Should the Feds Rescue UC-Berkeley? Sorry, No.

In a new opinion piece in the Washington Post, Rescuing Our Public Universities, UC - Berkeley chancellor Robert Birgeneau and vice-chancellor Frank Yeary propose a “21st century Morrill Act” that would have the federal treasury underwrite some of the operating expenses of the nation's top public research universities, the goal being “to ensure broad access and continued excellence at these universities.”

Like all public university leaders, Drs. Birgeneau and Yeary are desperate to save their campus from the devastation of state cutbacks that have resulted in deteriorating facilities, soaring tuition charges, the defection of top professors to private universities, inadequate operating budgets, non-competitive salaries, and growing rancor and polarization within campus communities. Berkeley is arguably the top public university in America, and its leaders are properly concerned that this unique national resource is in danger of being permanently harmed. Their proposed solution is to prop up its funding base (and that of the Michigans, and other top-ranked public flagships) with federal dollars, even if doing so would lead to more “federal and state oversight.”

In my opinion, the Berkeley leaders are exactly right when they assert that “the need for an alternative model to preserve the public character of our great universities is increasingly urgent.” This is the same concern that led USC’s Warren Bennis and Max Nikias recently to propose corporate sponsorship for public universities (about which I have commented in an earlier blog). Both proposals would supplement inadequate state appropriations with dollars from other sources. However, both proposals, although clearly well-intentioned, are unfortunately at odds with the realities of a social and political landscape that increasingly holds public universities responsible for their own mess.

Birgeneau and Yeary clearly understand this problem. “This is one model,” they write about their proposal, “but there may be other and more attractive options. Simply put …we must take some radical steps if we are to preserve the public character of America’s great public universities.” Right on, gentlemen.

But the many comments to their opinion piece highlight the challenges. To wit: “The idea of federal government funding is absolutely ridiculous in that it amounts to continuing to throw money at a problem that started to get out of hand in the mid-1970s. The academic sector has grown way out of balance with regard to the public’s needs.”

Other comments point to “warped priorities,” “out-of-control athletic programs,” "dysfunctional [university] systems,” and “throwing good money after bad.” Still others highlight “bloated overhead costs,” excessive administrator salaries, and the dangers of allowing “federal tentacles to encircle the prey.” Several comments see privatization of public campuses as the ultimate solution.

A few years ago I offered my own proposal for “rescuing our public universities,” also in the Washington Post, which I’ve elaborated on in Saving Alma Mater. One element of my proposal is to deregulate (not privatize) public campuses by phasing out their public subsidies, while also giving them the freedom to set admissions policies and tuition levels. States would continue to support their public campuses, but through scholarships to state residents rather than appropriations to campuses. In Saving Alma Mater I highlight some of the shortcomings of the current, problematic financial model, many of which center around problems inherent in government subsidies to campuses. A few of the problems (there are more):

1. Government subsidies to universities are not contingent upon institutional performance. Thus, this key revenue source carries no financial incentive for institutions to prune weak or unneeded programs, enhance efficiency and productivity, stay focused on mission, and be innovative and responsive to student needs.

2. Government subsidies shield universities from the beneficial influence of competition. The result is bureaucratic growth and a focus on lobbying and maintaining the subsidy, rather than competing with other universities to improve performance and enhance value.

3. Government appropriations for campuses use taxpayer funds inefficiently because they benefit wealthy, middle-income, and poor students equally. Blanket appropriations for campuses indirectly subsidize students who can afford to pay their own way, thus diverting state resources from those who cannot.

4. Government subsidies raise a university’s cost of doing business. The extra revenue from a subsidy increase is immediately swallowed into an institution’s permanent cost base, allowing it to increase future expenditures without having to prune weak programs or make internal reallocations.

5. Over the years, subsidy declines have not only driven up public university tuition charges but have exacerbated an academic culture of defensiveness and resistance to change. Government efforts to rein in campus spending and increase accountability have been counterproductive, resulting in a regulatory burden on universities that has raised costs, expanded bureaucracies, stifled creativity, and handicapped initiatives by individual schools to excel and distinguish themselves academically.

Although I question their proposed fix, I was very pleased to see this opinion piece from the leaders of the nation’s premier public campus. I hope it signifies not only a growing perception that the nation stands to lose a treasured resource that is indispensible to the future well-being of millions of Americans, but also the recognition that this resource cannot be saved merely by tinkering around the edges of a failed financial model.