Paul L. Caron

Monday, September 28, 2009

The Next Federal Bailout: 'Great' Public Universities?

Robert J. Birgeneau and Frank D. Yeary, the Chancellor and Vice Chancellor of the University of California at Berkeley, published an op-ed in Sunday's Washington Post calling for a federal bailout of "great" public universities, Rescuing Our Public Universities:

Almost 150 years ago, in an effort to better serve a growing nation, President Abraham Lincoln signed the Morrill Land Grant Act, which gave struggling states federal land with which they could generate revenue to build colleges. The result of that bold action is a national resource: a structure for higher education that is admired, and copied, around the globe in places such as Japan, Germany and Canada. We are the only country to have both private and public universities of world renown. Sadly, this amalgam of great public and private research and teaching universities is at risk as economically struggling states progressively disinvest in public higher education. ...

[O]over several decades there has been a material and progressive disinvestment by states in higher education. The economic crisis has made this a countrywide phenomenon, with devastating cuts in some states, including California. Historically acclaimed public institutions are struggling to remain true to their mission as tuitions rise and in-state students from middle- and low-income families are displaced by out-of-state students from higher socioeconomic brackets who pay steeper fees. While America is fortunate to have many great private universities, we do not need to add to the list by privatizing Berkeley, Illinois, Rutgers, etc. On the contrary, we need to keep our public research and teaching universities excellent and accessible to the vast majority of Americans.

Given the precarious condition of state finances, we propose that President Obama emulate President Lincoln by creating a 21st-century version of the Morrill Act.

Specifically, the federal government should create a hybrid model in which a limited number of our great public research and teaching universities receive basic operating support from the federal government and their respective state governments. Washington might initially choose a representative set of schools, perhaps based on their research achievements, their success in graduating students, commitment to public service and their record in having a student body that is broadly representative of society.

Washington would provide sufficient additional funding for operations and student support to ensure broad access and continued excellence at these universities. A portion of these resources would ensure that out-of-state and in-state students pay the same tuition and have access to the same financial aid packages. The combined federal-state funding must be sufficient for these universities to maintain their preeminence as well as charge moderate fees to all U.S. citizens and permanent residents.

Philanthropy must continue to be an important resource. To ensure stability, the federal government should agree to match, at a rate of 2-to-1, and the state government at 1-to-1, private endowment funds raised by these public universities for 10 years. If such a public-private partnership raised private philanthropy of $150 million per year, the university would have $6 billion contributed toward a new endowment at the end of 10 years. The payout from this new federal-state endowment would provide operating and other support such as need-based scholarships and would essentially secure excellence and access for a generation.

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Tracked on Sep 30, 2009 6:08:15 AM


The article is almost humorous in how wrong it is. The authors start by lauding land-grant universities as a way of opening up education and socio-economic advancement of those of lower socio-economic status, but then abandons that in favor of a proposal to give money to elite universities least likely to advance the original purpose of land-grant universities set forth by the authors themselves.

That being said, most (not all) of the comments here are ten times more laughable.

Posted by: Scott | Sep 30, 2009 9:40:56 AM

A trillion times, NO!!!

They get direct subsidies from their states, indirect subsidies from the Feds, tex-exempt donations, they've had decades to develop a responsible financial model but instead chose to just keep raping the taxpayer and mis-using the money that comes to them with inflated salaries, inflated administrations and absurd over-building.

Learn to live within a budget. Learn to set aside a rainy day fund. Learn how to manage when times are tough.


Posted by: Marty | Sep 29, 2009 6:08:14 PM

America's university system was once hailed as the best in the world because of competition among the various schools, public and private. Introduce the federal government and you will make guarantee mediocrity and stifling sameness.

Anyone serious about keeping our great public universities great will end the tuition loan programs, federal and state.

Too many of our great public universities are less in business to be great centers of education and more to market themselves to students flush with borrowed money. So many would be much better off at a community college or trade school. These students would be in an environment more suitable talents and abilities, would graduate with little or no debt and would enter the job market with credible skills.

That would free up the resources at our great public universities to educate those that truly belong there.

Posted by: Dave LeBlanc | Sep 29, 2009 2:54:14 PM

Well, why don't they stop spending so much money on Athletics and stop paying professors so much.

I went to Chapel Hill, and one professor in particular would rail on the unfair US, yet complain about his salary (which we looked up then - $130k).

Take less money, professors! Or at least don't bitch about how bad the US is.

Closet capitalists....

Posted by: regret | Sep 29, 2009 2:13:13 PM

Washington might initially choose a representative set of schools, perhaps based on their research achievements, their success in graduating students, commitment to public service and their record in having a student body that is broadly representative of society.

So does this mean that HBCU's will not be considered for increased funding?

Research I schools already get the lion's share of the resources. I would like to see what the net effect would be of lowering tuition to the inflation adjusted level of the 80's (pick your own year before the tuition rates started climbing dramatically) but increasing the universities' share of the state budget to the percent that it was at that time. I suspect that much of the growth in tuition is to make up for states cutting funding to universities.

Posted by: Ross | Sep 29, 2009 11:01:17 AM

Stimulus money is already being used to bail out higher education.

The Nashville Post reported on August 3, on the $3 billion grant funds they have received and linked to a spreadsheet (downloadable at the story.)

It's small change compared to the $506 million to prop up TennCare, but the millions going to higher education in Tennessee are not going to create any jobs.

Top education
1 Middle Tennessee State University $10,531,935
2 Tennessee State University $4,943,967
3 Nashville State Technical Comm $3,836,643
4 Draughons Junior College Inc. $3,697,593
5 National College of Business & Technology $2,988,922
6 Volunteer State Community College $2,866,021
7 Vanderbilt University $2,300,464
8 Nashville Auto-Diesel College Inc. $2,091,956

1 Executive Office of Tennessee $691,803,281
2 Tenncare $506,245,044
3 Tennessee Department of Transportation $407,383,014
4 Tennessee Department of Education $220,578,405
5 Tennessee Department of Human Services $199,741,000
7 Tennessee Department of Labor & Workforce Development $81,850,844
8 Tennessee Department of Finance & Administration $34,504,061
9 Metropolitan Development & Housing Agency $12,961,867
10 Metropolitan Nashville Airport Authority $4,788,316

Posted by: Jayr | Sep 29, 2009 10:45:21 AM

We should emulate A. Lincoln. Let each university control the oil concessions on a piece of unused federal holdings. For instance, UCBerkely could have 40 acres off the coast of California. Then they could choose whether to allow drilling. This could fund higher education and allow the real world to get a foothold on campus.

Posted by: TML | Sep 29, 2009 9:02:54 AM

The feds already provide billions of dollars in annual support to higher education including state universities; some great, some not so great. The federal support to universities is called the Pell Grant; Academic Competitiveness Grant; American Opportunity Tax Credit; Federal Supplemental Educational Opportunity Grant; National Science and Mathematics Access to Retain Talent Grant; Teacher Education Assistance for College and Higher Education Grant; ROTC scholarships; Hope Scholarship Credit; Barry M. Goldwater Scholarship; Perkins Loans; Truman Scholarship; Federal Work-Study Program, to name but a few.

The customers of no business enterprise in the nation are so well funded by the federal government as higher education. Make no mistake, having the federal government fund the customers is to have the federal government fund the business.

Posted by: Bill45 | Sep 29, 2009 8:03:34 AM


Now the Tenured Class of Lifetime Employees have THEIR hands out for direct subsidies too?

Well that's to be expected isn't it?

I mean here they are, ONLY receiving Federal Grant and Scholarship monies, research grants and patent royalties, State Grants and Scholarship funds, and charging tuition for the privilege of students sitting in their classrooms and learning such valuable money-making skills as speaking Latin and Art History.

Oh HOW can they be expected to make ends meet?

Meanwhile, across town, the University that started life as a business or secretarial college...or even a trade school,(Heavens!),is managing to make a profit.

Maybe because they are teaching folks things that actually make the graduates more employable...and doing so at the students' schedule?And at a cost that the market can bear?

Seeking a government subsidy is the first indicator of a failing business plan.

Posted by: Bilgeman | Sep 29, 2009 7:42:18 AM

What a great idea! As part of the package, let's also stop federal funding for any financial aid, including student loans.

We've been subsidizing higher education for years. Right now, public universities must compete with private ones for the federal dollars. Under this plan (as modified) we can stop subsidizing private universities.

Posted by: Think38 | Sep 29, 2009 7:39:22 AM

It's a terrible idea, but the comments here are great.

There actually is plenty of money in academia already. No longer do professors live in genteel poverty; instead, they make quite nice salaries. Now since these people are generally liberal and leftist, they almost certainly favor a redistribution of wealth. The current recession gives them an opportunity to show that they really believe this by donating part of their salaries back to the university.

How many will do this? Almost none, would be my guess. People who demand a redistribution of wealth almost never think of themselves as the intended victims. They are always thinking of getting the money from someone else.

Posted by: JFP | Sep 29, 2009 7:02:07 AM

NO, NO, NO - you are at a STATE institution; get your money from your state do not take it from mine. If your state decides to spend it's funds on providing for illegals, saving small fish or funding a full time state house and senate rather than funding its universities - that's your state's decision. Don't come and try to take my state's dollars to fix your state's problems. There's a reason we left California and turned down offers to return - you may want to consider doing the same.

Posted by: bmc | Sep 29, 2009 6:55:33 AM

Universities are experiencing the effects of their own economic bubble. They have had their own drunken irrational enthusiasm and inflated the value of a college education far beyond what it is worth, graduating people with worthless degrees in "Womyn's Studies" and "Cultural Ethnography." At the same time, they have made their campuses into little less than spas, with lush workout facilities, lounges, and cappuccino bars.

Like all bubbles, it deserves to pop and they must learn to cut back and do with less. If we bail them out, (and it is we, the taxpayers, that will do it, as we ARE lords of our government servants) are doing no better than going to the liquor store and buying a case for our town drunk. You get what you pay for...

Posted by: Reasoner | Sep 29, 2009 6:39:25 AM

be sure to read this too:

"the cost of higher education has been skyrocketing for years and has in fact outpaced that of healthcare. Even more ironic is that according to the College Board’s annual tuition survey, the rate of growth of the price of public 4 year colleges has been faster than at private 4 year colleges; a trend that has persisted for 3 decades."

Posted by: jg | Sep 29, 2009 6:21:17 AM

They are just looking to protect their own jobs and salaries and benefits
and trying to paint grand altruistic motives for the same

Posted by: vic | Sep 29, 2009 6:08:07 AM

In other words...


Posted by: Rich Vail | Sep 29, 2009 6:06:05 AM

Sorry, isn't that what an endowment and trustees are for?

Posted by: kdackson | Sep 29, 2009 5:52:03 AM

Why should the "great" universities have any financial problems? After all, the benefits of the education they provide are so pronounced and obvious that students and parents should gladly shell out tens of thousands of dollars per capita for the privilege of learning about the evil bankruptcy of western civilization.

Moreover, since the "great" universities are managed by super-smart, altruistic intellectuals, we can safely assume that the trusts they oversee made only the wisest and safest investments uncontaminated by the short sighted greed that so confounds us lesser mortals.

Posted by: Shannon Love | Sep 29, 2009 5:37:14 AM

Absolutely not. Universities spent the boon years raising tuitions and pouring money into investments in "trust" funds with the tuitions of the working class. They don't deserve a bailout for this kind of behavior. Lower salaries, especially those of administrators, is the appropriate remedy. The universities should return to the operating costs they had before the boon years, and lower tuitions back to what they were so working class families can afford them. Why should university employees get to keep their inflated salaries when the rest of us are suffering through the recession? My kids will likely have to start out at the local community college to get their basic courses because we cannot afford today's inflated tuitions. When I went to college not too long ago, working class families could still afford to send a child to the state schools; since that time tuitions exploded.

Posted by: GG | Sep 29, 2009 5:32:34 AM

Well stated. An uneducated person would just say "Give us your fokken money".

Posted by: Arty | Sep 29, 2009 5:04:26 AM

I suppose he thinks Cal Berkeley should be in that group? Realistically, how do we determine which ones get the bailout and which don't? It will be another exercise in political favoritism, a function of who has the most powerful patrons in DC. That's no way to run a university, a government, or a country.

Posted by: Archie | Sep 29, 2009 5:03:10 AM

Perhaps 'Haavad' and its many many millions of gazillions endowments, (the Mamie van Doren-Loren-Monroe-Bardot endowment) could bail out Cal...

Posted by: Broadsword | Sep 29, 2009 4:58:32 AM

So the Chancellor of UC-Berkeley proposes that the feds fund "a limited number of our great public research and teaching universities" " based on their research achievements, their success in graduating students, commitment to public service and their record in having a student body that is broadly representative of society."

Golly gosh, wonder who he has in mind?

Posted by: Steve White | Sep 29, 2009 4:51:55 AM

Why don't we just cut to the chase and have the President issue diplomas directly to everyone, and cut paychecks to university faculty?

Posted by: Rob | Sep 29, 2009 4:49:54 AM

No. No. No. A thousand times NO. Federal monies the universities receive now enable the mind-numbing politically correct culture of the level 1 research university. The professoriate is going to have to teach more and "research" less, especially in the humanities. And yes, we can expect a decline in their "scholarly" output - we'll have to learn to live without more post-modern marxist feminist literary critiques of transgendered artists living in the third world. Oh, the humanity ... I'd suggest we drop the whole Department of Education from the federal budget. The whole damn thing. And the regulations which the money is supposed to implement. We'd be better off.

Posted by: RKV | Sep 29, 2009 4:46:20 AM

Bailing out Berkeley with my Marine-supporting, Palin loving, Red State tax dollars!
Over my dead body.
Get it from Barbara Boxer's daddy's estate.

Posted by: Wendell | Sep 29, 2009 4:45:28 AM

Washington might initially choose a representative set of schools, perhaps based on... a student body that is broadly representative of society.

Well, I'd say this rules out Berkley

Posted by: nick | Sep 29, 2009 4:32:16 AM

Do they really want this? If the feds give out money, it will have strings attached, likely starting with an examination of how it's spent.

Posted by: s | Sep 28, 2009 2:54:17 PM