When The Higher-Ed Business Model Meets Economic Reality

Stop-Blog

(By William Murchison):

Follow the money, goes the time-honored advice about learning why so-and-so does such-and-such.

Accordingly, economics professor Douglass Webber of Temple University followed the money – specifically comparing the sums state and local government formerly poured into higher education with the government money presently flowing into it.

Bad news.  That is, if you’re a student hoping to get out of good old State U. with a diploma and a minimum of debt.  “The average annual net price of a four-year public college, after grants and scholarships,”  Webber writes, in the Summer 2018 number of Education Next, ”doubled in inflation-adjusted terms from $2,180 in 1997-98 to $4,140 in 2017-18.  Including room and board, the average net price increased by $5,660 over this period to $14,940 —or nearly $60,000 for a four-year degree.”

Let’s cut to the chase: How come?   The main reason: bigger and bigger allocations for state and local public-welfare spending, says Webber, with Medicaid the “single biggest contributor” to the education spending decline.

Whereas state and local higher ed funding averaged $9,489 in 1987, the 2015 comparable was $7,152.   Webber attributes roughly half that gap to increased welfare spending; health care spending adds another 23 percent, police and fire protection, 13 percent.  Highways and sanitation – the routine stuff of government –- cover the rest.

Interesting stuff.  Painful stuff.  Government’s view of its responsibilities has shifted so far from humdrum functions like the building of roads that education – the training of minds and characters – no longer, at budget time, receives automatic obeisance.

Maybe that’s all right.  Maybe public higher ed needs, at a minimum, to acknowledge some non-financial problems and work on its modus operandi.   It doesn’t make sense for the taxpaying public to subsidize students with marginal interest in book-larnin’, over-stuffed staffs, playgrounds for pro athletes-in-training, and, conspicuously, faculty uninterested in, if not hostile to, the academic ideal of teaching the best that’s ever been thought and said.

It doesn’t make a whole lot of sense that a poorly thought-through program like Medicaid – foisted on the states by the federal government – should come to dominate state financial decisions.   Yet ex malo bonum, as was said during the high noon of the old academic ideal:  out of bad, good may come.   Some significant reform in how we do public education could qualify as precisely the requisite dose of good.

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