIK) under their control.
 
For sure, California balances its budget with smoke and mirrors. Part of this is called "deferrals."

If a community college district gets x dollars from the state every year, common sense used to dictate that we'd get x/12 dollars, or about 8% each month. The additional 4% was made up at the end of the fiscal year in June.

Currently, that does not happen. Some months, we get 'way less than 8%; some months we get more. But in mid-July every year we get a payback from the State which covers every penny of the amount that was deferred earlier.

Of course, cc districts need to maintain a reserve to cover these deferrals--but that's a cash flow problem. Constance Carroll says that districts have built up reserves to deal with cash flow problems, but that's only part of the picture.

As Dr. Carroll says, "Her district [and every other CA cc district] has managed to build up its reserves even over the last couple of catastrophic years."

What this means is that over and above the dollars set aside to cover cash flow, CA cc reserves have increased--even during "the last couple of catastrophic years." In plain English, CA cc districts have been making money during the past few years.

In the district where I work, our reserves have increased by about 40%, from about $10M to $14M, over the past 4 years. At the same time, we've cut classes by 30%. This is NOT all about cash flow. In an earlier comment, I noted that the combined reserves of CA cc districts increased last year, "the worst budget year in history," from $1B to about $1.25B. That's billion with a "B," and it happened at a time we were all dealing with deferred payments from the State.

Next, our low tuition--$26/unit--does not nearly cover the cost of educating students. But we also get about $4600/year for every full-time equivalent student from the State.

The "break-even" point for a class taught by an adjunct faculty member is 6 to 8 students. For a well-paid old-timer like me, it's 22-24 students.

If you conclude from this that CA ccs run on the backs of adjunct faculty, then you're on the right track. You're also right if you understand that we're not even close to broke--yet.

--Philip
 
What I found fascinating was that an online CA acquaintance of mine found it cheaper to take yoga at the local CC rather than at the local parks and rec. Something is flawed somewhere when a person who would be just as happy taking an "interest" class through the rec district (which I guess I'm just assuming should be cheaper to run because of less overhead in things like the registrar's office and because I assume the credentialing requirements for the instructor would be lower) decides to take a credit-bearing CC class because it is cheaper.
 
I take yoga classes at my local California community college. I don't know whether it's cheaper to run a yoga class through the local parks & rec, but I'm not sure why it would be. The CC already has the gym, and is already offering the class to students also taking academic classes. The instructors are, as far as I can tell, local yoga instructors rather than PhD's in yoga. Possibly because of the number of local community members taking just a yoga class, the CC has to schedule more yoga classes, but I'm not confident that's true--maybe the locals are simply turning yoga classes of 20 into yoga classes of 30.
 
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