Budget cuts: a blessing in disguise?

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September 10, 2009

11:35 PM

Well, it’s that time of the semester again. In what has become almost a semi-annual event, Gov. Tim Kaine has announced that, in order to remedy the commonwealth’s budget shortfall, the College of William and Mary must again absorb cuts in state funding. In this go-round, the state cut 15 percent of their support. This brings the grand total of cuts to 32 percent since 2008, or $16.6 million. We know the economy is bad, but sometimes it seems like a disproportionate amount of money is being taken from higher education. How is it that the College — one of the preeminent public schools in the nation — now receives less than 15 percent of its operating budget from the commonwealth? There are several forces at work here. One, of course, is the continuing recession, but there has also been a sustained drop in state support for public higher education for decades.

First, let’s talk about the present. Education researcher Harold Hovey suggests that funding for higher education goes through a natural boom and bust cycle. When times are good, funding for public universities and colleges increases; but in a recession, they are cut more rapidly than other budget items. This is because legislators view higher education as a discretionary budget item, able to absorb cuts in funding more easily than other government programs.

For one, colleges have alternate sources of income — the largest of which is tuition — which to some extent can mitigate a dearth in state support. The institutions can also pass the costs on to students and teachers through payroll cuts and tuition hikes, thereby continuing effective operation with diminished funds. Furthermore, colleges can generate savings in the short run by increasing class size and faculty loads while reducing the number of courses, though this approach will have obvious long-term consequences for the quality of education offered. For these reasons, state funding for higher education is one of the first places lawmakers look to take money from in order to balance the budget.

However, this is not the complete picture of the situation. The amount of state funding for public education is not purely a boom and bust cycle — this funding is also decreasing over time. For example, in 1982 states spent 14.1 percent of their budget on higher education while in 2001 it was only 11.3 percent. This cannot be predicted by a simple business cycle; 1982 was not a great year economically. It is suggested that this trend can be explained by the expansion of certain state budget items, namely health care costs, prison expenditures and funding of K-12 education. These items’ percent share of the state budgets are expanding and crowding out funding for higher education, which is seen as less of a priority for the reasons I described above.

Virginia is no exception. For instance, funding of the Department of Medical Assistance has grown as a percent of the state budget from 2000 to 2008 and Kaine is doing the best he can not to subject K-12 education to the budget cuts he has already imposed on higher education.

Thus, the College and public universities in general are currently in the middle of a perfect storm. On the one hand the economic downturn creates a situation where politicians need to cut expenditures on higher education in the short term. At the same time long-term trends predict that education will shrink as a percentage of the state’s budget as it is crowded out by the growing cost of healthcare, prisons and K-12 education. What may result is a continuing spiral toward the privatization of many public schools. But this may be a blessing in disguise. With each successive drop in state funding, we become less and less dependent on sources of revenue outside our control and more immune to changes in the business cycle or the constitution of Virginia’s budget.

E-mail Ed Innace at [email protected]

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