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BY THOMAS K. GROSE
COVER STORY: LIFELINE TO THE STATES COVER STORY

LIFELINE TO THE STATES

A federal stimulus package will ease some of the pain felt by public universities. Still, budget and enrollment cuts loom, along with tuition hikes.

When a state’s revenues fall off a cliff and budget cuts are unavoidable, higher education is usually quick to get walloped.

Just ask beleaguered Ching-Jen Chen, dean of the College of Engineering jointly run by Florida State University and Florida A&M University. The Sunshine State instituted a three-year freshman enrollment cap a year ago and may hike tuitions next fall. Over the past two years, FSU has sliced his budget by 4 percent, Florida A&M by 15 percent.

Yet Chen still can’t sheathe his blue pencil. “It is a terrible time right now,” he sighs. “We’ve cut to the bare bone already.” Indeed, some of his faculty positions remain unfilled, and graduate teaching assistant slots have dropped from around 60 to 20. Now, with the state projecting an 8.6 percent budget shortfall, each school will most likely trim Chen’s budget by 10 percent more in FY 09. As a result, some faculty and staff in his college could face unpaid daylong furloughs each week.

Now that a potentially long and deep recession has taken hold nationally, Florida’s difficulties are set to be replicated coast to coast. States have increased aid to colleges by the lowest proportion in five years, and more than 40 are now struggling with revenue shortfalls, some dire. And because deficit spending is barred by most state constitutions, they face a tough choice between raising taxes, potentially aggravating the economic downturn, and draconian budget cuts that lay more people off and shrink benefits.

A PARTIAL RESCUE


Help is on the way from Capitol Hill in the form of a $787 billion stimulus and tax-cut plan aimed at easing the states’ fiscal plight, creating or saving millions of jobs with new or repaired infrastructure, computerizing health-care records and investing in a greener, more energy-efficient economic future. The package bears the stamp of a new president, Barack Obama, who views science, technology, and higher education as important tools for growth.

Besides large sums for transportation, clean water, flood control, federal buildings, housing repairs, and a “smart” grid and expanded broadband access, the Democratic package directed some $106 billion toward education – both schools and universities. It would help prevent teacher layoffs, reward districts that boost performance, increase federal Pell grants for low-income college students, and repair and modernize school and college buildings and other facilities. States and communities are eager for a share. Michael Griffith, senior policy analyst at the Education Commission of the States, predicts “the line will start at D.C. and go all the way, unbroken, to Hawaii."

The new federal spending is unlikely to forestall state budget cuts. The Congressional Budget Office (CBO) says there is usually a lag in spending large sums, given the need to draft plans for projects, solicit bids, enter contracts, and gain regulatory approval. Innovative projects, such as a new grid that distributes electricity more efficiently, take longer. New programs are frequently “slower than expected,” the CBO says. Expanding broadband could take seven years.

“The line [for help] will start at D.C. and go all the way, unbroken, to Hawaii.”

Democratic versions of the stimulus plan authorized some $10 billion for science facilities and basic and applied research. Subjects ranged from carbon capture to nuclear physics and from Internet technology to “environmentally responsible” aircraft. Some of this money would go to public and private universities, but how much of it would survive congressional wrangling was uncertain. Even if approved, the money would not flow overnight. It would be allotted first to federal grant-making institutions like the National Science Foundation, the National Institutes of Health, and the Department of Energy. And since both Obama and appropriators have lately come to scorn congressional earmarks, research engineers and scientists won’t be able to circumvent time-consuming grant procedures.

THE FLORIDA HOUSE OF REPRESENTATIVES AT WORK IN TALLAHASSEE

FEWER STUDENTS?


So for the time being, state-funded universities and colleges face tough times – though maybe not as tough as they seemed late last year. Academic budget cuts loom, as do tuition increases and efforts to reduce enrollment. Add on a shortage of private student loans because of the credit crisis – something Congress may also try to fix – and there’s a good chance that far fewer youngsters will be heading to college over the next few years. Low-income and ethnic-minority families are likely to be hardest hit.

That means “engineering [enrollment] could suffer, as well,” warns Don Giddens, dean of engineering at the Georgia Institute of Technology. That would deal a sharp blow to efforts to overcome a national engineering shortage at a time when many experts already fear for the future of America’s technological leadership. Attempts to draw more ethnic minorities into the profession will be hamstrung as well.

Giddens stresses that enrollment at Georgia Tech won’t be slashed: “We try not to let student/faculty ratios creep up to finance cutbacks.” Still, his college is feeling the pinch: an immediate 8 percent budget cut, with more cuts expected. While he can replace faculty who leave, he can’t make new hires, unless they’re in critical areas. Some staff have been laid off, and no new staff are being hired. Giddens also reduced state-funded travel and delayed some planned building maintenance and renovations. This spring, Georgia will add a temporary fee of $100 per student, per semester, at state research schools.

Cuts in higher education can ultimately backfire on states. Graduates outearn nongraduates and are thus a better source of tax revenue. But, explains Griffith, state officials view universities as better able than other state agencies to absorb cuts, since colleges, on average, get 75 percent of their income from sources other than state revenue, including tuition and fees, external grants and contracts, and endowments.

HIGHER FEES?


Griffith expects a “dramatic increase” in tuitions at many schools this coming fall. Some have already acted. The State University of New York system, as of this spring, is boosting tuition by $310 a semester, or 14 percent; Rhode Island hiked tuition at three state schools in mid-fall by 6.5 percent. Some states cut enrollment instead. Absent tuition increases, Griffith explains, “the only way to offset [a loss of state funding] is to cut the numbers of kids you’re serving.”

The California State University system plans to decrease its 450,000-strong student body by 10,000, and Tennessee and Washington say they’re also considering enrollment caps. Notes Wayne T. Davis, interim engineering dean at the University of Tennessee-Knoxville: “Many colleges, like ours, may find it necessary to limit the number of students that can be admitted.”

Such enrollment limits couldn’t come at a worse time for parents who, because of falling property values and tougher lending standards, can’t count on a home-equity loan to send their kids to college. Many anxious families are choosing state colleges over more-expensive private schools, and some students may enter a two-year community college instead of a four-year university. Paul Peercy, engineering dean at the University of Wisconsin-Madison, says that in order to preserve enrollment, universities need to improve productivity much the way industry does: “We need to produce more students of the same high quality while lowering per-unit costs.” One way, he suggests, is increased distance learning.

Wisconsin faces a budget shortfall of at least $5 billion over the next two fiscal years, and Peercy and his fellow deans at Madison are already going though a preplanning exercise: “We take a worst-case scenario – if this happens, what do we do?” In an increasingly multidisciplinary environment, he says, it’s important for the deans to act in tandem. Peercy also wants budget planners to think four years ahead: “I want to know where we could end up. I don’t want to die by a thousand different paper cuts.”

The recession is forcing schools to look at funding options they may have rejected in the past, such as differential tuition. This is the controversial practice of charging higher tuition to students who pursue majors – engineering is a big one – that require costly labs and equipment but hold out the promise of well-paying jobs. At FSU, Chen says, “We’re thinking of proposing a so-called engineering fee” on students in addition to their tuition.

Or, what if states encouraged more engineering enrollments, but placed tighter caps on liberal arts enrollments? As Griffith says, because engineering graduates ultimately tend to be higher earners than humanities grads, states might begin to question why they’re spending big money on graduating thousands of English majors but only hundreds of engineering grads. “It becomes an economic development issue. It’s an idea that might gain traction in hard economic times,” Griffith says. But Georgia Tech’s Giddens thinks it’s a bad idea for states to try to dictate what students choose to study. Even though he would love to see more engineering graduates, he says, “I would prefer to see the free market sort that out.”

Unlike state appropriations, so far funding from external sources – research grants and contracts from federal, state, and local governments and from industry – seems resilient, providing a cushion for graduate programs. As Chen notes, “Our research side is doing very well.” External funding will actually grow this year, he says, though he can’t predict what will happen in 2010 and beyond. If Obama has his way, there will be a surge in federal research funding, particularly for various kinds of green technology. Yet it’s possible that a deepening recession and worry over ever growing deficits will force him to lower his sights. In difficult economic times, Tennessee’s Dean Davis says, research grants and contracts tend to slide. For engineering colleges, which count on such funding more than on state appropriations, that could be the unkindest cut of all.

 

Thomas K. Grose is Prism’s chief correspondent, based in the United Kingdom.

 

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