Bacon's Rebellion

Democracy Thrives in Sunlight

Let UVa Be UVa

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by

James A. Bacon
in

uva

The University of Virginia is preparing to take another step in its incremental evolution toward a private-university business model. The Board of Visitors is scheduled to vote this week on a proposal to increase undergraduate tuition by 3.6% — and at the graduate-level programs at the Batten School of Leadership and Public Policy by a whopping 39% for in-state students.

The undergraduate tuition increase maintains the relentless increase of past years. While 3.6% seems modest in absolute terms, it occurs against a backdrop of negligible inflation. According to the Bureau of Labor Statistics, consumer-price inflation for the 12 months ending February was zero… as in 0.0%. Nothing new here — this is Business As Usual. Despite negative PR regarding campus rapes and race relations, UVa continues to exercise its pricing power as an elite institution. It can increase tuition, so it will.

The main constraint is not market demand but political. Administrators are pushing as fast as they can without sparking a legislative backlash. Politically, the tender spot is the cost of an undergraduate education. What Virginians value is the ability, if they can meet the stringent admission requirements, to get a top-flight undergraduate education (and/or debauched party experience in the fraternity scene) at a price that is affordable to the middle-class.

Graduate programs are a different matter. Voters don’t get as upset if UVa’s super-elite business and law schools charge more. Batten School administrators, reports the Daily Progress, are moving toward a “high tuition/high financial aid” pricing model similar to programs at Georgetown University, Duke University and the University of Michigan. Expect to see more of the same in the university’s other prestigious graduate schools.

(Update: Lo and behold, a follow-up Daily Progress article notes that the Darden School of Business is jacking up tuition by 5.9%, while the School of Law tuition will rise 4%.)

Bacon’s bottom line: Deep down inside, UVa wants to be an elite Southern Ivy like Duke. I say, let ’em be what they want to be. Let ’em admit whom they want and charge what they want. Take the $133 million in state support and use it to build up Virginia’s non-elite institutions.

— JAB

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29 responses to “Let UVa Be UVa”

  1. Steve Haner Avatar
    Steve Haner

    This is the most important debate in higher education in Virginia, a debate which we are not having openly enough. So I’ll kick it off. No, Jim. UVA is a public institution and at the undergraduate level, at least, I will not surrender to those who argue UVA and William and Mary should charge what the market will bear, and layer on added cost in order to subsidize tuition assistance for the poor and lower middle class. That is a form of transfer payment, an education tax, so to speak. But instead of being paid by the general taxpayer, it is paid through higher tuition by the middle class family (often borrowing the money) and yes, the wealthy family that can afford it.

    What the elite grad school charges, that’s different. But it is a crying shame that so many people are ready to abandon the ideal of a reasonably-priced education for the middle class family with a kid with the academic chops to get into the school.

    It has been my privilege to serve on SCHEV for the past four years where this argument has raged, if politely, in several meetings. I get where the institutions are coming from, and share their frustration that the General Assembly has not kept its commitment to cover 2/3 of the cost of an undergraduate degree with tax revenue. This most recent GA session added back quite a bit of money, restoring cuts made a year ago when the revenue was nose-diving, but at the end of the process the general fund support was still down about one percent from two years ago. The state is still going backwards. But I also believe the institutions have not done enough to drive down cost, to drive more of the money they have toward the classroom where it belongs. And that pressure will disappear once they go semi-private. JLARC can’t audit Washington and Lee.

    I will add that it is an argument I have been losing in SCHEV, and I may continue it once I’m off the board in a few months. Many people around W&M and UVA agree with you Jim — they would just refuse state support, charge a private-Ivy level tuition, and bolster their great institutions. But the Wren Building and the Rotunda are public assets, owned by every Virginian, and I hope I’m not alone is hoping to keep them true public universities.

  2. Lift Avatar
    Lift

    Correction: the increase proposed will be 3.9% + $1000 for undergrads.

    NO NO NO! Jim, please do not fall into this camp of indifference to the mission and legacy of this public asset. Think globally: the world needs not one more 2nd or 3rd tier American private university adrift among others furnishing 18 year-olds with overpriced degrees with diminishing utility in world economy. UVA has an opportunity to walk back to its intended purpose, of providing a good education to its taxpaying base. Affordability is reachable and need not compromise quality, it simply requires better management and focus on core values. I wish I could spew the cumber, but imagine how much Virginians have invested in UVA since its founding–I’m not walking way from that to leave it in the hands of wealthy out-of-state alums who drive the BOV in a direction that counters the interests of Virginians. At least not without a fight.

    Steve Haner, please don’t give up at SCHEV. You are absolutely right that this is the big fight for higher ed. Keep it up!

  3. Steve Haner Avatar
    Steve Haner

    So the president of one of these universities says to me: It’s not fair for a millionaire’s kid to go to (fill in the blank) for such a low tuition! The rich should pay! In fact, the rich should pay so much that they are covering part of the cost for the poor! (“From each according to his means” in effect. I’ve heard that somewhere before.)

    But my vision is more egalitarian. The state universities should be more affordable, as they are in other states, because the taxpayers in general are picking up more of the cost. The wealthy pay more in taxes, in theory anyway. It’s is not UVA’s fault that Virginia has a flat income tax, with the same rate applied to somebody with $50,000 in income as somebody with $5 million in income. Even with that, the wealthy pay through their taxes.

    In his vision, the wealthy attending the school pay more — but the wealthy sending their kids elsewhere do not. In my vision, I get all of the wealthy in VA to further subsidize the public institutions.

    The problem is to really create this again in Virginia will require a major reshuffle of priorities, a major new commitment of general funds to higher education. A free public K-12 education is a right, enshrined in the state constitution. Even the Tuition Assistance Grants Virginia pays to students in private institutions (Liberty) are mentioned in the state constitution. Look in vain for any guarantee even of a reasonably priced public higher education in the state constitution. The state’s promise ends at Grade 12.

    Higher education is the ticket. Whether we are talking about an MBA from UVA or an industry certificate program for electricians or HVAC techs at a community college. The promise cannot end at Grade 12.

    1. DonR Avatar
      DonR

      How long does an adult continue to be a”millionaire’s Kid”? Should a 30 year old son of a millionaire returning to law school pay a premium?

    2. larryg Avatar
      larryg

      re: ” But my vision is more egalitarian. The state universities should be more affordable, as they are in other states, because the taxpayers in general are picking up more of the cost. ”

      see, I don’t think you can legitimately use that word – egalitarian in such a narrow sense.

      I think egalitarian means that every kid – including all who are not headed to a 4yr college – deserve an education provided at taxpayer expense – or at least as much as taxpayers provide for higher ed.

      and my reasoning is pretty simple – I think our tax dollars should go to produce employed graduates – not just graduates.

      all kids – not bound for a 4-yr college should have access to a post K12 training that will get them a 21st century job because most jobs now require more than K-12 educations to perform.

  4. James A. Bacon Avatar
    James A. Bacon

    I’ll admit, I’m ambivalent about letting Virginia’s public ivies go private. The extended Bacon clan has sent a lot of people to UVa and/or W&M (myself, my sister, two daughters and a niece). We benefited from the relatively low tuition at both institutions, and it’s questionable whether we could have afforded to attend them otherwise. Now that we’ve gotten ours, I feel bad about pulling up the drawbridge behind us. The policy of state-supported education benefits the middle class. If you’re looking to use the power of government to support the middle class, this is about as good as it gets.

    Keep working on me, and I could change my mind.

    Steve, your argument about the wealthy paying through their taxes is a sound one, in my view. They do.

    1. DonR Avatar
      DonR

      STEM majors should be subsidized by liberal arts students since the STEM majors will spend their lives paying most of the taxes.

      1. larryg Avatar
        larryg

        I don’t think STEM per se – I think pure STEM has limited job opportunities.

        What employers want is employees that use STEM-level logic to solve problems. That requires a solid background in reading, writing, math and science. Someone has to be able to read and understand something that has been computerized.. automated.. and is using technology that employees have to understand if they are going to be useful and productive.

        for instance, if you are going to write an app for a smartphone – you have to really understand how the smartphone obtains data – like GPS… or how they actually connect to a cell tower, how info about your own GPS location gets transmitted to other folks like Uber… etc.

        so it’s bright people with solid core academic skills that then allow them to read and understand modern 21st century concepts that directly relate to jobs.

        1. DonR Avatar
          DonR

          Why wold you think a STEM (Science, Technology, Engineering and Math) major would lack the ability to read, write, do math and understand science? It is a big mistake to believe that engineers can’t read and write for example.

          1. larryg Avatar
            larryg

            no – the opposite. People who can master STEM can pretty much master 21st century job requirements.

            people who don’t graduate with a STEM may not depending on how much hard science and math they took.

            many, if not most jobs today – require an ability to understand how technology functions because it’s pretty much embedded in most jobs these days.

            someone with a STEM or STEM-equivalent degree is pretty much plug and play for many employers – i.e. – does not need additional “training”.

            this is one of the biggest complaints from employers today – prospective hires need “remedial” training – i.e. training they
            should have gotten in college but instead took a flabby course load.

            Parents – and kids are laboring under the idea that any college degree will get them the average college-degree salary.

            STEM is like a job-ready “certificate” that you’re ready to roll when you are hired.

            you can get that without going to UVA or VaTech.. you can get that at lot of 2nd and 3rd tier colleges if you take a hard-science path and get A’s or B’s.

            A navy R&D Lab I’m familiar with – did not care about the name of the University – they cared about the hard-science and grades. A non-science/math degree from UVA was worth nothing.. it would not even get you an internship or entry level job.

  5. larryg Avatar
    larryg

    I’d keep the state aid but take it away from UVA and turn it into a student scholarship program for kids who get a B or better in high school and want to go to Community College.

    I’d let all income groups compete for the state scholarships but means-test the aid but also make it contingent on the field of study that would have to lead directly to a certificate or a field that the labor dept says has demand for.

    what we’ve done is turn college into a middle-income version of what the wealthy do.

    It’s okay if a wealthy guy goes to school and gets a degree in a worthless field .. he can fall back on his parents wealth.

    but it’s NOT okay for a kid whose parents are of modest means to fritter away scholarships and student loans on and education that gets you to a counter position at starbucks.

    The wealthy will take care of themselves.

    the rest of us need to get serious about spending thousands of dollars of personal and state money on “education”.

    If some kid wants to go to UVA and then return home in SW Va as a medical professional – give him a full-boat scholarship.. If he wants to become a orthodontist in No.Va.. wish him well – on his own dime.

  6. larryg Avatar
    larryg

    The problem is that the state gives the money to the University instead of to the student as a voucher that he could use to pick where he wanted to go – based on the price.

    The size of the voucher would be means-tested.

    any kid with a B would get the full amount if they were economically disadvantaged.

    the wealthy would not qualify for the voucher and the middle class would get some help.

    when you give this money directly to the University – they just pad their finances and hire more folks than they would if they were in competition for the kids with vouchers.

    we keep talking about the wealthy and the middle class but I think the truth is we subsidize the middle class but we don’t give squat about those below …
    which reverberates back to K-12 where a kid KNOWs he will never go to college not even a community college if his parents have to contribute.

    K-12 and college favor the middle class .. and the do it in the worst possible way by giving the money to the college instead of the student.

  7. Sara E. Carter Avatar
    Sara E. Carter

    As a William and Mary (undergraduate) and University of Virginia (graduate) alumna, who worked her way through college, received grants, and took out loans to pay for the rest, I feel especially qualified to speak to this. Our competitive public universities are one of the few true meritocracies left. Kids that work really, really hard in high school, have the opportunity to get an education that is the envy of many other states. For low income kids, there are LOTS of grants and aid available at both public and private institutions. I know. For middle class kids, there are not nearly so many choices that will allow them to exit college without crippling debt. And if readers think that just because parents are middle class, that children aren’t paying for college, they are not listening to the younger generation. Low income students don’t have to take many loans at all, and if they do, they are small. That crippling loan debt…that comes from poor choices on the part of students (who really wanted to go to THAT school, no matter the cost) or parents who inform their kids that college is not part of their parental obligation.

    Great public schools are one of the ways that we attract and retain “the creative class.” Allowing those institutions to take their decades, or centuries, of public support and become private because we are in a market transition time would be shameful. As Virginians, we have invested in these institutions in the good times and the bad. If we are concerned about the cost of education, there are ways to deal with that. The first recommendation I would make is to spend less capital competing on the best dorms and the newest student center and more operating expenditures on excellent instruction. Ultimately, no one picks W&M for the dining hall.

    As for Larry G’s thought that we should spend the money on community college, this is not a bad idea, but one should not substitute for the other. Shouldn’t Virginia be able to offer community college to those in need and offer truly impressive undergraduate educations as well?

    1. larryg Avatar
      larryg

      I guess my view is that our K-12 greases the skids for those headed to 4-year and does little to nothing equivalent for kids who MIGHT go to a two year – which would include not only those looking for 2 year vocational certificates but those who ultimately are pointed to a 4yr and cannot afford the 4yr.

      I’m skeptical that the poor have “free” access to 4 yr college but I could be persuaded with some real stats.

      my view is that most kids can be “trained” to get enough post K-12 education to end up with a job, become a taxpayer and not need entitlements.. raise their kids – and if not middle class – they still are above the lowest entitlement-laden tier.

      I still think too many middle class get taxpayer assistance to get a degree that is not in demand in the marketplace and I think we should not be providing tax-payer subsidies for that purpose.

      the “creative class” needs to do that on their own dime.

      the justification for taxpayer money – has to be – a return on investment – an expectation -as there is with K-12 that – that money is going to create a future taxpayer.. who will “pay it forward”..

      I’,m not opposed at all to those who have other goals – we still offer significant opportunities in higher ed .. lots of ways to finance your way as well as help from the college.. but I do not think taxpayer money should be devoted to that purpose.

      and remember – I am the labelled “liberal” here in these blogs.

      I think a vibrant middle class is important in a society – but I have to tell you that it does require subsidies.. and without them – as the POTUS is now saying – the middle class may well go away.

      I see that as a bit of a conundrum for self-avowed Conservatives like Bacon. Take away the financial aid… and loan programs and the middle class no longer goes to UVA but to … lower tier colleges – which STILL provide excellent educations… but are not the stature of UVA. So.. I ask.. are we paying subsidies so the middle class can go to universities with “stature”?

      Remember, in the good old days – many of us could not afford UVA.. we just could not – so we took other paths to a college degree that we could afford.

      so tell me why – today – we still do not follow that practice and instead – essentially subsidize the middle class so they can go to a “name brand” college?

      1. John B Avatar
        John B

        Maybe you weren’t around at the time but in years past you could in many cases make a living with a just K-12 education. Classes were taught in the high schools in practical trades such as machining, woodworking, drafting, cooking, sales, etc.. Schools now in places like The Beach’s ATC offer robotics, injection molding, IT which can afford at least initial if not permanent employment opportunities.

        Some years ago my son who was plenty smart but didn’t apply himself as a teen, attended a Fairfax County high school half a day and worked as “Hobart” half a day at a national restaurant chain’s “Distributive Ed” program. Later on through diligence he enjoyed a six-figure income as a VP in a related industry.

        There still should be attractive opportunities for those not wishing to go past K-12.

        1. larryg Avatar
          larryg

          I think you need “post-K12” these days for many jobs.. it’s vocational but it’s oriented to the jobs that require higher reading, writing, technological understanding skills than just a HS diploma.

          It’s what COmmunity colleges were designed to do and are ideal.

          Our goal should not be college grads – it’s should be number of employed – and not on entitlements.

  8. DonR Avatar
    DonR

    Let them go private. However, the sniveling elitist liberals in charge should remember – the people own the facilities. Dig deep into your pockets liberals – that land and those buildings are worth billions.

  9. Lift Avatar
    Lift

    Much like the crisis in health care, there is little discussion about cost, it’s only about how to pay or who pays. Every time tuition is raised and the rolls fill with applicants, the institutions face no pain. But this tuition bubble has produced, at least at UVa, a changed demographic. The higher tuition/higher aid vicious cycle will go on until the student loan bubble bursts, just like the mortgage bubble. Let’s force institutions to rein in their spending, the same way you would each do in your own households if faced with difficult choices.

    1. Sara E. Carter Avatar
      Sara E. Carter

      Lift is correct. So much of this issue is addressed most simply by dealing on the cost side, which the state can control.

    2. larryg Avatar
      larryg

      well you can’t force them to reduce spending unless you cut them off…otherwise we’re just pretending…

  10. Lift Avatar
    Lift

    I see Danny Meyers in attendance at the Finance Committee meeting in which this tuition increase will be discussed. His business? Lending to students.

  11. Darrell Avatar
    Darrell

    Shouldn’t business taxes go to business schools? Especially since they profit the most from an educated workforce and don’t have to pay healthcare or pensions any more. Call it the windfall education tax.

  12. Cville Resident Avatar
    Cville Resident

    Good post! I’m all for privatizing U.Va. and William and Mary.

    Everyone seems to looking at it from a consumer end. But what about from a fiscal perspective? Does it make any sense for tax dollars to subsidize these two schools that can easily self-fund? Not at all.

    We’re in an age of very constrained public budgets. Tough to justify U.Va. and William and Mary as public schools. Let them go private. There’s no reason for them to be tied to the state at this point. You know why the legislature won’t let them go private? I was told that one of the biggest constituent services performed by members of the GA is when they send letters to U.Va. and W&M recommending certain kids for admission! One of the former Asst. Deans of Admission at U.Va. said they all laughed about the letters b/c they received hundreds of them each year. One legislator once sent them 20 in one year. Yeah, I’m sure the esteemed Delegate personally knew 20 kids in one graduating class in his district so well that he could write a letter of recommendation. Can you say re-election campaign????

    I imagine William and Mary has similar stories about these “personal” recommendations.

    As I was once told….spend a day at William and Mary….spend a day at U.Va……spend a day at UNC. The first two have a distinctly different feel. They feel private and they have almost no connection to Virginia. Carolina feels public the moment you step on campus and it’s pretty obvious that North Carolina is a big deal to the school.

    1. larryg Avatar
      larryg

      I still think when you give the money to the University – it gets swallowed up with no accountability and they still raise tuition…

      there is no way to fix this unless you DON’t give the money to the college.

      and if you give it to the student and let them “shop” then some semblance of competition will ensue.

      it’s not just about money per se. It’s about spending money on things that are not cost effective. It’s about prioritizing things for funding that have no financial benefit to the college nor to students.

      as long as the money goes to the institutions it will be swallowed up and tuition prices increased anyhow.

      we need taxpayers – not college grads.. I’m shocked – SHOCKED that Bacon and the other self-proclaimed conservatives here whine like liberals on this.

      1. James A. Bacon Avatar
        James A. Bacon

        Hmmm… LarryG and I seem to agree on this. I must be doing something wrong. I’ll have to re-evaluate my position.

        1. larryg Avatar
          larryg

          I think …probably.. more than anything else – the middle class treasures the idea that their child/children can go to top-flight Universities…

          it’s become a middle class right of passage…

          but don’t mistake it. It’s subsidized just like medicare is and just like welfare and food stamps are.. it all comes from the same place.

          Middle class folks just think it’s “worth it”.. as if it has a much better ROI than paying for Head start or SNAP.

          this is what has divided folks on ObamaCare. It’s perceived as subsidies for people “who do not deserve it” – when at the same time – employer-provided is – in essence – govt welfare for those lucky enough to qualify for it.

          Employer-provided is not only tax-free, it’s FICA tax free AND the govt does require the insurance companies to cover you and to cover you at the same price as others – whereas if you did not have employer-provided – you’d have none of those benefits.. and you’d be in the same boat as those who need ObamaCare.

          but we look at these things through middle class “lenses” where we think it’s not govt assistance if you get benefits from the govt – if you are middle class.

          the reality is – we do.. and it’s most prevalent on college and employer-provided.

  13. ZS Avatar
    ZS

    I was recently invited to put in for a senior position at UVA and as part of my application research I found that much of their recent financial problems had to do with decreases in grant and contract revenue. Basically in the past three years UVA’s grant and contract funding is down almost $80M/year (about 4% of operating revenue) and hasn’t been this low in real terms since the mid 1990’s . This loss of revenue equates to roughly $4k/student and looks like it’s being made up through tuition and hospital fee hikes. While some will point to sequestration as a cause, the numbers and the numbers of UVA’s peers in higher education don’t bear this out.

    The problems look to be internal and most likely in a lack of leadership accountability. Submitting proposals for grants and contracts is tedious work and not something most people like doing, but it’s important for helping to offset operating costs. If leadership (President and COO) aren’t holding department heads accountable, then it’s very likely that proposals aren’t being done or are being done in a poor, going through the motions, manner that doesn’t result in an award (UVA’s award percentage numbers do bear this out).

    BTW, state appropriations are less than 5% of UVA’s revenue. Focusing on that portion of UVA’s financial’s misses where the management issues are in the University. The major tuition hikes aren’t happening because of loss of State appropriations or even from operating cost increases year to year. These are simply distractions to the real issues internally.

    1. James A. Bacon Avatar
      James A. Bacon

      Very interesting, ZS. Is there anywhere in the public record that we can document that loss of grant and contract funding?

      1. ZS Avatar
        ZS

        The financial reports for UVA are public record here: http://www.virginia.edu/execvp/reports.html

        Grants and contracts fall under “sponsored programs”, but they are also broken out individually in the summary of revenues. The last three fiscal years, revenue from sponsored programs are down 5.6% in 2012, 2.6% in 2013, and 12.3% in 2014. Those numbers are nominal and even worse when you look at them in real dollar amounts.

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