by Bill Powers
October 23, 2013
Today, I’m proud to begin my one-year service as chairman of the Association of American Universities. Since 1900, the AAU has been the chief promoter of the American research university, and the University of Texas at Austin is one of just 62 current members.
In American higher education, there is no issue more critical than affordability. Gov. Rick Perry has made it a priority and President Barack Obama has as well. It concerns me, as it should every leader in higher education and all who understand the crucial role a college education plays in social mobility and national productivity.
In August, the White House published its College Scorecard, an interactive tool families can use to evaluate college options. UT-Austin fares well with a high graduation rate and a below-the-median cost.
In the final analysis, there are only two main ways to decrease the price tag of college for students: 1) decreasing operational costs and 2) increasing support from nontuition sources. Obama has called on universities to control their costs, and at UT, we are doing that. For example, we are undergoing a major initiative to reduce the costs of our operations by consolidating our staff so that multiple departments can share the expertise of specialists in human resources, information technology, procurement and accounting. Universities are behind the business sector in modernizing these functions, and we will all benefit from catching up.
But holding the line on costs — even cutting costs — is not sufficient for the needs of the future. We must also increase support for higher education from nontuition sources. These sources fall into four main categories: philanthropy, research grants, nontraditional revenue sources (such as licensing our discoveries or merchandising our brand) and public funding.
On this last count, we all have reason for alarm. In the last 25 years, student enrollment at state universities across America has grown by 62 percent, while total public funding has increased by only 2 percent. Consequently, state funding per student has dropped by 30 percent in those 25 years. And this is not a matter of our collective wealth, but rather, a matter of priorities: Nationally, state support per $1,000 of personal income has dropped by 37 percent. We cannot continue to decrease public funding across the nation and then express shock when the price to students goes up or we fall behind our competitors around the world.
We are witnessing a massive, historic public disinvestment in higher education. In spite of that, higher education is still doing amazing things. In Texas, economists have estimated that our state receives a 21-to-1 return on investment from UT-Austin. That is, for the state’s annual investment of about $300 million, it gets a university that contributes $6.4 billion to the economy through direct and indirect spending by staff, faculty and students.
The reasons for this disinvestment are many and include state- and federally mandated programs that have eaten deeply into the amount over which state legislatures have discretion. Those mandates likely are not going away. But if legislators realized the massive return on investment they are already getting from higher education, they would be going “all in” with public funding like a poker player with the best hand of his life. Of course, it is not just a matter of “throwing money at a problem.” We must be smart and targeted in our spending; but make no mistake, we must invest resources in higher education.
University administrations need to aggressively control higher education’s cost. But the responsibility for the cost of public higher education also rests with the public. Higher education affordability should be a nationally shared priority. State governments should begin making up lost ground by returning to their historical investment levels for higher education. It will help hold the line on the cost to students, and it’s the best investment of public dollars we can possibly make.