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Original article URL: http://bridgemi.com/2012/01/michigan-college-cost-dilemma-bankrupts-all/

Phil's column

Phil Power is founder and chairman
of the Center for Michigan.

Michigan college cost dilemma bankrupts all

I’ve been observing Michigan public policy discussions for nearly 50 years. It’s amazing that, so often, it’s as though people with differing views live in two different universes.

Take Michigan universities. Analysis presented last week in Bridge showed costs at Michigan public universities are higher than the average at comparable schools around the country and that student debt in our state has ballooned to $1.8 billion for last year alone.

The folks at the universities say this is the result of decades of Michigan elected officials choosing to skim money from higher education. The less state support, the argument goes, the higher schools have to push tuition and fees. And there’s some historical evidence: In the 1970s, the state covered around three quarters of total university costs; today, the numbers are reversed – and tuition has soared.

It’s not unreasonable to conclude that Michigan has imposed a stiff “college use tax” on hundreds of thousands of Michigan students and their families.

The folks in the Legislature, particularly the House of Representatives, couldn’t disagree more. They think the universities are constantly whining for more state money and asserting their constitutional autonomy immunizes them from legislative attempts to cut costs, enforce productivity and apply graduation standards.

Rep. Bob Genetski, R–Saugatuck and chairman of the House Appropriations Subcommittee on Higher Education, is an outspoken critic of how universities spend money. In an interview with Bridge’s Ron French, published last week, Genetski talked about whether Michigan has made a conscious policy choice to have college paid for by individual families, as opposed to by the state:

“We’re not saying we don’t care about higher education. … But there are so many places we can cut, and higher education happens to be one of those.  It happens also to be one where, as soon as you cut it, (universities) can turn around and, instead of looking inward for legitimate cuts, increase tuition. … Parents tell me universities don’t make a strong effort to make cuts. Taxpayers deserve better.”

While university and legislative ships pass in the night, the facts of Michigan’s damaging and unsustainable higher education policies wind up giving nearly everybody the shaft.

Students and their families are paying way above national market price for degrees at Michigan universities. Many are scared off by costs from getting a college degree in the first place. Many able kids leave the state to get cheaper degrees elsewhere; most don’t come back.

College graduates are burdened by crushing debt at high interest rates. Families in hock to student loan outfits aren’t going to buy cars, houses or much of anything. Student debt last year – $1.8 billion – far exceeds total state support for higher education ($1.2 billion). Declining state support has been converted into ballooning student debt.

Michigan’s economy, which depends on lots of college-educated folks in the work force, is suffering. Many high-tech start-ups depend on inventions from university labs migrating into the business world. Starved universities are unlikely to be robust innovators.

Michigan employers are crying out for better-trained, more-skilled workers — workers with college degrees. Fewer Michigan kids going to college means fewer productive workers for Michigan businesses — and that means our economy doesn’t grow as fast as it could.

Putting up with the mutual incomprehension and joint acrimony that we’ve seen over the past decade hurts everybody. Surely we can do better — especially when it’s clear everybody’s hurt by the present stalemate.

A starting point would be for university leaders and legislators to sit down — together with economists and representatives of the business community and the Governor’s Office — and start talking candidly to each other about higher education and Michigan’s prosperity.

One result might be agreement on a set of outcome-based performance metrics for universities that could be used to allocate state support. Another would be to set an overall state policy objective to fund Michigan universities over time at a level comparable to top 10 states – if they meet or exceed the performance of peer institutions.

For years, everyone has paid lip service to the assertion that our universities are among our state’s crown jewels. And, for years, we’ve been leading the nation in kicking sand on the diamonds. It’s way past time for that to stop.

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and president of the Center for Michigan, a nonprofit, bipartisan centrist think–and–do tank, designed to cure Michigan’s dysfunctional political culture; the Center also publishes Bridge Magazine. The opinions expressed here are Power’s own and do not represent the official views of the Center. He welcomes your comments via email.

3 comments from Bridge readers.Add mine!

  1. Nick Fleezanis

    Phil,

    I agree with you completely. Legislators and higher education leaders must come together and reach agreement as to how they are going to deal with the outrageous costs that burden our state’s students! If not – parents and students will seek out other alternatives to college degrees. The private sector has already begun to offer substitutes for a degree that are within the reach of those looking to find career options. Will we see home schooled college degrees? Certifications and other types of credit and non-credit bearing offerings are springing up all over the nation. Soon – industry will be forced to look at these in order to hire employees as some have already done. The entitlement attitude at the university level must end and reality sink-in. Lean and mean is good for industry – so why not higher education?

  2. RM

    Taxpayers elected representatives with a hostile attitude toward higher education, so I think the financing remedy needs to be focused on taxpayers, not legislators.

    I think a paradigm shift has to take place here. Instead of taxpayers funding universities, I think taxpayers need to fund students and have them fund the universities. I think taxpayers will be more willing to fund a student oriented voucher system than direct payments to universities.

    The current direct payment system is fundamentally unfair since it favors some universities more than others. It also has no influence on what is taught and in many cases is of no benefit to taxpayers. For example, if a university offered a major in horse drawn buggy design, as a taxpayer, I wouldn’t be happy about paying for this service. More realistically, if the state’s universities enroll several times the number of elementary school teaching majors than are needed in Michigan, I’m not a happy taxpayer.

    That said, I don’t want state bureaucrats or the legislature deciding what’s taught and not taught at our universities or somehow attempting to establish quotas for majors or pick and choose what schools teach what. However, I do want my representatives in Lansing to be able to influence these decisions.

    Vouchers can be manipulated to influence student demand for higher education services. For example, if there is a glut of elementary education majors, then vouchers given to students to pay for an elementary education course may be less than what is paid for a course where there’s a huge need in our state, for example a course teaching a kid to program a computer.

    Vouchers can be motivators for students if more is paid for a higher grade in a course and less for a lower grade. They can also be motivators if there’s a bonus paid when a kid graduates.

    Vouchers can manipulate the market for services provided by our 15 universities. Demand will impact supply and since a voucher can be used in any of the 15 schools, the vouchers may impact both pricing and supply by these schools. There will be more competition among these schools for students. If, for example, $10,000 in vouchers buys a lot more education at Grand Valley than U-M, then I would suspect that Grand Valley will attract many student who might otherwise have gone to U-M.

    The benefit for taxpayers is that they’ll get more bang for the buck and knowledge workers better focused on the state’s needs. Taxpayers would have better confidence that our tax supported universities are operating as efficiently as they can, may therefore be willing to spend more on higher education and may be more willing to give money to students than to the institutions.

    1. Mike R

      The voucher idea is interesting, but my initial reaction is that it appears to provide funding only for the courses actually taught, and fails to deal with the multiplicity of other services provided and functions served by the universities. For example: the University of Michigan is a world class research institution, whereas Oakland University is not. Would a voucher be adjusted upward to account for each student’s proportional share of research overhead at U of M? Would the value of the voucher be determined by the institution to which the student is accepted? In that case, wouldn’t we end up having the same political arm-wrestling matches each year when the value of the vouchers is to be set? It seems to me that if the only criterion for valuation of the voucher is the political, social, or financial desirability of the course of study, in short order we would find ourselves in a worse mess than the current one.

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