Michigan universities face hostile financial, political circumstances

There’s little doubt that our universities are among Michigan’s most valuable and important assets. But real alarm about public higher education is spreading throughout the country -- and threatening profound consequences for our state and it colleges.

Take the case of Teresa Sullivan, a former provost at the University of Michigan and now president of the University of Virginia. On June 10, with no advance warning, she was forced to resign by the university’s board, which said she wasn’t making changes fast enough. The campus erupted in anger. Under pressure from the governor, the board quickly reinstated Sullivan.

This is not a unique scenario. Richard Lariviere, president of the University of Oregon, was fired. Carolyn Martin, chancellor of the University of Wisconsin-Madison, resigned to go to Amherst, a small private college. Michael Hogan, University of Illinois president, resigned after a faculty revolt. Bill Powers, president of the University of Texas, is in big-time conflict with his board over tuition increases.

Underlying these events are a series of structural problems affecting public universities. Once among America’s proudest achievements, they now face a set of unprecedented threats:

* Declining public support. According to higher education’s respected Grapevine Survey, overall state appropriations to universities have deteriorated by $6 billion, 7.6 percent, over the past decade, with more cuts likely coming. Over the last decade, successive Michigan Legislatures have cut $536 million from higher education support, according to the Senate Fiscal Agency; that amounts to a 29.3 percent drop, the most of any budget category. This year’s state budget increased support for higher education by 3 percent overall, the first in years. Twenty years ago at the U of M, public support provided 75 percent of costs; tuition and fees, only 25 percent. Today, you may be shocked to learn it’s exactly the reverse.

* Increasing tuition and fees. According to the National Report Card on Higher Education, tuition nationwide has increased by 375 percent since the early 1980s; the inflation-measuring Consumer Price Index by only 95 percent. The result? An explosion of student debt, now approaching $900 billion nationally. In Michigan alone, student debt now has to be in the tens of billions.

* Fraying public relations. By increasing tuitions and making education less accessible, universities are aggravating students, their families and politicians. Lawmakers are also meddling; in Michigan, the Legislature this year bizarrely attached various restrictions to higher education appropriations.

* Changing technology. The basic business model of many residential universities is suddenly at risk, thanks to new technology. Coursera, a start-up nonprofit joint venture among the U of M, Princeton, Pennsylvania and Stanford, is offering for free online courses taught by world-famous professors -- “education for everyone.” The initial response was overwhelming -- more than 100,000 students worldwide have signed up. 

But the new delivery platform raises a host of questions. If students can get classes taught online for free, why should they pay expensive tuitions? Why should professors, already under criticism for low productivity, teach classes face-to-face when lower-cost alternatives are available? How much will a certificate from an online class cost, compared with traditional tuition -- and how much will it be worth as a credential?

Any industry facing fundamental changes in its basic business model inevitably comes under extreme stress, and public higher education is no different. One of the biggest stress points is the relationship between governance (exercised at universities by their boards, which set overall policy and hire and fire presidents) and leadership (exercised by presidents, who need to manage the rate of change their institutions can tolerate.)

The dispute at the University of Virginia between President Sullivan and the rector (chairwoman of the board), Helen Dragas, was exactly about this. Dragas said “the world is simply moving too fast” for the university to maintain its position “under a model of incremental marginal change.” However, Sullivan argues that universities are not like businesses, which can be managed forcefully from the top down. Instead, colleges require careful consultations with various constituencies, including faculty, students and alumni. 

So far, we have yet to see dramatic conflict occur at Michigan’s public universities. As far as I know, no president is about to lose his or her job. And students do not appear to be rioting over tuition rates.

But pressure is building statewide, best seen this year in the Legislature. At hearings in May on state support for higher education, lawmakers criticized universities for arrogance, unwillingness to provide information, rigidity and whining. Reportedly, some higher education officials are not welcome in the office of House Speaker Jase Bolger, R-Marshall. Worse, recent talks with a number of university board members revealed that most have no idea of just how unpopular their institutions are inLansing. 

This is a big issue that can only get bigger. Michigan has 15 public universities, all struggling to cope with pressures that have been building in recent years. Whether that can be done successfully will go a long way in determining how effective they can be in meeting our future needs -- and those of our students. 

Coming Thursday: The University of Michigan pioneers a new business model for public universities.

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 chairman 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.

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Comments

RM
Tue, 07/17/2012 - 11:00am
I think universities and their boards make good decisions, but the process is lengthy and ponderous. That's the nature of the beast and I think we'd be worse off if this were any different. Technology has been playing a role at our universities for years. Three of our schools were the first in the nation to embrace the Internet (the non-profit Merit Corporation co-operative agreement among UM, Wayne State and MSU). Online lectures have been available as a supplement to actual lecture attendance at MSU for years and probably at other schools. They'll do just fine with technology changes. The worrisome part of all this is the public support. It's waning, both financially and politically. Is this because of things the universities have done (or not done) or are they caught up in the general backlash of distrust for all public institutions. Personally, I think Republicans want to abolish all public education.
Duane
Tue, 07/17/2012 - 4:06pm
Maybe it isn't only the university model that needs to be looked at, it may be their purpose that the universities need to reconsider. Is it simply to put as many people through the university process no matter the cost to those students? Might it be time for univieristies to look at the value they are providing to their stakeholders. Do the students coming out have the knowledge and skill that the market place wants so those students can pay for the cost of their educations? Are the taxpayers getting value for their tax support such that the students are filling the employment needs of the State, that the services/research/expertise is enhancing the the employment based in the State? Are the legislators (who are drawn from the general citisenry) being given the full and open description of the university practices so they will have sufficeint understanding to make the proper desicions for all of the State education system? We hear much about banks being 'too big to fail' and that they should be allowed to fail when they fail in their roles. Maybe the Boards and adminstrators of our unversities should be given that reality, that they can fail and that they should be allowed to fail. Maybe it is the mind set of 'tenure' that the univeristies have allowed to permiate their culture to the point that they have become aloof from the day to day realities of society. They have lived so long on the goodwill and trust of others that they no longer appreciate what those who have provided them with suppport do, so the universities can exist. When there is a disconnect with the market place companies that succeed look at all asspects of the disconnect and change to address the problems. Maybe it is time that the universities and their governing bodies look at all aspects of the issues at hand and change so they can become sustainable.
Esteban
Wed, 07/18/2012 - 12:29am
If it's true that "twenty years ago at the U of M, public support provided 75 percent of costs; tuition and fees, only 25 percent" and now the situation is reversed, then it's the *legislators who voted to decrease public funding to universities* who are responsible for rising tuition costs and the student debt crisis. (Universities were forced to increase tuition to compensate for the decreased revenue from states.) Conservative republicans are quickly dismantling public higher education and turning it over to the private sector. The result, as is the result with all markets, is that some are able to afford education and some are not. It will continue to get worse unless we elect legislators who believe in the the power of the public sector and the rights of all Americans to the opportunity that education allows.