By Brian Fleming, Senior Analyst and Heather O’Leary, Principal Analyst
Daily headlines of struggling colleges and universities have almost become commonplace. In recent news, Maine’s state colleges appear to be in dire straits; Georgia has approved the consolidation of its system from 12 schools to six; and more than three dozen colleges have had their credit rating downgraded by Moody’s. If these mounting headlines haven’t drawn your notice, it is hard to turn a blind eye to the situation unfolding in California between the President of what has long been viewed as the platinum standard for public universities, the University of California, and the Governor of the eighth largest economy in the world. All of higher ed should pay close attention to how it unfolds in years to come.
The UC Challenge
Driven by both the state’s reduced investment in higher education and increasing enrollments, California’s spend per student for UC alone (omitting its State system, which has followed similar trends) has decreased by 55% over 30 years, from just over $24,000 per student in 1980 to approximately $10,000 in 2013. While campuses have restructured to achieve costs savings, the growing budget gap has resulted in significant tuition hikes for UC students. In November, the UC Board of Regents approved a plan to increase tuition by as much as 27% over the next 5 years. UC’s President, Janet Napolitano, has stated that this increase is necessary to provide access to California residents and maintain the quality of the UC education. Governor Jerry Brown has stated that raising tuition is not the answer; instead, the UC system should look to innovations such as competency-based education, three-year degrees, and online education to close the financial gap.
Figure 1. Implications of Proposed Solutions
The Eduventures Perspective
California has become a high-profile symbol of the tension between short-term band-aids and longer-term solutions that not only require significant up-front investment, but will also take years to see a return. Universities of any kind will face this crossroad when their revenues shrink faster than their budgets, whether it’s because of state disinvestment or declining tuition revenue due to decreasing enrollments and increasing discount rates. In California’s case, UC’s successes have always hinged on public support for higher education, which, as in most other states, has reached an all-time low.
It’s Time to Wake Up.
How California navigates the next five years could lay a blueprint for how higher education as a whole, both public and private, adapts in a climate of limited budgets, shrinking support, and expanding possibilities for change. UC will have to do two things:
- Judiciously manage its risky plan to increase costs, as well as the debt burdens of students and families.
- Boldly and transparently forge ahead with more innovative delivery models, which will surely include online learning and competency-based degrees.
Executing these strategies will require a constant leadership balance between Napolitano’s pragmatic short-term solution to keep the system afloat and Brown’s vision of experimenting with new, innovative ways of doing business to secure its future. Both parties will need to make good on bold promises to steer the UC system back in the right direction to preserve not only its mission, but also the mission of American higher education.
As the adage says, “as California goes, so goes the nation.” Every leader at every college should be watching what is happening in California closely. The time to invest in strategies and tactics to help your institution prepare for the future is now, before you find yourself in dire straits. What is happening in California will spill across state lines for years to come. The time to prepare for that change is now.