On January 22, 2014, Robert J. Birgeneau (Chancellor Emeritus and Silverman Professor of Physics, Material Science, and Engineering and Professor of Public Policy at the University of California, Berkeley), Mary Sue Coleman (President of the University of Michigan), Philip Bredesen (former Governor of Tennessee), Don M. Randel (Chair of the Board of the American Academy, President Emeritus of the Andrew W. Mellon Foundation, and President Emeritus of the University of Chicago), and Frank D. Yeary (Executive Chairman of CamberView Partners and former Vice Chancellor of the University of California, Berkeley) participated in a conversation on the future of America’s system of public higher education. The program, held at the University of California, Berkeley, served as the Academy’s 2003rd Stated Meeting. The following is an edited transcript of the presentations.
Robert J. Birgeneau
Robert J. Birgeneau is Chancellor Emeritus of the University of California, Berkeley, where he is also the Silverman Professor of Physics, Material Science, and Engineering and Professor of Public Policy. He was elected a Fellow of the American Academy in 1987 and currently serves as Cochair of the Academy’s Lincoln Project.
One year ago at Berkeley, we publicly announced the Academy’s Lincoln Project: Excellence and Access in Public Higher Education, which has now been fully launched. We have had a couple of meetings so far, and have quickly discovered that the work we have ahead of us will be exciting but also very challenging. Many of you know the challenges facing public higher education not only in the state of California, but also in the country as a whole. We have brought together some of the most innovative minds in the country to figure out long-term solutions that will help stabilize public research and teaching universities and ensure that they maintain their public character.
Tonight we will hear from several members of the Lincoln Project committee. First will be my cochair for the project, Mary Sue Coleman, who has been an extraordinary leader in public higher education in the United States. I will not list all the institutions that she has led, but for the last twelve years, she has been the President of the University of Michigan, one of our great partner institutions in public higher education. Soon she will transition out of that role and into private life, so we are extremely privileged to have her here tonight.
Mary Sue Coleman
Mary Sue Coleman is President of the University of Michigan, where she is also Professor of Biological Chemistry in the Medical School and Professor of Chemistry in the College of Literature, Science, and the Arts. She was elected a Fellow of the American Academy in 2001 and currently serves as Cochair of the Academy’s Lincoln Project.
All of us have seen that the value of higher education is increasingly challenged. That cost increases are higher than the rate of inflation is something that cannot continue, and we have to find ways to moderate costs. Right now we do not know what innovations will work, or whether the innovations will necessarily lower costs. Still, we need new ideas to ensure that students today have the rich experiences that have been a hallmark of our great public universities.
The Lincoln Project is seeking to position research universities in a new light for the nation. The name, of course, comes from President Lincoln, but in particular it pays tribute to his signing of the Morrill Act of 1862, which laid the groundwork for our public university system. We have some very important questions to answer, and we want to do it with evidence and data–some of which is hard to obtain or is difficult for laypeople to interpret. But having the platform of the American Academy is going to help us in these areas. We intend to listen carefully to the critics; it will do no good if we end up with a report that we are all convinced about but that others find unsatisfactory for various reasons.
We plan to compile a great deal of data to help answer some of the most important questions: Why does college cost so much? What do students gain from college? Why should they have this experience? We want to better understand how a region benefits from having a research university, which is something the public doesn’t quite understand. We have put together a committee that includes leaders from higher education, business, government, and foundations so that we can all challenge each other to answer the hard questions and to defend the positions we take. One of our goals is to limit the type and number of universities that we include in our study. While we understand that the whole spectrum of higher education is important in this country–two year colleges, four year colleges, comprehensive universities, research universities–we want to limit this study to about one hundred research universities. We would like to cover all fifty states because we understand that this is a political process as well as one we want to be sure of in order to justify our findings.
We have established several committees, which have begun to meet to consider a specific set of questions. By this fall, we hope to publish the first in a series of white papers that will share our findings and recommendations with the broader public. Ultimately, our aim is to generate a new model, perhaps a new funding model, that will provide more financial stability to public research universities.
I am very excited to be part of this work because it is time that we stand up and justify this enormous resource that has been created over many decades and not let it slip away just because people do not appreciate what these universities mean to our country.
Philip Bredesen served as the 48th Governor of Tennessee from 2003 to 2011. He was elected a Fellow of the American Academy in 2012 and serves as a member of the Academy’s Commission on the Humanities and Social Sciences and the Lincoln Project.
I live in Nashville, Tennessee, which is home to Vanderbilt University, a private research university. I have seen firsthand the many ways in which the presence of a major university enhances quality of life and economic competitiveness in a community or region. And public research universities in particular are extremely important to a state’s overall strategy. First of all, they frequently broaden access by enrolling more lower-income students than a typical private university. Second, they can be persuaded more easily to be guided by the priorities and needs of their community and state. Here at Berkeley, for instance, I suspect that many programmatic decisions have been made in response to the economic opportunities in Silicon Valley.
Tennessee’s public research university is the University of Tennessee, with locations in Knoxville and Memphis. Both campuses have an enormous impact on their respective regions and on the state’s ability to respond to its challenges and opportunities. I think that the special perspective I bring to the Lincoln Project is having been the one, as governor of Tennessee, who had to cut the budgets of my state’s universities in response to the fiscal challenges facing our state, especially after 2008. The flexibility that governors and legislatures have with their state budgets, particularly over the past twenty or thirty years, has declined dramatically with the growth of federal programs that require state contributions.
Consider the example of Medicaid, which in many states is the largest single expenditure (as it is in Tennessee). Medicaid didn’t exist in 1965, but by 1981 Tennessee was spending half as much on Medicaid as on K-12 education; in 1992, Medicaid spending passed K-12 education. When I became governor, we were spending two-and-a-quarter times as much on Medicaid as on public education. Tennessee’s situation is not unusual, with many other states facing the same problem. When I sought to talk with the public and the legislature to give them some perspective on the problem, I would explain that Tennessee’s Medicaid pharmacy program alone was larger than what we spent on the higher education system. We spent more money on the two top drugs in that program than we spent on the whole of the University of Tennessee Medical School. These federal programs give states little option; we simply pay the bill when it is due, while other state investments take a back seat.
From a governor’s perspective, there are many good functions of state government worthy of funding. Higher education is a good thing; K-12 education is a good thing; pre-K programs and other children’s services are good things. Forty-nine of the fifty states are constrained by either legislation or constitutional provisions that require them to have balanced budgets. States operate under a very different set of constraints than the federal government does: they have to make choices and find ways to actually pay for those choices.
I found that higher education often does not do a very good job of making the case for itself, and I would like to talk a little more about the kinds of arguments that I think will resonate with the broader public and the legislators who represent them. Many of the arguments from the higher education community assume that the value of what they do is intrinsic and obvious: higher education is good, college degrees are good, everybody knows it’s a good thing to go to college, so why don’t you understand this and provide the funding we say we need? And yet if you step back, you realize that the source of all this money is people who work in factories, as bricklayers, as accountants–that is, all those citizens who are paying the state taxes that make this funding possible. We owe these people an accounting, and we need to be able to make a clear argument, not that higher education is good in its own right, but that higher education is good in that it advances their values and the things that they consider important for themselves, their families, and their state. That is an argument that I think higher education often fails to make.
When you become governor of any state there is a long line of people whose purpose is to extract more money from your budget than you are presently giving them. What you don’t get so often–and what would be most welcome–is someone who brings to you a proposed solution to the problem. My hope for the Lincoln Project is that we will not simply make an argument about and publish a white paper on why public higher education is very important; but rather attempt to understand the problems that states and the federal government are facing and then offer some ideas about how to address them. If we can do that, the Lincoln Project will be helping solve the problem instead of being just one more petitioner for a larger check.
Don M. Randel
Don M. Randel is Chair of the Board of the American Academy of Arts and Sciences. He is President Emeritus of the Andrew W. Mellon Foundation as well as President Emeritus of the University of Chicago. He was elected a Fellow of the American Academy in 2001.
We have heard a certain amount in this country about our crumbling infrastructure, and yet we don’t seem to be doing very much about that. But what is much less often talked about is our crumbling intellectual infrastructure, and it is that intellectual infrastructure that made the country as successful as it has been. Today, however, we are falling steadily down the list of developed countries in the amount that we invest in the intellectual infrastructure. We can ill afford this decline in fortunes. Unfortunately, higher education has many of the features of health care when we think about how to deal with it. And our success in viewing and discussing health care in this country does not inspire much hope for a more successful discussion when it comes to higher education. And yet it is crucially important.
The simple question is: who gets what type of education, and at whose expense? That immediately evokes many of the issues that are toxic in the national discussion at the moment. Who gets what type of education: that question suggests rationing, if not death panels. And at whose expense? If the problem of access to higher education is money, then you have to go where the money is and take it from there to give it to the places where it isn’t. That is redistribution no matter how you want to talk about it, and that, too, is a fairly toxic concept–though we do it in all walks of life. Your automobile insurance, for example, is a form of redistribution. But we have to find our way through the ideological hot buttons in order to address the matter head-on. To do exactly what Governor Bredesen says–that is, to find ways to reach people and help them understand what is in their interest–means that we must partly change some of the terms in which the issues are frequently discussed.
The main thing we have been fixated on in this country lately has been the high cost of higher education, and no doubt the cost has risen–indeed, has risen faster than inflation. There are very good reasons for that. In public institutions, especially where state support has declined, there has been no alternative but to increase revenues in the form of tuition. And in state universities like Berkeley or the University of Michigan, another thing that has happened is that the percentage of out-of-state students has increased, because they can be charged much more than in-state students, and one simply redistributes that income from the people out of state to the people in state. It is as if the solution to the funding of public higher education in America would be for every state institution to accept only students from other states. We lament the rate at which costs are increasing and argue that costs should not rise faster than inflation. However, a recent book by two economists at the University of William and Mary shows that the rate of increase in the cost of higher education has been precisely the same rate as the increase in the cost of dentistry. Those two curves lie exactly on top of one another. Why is that?
It turns out that there is a limit to how many mouths you can examine in one day. You can upgrade the technology and hire more assistants in the dentist’s office, but sooner or later you reach the limit of productivity gains. Higher education is a business (and this has been well understood for a long time) in which it is very hard to achieve productivity gains. So why don’t we adopt more of the methods that could lead to productivity gains, you might ask. I can tell you right now how we could increase the efficiency of universities. We could go back to the way it was when I was first an assistant professor, in 1967. I taught twice as much as I did later in my career, and students came to campus, ate the food we put in front of them three times a day, and slept in a small room with a stranger of the same sex. The consumer pressure in this country is a huge part of what is now driving the cost of higher education, and the despicable rankings of U.S. News & World Report give only incentives to increase costs.
We have a big public education and public relations problem to face. It is not that higher education doesn’t know how to become more efficient as an industry. I have been in higher education administration in one way or another since about 1970, when as a poor young fellow I was persuaded to become chairman of my department. In and out of administrative roles over decades, I didn’t have a single year when I wasn’t cutting one budget or another. In the 1970s it was the orchestra budget. We had a very distinguished conductor, and we had to cut the budget of the orchestra to save money in the music department, losing an oboist who was also on the faculty. I could tell you many similar stories. The balancing act that universities have been through has been one of, at minimum, steadily trimming sails; but there is, as I said, a point at which you reach a limit, and it is clear that we have reached that limit in terms of the threat to the quality of the enterprise at a university like Berkeley. And Berkeley, let me say as a foreigner, is the greatest public university there is, and it enjoys the company of only a handful of other such universities (University of Michigan among them). To watch the systematic disinvestment in these great institutions is a terrible tragedy, one that the nation simply cannot afford. Thus the work of the Lincoln Project has as high a priority as any project possibly could. The American Academy is exactly the place to carry out this discussion and to form arguments in terms that the public can understand–and in terms that will lead higher education to do a better job of what it has been put in place to do. Public higher education is where the majority of students in the United States get their education, and that is an issue we have to address if we are to have not only a prosperous country, but a wholesome democracy.
Frank D. Yeary
Frank D. Yeary is Executive Chairman of CamberView Partners LLC. Previously he served as Vice Chancellor of the University of California, Berkeley. He is a member of the Academy’s Lincoln Project.
I have spent most of my life in the business world, but I served for four years as vice chancellor here at Berkeley. I am calling my talk tonight “Common Ground” because, as I will discuss, there is a lot of common ground between the business world and public universities in particular.
Having spent time in higher education administration, I am aware that there is a tendency at universities to be skeptical of what business leaders say and think. So when Mary Sue and Bob asked me to be part of tonight’s program, I had an image of a fish swimming upstream. But I am happy to wade in the water as long as you understand that I am sharing with you what I think are very common perspectives among business leaders about the future of public higher education. The good news, and it is good news, is that most businesses really do care about the students you educate, and they believe that the students you educate are critical to the success of businesses.
During the golden age of the 1950s and 1960s, public universities grew dramatically and were seen as a leading player in the advancement of both industry and the economy in every state where they operated. Universities were highly supported by very involved business leaders, and we need only to go back and look at the list of UC Regents during that era to see that it was a Who’s Who of state leaders. Phil Boyd, who at the time owned everything that we now know as Palm Springs; Dorothy Chandler, whose family ran the Los Angeles Times; Katherine Hearst; Chester Nimitz; Norton Simon; and others: these were the regents of the University of California. They devoted their time, energy, and money, and they cared deeply about the university’s success. They were the most important people in the state, and they dedicated themselves to public education.
Now, we all know the story since those golden years; it has been told by the speakers ahead of me and doesn’t need to be repeated by me. In short, it is a story of a nearly fifty-year trend of putting other priorities above higher education. And unfortunately, this trend continues to this very day. Here in California, the legislative analyst’s office in Sacramento recently suggested that Governor Brown’s budget will take UC’s share of the general fund below 3 percent for the first time ever in 2014–2015. There is a broadly held view in the business community that states are not going to come back to help higher education, and that K-12 education, public pensions, and medical costs will consume all of the available money (not that there is necessarily all that much money available for these other programs). Business leaders hope that universities have figured this out, and that they are charting a course to success that counts on that reality.
Most of us in this room know certain things about higher education–about its value, its successes, and its necessity. It is nice that we all know this, but it would be much nicer if we had better facts and more friends to help us aggressively make our case. At the moment, I believe that we are in the process of losing the audience. We are losing the voters, the parents, and even the students. And it is no surprise that a large part of this disenchantment has to do with costs. I recognize that there are debates about the accuracy of some of the cost arguments circulating among the public, and no doubt there are many fine things being done in terms of financial aid and access at many colleges and universities; but it is absolutely essential that leaders in public higher education make a commitment to bend the cost curve and seek help in doing it. Once they have made that commitment and have begun efforts toward it, then we need to publicize that. We need to show that we live in the same real world as our fellow Americans.
Recent data show that for the first time, most unemployed people in America today have some college education. It is still true that the best ticket out of unemployment is a college degree, but today there are too many young people who have large student loan obligations and are working the same kinds of jobs as their high school friends who didn’t go to college. There are plenty of journalists who want to write this story, which means we have a big PR challenge. But there is something else here. Not enough students are well prepared for life in the working world. This is a challenge that we should openly discuss and embrace because we are well served to fix it. As the country has embraced a strategy that asks students to be more responsible for the cost of their education, students themselves are clearly taking notice. A recent study of currently enrolled students showed that nine out of ten of them identified student loan debt as a problem.
Since I left Berkeley eighteen months ago, I founded a technology company that is helping young adults take control of their personal financial challenges. We interviewed hundreds of people ages 18 to 35, and by a long distance the most emotional issues that they talked about were their student loans and how the servicing of these loans forced them into certain difficult choices. Student loan debt, which now is over $1 trillion, is a big issue for universities. When you combine this problem with others, such as the public perception that universities don’t keep their costs under control, you see the major challenge we face in gaining public trust and support.
In many cases, states have abandoned public universities as reliable partners, and we are now embroiled in an uncomfortable debate about costs and the value that universities deliver. We would be wise to find powerful new friends, so that we can create a big tent of supporters who truly want to help us succeed. Business is the natural ally of public universities. Why? Because public universities are the best option for producing in large numbers a competitive workforce in a global economy. In addition, public universities support and produce groundbreaking research, especially basic research, that improves productivity for everyone. According to the Association of American Colleges and Universities, these are the top five skills that business leaders look for in new hires: critical thinking, complex problem solving, written communication, oral communication, and applied knowledge for the real world. A strategy that acknowledges these critical skills as well as the part universities can play in developing them among their students would go a long way in helping to create a strong partnership between business and higher education.
As I said at the outset, universities and businesses share many common goals. If their interests are more aligned, there are plenty of resources to bring to the table. Today, business spending on R&D dwarfs by a long distance the money spent at universities. To be fair, much of this money is spent on the development side of R&D; nonetheless, we can imagine the common ground here. Indeed, there are many efforts already under way along these lines. At Intel Corporation, where I am a member of the board of directors, we donate $100 million a year to a foundation that helps teachers improve their teaching, and students their learning, in STEM fields. That is a lot of money, but we believe it is in the interest of society and also in the interests of our company, because chances are if a student or teacher is using a computer, it is often with Intel technology.
STEM jobs are the fastest growing job sector in the economy today. Over the next five years, STEM jobs requiring a four-year degree will grow from half of all STEM jobs to two-thirds. Yet growth in the number of STEM majors is the lowest of any academic category on college campuses, and women, African Americans, and Hispanics are all significantly underrepresented in the STEM fields. Business leaders would say that we are doing our best to produce high-paying jobs, so we need a partnership that helps us solve some of these problems. This is a terrific opportunity for public universities and business to find common ground and make incremental, valuable progress.
The opportunity exists to create a public/private partnership around funding, whereby the federal government, business leaders, and philanthropists would together play a major role in bringing resources to bear. And if those groups showed a unified front, they might even be able to squeeze some money out of the states. This is just one idea for how business and universities can work together, and it happens to be the topic of a white paper that Bob and I co-wrote a couple of years ago and presented in Washington, D.C. There may be better ideas out there; the key is just to get started sharing ideas.
What tools do universities have to help them succeed in the face of great challenges? I happen to think that they have a full toolbox. We have brilliant faculty, a dedicated staff, very loyal alumni who will do amazing things if we just ask, fearless students who do amazing things even when we don’t ask, irreplaceable and magnificent campuses in the center of cities all over the country, and a tradition of delivering on the promise of education. But I believe that public universities have a secret weapon: nearly everyone wants us to succeed. There is a deeply embedded view that at the core of democracy is the ability of people to better their position, especially through education. As great as the Princetons and Stanfords are in our higher education landscape, the average middle-American kid doesn’t believe that he is going to one of these schools; but he does believe he can go to Michigan or Virginia or Tennessee or Berkeley. We have the ability to rally this spirit, and one way to do that is simply to reach out and involve all our constituents in our future success.
Why are STEM majors more numerous in foreign countries, such as Japan and Korea, than in the United States?
Mary Sue Coleman
My answer is pure speculation, but I would say that in most places in Asia, there is an enormous family value in education, and in a way that doesn’t exist in this country, or at least not to the same degree. Somehow we have created an environment where young people think that math is too hard and that they can’t do it because they will fail, so they don’t try. We haven’t done a particularly good job of training our K-12 educators to teach math in an exciting and interesting way. So there are multiple layers to this problem, and it continues to be a confounding problem. It is not as if we haven’t talked about the excitement in STEM fields and the opportunities available there, and it is still a matter of dragging people to the table. I am a scientist myself and have been interested in science from the time I was in junior high. Fortunately, I was encouraged in this pursuit, but a lot of students are not.
Could the panel comment on the idea that somehow the rise of the research university has led to the demise of the undergraduate experience?
When you think about what Frank identified as the skills business leaders want in the people they hire, it has to be something about the ability to question received opinion and think differently, to doubt and then to reimagine, as someone put it. A student at a research institution, where the entity is absolutely committed above all else to the rigorous questioning of received opinion, learns something very valuable just being in that environment. And we should never want to separate the research enterprise from the teaching enterprise because they are absolutely of a piece. What you want every undergraduate to do is to develop the research instinct, whether it is about novels or the periodic table or anything else. It is precisely the same thing that scientists and humanists are after: namely, stimulating that spirit of inquiry, the willingness and ability to look at a body of material, data of some kind, and find how it makes sense. You can do that with good books and you can do that with things in the natural world.
The difficulty is not that one doesn’t want the spirit of research involved, but it does have something to do with the degree to which universities have been driven by rankings and other kinds of consumer pressure to hire stars. That certainly does happen. But also important is the fact that more and more of the teaching in universities of all kinds is being outsourced to migrant labor. Only 20 percent of the instruction that takes place in colleges and universities in America today is done by faculty members who have tenure or are on the tenure track. The rest is done by graduate students and adjunct faculty, many of whom cannot make a living on what they are paid. Just think about it: you could teach five courses a semester, three semesters a year, at $2,000 per course and you would be living near the poverty level. That is one of the things that is unsustainable about our current situation. If we want to have quality teaching in institutions we will have to find a way to pay people to do it. But I don’t think that the research enterprise is the driver of that problem.
One of the things we do very well in research universities is to involve undergraduate students in the research enterprise. When I was a regular faculty member, I always had a significant number of undergraduates working in my lab, and the absolute majority of them, when they were about to graduate, would come by and say how their single best educational experience was in the laboratory, not in the classroom. So I think the research opportunities we offer our undergraduates are exceptional and are a part of their educational experience at research universities that would not be available at most institutions.
Are you looking at other universities south or north of the border to help answer questions such as why tuition in the United States is so high? My second question has to do with Jeffersonian notions of education. While business is important, Jefferson thought the most important thing was citizenship and democracy. I myself am still teaching because I see it as a civic duty. My two questions are related: on the one hand is the issue of higher education’s role in creating an educated citizenry, and how democracy is weakened when higher education isn’t performing well; and on the other hand, the controlled comparison of other countries that have free universities. This is important because just as we have seen people going to other countries for cheaper medical care, for example, so are young people going to other countries for a more affordable education.
Mary Sue Coleman
The residential experience that is given at a place like Berkeley or Michigan is quite different from the residential experience, or lack thereof, in some countries that do not charge tuition or have very low tuition. It is more of a mass education model. That is not to say that students do not come out being very proficient in the areas that they are studying. I also don’t believe that faculty are compensated in the same way in a number of other countries. So I’m not sure how useful those comparisons will be for our work, though we should definitely have our minds open to anything.
On the argument about education as a great tool for democracy, I absolutely agree with you, but I don’t think that it is a winning argument. We have become so focused in trying to justify our existence and why young people should get a college education, arguing that graduates are going to make $1 million more in their lifetime and so on. So we have actually fed into this argument that education is a private good, not a public good. And so naturally the public says, if you’re going to make $1 million more, then you pay for your education. So we have almost killed ourselves in some of the arguments we have made.
The more education we have as a society, the more tolerant we will be. There are good data to show that tolerance increases with education, because you become more likely to listen to other points of view. We seem to lack that skill in our country today.
I was president of the University of Toronto for four years, so I know a lot about the Canadian system. There are many things that they do well, and we will be profiting from that experience. But in terms of access, we do a better job here in the United States, and in California in particular, than in any other country in the world. At Berkeley, the tuition for students whose family income is under $80,000 is $0, and we have robust financial aid to cover living costs. I do not know of any other country that does that, or certainly none that does it as well.
I could not agree with you more about the importance of public education in maintaining our democracy and citizenship. I am not convinced that we can find a way to present that argument in a convincing manner to the people we need to provide us support. One of the challenges for the Lincoln Project will be to figure out the right language in order to express our arguments in ways that convince the people we need to convince.
By coincidence, the Conference Board of Canada is sponsoring a project that is an analogue to the Lincoln Project. Our projects have somewhat different approaches, but we will see what we can learn from each other.
I wonder why women and minorities don’t pursue more STEM careers. Where are the role models? I am in chemistry because I had a wonderful woman chemistry teacher. In those days, if women teachers married they had to quit. Things have gotten a lot better than that, but I still don’t see the women role models or the minority role models that would entice women into doing some of these things.
We are so often whatever we have become because of a wonderful teacher who ignited a passion or developed our capacity in a certain field or skill. I think we need to remember that anytime somebody tells us that technology is going to solve the problem. As we say in the music business in Nashville, after a certain point you don’t need a teacher who tells you where to put your fingers, you need a teacher who can get you to practice. And the best flat-panel display in the world is unlikely to be successful at that.
This is not true always, but in many states where there is a very strong private institution, public institutions often have struggled for prominence. These days the top public institutions go head to head with private institutions, and private institutions are driving up the cost, I think, for all of us. Is there an appropriate role for private institutions to play in protecting public institutions? Because in the arms race, there’s no way we can keep up.
When you talk about private institutions, you have to start with what I think to be a fact. There are only four truly rich private institutions: Harvard, Yale, Princeton, and Stanford. All the rest–and I am including Columbia, Penn, Cornell, and Chicago–are in an entirely different world in terms of finances. They, too, are going head-to-head with those four rich guys. As I said at the Mellon Foundation, Harvard, Yale, Princeton, and Stanford don’t really need our money; we need to help Penn, Columbia, Cornell, and Chicago stay in the game with those guys. But the pressures for competition are, in the end, market driven. Suppose we decided to advertise our institutions by saying we are not going to pay what the market demands for the very best professors, but we think you should send your kid here anyway. Whereas parents want to send their kids to a place that has famous professors, the kid wants the famous professor to set aside what made him famous and devote all his time to this kid, and then pick up his research again later.
There’s a perverse set of incentives at work in higher education. One is the “winner take all” issue, whereby everybody wants to claim that their guys hit it out of the park more often than anybody else. Then there’s the question of the amenities that one provides because the market demands it. There is the question of the kind of support for student life that is now required because we have a different kind of population; and as the demographics of the population change that will only get much worse. All the questions of completion rates and helping kids get through require a support network that is not going to reduce costs by any means. That said, we are all in this together. Public and private do indeed need to get together to support the overall enterprise, but I don’t think it is quite as simple as saying that the privates are visiting this problem on the publics (except in certain limited domains). It was, after all, the University of Texas that created a slush fund with which to raid California institutions when they were in trouble a few years ago. We have that to contend with.
Increasingly, private institutions–the richest four to start with, but others as well–are realizing that they have a highly advantaged tax environment legislated by the federal government that allows them to have $20, $30, or $40 billion endowments that they pay no taxes on. Then they get huge resources from the federal government to do research, and then they get overhead that is more than what the public institutions get. So they have a sweet deal. Now fast forward ten or fifteen years, and if the truly great institutions in the country do not include UCLA and Michigan and Berkeley, then when you want to go to one of the great institutions in the country, you must go to a private university. If I were president of a private university I would very much fear that day, because that is a day that will be extremely uncomfortable with respect to many billions of dollars of tax breaks.
I would argue that the deal isn’t quite as sweet as you make it out to be. At a place like Cornell or Columbia, endowment produces 10 or 15 percent of operating income max. At Princeton it is a real source of income. Endowment per student there is huge, and I don’t know what they do with all that money. Their entire financial aid budget is supported by endowment, so every nickel of tuition is gravy. But that’s at the limit. And then you talk about the question of research funds. The federal government simply doesn’t pay the cost, at least not the full cost, of the research that we do, and so it’s a money-losing business. The more you take in, the shorter you are; and I don’t think that the privates are really any better off in that than the publics. But the main point is that we really are all in this together, and we do have to stick together in advocating the fortunes of higher education, but especially public higher education because that is where the students are.
At the very wealthy universities at least, it works that the extremely rich and the quite rich subsidize the not so well-off, and there’s a huge amount of funds transfer from that. That is much less the situation at public universities. I am curious about other ways of trying to share the burden as far as tuition goes, particularly at public universities given the wide spectrum of students they serve.
At public universities like Berkeley or UCLA, the net cost for really low-income students is what we call a self-help level, and that is about $8,000. It is lower at the elite privates. The problem is that here at Berkeley alone we have 4,000 undergraduates whose family income is under $20,000, whereas at Stanford it is probably 200. So we have 20 times as many really low-income students whom we have to support with a financial aid package, and our funds just do not go that far. Because of our commitment to access for low-income students, the absolute number of low-income students we have is so large that there just is not enough money to go around. We have put a lot of emphasis on raising private funds for scholarships for low-income students, and we have been quite successful at that. But again just the sheer numbers of Pell grants (UCLA in fact has even more than we have at Berkeley) means that the amount of financial aid that we must offer to keep the self-help level down is enormous.
© 2014 by Robert J. Birgeneau, Mary Sue Coleman, Philip Bredesen, Don M. Randel, and Frank D. Yeary, respectively