From the President

Ground Rules Changing for Public Universities

Who reaps the greatest benefit from your UW education? Is it you, as an individual, with enhanced opportunities for career and quality of life? Or is it society in general, with a more enlightened and productive citizenry?

UW President Richard L. McCormick

UW President Richard L. McCormick. Photo by Mary Levin.

This was the large question that underlay a fascinating and provocative session last November called "Financing Public Universities in the New Millennium." As part of the UW's annual Visiting Committee and Advisory Board Day, we held a forum on this subject with two guest experts: Dean David Breneman from the University of Virginia's Curry School of Education and President Emeritus James Duderstadt from the University of Michigan.

Both these men, drawing on the experience of their own institutions and looking at national trends, suggested that the "social contract" between state governments and public universities is undergoing profound change. The days of generous state support, based on the notion that higher education is primarily a public good, may be over, they said. In fact, across the country, funding for higher education as a percentage of total state spending has declined more or less steadily from its peak in 1979. The burden of financing higher education has shifted significantly from the taxpayer to the student and his or her family.

Both the University of Michigan and the University of Virginia now think of themselves as "privately funded public universities" (in Duderstadt's phrase). At both schools, out-of-state and professional-school tuition levels are now comparable to those at elite private universities. In-state undergraduates still enjoy substantial subsidies and, where necessary, financial aid; even so, in-state undergraduate tuition at Michigan is almost 90 percent higher than at the UW. And at both schools, (higher-paying) out-of-state students are a much larger proportion of the student body than the 10 percent or so admitted to the UW.

But higher tuition revenue is only one part of the new financial structure at Michigan and Virginia. More ambitious fund-raising, more aggressive pursuit of federal and industrial research funds, more reliance on reserve and endowment funds and hospital revenues, and new management models are also part of the mix at one or both of these institutions.

This kind of privatization, according to both speakers, is increasingly prevalent at leading public universities east of the Rockies, in response to the decline in state funding. But Michigan has gone farther down this road than Virginia, for two reasons.

First, privatization has been deliberate policy at Michigan for almost 30 years. Beginning in the 1970s, as they looked at the state's sagging economy and its growing number of public colleges and universities, the University of Michigan's administration and regents became convinced that the state was simply not in a position to support a world-class research university. So they set out to build new financial and management structures that could support such a university and that would rely much less heavily than in the past on state funding. The result today is a university that, according to Duderstadt, is stronger than ever but gets only about 10 percent of its revenues from state appropriations.

But there was a second key factor that set the stage for the university's planning and policies. In the world of public universities, Michigan has unusual—perhaps unique—institutional autonomy. It is effectively a separate branch of state government. University of Michigan regents can set tuition, determine educational programs, and allocate resources independent of legislative oversight. When asked, at the forum, whether the university could have achieved its current financial (and educational) success without this autonomy, Duderstadt had a quick one-word answer: "No."

Universities in the West, said our speakers, have historically followed somewhat different patterns from those in the rest of the country. Neither man was ready to predict whether the experience of his own university would be applicable here—nor am I. But their talks provided much food for thought.

The benefits that accrue to individuals from a university education are undeniable. But so, I would argue, are the benefits to society. An educated populace, prepared to contribute to the collective betterment of society, is a public good. Public universities were established on that premise. If the nature of these universities is changing, we need to think hard about what is gained and what is lost.

Richard L. McCormick signature

Richard L. McCormick, President

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