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New Models for Financing Public Universities

Mar 21, 2011

States throughout the country are facing massive debt and seeking ways to balance budgets. As a result, cost cutting is affecting all types of state programs, including public universities. Now, both university and government leaders are looking for change in how public universities are financed.

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By Jeff Calareso

The Need for Change

The demand for change in public university financing is coming from without and within. State governments throughout the country, including Oregon, Wisconsin and Louisiana, want to see less money flowing into these institutions. They're grappling with budgets that have grown far out of balance and see public universities as one place to cut spending.

Administrators at many universities are welcoming the call for change. They've seen their revenue from the state drop due to the economic collapse, leading to a variety of problems. They're finding it harder to maintain compliance with complicated state regulations when the money to finance state-mandated projects and programs isn't sufficient. Additionally, with their finances so intricately tied to state budgets, public universities are often less able to adapt and stay competitive relative to peers in the private sector.

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Proposed Models

There are a variety of proposals being considered in different parts of the country. In Ohio, Governor John Kasich has discussed forming 'charter universities;' like charter schools, these institutions would receive less public money and, in exchange, be exempt from some of the rules that come with that money. Elsewhere, President Richard Lariviere of the University of Oregon would like to combat the ebbs and flows of state financing through a $1 billion bond sale. That money, he suggests, would keep the university secure for the next 30 years.

University of Wisconsin protestors

In Wisconsin, conflict between the government and state workers has turned ugly in recent weeks. Yet both Governor Scott Walker and University of Wisconsin-Madison Chancellor Carolyn Martin have suggested separating the Madison campus from the other universities in the state system. This move would offer greater flexibility for the state's flagship university and provide it with more autonomy.

Resistance to Change

While state and university officials often agree that change is necessary, there are still fears about what that change might mean. Public universities are intended to provide residents with cost-effective access to postsecondary education. There are concerns that without more government oversight, tuition could rise and that access could shrink.

The plan for Oregon has detractors who worry that the bond revenue could be co-opted by the state to balance their books rather than go to funding the university. In Wisconsin, some fear that removing the flagship Madison institution from the system could hurt the other universities; it has been suggested that the prestige of the Madison campus attracts higher caliber faculty members, research projects and students to the other schools in the system and that residual effect would disappear if Madison was isolated.

Ultimately, changes are being made and will continue to be made. Yet the debate rages as to how best to effect those changes while preserving the interests of all who are involved, from state budgets to future students.

Public universities may need to fight not only for funding and autonomy, but also to better serve low-income and minority students.

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