Readers of a certain age will remember when state universities were a bit
spartan but extremely cheap. Middle class families could send their kids to Ohio
State or UCLA without taking out a second mortgage, and the kids could focus
on classes and fun instead of juggling multiple part-time jobs to cover room
and board.
Those days are long gone, due in part to a building boom fueled by easy
access to student loans that allowed kids to demand ever-more plush
amenities. But mostly it's because so many states are slouching towards
bankruptcy, starving their schools in the process. Let's use Illinois, the
poster child for fiscal dysfunction, to illustrate the point:
Illinois
Finances Are Worse Than Suggested
(Wall Street Journal) - The state's unfunded pension obligations translate
into about $10,000 of debt for every man, woman, child and zombie in
Illinois; but less than half of the state's residents are tax filers and well
under half of those filers (earning more than $50,000 a year) pay significant
income taxes. Those tax filers who actually are stuck with the pension IOU
therefore are carrying an unstated pension debt burden of about $50,000 each.
The moment that taxpayer heads to Texas or Florida, the $50,000 IOU goes
away, as do state income taxes and crushing property tax rates. The pension
IOU for moderate- to high-income taxpayers left behind in Illinois goes up
about 1% for each 25,000 tax filers escaping to more tax-friendly and warmer
climates.
This ongoing fiscal meltdown translates into less money for everything,
but especially for public higher ed, which has been systemically starved for
years:
Illinois
Universities Feel the Brunt of State's Fiscal Woes
(Wall Street Journal) - With the budget stalemate in Illinois in its 21st
month, public universities in the state are going beyond belt-tightening to
deal with a funding drought that has no end in sight.
Campuses already have pressed pause on new construction and stopped hiring
for vacant positions. Now, universities including Northeastern Illinois,
Governors State and Southern Illinois are looking to fixes like hiking
tuition, cutting academic programs or laying off student workers.
"We are in a crisis situation," said Beth Purvis, the state's
education secretary. "The next set of cuts will affect outcomes for our
postsecondary students."
In fiscal 2015, the state appropriated $1.2 billion to public
universities. Stopgap measures provided about 30% of that funding in fiscal
2016 and about half this year.
The state has also cut down on funding for a separate grant program that
helps in-state students afford tuition. Last year, the state belatedly doled
out about $320 million under the program, providing an average of $3,000 in
aid to 107,000 students. That's down from nearly $364 million in aid to
128,000 students the previous year. It hasn't yet given any funds for the
current academic year, and some schools have warned they can't afford to keep
fronting the money.
"Parents and students are beginning to lose confidence in public
education in Illinois," said Richard Helldobler, interim president at
Northeastern Illinois, which has about 9,500 students. "You try to
reassure them as best you can, all the while you're down in Springfield
saying, ‘Please, you're starving us to death.'"
The Chicago school must cut $8.2 million to meet payroll through June. It
will temporarily lay off 300 student workers during spring break and force
about 1,100 employees to take a total of eight furlough days in an effort to
save $2.8 million.
Amy Sticha, a biology major who works about 20 hours a week in a lab on
campus, has been putting in applications at area bars and restaurants, and
even at a bike tour company, in case her campus job falls through altogether.
"I have no idea if I will still have a job a month from now, and I'd
like to have a backup," said Ms. Sticha, who earns $10.50 an hour at the
lab, which she says covers a big part of her rent and tuition.
Governors State, with about 3,900 students south of Chicago, said earlier
this month that it would increase base tuition by 15% for the coming school
year, to $9,390. It also is cutting 22 more academic programs, including
undergraduate economics and a master's in education, on top of 13 degree and
certificate programs it eliminated in the past two years.
The school received about $18 million from the state in fiscal 2016 and
fiscal 2017 combined, compared with $24 million in fiscal 2015 alone.
Citing the recent moves at Northeastern Illinois and Governors State,
Moody's Investors Service earlier this month warned that the budget impasse
is harming the state's public universities and community colleges. The
ratings firm already classifies the debt of Governors State, Northeastern
Illinois and other Illinois schools as "junk."
Meanwhile, Eastern Illinois University has shed about a quarter of its
employees, while Southern Illinois in recent months nominated for possible
funding cuts its public broadcast center, a regional economic development
office and counseling services. It also said it would eliminate its men's and
women's tennis teams and trimmed scholarships for swimmers.
Chicago State University declared financial exigency last year in order to
eliminate jobs quickly and remains in a fragile financial state after
enrollment in the fall plummeted by 25% from a year earlier to 3,578—with
just 86 freshmen. The school, which serves many adult students, has shrunk by
more than half since 2010.
This series
chronicles the ways in which the global debt binge of the past four decades
is changing the nature of life in the US and elsewhere. Things we used to
take for granted like fast police response times, clean streets, plentiful
jobs and high quality, affordable education are disappearing as debts mount
and public services at every level are starved.
The result: For today's students the college experience is very different
from what their Baby Boomer parents remember. Money is tight, part-time jobs
dominate student schedules, classes are bigger and are taught by less
qualified adjuncts or grad assistants, and student loans are a crushing
burden. It's not yet an impossible situation, but it's a lot harder than it
used to be.
And there's no end in sight. State and local pensions - set at
unrealistically high levels by previous generations of legislators who knew
they'd be long gone when the bills came due - are wildly underfunded and can
only be paid though 1) massively higher taxes which lower the ability of
parents to save for their kids' college or 2) sweeping cost cuts, some of
which will hit higher ed. Either way, the idea of college as every American's
birthright is evaporating.
Zooming out to the macro implication of the coming crisis: The only
solution that sitting politicians will find conceivable is aggressive
devaluation of the dollar (and euro, yen and pound sterling) to make current
debts manageable. Which shouldn't be a surprise, because that's how it always
goes with banana republics.