Sunday, December 09, 2018

Public-Private Colleges?

My erstwhile Massachusetts colleague Lane Glenn, president of Northern Essex Community College, posted a thought-provoking piece about public higher ed funding over the weekend.  Some of it is state-specific, such as the reference to “9C” cuts (midyear cuts to appropriated allocations). But the conclusion strikes me as applicable, and challenging, across the country.

Glenn writes:

So, rather than spend more time haggling over how to allocate diminishing resources through a formula that will never work effectively; the best way forward for our campuses and our students lies in creating a new social compact for community colleges in the Commonwealth that relies on partnering with policymakers, employers, and supportive organizations like the Boston Foundation and the Massachusetts Taxpayers Foundation to help us transition into our new role as public-private colleges with increased attention to fundraising, employer sponsorships, return on investment, entrepreneurial business models, and, yes, helping every student to succeed.

“Public-private colleges.”  It’s a play on “public-private partnership,” but with much broader implications.

A typical public-private partnership is based on a contract, or memorandum of agreement, between discrete parties.  A public-private college is different. It has a public charter and a nonprofit mission, but the “private” funding that is now most of its budget comes from students collectively, and, in significant part, from the Federal government in the form of financial aid.  There’s no single entity on the private side.

Public colleges weren’t built on the same fiscal model as their private counterparts.  Elite private institutions often have significant endowment funds, which they can draw down at varying speeds depending on the needs of the moment.  (Ideally, they only draw down from interest or investment gains, allowing the principal to continue to build.) They rely on alumni as donors, and make fundraising one of the central roles of administration.  They also charge whatever tuition the market will bear.

To be fair, many non-elite private colleges are struggling now with what the market will bear.  They’re discounting their tuition by half or more just to keep students flowing in, hoping to make up the difference through fundraising or sheer volume.   That’s a difficult, and possibly unsustainable, way of leaving the existing model in place when demand is soft.

Community colleges in particular were built on the model of charging far less than the cost of production, with the difference made up almost entirely through public subsidy.  Fundraising was an afterthought in this sector; many community colleges didn’t even bother establishing fundraising arms (or foundations) until a few decades after the colleges were established.  

Over time, without ever quite admitting they were doing it, the various public funders have slinked away from their roles.  Community colleges have adapted piecemeal.

Glenn’s piece suggests, I think rightly, that it’s time to rethink the basic business model.  That will certainly mean ramping up the fundraising, even as some people raise a stink about “administrative bloat” in hiring development staff.  It will certainly involve more traditional public-private partnerships. It may go beyond that. If we accept as inevitable that public support will be far less than the cost of production for the foreseeable future, then we need to take a hard look at tuition levels.  (Alternately, if we want free community college, then we need to lock in dramatic and sustained increases in operating aid.) And we should make that tradeoff explicit and public, so the public understands what’s at stake.

Kudos to President Glenn for connecting the dots, and for giving us a framework within which to understand what we’re up against.  Now comes the tricky part...