November 30, 2018

Raising Alma Mater

So what gives with my alma mater begging for money?  Miami has a half-billion endowment, is the most expensive college in Ohio, has a wealth of new buildings, and gets millions in state monies in addition to tuition.  Kids going to Miami pay, their parents pay, the taxpayer pays, and they want alumni to pay.  Does it take a village to raise a university?

The problem is complex but it’s telling that stats are hard to come by since the colleges only promote the declining percentage of their budget coming from the state. This is partly due to flat-lined state giving (due to other priorities like health care spending, prisons and K-12 education), but it’s also because college education is going up much faster than the rate of inflation.

Fifty years ago 70% of Miami’s funding came from the state and now only 10-15% does. Colleges back 50 years ago didn’t try to rein in expenses because they didn’t have to. So the inflation rate of college education sky-rocketed while the amount of money given by the state barely stayed the same.

Even former Miami president James Garland admits that the university culture plays a role in the problem:
Unlike corporations, public universities have had few purely financial incentives to improve themselves and become more productive.
In my opinion, both the Ohio legislature and the universities are partially correct: the problem of rising public college tuition is driven by a combination of declining state subsidy levels and the inability of universities to exercise the cost discipline that is common for well-managed organizations outside academia.
So should the alumni kick in money to try to prop up this broken system?

On the one hand, if you just let market forces force the universities to seek profit, will colleges become available only to the rich and the intellectually gifted.  Are there too many mediocre students going to college today simply because so many jobs require a college diploma?  Or should there be more low-cost colleges much as Walmart undercut the competition in retail by going for the low-cost angle? 

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