Getting It Right and Getting It Wrong on the “Real Costs” of Higher Education

This from the Academe Blog (April 6):

In the Sunday Review section of the New York Times, Paul F. Campos has offered his opinion on “The Real Reason College Tuition Costs So Much.” [The whole piece is available at: http://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-college-tuition-costs-so-much.html?smid=fb-share&_r=0]

Campos argues that attributing the rise in tuition costs to reductions in state funding is a fairy tale that administrators have been telling to cover up the tremendous increases in administrative positions, administrative compensation, and administrative support staff that have been the major drivers of increased costs.

He has gotten it half-wrong and half-right–if one is feeling very generous toward him..

Campos asserts: “In fact, public investment in higher education in America is vastly larger today, in inflation-adjusted dollars, than it was during the supposed golden age of public funding in the 1960s. Such spending has increased at a much faster rate than government spending in general. For example, the military’s budget is about 1.8 times higher today than it was in 1960, while legislative appropriations to higher education are more than 10 times higher.”

He provides no sources for these numbers, but using 1960 as a baseline is very problematic for several reasons: (1) none of the baby boomers had yet entered college; (2) to accommodate the baby boomers in the 1960s and 1970s, every institution is the country dramatically increased the size of its facilities and its faculty, many new institutions were established, and the public community college system was dramatically expanded; (3) to keep college affordable, very inclusive federal grant programs, such as the Basic Educational Opportunity Grants (BEOG), were established. All of these things dramatically increased the expenditures on higher education. If the G.I. Bill opened college to many veterans, the expectation in the 1960s had become that anyone who wanted to attend college would be able to afford to do so. In a very real sense, using 1960 as a baseline for tracking increases in spending on higher education is comparable to using 1935 as a baseline for tracking increases in defense spending.

Moreover, Campos’ assertion that defense spending is 1.8 times higher now than in 1960 is very dubious. In July 2013, Time magazine ran a series on the real cost of Defense, and the second article in that series explored how the calculations that the Department of Defense commonly uses to understate the increases in Defense spending are markedly different from the calculations used to track every other area of government spending and every other type of economic activity. The full article is available at: http://nation.time.com/2013/07/16/correcting-the-pentagons-distorted-budget-history/ It includes this chart, with the black line showing the increase since 1945 measured in current dollars:

In addition, it must be noted that since the terrorist attacks on 9-11-2001, the budget of the Department of Defense has not included either the costs of the wars in Afghanistan and Iraq or the costs associated with Homeland Security. In any case, the Defense Budget in the 1960s accounted for 50%-60% of all federal spending; so if that is the baseline, Defense spending started at a much, much higher level than federal spending on higher education, and so comparing the degree to which the two amounts have increased as a percentage is almost inevitably going to be very, very misleading.

Campos’ article also includes these paragraphs: “Some of this increased spending in education has been driven by a sharp rise in the percentage of Americans who go to college. While the college-age population has not increased since the tail end of the baby boom, the percentage of the population enrolled in college has risen significantly, especially in the last 20 years. Enrollment in undergraduate, graduate and professional programs has increased by almost 50 percent since 1995. As a consequence, while state legislative appropriations for higher education have risen much faster than inflation, total state appropriations per student are somewhat lower than they were at their peak in 1990. (Appropriations per student are much higher now than they were in the 1960s and 1970s, when tuition was a small fraction of what it is today.)

“As the baby boomers reached college age, state appropriations to higher education skyrocketed, increasing more than fourfold in today’s dollars, from $11.1 billion in 1960 to $48.2 billion in 1975. By 1980, state funding for higher education had increased a mind-boggling 390 percent in real terms over the previous 20 years. This tsunami of public money did not reduce tuition: quite the contrary.”

Campos’ choice of 1980 is a very interesting one here because, in most states, 1980 was actually the high-water mark in terms of the percentage of the costs at public colleges and universities that were covered by state subsidies. The Carter-Reagan recession of the late 1970s and early 1980s, the Bush recession of the early 1990s, the Bush recession of the early 2000s, and the Great Recession of 2008, each accelerated what were otherwise steady declines in state spending on higher education as a percentage of the total cost. It is very widely documented and simply unarguable that the increase in costs being borne by students has been the inverse in the decline in support being provided by the states.

Moreover, state support for higher education has been declining even as the demand for higher education, by percentage of the population—and, in particular, by percentage of the traditional college-age population—has been increasing. In the early 1980s, the reductions in state support may not have been in real revenues but, instead, in the sizes of the increases that the institutions had requested, but since the early 1990s and certainly since the 2008 recession, the cuts have been in real dollars. To cite just a very salient example, Bobby Jindal has been cutting state support for higher education year in and year out since he was elected. Because of very ill-conceived state tax cuts, higher education may have to absorb $300-$400 million of the projected $1.4 billion budget shortfall that the state is currently facing. If some miraculous fix is not found, those cuts will have a devastating impact of public colleges and universities in the state. That situation simply has nothing to do with how the institutions are spending available revenues.

Indeed, Campos shifts from citing percentage increases to citing changes in raw dollar totals when doing so suits his argument—and that sort of selective and inconsistent number-crunching undermines the credibility of his analysis: “State appropriations reached a record inflation-adjusted high of $86.6 billion in 2009. They declined as a consequence of the Great Recession, but have since risen to $81 billion. And these totals do not include the enormous expansion of the federal Pell Grant program, which has grown, in today’s dollars, to $34.3 billion per year from $10.3 billion in 2000.”

But that brings us to what Campos does get right. He rightly emphasizes that any increases in spending on higher education have not gone to faculty compensation or even to an increase in full-time faculty, despite the steady increases in enrollment: “Interestingly, increased spending has not been going into the pockets of the typical professor. Salaries of full-time faculty members are, on average, barely higher than they were in 1970. Moreover, while 45 years ago 78 percent of college and university professors were full time, today half of postsecondary faculty members are lower-paid part-time employees, meaning that the average salaries of the people who do the teaching in American higher education are actually quite a bit lower than they were in 1970.”

He then notes the dramatic increase in allocations for administrative positions, administrative compensation, and administrative support staff:

“By contrast, a major factor driving increasing costs is the constant expansion of university administration. According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions.

“Even more strikingly, an analysis by a professor at California Polytechnic University, Pomona, found that, while the total number of full-time faculty members in the C.S.U. system grew from 11,614 to 12,019 between 1975 and 2008, the total number of administrators grew from 3,800 to 12,183 — a 221 percent increase.

“The rapid increase in college enrollment can be defended by intellectually respectable arguments. Even the explosion in administrative personnel is, at least in theory, defensible. On the other hand, there are no valid arguments to support the recent trend toward seven-figure salaries for high-ranking university administrators, unless one considers evidence-free assertions about “the market” to be intellectually rigorous.”

Even though he lays out many of the relevant elements, what Campos doesn’t really get at is that, regardless of who is footing the bill, the “real cost” of higher education–that is, expenditures per student–has not risen much since 1970. But what have changed dramatically are the percentages of the institutional revenues that are being allocated to administration and to instruction. The rise in the exploitation of both part-time and full-time contingent faculty is directly related to the transfer of allocations from tenure-track faculty lines to administrative budget lines.

At most public universities, less than a quarter of all spending is now devoted to faculty salaries and benefits and less than half of all spending is devoted to everything that might be even remotely construed as instructional support.

Several years ago, in another post, I commented wryly on our administrations being preoccupied with planning for our institutions’ post-educational futures. I realize now, even more than I did then, that I may have been laughing into the abyss.