How Not to Do Higher Education Budgeting (Part II)

Washington -- The relationship between state tax support and tuition charges at public universities is a complex one and should be treated as such. There is an unfortunate new tendency to treat them as having a fixed, inverse relationship. This is wrong and can lead to bad decisions on both tax support and tuition levels.

Sometimes the two should increase together; for example, when an academic program is to be improved. Students agree to pay more if taxpayers also kick in their share.

Sometimes the two should decrease together; tough economic times might require trimming expenditures and passing the savings back both to students and to taxpayers.

Sometimes, of course, the two should move inversely; for example, when either revenue source starts to carry too much of the expenditure burden. What is too much? That's for each state and institution to decide. The work of the Carnegie Commission in the 1970s, especially its publication Who Pays? Who Benefits? Who Should Pay? is still relevant and helpful in answering these questions.

But lately states and, especially, public institutions have been acting as if the relationship is fixed inversely. Institutions under fire for raising tuition are quick to blame states for inadequate tax support. Sometimes this is justified, sometimes not. The situation is almost one of blackmail: "Give our institution more tax support or we'll raise tuition."

Governors and state legislators can also play this game: "We're giving you more tax support so don't you dare raise tuition." Or both sides play the same game and reach agreement that in exchange for a certain level of tax support, tuition will not increase. This is done amid much self-congratulation.

Lost in the rush to treat tax support and tuition as yin and yang are the situations and questions raised above. What about expenditure levels? What about institutional missions and priorities? What about changing emphasis back to affordability rather than the pursuit of prestige rankings? What about the possibility that the baseline levels were wrong in the first place, and that both institutions and states have been increasingly burdening a generation of students and families with excessive student loan debt and this debt is a troubling overhang to our nation's economic recovery? That is an emerging, albeit painful, national realization.

Good higher education budgeting is important to our nation's future. A healthy skepticism is the right reaction to any chancellor, governor, or state legislator who is cavalier about the relationship between state tax support and tuition.