Sunday, December 20, 2015

An Idea Offered Freely to Candidates

On Saturday night, with The Boy out visiting friends, The Girl announced that she wanted to use her control of the tv to watch...the Democratic debate.  

So we did.

What that says about us as parents, I’ll leave to the reader.

There’s no shortage of material to write about in the debates, and others have done just that.  I’ll just focus here on some of what seemed missing in the brief discussion of higher education.

You wouldn’t know it from the debate, but public higher education in America is mostly run by the states and/or local governments.  (It varies by state: in New Jersey, for instance, counties have a strong say; in Massachusetts, none at all.  I’m not sure how public higher ed is run in D.C.)  That’s especially true at the level of community and state colleges.  Here, Federal funding tends to take the form of financial aid -- which is to say, accessible to the college only by charging students tuition and fees -- or certain grant programs to institutions, like Perkins or Title III.  Operating funds come from students -- again with the indirect help of the Feds -- and states, and sometimes localities.  (There’s also some income from facility rentals, bookstore revenues, and the like, but all of that totals in the single digits.)  

But the candidates’ plans didn’t seem to acknowledge that.  They mostly spoke of financial aid and the prices that students pay.  I did hear a passing reference to state disinvestment, but I never heard a proposal to address it.  And I don’t recall it coming up in a substantive way in any of the Republican debates, either.

If we want to get a serious handle on higher ed affordability and quality, we need to address its political economy and structure.  It’s simply not under direct federal control in the same way that, say, Medicare is.  It’s more variable across the country.

The easiest way to address such variable structures across the country is to go through the single common denominator, which is students.  Pell grants work the same way in Utah that they do in Connecticut.  And that’s largely how the Feds have addressed college access up until now.  The GI Bill, Pell grants, Federally-backed loans -- all are ways of attaching money to students.  For colleges to get that money, they have to charge the students.  

That strategy worked pretty well for a while.  But over time, states (and sometimes localities) realized that they could cut their contributions to colleges’ operating budgets without much consequence, since colleges could shift those costs to students (and indirectly to the Feds).  On the ground, it wasn’t quite that simple; over the decades, colleges have largely split the difference between cost shifting and ever-tightening austerity.  The combination of steady tuition increases and a gradual but inexorable trend towards adjunct faculty was mostly able to offset reduced support until the Great Recession hit.

The enrollment surge of 2009 briefly hid the effects of disinvestment, but as the surge has receded, the funding shortfalls have become impossible to ignore.  

Now we’re hearing calls for “free community college,” which, depending on implementation, would attack the revenue stream on which we have come to rely the most.  Yes, grants could still be available for student living expenses, but that doesn’t help colleges make payroll.  And although I would love to imagine that states and localities were itching to step up with major multiples of their current contributions, I just don’t see it.  

Here’s where the candidates have an opening.  And I’m happy to share it with anyone from either party.  

If you want to get costs under control, you have to be willing to change two things.  The first is the reliance on the credit hour, which drives costs inexorably upward through the mathematical trap of Baumol’s cost disease.  The second is the free ride that states and localities have had in reducing support.  The first holds the potential to finally get cost inflation under control, and the second holds the potential to reverse the trend of cost-shifting to students.

The Feds have nibbled around the edges of each, the former with experimental site authority and the latter with a marginally-effective “maintenance of effort” requirement in 2009-10.  But they haven’t taken either on directly.  This is where someone who was willing to step up could make a real difference.

So, here’s the idea: matching funds for operating budgets.  For every dollar a state or locality pours into a college, the feds put in one to match.  So a state puts, say, five million towards a college, but its economy gets ten million worth of activity.  (The exact multiplier is obviously adjustable; I’m just using one-to-one for the sake of simplicity.)  Given that colleges are, among other things, local employers, the appeal could be significant.  And the one-for-one would work both ways; cuts to college budgets would mean leaving money on the table.  

We already know that an educated workforce is a hugely positive investment over the long term.  But the short time horizon of elections can wreak havoc with that.  Matching funds can make the long term benefits concrete and legible in the short term.  And with robust operating budgets, colleges can both hold the line on prices and restore some of the externally-invisible cuts that do subtle, but real, damage.  

In the spirit of bipartisanship, I offer this idea freely to any candidate who wants to run with it.  Getting college costs under control isn’t just a matter of tinkering with financial aid.  It requires reversing some key underlying realities.

I’ll warn any politicians who are reading: my daughter is onto you.  If you haven’t done something by the time she reaches voting age, she’ll notice.  You’ve been warned...