Wolf Richter www.testosteronepit.com
Tuition for the fall semester at the California State University system will be double of what it was for the 2007-08 academic year—which should send leftover deflation mongers back to their burned-out calculators. But it's still not enough. Now CSU is threatening the beleaguered public, taxpayers, and prospective students with stunning enrollment cutbacks, unless—and this smells of extortion—it gets its favorite tax increases on the ballot and passed. CSU’s wealthy cousin, the University of California is also jacking up tuition and limiting enrollment. Budgets for the two systems were cut by $1.4 billion this year, and more budget cuts are expected unless tax hikes save the day. And yet, stunningly, a lavish multi-billion-dollar building boom continues on campuses around the state.
For the spring semester next year, CSU will not admit new students. Its perverse goal: cut enrollment from 417,000 students down to 400,000. To push this strategy further into the absurd, CSU may block even more students in order to bring enrollment down to 380,000 by the fall of 2013—if voters reject the tax increases that will be vying for their love and attention on the ballot.
Ironically, preventing willing and able buyers (students) from buying the ever more expensive product (education) won't save that much money: it shrinks revenues by the amount of tuition and fees that these students would have paid—though granted, in-state tuition doesn’t cover the whole cost. San Diego State University ran into this. After trimming its enrollment to save money last year, it couldn’t fill its dorms (duh!) and ended up closing an eleven-story building. Now it got smart. For this academic year, it required incoming freshmen from further way to live on campus, at a cost of $8,000 to nearly $14,000 for room and board, though they might have been able to bunk down for a lot less elsewhere.
And yet, despite the money crunch, enrollment cutbacks, layoffs, and vertigo-inducing tuition increases, the University of California is plowing a whopping $8.9 billion into 200 construction projects on 10 campuses. A jump of 75% from a decade ago, according to California Watch. And the ever short-changed CSU system is building as well, but on a more modest scale, $161 million, up 5.2% from a decade ago (graph). Perhaps on the theory that new buildings are more conducive to higher education than new students.
But new buildings aren't free. Maintenance is expensive; at CSU, the estimated cost of maintenance that has been deferred due to lack of money already exceeds $450 million. And the financing costs also eat into operating budgets, even if buildings are empty, as is a $36-million medical school building that UC Riverside can’t afford to operate.
Much of the money comes from construction bonds, which isn’t free money either, a surprise to some people. Interest payments—$1.1 billion per year—are part of operating budgets, along with maintenance, heating and cooling, and so on. Other construction funding comes from private donations and grants. And some comes from student fees.
But wait.... It’s not only crazy Californians. The construction boom is nationwide. “What you’ve seen in California you’ll see in other places, too,” said Mary Vosevich. She should know, as President-Elect of APPA, the national association of campus facilities administrators.
Some construction may be justified, particularly at crowded community colleges that are catching students who can’t get into the university system, or can’t afford the tuition. But, as California Watch says dryly, “Many new buildings are going up on campuses because financial donors want their names immortalized, university presidents like to leave legacies of brick and mortar, and admissions directors are battling for applicants they’re convinced are lured by shiny new amenities."
In a real-world business, this type of logic wouldn’t fly. Investments have to make sense on the bottom line. Alas, “There’s no bottom line in higher education,” said Richard Vedder, Director of the Center for College Affordability and Productivity.
So, thousands of students from all over California snarled traffic during their march on the Capitol in Sacramento. Hundreds flooded the Rotunda of the Capitol, a raucous affair—until the Highway Patrol cleared them out and threw 60 of them into the hoosegow. Their problem: tuition increases. For the debacle of a system that has become dysfunctional, and the nightmare that student loans have become nationwide, read.... Next: Bankruptcy for a Whole Generation.