Are America's Public Universities Dying?

The recent recession exacerbated a decades-long pattern of diminishing state dollars spent on public universities. Now, as some wonder whether the state schools can emerge from the economic crisis and regain their former robustness, a disturbing question is being asked: are America's troubled public universities dying?

Public Universities Financially Sick

The last twenty years have seen the positive trend of growing enrollment at public universities counteracted by the negative trend of decreased government support for these schools. From 1988 to 2008, the number of full-time enrolled (FTE) students at public universities increased 42 percent, while the amount of state money spent per FTE student declined 9.1 percent. Neither federal funding nor higher tuition has made up that loss. As a result, public universities' debt is up 54 percent just to finance their facilities.

Despite economic hard times, private universities have consistently outspent their public counterparts per student. This means they've been able to attract more prestigious faculty by paying more than struggling public universities, and they've also been able to fund graduate students better and make more improvements to their campuses.

Faced with the pressing need to bring in money and compete with private schools, many state schools are failing to meet their historic mission to educate citizens of all classes. Public universities still have impressive coffers from which to award student aid, but because students coming from out-of-state pay higher tuition, state research universities have started enticing these students with generous grants, regardless of financial need.

As a result, those who don't need them are being given price breaks at the expense of those who do. Unable to afford public university tuition, many poorer students are opting for community or for-profit colleges. At troubled public research universities, between 1995 and 2003, the number of undergraduate students with annual family income of more than $100,000 went up 12 percent. At the same time, undergrads with annual family income of less than $20,000 dropped from 14 percent to 9 percent of the student body.

How to Improve Public Universities' Health

Here are two suggestions for getting the struggling public universities back on their feet:

• Peter Orszag, 2009-2010 White House Director of Management and Budget, pointed out in a recent New York Times column that increases in state spending on Medicaid have been almost exactly equal to decreases in higher education spending over 25 years. Federal help in paying Medicaid costs, and containment of health care costs in general, should allow states to restore levels of funding for their university systems. The Association of Public and Land-Grant Colleges calculates that increasing the education allocation of state budgets just two percentage points would make a significant impact.

• Even without more funding, public universities could potentially improve their situation by spending the money they do have differently. The Chronicle of Higher Education quotes Cary Nelson, President of the American Association of University Professors, as saying that schools should spend less on ambitious but expensive "fantasy projects" and more on recruiting and paying faculty and other basic educational priorities. And the Education Trust asserts that public universities can choose to fund more low-income and minority students, and some already have begun doing so to great effect.

American public universities are still among the best in the world. Whatever their current troubles, eight U.S. public universities appear in the top 30 of the Times of London World University Rankings 2010.