Washington -- To break the current impasse over the debt ceiling and the continuing resolution to fund the government, House Republicans who would vote to end the crisis need to assert themselves. To do this, they should caucus as "Independent Conservatives" whose platform would be to negotiate a grand bargain with President Obama, after the government has been reopened with a bipartisan vote and the full faith and credit of the United States restored.
The President should agree to negotiate with these Independent Conservatives, giving them the first invitation among Republicans to set the agenda for such talks. This would strengthen their hand and provide a way out of the crisis.
The great stateman George Norris of Nebraska led such a group of House Republicans in 1910. Norris and his followers broke the power of Speaker "Boss" Cannon to hold legislation hostage. Latter day Republicans who want to reopen the government are said to fear primary challenges if they don't toe the line of Speaker Boehner. But not only was Norris re-elected after overthrowing Speaker Cannon, he went on to serve in Congress another thirty-three years.
As for primary challenges, such Independent Conservatives should (1) put their country ahead of their own careers and (2) be ready to take yes for an answer if President Obama agrees (as he has before) to put entitlements on the table in the negotiations. They would then have a record of conservative accomplishment to show voters, as opposed to the nihilism that has currently captured the Republican party and threatens America's international credibility.
Comparisons Across Capitals
October, 2013
Lincoln -- Trying to keep track of developments in three capitals provides a perspective to make comparisons.
Berlin is dealing collegially with the results of last month's elections, putting together a coaliton of its leading political parties. A CDU/SPD grand coalition, which ruled from 2005-2009, is again a possibility.
Washington is at an impasse, the government shut down for several days and counting. The credibility of Washington at home and especially abroad has taken an enormous beating. No foreign enemy or terrorist organization could do the damage that Washington is doing to itself.
The choices Washington faces are fundamentally ethical: is it ethical for a minority (of either party) to shut down the government to try to get its way on an issue for which it does not have the votes? Is it ethical to give in to such tactics? Should the Speaker of the House continue to have the power to prevent an up-or-down vote of the entire House to re-open the government? Is it ethical that national security should be put at such risk?
In Nebraska, has anyone thought to ask the state's congressional delegation if they remember what George Norris, a Nebraska Republican congressman, did in 1910 in the face of a similar dilemma? Norris led a group of fellow Republicans to challenge the power of Speaker Joseph Cannon to dictate what legislation could be voted on. Norris prevailed; Boss Cannon was stripped of such power.
George Norris went on to be re-elected to the House and later elected to the Senate, serving until 1943. He is a political legend in Nebraska and in Washington, profiled in JFK's Profiles in Courage. He was among the first elected to Nebraska's Hall of Fame.
German friends note with sadness that America has fallen so far, and with irony that it was primarily America, after WWII, that set up their own government, which continues to function comparatively smoothly. In Germany, conservatives have accommodated liberals, and vice versa, to create a country where the economy is robust, where the gap between rich and poor is narrow, where health care is effective and affordable, and where education and opportunity abound.
Lincoln -- Trying to keep track of developments in three capitals provides a perspective to make comparisons.
Berlin is dealing collegially with the results of last month's elections, putting together a coaliton of its leading political parties. A CDU/SPD grand coalition, which ruled from 2005-2009, is again a possibility.
Washington is at an impasse, the government shut down for several days and counting. The credibility of Washington at home and especially abroad has taken an enormous beating. No foreign enemy or terrorist organization could do the damage that Washington is doing to itself.
The choices Washington faces are fundamentally ethical: is it ethical for a minority (of either party) to shut down the government to try to get its way on an issue for which it does not have the votes? Is it ethical to give in to such tactics? Should the Speaker of the House continue to have the power to prevent an up-or-down vote of the entire House to re-open the government? Is it ethical that national security should be put at such risk?
In Nebraska, has anyone thought to ask the state's congressional delegation if they remember what George Norris, a Nebraska Republican congressman, did in 1910 in the face of a similar dilemma? Norris led a group of fellow Republicans to challenge the power of Speaker Joseph Cannon to dictate what legislation could be voted on. Norris prevailed; Boss Cannon was stripped of such power.
George Norris went on to be re-elected to the House and later elected to the Senate, serving until 1943. He is a political legend in Nebraska and in Washington, profiled in JFK's Profiles in Courage. He was among the first elected to Nebraska's Hall of Fame.
German friends note with sadness that America has fallen so far, and with irony that it was primarily America, after WWII, that set up their own government, which continues to function comparatively smoothly. In Germany, conservatives have accommodated liberals, and vice versa, to create a country where the economy is robust, where the gap between rich and poor is narrow, where health care is effective and affordable, and where education and opportunity abound.
Historic Opportunity, No Legislation Required
October, 2013
Washington -- Many college admission directors and business officers across the country are worried about the sustainability of their enrollment models, strategic plans, and the future of the institutions themselves. Old enrollment management schemes, like "merit aid" discounts based on the high-tuition-high-aid model, may have run their course. Overall, higher education enrollment is down this year and, at several colleges, seriously down.
This means many institutions have excess capacity and could handle more students at low marginal costs per student. The institutions should be happy to enroll students who bring in revenue that covers marginal costs, namely those bringing federal aid, like Pell students and veterans. These students, if more aggressively recruited, could keep up necessary enrollments where the alternative might be a downward spiral of slashing programs and faculty until the institution is faced with demise.
This is where the Secretary of Education could be helpful, not only in pushing for more affordable access for Pell recipients and veterans, but also in reversing the exhausted merit aid model. He could offer colleges a carrot for opening up access to the lower income in ways that do not burden them with loans.
Under current law, the Secretary has wide discretion to establish "experimental sites"; he could invite several willing colleges starting next year to rework their strategic plans and models away from futile chases after rankings and prestige, toward affordable access for populations that are now being squeezed out financially or poorly served by exploitative, proprietary institutions that sink students into unconscionable levels of debt. The reward could be a substantial relaxation or waiving of regulations for a college, as an experimental site.
This could be done under current law with no additional appropriations. The Department could put an invitation in the Federal Register for proposals. The current situation of excess capacity, exhausted tuition gimmickry schemes, fearsome student debt burdens, and a widening lower-income access gap presents a historic opportunity for action.
Washington -- Many college admission directors and business officers across the country are worried about the sustainability of their enrollment models, strategic plans, and the future of the institutions themselves. Old enrollment management schemes, like "merit aid" discounts based on the high-tuition-high-aid model, may have run their course. Overall, higher education enrollment is down this year and, at several colleges, seriously down.
This means many institutions have excess capacity and could handle more students at low marginal costs per student. The institutions should be happy to enroll students who bring in revenue that covers marginal costs, namely those bringing federal aid, like Pell students and veterans. These students, if more aggressively recruited, could keep up necessary enrollments where the alternative might be a downward spiral of slashing programs and faculty until the institution is faced with demise.
This is where the Secretary of Education could be helpful, not only in pushing for more affordable access for Pell recipients and veterans, but also in reversing the exhausted merit aid model. He could offer colleges a carrot for opening up access to the lower income in ways that do not burden them with loans.
Under current law, the Secretary has wide discretion to establish "experimental sites"; he could invite several willing colleges starting next year to rework their strategic plans and models away from futile chases after rankings and prestige, toward affordable access for populations that are now being squeezed out financially or poorly served by exploitative, proprietary institutions that sink students into unconscionable levels of debt. The reward could be a substantial relaxation or waiving of regulations for a college, as an experimental site.
This could be done under current law with no additional appropriations. The Department could put an invitation in the Federal Register for proposals. The current situation of excess capacity, exhausted tuition gimmickry schemes, fearsome student debt burdens, and a widening lower-income access gap presents a historic opportunity for action.
Time to Act, Mr. Secretary
September, 2013
Washington -- In the previous post, I described new research on how colleges move around billions of dollars in students' financial aid packages, to the great disadvantage of the financially needy. With these practices, colleges thwart the purpose of federal and private charitable grant aid, balloon student debt, exacerbate the growing gap between our society's rich and poor, and drag down our nation's economic recovery.
Many college administrators admit to the practices but are afraid to break away from the pack, fearful of what it might do to their own individual institutions. Likely as not, many of these colleges have strategic plans to increase ranking and prestige, using sophisticated enrollment management models to convert supposedly restricted federal and private grant aid to unrestricted use. With such unrestricted revenues, the institutions embark on merit aid and campus amenity programs that impress those who value rankings and prestige. This is being done on the backs of low income students who must take out loans and at the expense of federal taxpayers, whose elected representatives have exhibited an astonishing lack of oversight.
The Secretary of Education could take two steps immediately to end these abusive (and unethical) practices.
1. Send Department of Education "program reviewers" to a few representative colleges. Upon finding abusive practices, put the colleges on notice that their continued participation in federal Title IV financial aid programs will be handled as appropriate by existing Limitation, Suspension, and Termination (LS&T) powers of the Secretary.
2. Announce that the existing Student Right to Know Act (SRTK) requires Title IV participating institutions to advise students about how all financial aid funds are packaged. Colleges (and their enrollment management contractors) have long maintained that this is proprietary information. Sunshine is a powerful disinfectant and will help enable students, their families, charitable donors, federal taxpayers, and others with an interest in financial aid packaging to make sure that grants given to financial needy students are indeed used to reduce their work and loan burdens, rather than being manipulated by the colleges for their own purposes.
If the Secretary would take these two actions, a shockwave would go through the higher education community immediately. Enrollment managers would have to eliminate abuse of the low income as a tool in strategic planning. Private charities would have a new tool to ensure that the students they want to help will actually benefit (which will also serve to assure prospective donors that their contributions are being put to good use). Colleges themselves will not have so much reason to raise tuition in order to have sufficient institutional aid funds to mingle and manipulate in financial aid packages. Ethical voices in colleges and universities will be heard. Student financial aid administrators, many of whom chose a career in what they hoped would be a helping profession, would potentially be freed from the oppression of admissions directors and enrollment managers whose only goal is an institutional ranking uptick that looks good on their resume.
And federal taxpayers will have a sense that the President and the Secretary actually care about making sure federal programs work as intended.
Washington -- In the previous post, I described new research on how colleges move around billions of dollars in students' financial aid packages, to the great disadvantage of the financially needy. With these practices, colleges thwart the purpose of federal and private charitable grant aid, balloon student debt, exacerbate the growing gap between our society's rich and poor, and drag down our nation's economic recovery.
Many college administrators admit to the practices but are afraid to break away from the pack, fearful of what it might do to their own individual institutions. Likely as not, many of these colleges have strategic plans to increase ranking and prestige, using sophisticated enrollment management models to convert supposedly restricted federal and private grant aid to unrestricted use. With such unrestricted revenues, the institutions embark on merit aid and campus amenity programs that impress those who value rankings and prestige. This is being done on the backs of low income students who must take out loans and at the expense of federal taxpayers, whose elected representatives have exhibited an astonishing lack of oversight.
The Secretary of Education could take two steps immediately to end these abusive (and unethical) practices.
1. Send Department of Education "program reviewers" to a few representative colleges. Upon finding abusive practices, put the colleges on notice that their continued participation in federal Title IV financial aid programs will be handled as appropriate by existing Limitation, Suspension, and Termination (LS&T) powers of the Secretary.
2. Announce that the existing Student Right to Know Act (SRTK) requires Title IV participating institutions to advise students about how all financial aid funds are packaged. Colleges (and their enrollment management contractors) have long maintained that this is proprietary information. Sunshine is a powerful disinfectant and will help enable students, their families, charitable donors, federal taxpayers, and others with an interest in financial aid packaging to make sure that grants given to financial needy students are indeed used to reduce their work and loan burdens, rather than being manipulated by the colleges for their own purposes.
If the Secretary would take these two actions, a shockwave would go through the higher education community immediately. Enrollment managers would have to eliminate abuse of the low income as a tool in strategic planning. Private charities would have a new tool to ensure that the students they want to help will actually benefit (which will also serve to assure prospective donors that their contributions are being put to good use). Colleges themselves will not have so much reason to raise tuition in order to have sufficient institutional aid funds to mingle and manipulate in financial aid packages. Ethical voices in colleges and universities will be heard. Student financial aid administrators, many of whom chose a career in what they hoped would be a helping profession, would potentially be freed from the oppression of admissions directors and enrollment managers whose only goal is an institutional ranking uptick that looks good on their resume.
And federal taxpayers will have a sense that the President and the Secretary actually care about making sure federal programs work as intended.
Research In, Opinion Shifting
September, 2013
Washington -- Last month, the National Bureau of Economic Research published an important paper demonstrating how colleges and universities "game" federal student financial aid, essentially taking it away from financially needy students. This gaming is prevalent in private, non-profit institutions but is also taking over public four-year institutions.
It is a prime cause of the the trillion-dollar student debt crisis, which not only threatens individuals and their families, but is a significant drag on the nation's economic recovery.
The NBER paper corroborates the 2012 work of Lesley Turner, who estimated that billions of Pell grant dollars are lost annually to these gaming practices. It is likewise good to see the Congressional Budget Office take note of the Turner study. These studies confirm the findings and warnings of many of us over the years.
Some college administrators are facing up to the situation. Catharine B. Hill of Vassar, who is also a higher education economist, has written cogent op-eds about how the federal government must provide the correct incentives to eliminate gaming. (She is still too much the college apologist, however, in ascribing the problem to the widening societal gap between the rich and the poor, disingenuously failing to acknowledge that colleges themselves widen the gap when they move billions of dollars of federal funds, intended for the needy, to the non-needy.)
Henry E. Riggs of Stanford and Harvey Mudd is more forthright in acknowledging what is going on and what should be done about it:
Any sweetening of (a) Pell Grants or (b) other state- or federal-government financial-aid awards serves to offset institutional funds. To the extent these offset funds are used for merit scholarships, the Pell Grant program's objectives are being thwarted: Some or all of the funds may in fact be going to non-needy students. This is certainly not an appropriate use of taxpayer dollars. Governments should restrict their granting of need-based scholarships to those colleges that do not "buy" students by granting merit scholarships.
Riggs continues with a prescription for private charities as well:
When generous donors restrict their gifts to the support of need-based student financial aid, they are really making "unrestricted" gifts. That is, their gifts replace the institution's own financial-aid funds, and those funds can then be used for any—that is, unrestricted—purposes. Donors of student-aid funds, then, would be wise to insist that their funds add to the total of need-based aid and are not used for merit scholarships, either directly or by substitution.
Last week I was guest speaker for a meeting of a charity dedicated to aiding low income students. The charity is concerned that the funds they raise are being gamed in the same way Pell grants are gamed, and they are right. They want to know what can be done.
That will be the subject of the next "Three Capitals."
Washington -- Last month, the National Bureau of Economic Research published an important paper demonstrating how colleges and universities "game" federal student financial aid, essentially taking it away from financially needy students. This gaming is prevalent in private, non-profit institutions but is also taking over public four-year institutions.
It is a prime cause of the the trillion-dollar student debt crisis, which not only threatens individuals and their families, but is a significant drag on the nation's economic recovery.
The NBER paper corroborates the 2012 work of Lesley Turner, who estimated that billions of Pell grant dollars are lost annually to these gaming practices. It is likewise good to see the Congressional Budget Office take note of the Turner study. These studies confirm the findings and warnings of many of us over the years.
Some college administrators are facing up to the situation. Catharine B. Hill of Vassar, who is also a higher education economist, has written cogent op-eds about how the federal government must provide the correct incentives to eliminate gaming. (She is still too much the college apologist, however, in ascribing the problem to the widening societal gap between the rich and the poor, disingenuously failing to acknowledge that colleges themselves widen the gap when they move billions of dollars of federal funds, intended for the needy, to the non-needy.)
Henry E. Riggs of Stanford and Harvey Mudd is more forthright in acknowledging what is going on and what should be done about it:
Any sweetening of (a) Pell Grants or (b) other state- or federal-government financial-aid awards serves to offset institutional funds. To the extent these offset funds are used for merit scholarships, the Pell Grant program's objectives are being thwarted: Some or all of the funds may in fact be going to non-needy students. This is certainly not an appropriate use of taxpayer dollars. Governments should restrict their granting of need-based scholarships to those colleges that do not "buy" students by granting merit scholarships.
Riggs continues with a prescription for private charities as well:
When generous donors restrict their gifts to the support of need-based student financial aid, they are really making "unrestricted" gifts. That is, their gifts replace the institution's own financial-aid funds, and those funds can then be used for any—that is, unrestricted—purposes. Donors of student-aid funds, then, would be wise to insist that their funds add to the total of need-based aid and are not used for merit scholarships, either directly or by substitution.
Last week I was guest speaker for a meeting of a charity dedicated to aiding low income students. The charity is concerned that the funds they raise are being gamed in the same way Pell grants are gamed, and they are right. They want to know what can be done.
That will be the subject of the next "Three Capitals."
Assembling to Remember Great Scientists and Remarkable Nebraskans
August, 2013
Lincoln -- On August 9th, in perfect weather, a dozen of us assembled in Wyuka Cemetery to recall an event a hundred years earlier to the day, the International Phytogeographic Excursion's visit to Lincoln. Leading scientists of the time traveled from several different countries to observe Nebraska prairies and to learn from their Nebraska botany and ecology colleagues.* Several of the planners and participants of the 1913 event are buried at the cemetery (Charles Bessey, Samuel Avery, Frederic Clements, Frank Shoemaker, Jack Miller and William Hardy). The south fence of the cemetery is the same fence that surrounded the University of Nebraska until the early 1920s.
A walk through the cemetery took us by the grave markers of many other notable Nebraskans (the Pound sisters, the Eager brothers, Marjorie Barstow, Leta and Harry Hollingworth, Edgar Burnett, Erwin Barbour, Carl Hartley, Lawrence Bruner). In our party was a student of the Philippine American War who was particularly interested in Frank Eager and his important role in it; another in our group was a writer who has recounted Erwin Barbour's paleontological work around the state.
Several in our party quickly noticed an inverse relationship in some cases between size of gravestone and greatness. It was first remarked at the almost unnoticable marker of Louise Pound; the notion was reinforced at the modest stone of Erwin Barbour and highlighted even more at the plot of Frederic Clements, who had no marker whatsoever until recently. Robert Wolcott and Frank Shoemaker remain unmarked (although a conservation area north of Lincoln is named for Shoemaker).
The relationship is due at least in some instances to extraordinary commitment. University scholars and leaders in the early days gave their all, including their own financial resources, to their discipline and their institution. When Charles Bessey died, the state legislature created a fund for his widow; a Bessey successor put up his own resources to match an outside university grant. The academic and administrative life back then was often one of financial sacrifice. But such epitomizes greatness.
Accounts of the 1913 excursion suggest that the visiting international scientists did not spend as much time exploring prairies around Lincoln as they wanted. Commercial interests in Lincoln apparently saw the 1913 visitors as potential international boosters and took up much of their time with promotions and speeches. Some of the visitors escaped to look at prairies north and west of the city, however briefly, before their train departed the old Burlington station in the early evening of August 9, 1913.
Our small party, however, lunched not in the city with business boosters but on a prairie a few miles northwest owned in 1913 by the Eager** family, near the site of Nine Mile Prairie, a tallgrass prairie now on the National Register of Historic Places. Research on these prairies and on others nearby led to the establishment of what is known as the Grasslands or Nebraska school of ecology. This approach to ecology reached its apogee in 1929 with the publication of Frederic Clements' and John Weaver's Plant Ecology, a text that would be used throughout the world for generations.
* The University of Nebraska had established itself as one of the leading universities in the nation (admitted to the Association of American Universities in 1909) based largely on the reputation of its natural sciences faculty.
** In the 1970s, George Eager, son of Frank Eager, raised bison on the original Eager homestead north of Lincoln near Davey.
Lincoln -- On August 9th, in perfect weather, a dozen of us assembled in Wyuka Cemetery to recall an event a hundred years earlier to the day, the International Phytogeographic Excursion's visit to Lincoln. Leading scientists of the time traveled from several different countries to observe Nebraska prairies and to learn from their Nebraska botany and ecology colleagues.* Several of the planners and participants of the 1913 event are buried at the cemetery (Charles Bessey, Samuel Avery, Frederic Clements, Frank Shoemaker, Jack Miller and William Hardy). The south fence of the cemetery is the same fence that surrounded the University of Nebraska until the early 1920s.
A walk through the cemetery took us by the grave markers of many other notable Nebraskans (the Pound sisters, the Eager brothers, Marjorie Barstow, Leta and Harry Hollingworth, Edgar Burnett, Erwin Barbour, Carl Hartley, Lawrence Bruner). In our party was a student of the Philippine American War who was particularly interested in Frank Eager and his important role in it; another in our group was a writer who has recounted Erwin Barbour's paleontological work around the state.
Several in our party quickly noticed an inverse relationship in some cases between size of gravestone and greatness. It was first remarked at the almost unnoticable marker of Louise Pound; the notion was reinforced at the modest stone of Erwin Barbour and highlighted even more at the plot of Frederic Clements, who had no marker whatsoever until recently. Robert Wolcott and Frank Shoemaker remain unmarked (although a conservation area north of Lincoln is named for Shoemaker).
The relationship is due at least in some instances to extraordinary commitment. University scholars and leaders in the early days gave their all, including their own financial resources, to their discipline and their institution. When Charles Bessey died, the state legislature created a fund for his widow; a Bessey successor put up his own resources to match an outside university grant. The academic and administrative life back then was often one of financial sacrifice. But such epitomizes greatness.
Accounts of the 1913 excursion suggest that the visiting international scientists did not spend as much time exploring prairies around Lincoln as they wanted. Commercial interests in Lincoln apparently saw the 1913 visitors as potential international boosters and took up much of their time with promotions and speeches. Some of the visitors escaped to look at prairies north and west of the city, however briefly, before their train departed the old Burlington station in the early evening of August 9, 1913.
Our small party, however, lunched not in the city with business boosters but on a prairie a few miles northwest owned in 1913 by the Eager** family, near the site of Nine Mile Prairie, a tallgrass prairie now on the National Register of Historic Places. Research on these prairies and on others nearby led to the establishment of what is known as the Grasslands or Nebraska school of ecology. This approach to ecology reached its apogee in 1929 with the publication of Frederic Clements' and John Weaver's Plant Ecology, a text that would be used throughout the world for generations.
* The University of Nebraska had established itself as one of the leading universities in the nation (admitted to the Association of American Universities in 1909) based largely on the reputation of its natural sciences faculty.
** In the 1970s, George Eager, son of Frank Eager, raised bison on the original Eager homestead north of Lincoln near Davey.
How Not To Do Higher Education Budgeting (Part III: Federal Budgeting)
Washington -- President Obama shook up the higher education community with some suggested reforms to how the federal government goes about supporting America's diverse higher education system. The proposals announced in Buffalo were long overdue. They might even work, although reformers must be careful not to replace one set of bad incentives with another. This is a real danger.
Many of the President's reforms require legislation, most likely through the upcoming reauthorization of the Higher Education Act. As a veteran of several reauthorizations, however, I can attest that this process is unlikely to be a good reform vehicle. A reauthorization is an exercise in strangulation by lobbyists, campaign donors, narrow interests, and favor seekers.
The President and his Secretary of Education should not wait to begin their reforms. Much legislation is already on the books giving the Secretary powers he has seldom if ever used.
• If student confusion over prices and financial aid is a problem (and it is), the Secretary can enforce the Student Right to Know Act to prevent colleges from manipulating aid behind closed doors.
• If state and institutional disinvestment in lower income students is a problem (and it is), the President can immediately instruct his Secretary and OMB to prepare their next federal budget proposal to emphasize existing federal programs that require state and institutional commitment.
• If student loan borrowers are abused and misinformed as to their repayment options (and they are), the Secretary can crack down on the servicers and collectors with Limitation, Suspension, or Termination (LS&T) orders.
• If colleges countervail the purposes of federal aid by using the aid in a plan to adopt a high-tuition-high-merit-aid model of institutional finance (and hundreds of colleges do), the Secretary can send out program review teams to determine the extent of waste, fraud, or abuse of federal funds.
• If false and misleading advertising lure students into bad choices that result in dropping out and being burdened with overwhelming debt (as is too often the case), the President and the Secretary can use the bully pulpit, including public service announcements, to advise prospective students as to where they and their families can get reliable information.
• If college ranking organizations (U.S. News for example) create incentives for colleges to cheat and to reward colleges for countervailing federal programs (and they do), the Secretary can work with alternative rankings organizations that do not; he can make grants to responsible ranking organizations to identify issues in preparation for the Department's own proposed rating system.
• If the old, moribund higher education establishment in Washington will not constuctively cooperate in ending abuses and reforming federal incentives (and most likely it won't), the Secretary can encourage and start working with the many college presidents and faculty around the country who will. Many colleges are rightly concerned that the status quo will lead them to extinction. The President, the Secretary of Education, and the Attorney General must assure college administrators that they will not be investigated for anti-trust activities when cooperating in needed higher education reforms.
From time to time I discuss policy questions with my former colleagues in state and federal government and in the institutions; on occasion I am invited to consult on the Hill. My advice for several years has been for the Secretary to get a stiffer backbone and take action using the powers he already has. I'm pleased to see that the Department of Education will now be contacting borrowers directly to tell them about their repayment options, an action I have long advocated.
Colleges, states, loan servicers and all connected to the huge higher education enterprise react to incentives. For years, many federal incentives have been wrong; the President and the Secretary have until now turned a clouded eye to how the federal government itself has contributed, by its actions and inactions, to the current sorry state of affairs. Here's hoping the Buffalo speech represents a watershed event.
Many of the President's reforms require legislation, most likely through the upcoming reauthorization of the Higher Education Act. As a veteran of several reauthorizations, however, I can attest that this process is unlikely to be a good reform vehicle. A reauthorization is an exercise in strangulation by lobbyists, campaign donors, narrow interests, and favor seekers.
The President and his Secretary of Education should not wait to begin their reforms. Much legislation is already on the books giving the Secretary powers he has seldom if ever used.
• If student confusion over prices and financial aid is a problem (and it is), the Secretary can enforce the Student Right to Know Act to prevent colleges from manipulating aid behind closed doors.
• If state and institutional disinvestment in lower income students is a problem (and it is), the President can immediately instruct his Secretary and OMB to prepare their next federal budget proposal to emphasize existing federal programs that require state and institutional commitment.
• If student loan borrowers are abused and misinformed as to their repayment options (and they are), the Secretary can crack down on the servicers and collectors with Limitation, Suspension, or Termination (LS&T) orders.
• If colleges countervail the purposes of federal aid by using the aid in a plan to adopt a high-tuition-high-merit-aid model of institutional finance (and hundreds of colleges do), the Secretary can send out program review teams to determine the extent of waste, fraud, or abuse of federal funds.
• If false and misleading advertising lure students into bad choices that result in dropping out and being burdened with overwhelming debt (as is too often the case), the President and the Secretary can use the bully pulpit, including public service announcements, to advise prospective students as to where they and their families can get reliable information.
• If college ranking organizations (U.S. News for example) create incentives for colleges to cheat and to reward colleges for countervailing federal programs (and they do), the Secretary can work with alternative rankings organizations that do not; he can make grants to responsible ranking organizations to identify issues in preparation for the Department's own proposed rating system.
• If the old, moribund higher education establishment in Washington will not constuctively cooperate in ending abuses and reforming federal incentives (and most likely it won't), the Secretary can encourage and start working with the many college presidents and faculty around the country who will. Many colleges are rightly concerned that the status quo will lead them to extinction. The President, the Secretary of Education, and the Attorney General must assure college administrators that they will not be investigated for anti-trust activities when cooperating in needed higher education reforms.
From time to time I discuss policy questions with my former colleagues in state and federal government and in the institutions; on occasion I am invited to consult on the Hill. My advice for several years has been for the Secretary to get a stiffer backbone and take action using the powers he already has. I'm pleased to see that the Department of Education will now be contacting borrowers directly to tell them about their repayment options, an action I have long advocated.
Colleges, states, loan servicers and all connected to the huge higher education enterprise react to incentives. For years, many federal incentives have been wrong; the President and the Secretary have until now turned a clouded eye to how the federal government itself has contributed, by its actions and inactions, to the current sorry state of affairs. Here's hoping the Buffalo speech represents a watershed event.
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.
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.
How Not To Do Higher Education Budgeting (Part I)
August, 2013
Washington -- The University of Wisconsin and Iowa State University recently demonstrated bad practices in higher education budgeting; both are paying for it with bad press and public distrust.
Officials at UW failed to disclose that they had built up a cash reserve of hundreds of millions of dollars all the while raising tuition and asking the state legislature for more tax support. The university's financial reports obfuscated the size of the surplus; UW officials tried to explain it away by saying much of it was obligated and attributed the rest to fiscal prudence. State legislators were not amused by what they considered hoarding and an astonishing lack of transparency in a public institution; they reduced a planned tax support increase.
Iowa State earmarked a percentage of tuition increases for financial aid to the low income. Some Iowans jumped to the conclusion that better-off students were therefore paying for the education of the poor. State legislators waded in with a bill to stop the practice and earmarked tax dollars for need-based financial aid; the governor signed the legislation. Moody's took a dim view of it all and said the legislation would hurt ISU's financial ratings because of all the unusual earmarking.
What few seemed to have considered at ISU is that all its students receive tax-subsidized tuition: some more, some less. And that tax support and tuition, under generally accepted accounting principles, both go into a university's unrestricted general fund operating budget; it was quite unnecessary to do any earmarking in the first place.
So at ISU, it all seems to have been a big misunderstanding that could have been avoided. Unfortunately, the national attention devoted to the ISU dust-up took attention away from many universities' policies to aid the better off at the expense of the low income, not through earmarking but through misguided enrollment management practices that put institutional prestige rankings above basic student affordabilty and access. Ironically, ISU seems to have been trying to do the right thing, but went about it the wrong way.
The Wisconsin example of bad budgeting that hurt UW reminds me of a similar situation many years ago in Nebraska. The University of Nebraska tried to build cash reserves by underestimating tuition revenue for an ensuing year, persuading the state legislature to give it more tax support to maintain the same or growing levels of expenditures. The following year, NU would put the higher actual tuition revenue on its books and, like UW, say it was obligated or necessary for cash flow. The gimmick didn't work any better in Nebraska that it did in Wisconsin. The NU president, Woody Varner, soon resigned, saying he had lost the confidence of the people in the statehouse. He was right.
The governor of Nebraska at the time, Jim Exon, took a dim view of gimmickry in higher education funding. He proposed instead a tax support level at least at the average per-capita higher education spending of surrounding states. Institutional governing boards and administrators would then be free to manage; there would be no gamesmanship among funds, hidden or not. The university could coordinate cash flow needs with the state itself, he volunteered. It never happened.
These three examples serve as reminders that budget gimmickry, misadventures in fund accounting, and a lack of transparency can come back to hurt an institution and dimish trust in its leadership.
Washington -- The University of Wisconsin and Iowa State University recently demonstrated bad practices in higher education budgeting; both are paying for it with bad press and public distrust.
Officials at UW failed to disclose that they had built up a cash reserve of hundreds of millions of dollars all the while raising tuition and asking the state legislature for more tax support. The university's financial reports obfuscated the size of the surplus; UW officials tried to explain it away by saying much of it was obligated and attributed the rest to fiscal prudence. State legislators were not amused by what they considered hoarding and an astonishing lack of transparency in a public institution; they reduced a planned tax support increase.
Iowa State earmarked a percentage of tuition increases for financial aid to the low income. Some Iowans jumped to the conclusion that better-off students were therefore paying for the education of the poor. State legislators waded in with a bill to stop the practice and earmarked tax dollars for need-based financial aid; the governor signed the legislation. Moody's took a dim view of it all and said the legislation would hurt ISU's financial ratings because of all the unusual earmarking.
What few seemed to have considered at ISU is that all its students receive tax-subsidized tuition: some more, some less. And that tax support and tuition, under generally accepted accounting principles, both go into a university's unrestricted general fund operating budget; it was quite unnecessary to do any earmarking in the first place.
So at ISU, it all seems to have been a big misunderstanding that could have been avoided. Unfortunately, the national attention devoted to the ISU dust-up took attention away from many universities' policies to aid the better off at the expense of the low income, not through earmarking but through misguided enrollment management practices that put institutional prestige rankings above basic student affordabilty and access. Ironically, ISU seems to have been trying to do the right thing, but went about it the wrong way.
The Wisconsin example of bad budgeting that hurt UW reminds me of a similar situation many years ago in Nebraska. The University of Nebraska tried to build cash reserves by underestimating tuition revenue for an ensuing year, persuading the state legislature to give it more tax support to maintain the same or growing levels of expenditures. The following year, NU would put the higher actual tuition revenue on its books and, like UW, say it was obligated or necessary for cash flow. The gimmick didn't work any better in Nebraska that it did in Wisconsin. The NU president, Woody Varner, soon resigned, saying he had lost the confidence of the people in the statehouse. He was right.
The governor of Nebraska at the time, Jim Exon, took a dim view of gimmickry in higher education funding. He proposed instead a tax support level at least at the average per-capita higher education spending of surrounding states. Institutional governing boards and administrators would then be free to manage; there would be no gamesmanship among funds, hidden or not. The university could coordinate cash flow needs with the state itself, he volunteered. It never happened.
These three examples serve as reminders that budget gimmickry, misadventures in fund accounting, and a lack of transparency can come back to hurt an institution and dimish trust in its leadership.
The Ultimate Senate Gang
August, 2013
Washington -- As Congress sinks even lower in its inability to measure up to the nation's challenges, one of the few bright spots is the emergence of Senate "gangs" to deal in a bipartisan manner with otherwise intractable problems. These gangs have been ad hoc groupings tied to specific issues, such as judicial confirmations and immigration.
It is time to think beyond these gangs and for the Senate Republicans who have participated in them to consider the formation of the ultimate gang, a temporary -- through the 2014 elections -- Independent Conservative party.
This temporary party, which would need about 8-10 Senate members, would position itself in the middle of the two existing parties and wield effective control over the filibuster, the procedural tool that now hamstrings the Senate. Its members would either threaten to bolt the Republicans and caucus with the Democrats, or actually do it in exchange for some major concessions from the Democrats. Those concessions might involve bringing entitlement reform to the floor, or revenue-neutral tax overhaul, or both.
Yes, the Republican caucus might try to strip these new Independent Conservatives from their committee assignments and positions. But the answer to such a threat would be a question: "Do you want me back in the Republican caucus in 2015? If so, leave my committee assignments (and the staffs and budgets that go with them) alone."
In parliamentary systems it is common for parties positioned in the middle to exercise a great deal of influence. In Germany, the FDP for decades has joined with either the SPD or the CDU to govern the country; its influence far exceeds its power at the polls. Being in the middle is an enviable position.
In the U.S. Senate there are perhaps a dozen gang-minded or independent Republicans who could feasibly form a temporary political party, because they are not up for re-election in 2014, or they are retiring, or it would not hurt them back home to become an independent for purposes of breaking the Senate gridlock. In the first category are McCain, Murkowski, Coats, Hoeven, Portman, Corker, Grassley, and Burr; retiring are Chambliss and Johanns; Collins would not be hurt by becoming independent in Maine.
This would foil those who want to shut down the government, default on the national debt, or play brinksmanship with national security. It would create a dynamic that would require the White House to engage with the Senate rather than endlessly sending the president on fruitless campaign-like appearances around the country. It would lessen the House's hyper-partisan leverage. Public opinion would likely be with senators who put the national interest ahead of partisanship.
Washington -- As Congress sinks even lower in its inability to measure up to the nation's challenges, one of the few bright spots is the emergence of Senate "gangs" to deal in a bipartisan manner with otherwise intractable problems. These gangs have been ad hoc groupings tied to specific issues, such as judicial confirmations and immigration.
It is time to think beyond these gangs and for the Senate Republicans who have participated in them to consider the formation of the ultimate gang, a temporary -- through the 2014 elections -- Independent Conservative party.
This temporary party, which would need about 8-10 Senate members, would position itself in the middle of the two existing parties and wield effective control over the filibuster, the procedural tool that now hamstrings the Senate. Its members would either threaten to bolt the Republicans and caucus with the Democrats, or actually do it in exchange for some major concessions from the Democrats. Those concessions might involve bringing entitlement reform to the floor, or revenue-neutral tax overhaul, or both.
Yes, the Republican caucus might try to strip these new Independent Conservatives from their committee assignments and positions. But the answer to such a threat would be a question: "Do you want me back in the Republican caucus in 2015? If so, leave my committee assignments (and the staffs and budgets that go with them) alone."
In parliamentary systems it is common for parties positioned in the middle to exercise a great deal of influence. In Germany, the FDP for decades has joined with either the SPD or the CDU to govern the country; its influence far exceeds its power at the polls. Being in the middle is an enviable position.
In the U.S. Senate there are perhaps a dozen gang-minded or independent Republicans who could feasibly form a temporary political party, because they are not up for re-election in 2014, or they are retiring, or it would not hurt them back home to become an independent for purposes of breaking the Senate gridlock. In the first category are McCain, Murkowski, Coats, Hoeven, Portman, Corker, Grassley, and Burr; retiring are Chambliss and Johanns; Collins would not be hurt by becoming independent in Maine.
This would foil those who want to shut down the government, default on the national debt, or play brinksmanship with national security. It would create a dynamic that would require the White House to engage with the Senate rather than endlessly sending the president on fruitless campaign-like appearances around the country. It would lessen the House's hyper-partisan leverage. Public opinion would likely be with senators who put the national interest ahead of partisanship.
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