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The Virginia General Assembly has taken up
the “chartered university” proposal that could
restructure the relationship between the state and
its public colleges and universities. Chartered
universities would be able to make many important
decisions on campus instead of waiting for
decisions in Richmond. Most importantly, chartered
institutions would control
tuition.
This
frightens many people who fear that rapid tuition
increases will close classroom doors on students
from lower and middle income families. This fear
is misplaced. The state’s current mechanism for
financing higher education is what constrains
access to higher education. Under the charter
proposal access likely will broaden.
The briefing materials from
the November Senate Finance Committee retreat
paint a clear picture of the way Richmond
currently views higher education finance. The
state has developed very sensible procedures for
calculating the costs of providing higher
education, and they have set two funding goals on
the basis of these benchmarks. The first is a
cost-sharing goal for in-state students. The state
would cover two thirds of the costs, with tuition
revenues supporting the remaining third. Secondly,
the state has set a goal of meeting at least 50
percent of remaining student need (the need after
other grants and scholarships).
The Senate Finance Committee
staff says the state will be roughly $200 million
short of meeting its cost sharing goal by the end
of the current funding biennium. Yet this actually
represents major progress. In last year’s budget
the “base adequacy gap” was almost $400 million.
The forecasts are not as sanguine on the financial
aid goal. The Senate Finance Committee staff
estimates it will be able to meet 34 percent of
the remaining need in the 2005 fiscal year and
only 31 percent in 2006.
These two funding priorities
affect students and their families very
differently. The cost sharing money is a general
subsidy provided to all in-state students. It is
what permits in-state tuition to cover such a
small portion of the cost of higher education.
This general subsidy benefits a large number of
students who have no financial need. The money
behind the second goal provides a targeted subsidy
because it finances need-based aid given to
students who meet state-defined criteria. Targeted
subsidies of this type clearly increase access to
higher education because they go to students who
would not otherwise be able to attend.
The General Assembly clearly
is very interested in meeting the goal for the
general subsidy. Their current two-year budget
closes half of that deficit. At the same
time they are falling further behind on their goal
for targeted subsidies. This is not a sensible
public policy if broadening access to higher
education is an important social goal.
How would things change if
these financing decisions were made by the
institutions? Two pieces of information are
critical, what the institutions say and what the
institutions have done.
First, what have they said?
The charter proposals are all based on finding the
revenues to meet the state’s own formula for the
cost of higher education. The funds to do that
will come either through state appropriations or
through tuition. Additional tuition increases
would be used to close the state funding gap only
if state appropriations failed to do so. The
universities also commit themselves to increase
the percentage of financial need that they cover
for admitted Virginia students.
Second, what have they done?
In the last fiscal year, Virginia’s public
colleges and universities raised tuition under
authority granted by the General Assembly in order
to reduce the base adequacy gap. The Senate
Finance Committee reports that this year 10
institutions set aside $11.3 million of that new
tuition revenue for student aid. By contrast, the
state’s own budget contains only $3 million in new
aid money per year. These institutions took money
that they could have used to make up more of the
base adequacy funding gap and used it to meet the
needs of an important target group of
students.
Based on what they say and how
they have acted, Virginia’s public colleges and
universities have a much more sensible notion of
how subsidies are best arranged than does the
General Assembly. Those who are interested in
student access to higher education have more to
fear from leaving decision making in Richmond’s
hands than they do from chartered universities
with tuition authority.
-- January 17,
2005
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