Bacon's Rebellion

Democracy Thrives in Sunlight

UVa’s Silent Crisis

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by

James A. Bacon
in

UVa_revenue
Note: Numbers not adjusted for inflation.

by James A. Bacon

While the University of Virginia positions itself in the academic marketplace as an elite Southern Ivy akin to Duke University with the full support of faculty, administrators and the Board of Visitors, students aren’t terribly happy about the rising tuition and fees. The university’s “Affordable Excellence” is long on excellence and short on affordability. Protestors with the student group UVa Students United expressed their displeasure by blocking the doors of the room where the BoV was holding a meeting yesterday, as reported by the Daily Progress today.

Against that backdrop, permit me to present some data to put the tuition hikes into perspective. UVa administrators, like their university brethren across the state, like to blame cuts in state support for skyrocketing tuition and fees. But take a gander at the chart above, with data taken from UVa’s annual President’s Reports (specifics shown below). State appropriations between 2006 and 2014, as seen in the green line, have been stable in absolute terms. The red line shows the steady march of revenue from tuition and fees.

revenue_table2
Source: UVa Presidential Reports. Note: These numbers do not count hospital and health system revenues.

What about the blue line? That tracks what administrators call “sponsored programs,” also known before 2010 as “grants & contracts.” After rising steadily through 2011, this category of revenue declined markedly in the past three years — by 19%.

Is there a link between falling grants & contracts and rising tuition? I’d never considered that question before. But a comment to a previous blog post by a certain “ZS” is worth pondering.

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 is 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 financials 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.

This decline in sponsored revenues is consistent with the tumble in UVa’s reported R&D expenditures. According to National Science Foundation data, R&D expenditures fell from $398 million in 2011 to $386 million in 2013, the most recent data available. UVa’s national R&D ranking declined from 54th place to 59th. (However, it must be said that the 2011 numbers represented a huge leap from the previous year, 2010, when R&D expenditures were only $276 million.) By contrast, Virginia Tech increased its R&D expenditures from $450 million to $496 million between 2011 and 2013.

It is noteworthy that UVa President Teresa Sullivan assumed office on August 2, 2010. A surface analysis would suggest that the decline in sponsored-program revenue and R&D funding occurred on her watch. I have seen no evidence in the media coverage that the Board of Visitors has focused on this issue, much less the relationship between declining sponsored revenues and rising tuition & fees. Perhaps it’s time it did.

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47 responses to “UVa’s Silent Crisis”

  1. larryg Avatar
    larryg

    well … with some caveats about correlation and causation, this looks like a bit of a smoking gun… congrats on the effort to track it down after getting that tip.

    makes me wonder about the sponsored programs and who was funding those programs. was it govt or private? Is this reduction associated with the Federal budget sequester or perhaps the downturn in the economy?

    normally – most organisations have a base budget and a discretionary budget.

    the base budget comes from continuous sustainable revenue sources where-as the discretionary comes from funding that is not long term/sustainable, grants.. contractors, etc.

    positions hired with discretionary are normally expected to go away if the funding source – like a grant – goes away. Such employees are often referred to as “contract” employees … and it is expected that when the contract funding goes away the employee has to find another job – sometimes they catch on to another grant …and just change employers but stay working.

    there is a temptation for the employer to direct-hire the contract employee if they are good … but then they have to be paid year after year from some source.

    so we get to the sticky wicket – which I would assert is the number of employees of UVA… what does that look like?

  2. larryg Avatar
    larryg

    from the news: ” The total price of education for an in-state student — including tuition, fees, room, board, books and travel — will increase 3.3 percent, or $895, to $27,963, compared to $27,068 in the current academic year.”

    $100,000 for a college degree? And we’re worried about their percent of “sponsored” programs?

    Maybe I’m out of touch with modern day realities but I don’t see that kind of money as what one would expect to come from a middle income family.

    Yeah, maybe some high grade govt employees in NoVa and Doctor and Lawyers sprinkled throughout RoVa but how many non-professional folks earn anywhere near this amount of money?

    Median household income, 2009-2013 Virginia $63,907 USA $53,046

    It’s become crystal clear that people are living beyond their means and it’s no surprise at all that it’s both the parents and the kids – who end up 30-40K in debt after graduation.

    And this is for ONE kid.

    This is why the state money should go to the kids – not the colleges who are just a more upscale version of predatory payday lenders.

    and state money to community colleges.

    we had this big economic meltdown over people buying homes they could not afford.

    we’re doing it again – with college education.

    there is no way on God’s green earth that a decent college education should cost this much – but the demand for it is unsatiated..and these higher-ed versions of rip-off-artists have the chutzpah to call these loans – “financial aid”.

    this is one of those Pogo deals.. you know… “we have met the enemy….”

  3. Virginian Avatar
    Virginian

    In response to the original post I have the following observations.
    Over the past three years the issue of deteriorating grants and R&D funding have been discussed at BOV meetings. Dr. Ed Miller, the former CEO of Johns Hopkins Medical Center and the chair of the UVA Medical Center Operating Board, has frequently commented on the need for a much more robust and coordinated effort to actively seek and solicit federal and private research funding and bemoaned what he sees as an inferior, fragmented and disorganized approach from the Administration down through the various colleges and departments of the University.

    As Rector and now past Rector, Helen Dragas spoke (and continues to speak) frequently and passionately about the low grants and contracts that are a historical norm for the University relative to peer institutions. Her efforts obviously are being met with UVA’s typical resistance to change. It’s not surprising that UVA continues to drop lower in the national rankings, but this is a disturbing trend that is not getting the attention from the Administration it deserves.

    The job of seeking more R&D funding and public or private grants is an integral responsibility of the Administration. At some point in time the failure to reverse the slide deeper into mediocrity is a matter of core competence and management that the BOV must address sooner rather than later.

    1. DonR Avatar
      DonR

      I supported Sullivan during the “Dragas Affair”. Now, I wonder whether that might have been a mistake. Her tenure as president has been pretty much of a disaster. When she’s not busy shutting down fraternities and sororities over a yellow journalism article that has now been wholly discredited she is failing to get the usual level of grants.

      In addition, your point about falling rankings is very valid. As I recall UVA has fallen from about #15 to #25 over the past 25 years. Meanwhile, other public universities have been rising in the ranks.

      This sounds like a complete meltdown in management over several administrations.

      Tome for the BoV to clean house. Start with Sullivan (again).

    2. ZS Avatar
      ZS

      I noticed this fragmented organization when trying to understand how UVA operates their grant and contract approach. I’ve worked quite a bit in the past with federal contracting and typically most companies have a “center of excellence” mechanism to handle that function since it requires a number of specialists and a good strategic plan. The way UVA is structured, only the President and COO really have total oversight and responsibility which is really too high in the chain of command for such a development function.

  4. Steve Haner Avatar
    Steve Haner

    Jim, the quotation you copy is disingenuous. The state general fund support is far, far more than 5 percent of the undergraduate program, and the erosion of state support remains a major contributor to the cost of tuition at that level. The university presidents use that line all the time and it’s smoke. “State support is only XXXX percent of our budget!” They are usually looking at the total budget, including auxiliary program like food service and dorms. At some schools the state dollars still represent about half of the cost of a full time undergraduate enrollment. Not at UVA though. You need to look at the UVA state support per capita and adjusted for inflation — then that line will nose dive. (But you know how the games are played with numbers.)

    The slippage of R&D and other grants is probably a contributor, to some extent for the undergrads but more so for the graduate programs.

    Virginia is not a leader in sponsored research. I don’t know whether the pattern you show at UVA is matched elsewhere, or if other schools (VT, CWM, GMU) are doing better. There is a great deal of competition in this area. But on a statewide basis, we are not a leader. The problem? This is one area where you need to spend some seed money to get the big payoff, and Virginia won’t do that. Perhaps the schools need to get into the movie making or beer brewing business – those seem to draw the big subsidy bucks these days.

    1. James A. Bacon Avatar
      James A. Bacon

      What you’re saying (I think) is that state support is more critical to undergraduate education while sponsored research is more critical to graduate-level education (especially in engineering and the sciences, which attracts most of the R&D dollars). Am I getting warm?

      1. Steve Haner Avatar
        Steve Haner

        Yep. I also note that your charts exclude the hospital with all its affiliated research — so the engineering and other sciences (and social sciences) are what we are talking about. The vast majority of state general fund money goes to the undergraduate program (first priority) and to facilities. Very little goes to research. And most of that is medical.

      2. ZS Avatar
        ZS

        Looking through UVA’s financials really doesn’t show that money is allocated for particularly uses. While I’m sure they have a budget process, I’d assume the monies are balanced out (like a portfolio) and reserves kept for shortages in a department(s).

        For example, just looking at the engineering school, they’ve gone from $63M in awards in FY12, down to $47M in FY13, and back up to $54M in FY14. It’s unlikely the engineering department cut $16M in expenses in 2013, as it would likely crush their programs. UVA most likely cross-subsidized monies to balance expenses and maintain programs as best they could.

        The problem is that all these revenue losses in aggregate across the schools requires either cutbacks in the departments or increases in tuition. Getting grant or contract money helps pay for faculty compensation which covers both grad and undergrad education, and reduces the tuition burden needed to maintain the school at the target service level needed for reputation and branding.

        1. DonR Avatar
          DonR

          ZS:

          Good to have you on the blog. Of course they cross fund from department to department. Unless there is some legislative or regulatory prohibition against it they cross fund graduate and undergraduate programs too.

          The idea that any organization can be accurately chopped into tiny bits and then the bits can be examined for efficiency runs rampant on this blog.

          1. larryg Avatar
            larryg

            re: cross-subsidies

            well.. most businesses separate their profit centers from their costs centers right?

            the problem with UVA is two parts.

            the first is that by cross funding they’re not really reporting costs for programs and whether those programs are actually supported by enrollments or just sucking up money from tuition for other programs.

            and even that might be debatable if they were not raising tuition rates higher than inflation …

            so instead of trimming programs to match enrollment – they’re increasing tuition on all students to pay for what probably ought to be downsized.

            I note that UMW in Fredericksburg just cut two programs using just that rationale – that they could no longer be justified because of low enrollment numbers.

            but even that wouldn’t be horrible if UVA was not getting state funds also.

            the question is – should UVA be changing with the economy and other factors or just sit still and continue to operate but require more and more funding – either from the state or out of the hide of tuition payers?

            I still think the tale can be told by looking at UVA employment numbers.

            where are the increased costs that require either more state aid or higher tuition that is over and above the rate of inflation?

            publicly-funded institutions have a responsibility to disclose their use of public funds. They should be able to treat it as a discretionary revenue source.

  5. Cville Resident Avatar
    Cville Resident

    larryg,

    The issue really goes back to wealth concentrating at the tip top of society. Do you want to know why U.Va. and W&M can charge such a premium? Because as much as employers talk the talk and send recruiters to traditional state schools….when it comes to those positions that can put you in the top 1-3% (i-banking, law, medicine, finance)….those companies only actually hire from a tiny batch of schools and those schools are also “inside” schools for positions in the top law, medicine, and business professional schools. U.Va. and W&M are two of them.

    Walk into Goldman Sachs and see how many U.Va./Darden grads work there. Then ask about all the other colleges in Virginia….tell me what you find. Or go to Harvard or Stanford business, law, and med schools…how many of those kids went to U.Va. or W&M undergrad and how many went to all the other Virginia colleges?

    In a way your point is valid about “God’s Green Earth” but in another way, it’s perfectly rational….if money continues to accumulate at the very tip top….you damn well want your son or daughter at a school that has the connections to put them in those slots. Especially as the pie shrinks for the bottom 95% of society. There was a recent story that showed just how dominant the Ivies and public Ivies were in American society….Out of the Ivies (8 schools…whose total alum base constitutes less than .1% of America’s population)….43% of the American attendees at Davos went to an Ivy. Of the top 25 USNews schools…64% of the Davos attendees went to one for either undergrad or grad school.

    1. Steve Haner Avatar
      Steve Haner

      All the more reason why it is just criminal to let the oligarchs take over by pricing out the rest of the country. In an earlier post I talked about the long-term plan to raise the tuitions to private school levels, but I forgot to mention the other part of the long-term plan, and that is to increase out of state enrollment. Virginia taxpayers have built these institutions and are about to lose control over them.

      1. Cville Resident Avatar
        Cville Resident

        Like I said earlier, I support privatizing U.Va. and William and Mary 100%. Same with UC-Berkeley. They’re anachronisms as “public” schools.

        Go look at the grad programs at Berkeley and U.Va. and compare them to Cornell, Brown, and Dartmouth:
        Law: Berkeley and U.Va. tied at 8th, Cornell 13th Brown and Dartmouth don’t have Law Schools
        Business: Berkeley 7, Dartmouth 9, U.Va. 10, Cornell 16 Brown doesn’t have a Business School
        Medicine (Research): Cornell 18, U.Va. 26, Brown 35, Dartmouth 37 (Berkeley doesn’t have a medical school)
        Engineering: Berkeley 3, Cornell 13, U.Va. 39, Brown 49, Dartmouth 61
        Ed: Berkeley 17, U.Va. 22, Cornell (unranked), Dartmouth and Brown don’t have grad ed schools

        I’d throw in Computer Science as the most useful of the grad programs:
        Computer Science: Berkeley 1, Cornell 6, Brown 20, U.Va. 29, Dartmouth 40

        In each of these areas, Berkeley and U.Va. outrank at least one Ivy. If you were to rank these schools overall (undergrad, grad, professional, research, endowment), I’d say: Berkeley, Cornell, Virginia, Dartmouth, Brown

        I think it’s ridiculous that the state is spending a penny towards U.Va. right now. It could easily support itself. Let them privatize.

        1. DonR Avatar
          DonR

          Privatize the graduate school, keep the undergraduate school public. Why won’t that work?

        2. DonR Avatar
          DonR

          “If you were to rank these schools overall (undergrad, grad, professional, research, endowment), I’d say: Berkeley, Cornell, Virginia, Dartmouth, Brown”

          You are dramatically overstating Virginia’s academic quality.

          I also wonder what you think of Michigan, UCLA, UNC – Chapel Hill, Georgia Tech, UCSD, etc.

          Why is it, in the Commonwealth of Virginia, if we have good public universities they have to be privatized?

          California has 5 of the 10 top public universities. Do they all have to be privatized?

          The failure here, as always, is on The Imperial Clown Show in Richmond.

          Where are our elected representatives on these issues?

          Nowhere to be seen.

          Throw the bums out.

          1. Cville Resident Avatar
            Cville Resident

            Well….I had a son who went to Dartmouth undergrad and Harvard for med school. U.Va. runs circles around the Big Green. It’s not even close. It amuses me that due to an athletic affiliation (Ivy League) that people put Dartmouth in the same breath as Harvard. They’re on different planets. Dartmouth and Brown are dying….they’re in a dying part of the country and they’re too small. I don’t think there’s anyone in academia who would put Brown and Dartmouth ahead of U.Va. when you consider the totality of the school (ugrad, grad, professional, endowment, research). I have no idea where you get the idea that Dartmouth and Brown are better schools than Virginia. Undergrad…yes. But overall? I don’t see how you reach such a conclusion.

            Berkeley runs circles around U.Va. No doubt. But U.Va. makes mincemeat of UNC across the board. I will guarantee you that if you put the same applicants with the same credentials for a slot at Wharton’s MBA program before the Wharton admission committee, Wharton will pick the U.Va. kid over the UNC kid every time.

            Michigan’s the saddest of all. There was a time when UMich was probably one of the top 10 overall schools in the nation (again, ugrad, grad, professional, endowment, research). But like Dartmouth and Brown, they’re in a dying part of the country. Except their death is accelerating as the state of Michigan becomes a land of untouchables. Their law, business, and med programs have taken significant tumbles in the past 5 years….their law school used to be ranked with Harvard and Yale in the top 3. Now they’ve tumbled out of the top 10. Their business school has also tumbled out of the top 10. Same with med school…they were a top 5 school at one point. Now they’re barely a top 10 school. The top kids no longer want to go to Michigan for grad school. Go look at UMich’s faculty….they’ve been fleeing over the past 5 years as well…..

          2. larryg Avatar
            larryg

            still trying to figure out the VALUE of govt-guaranteed loans to people who will make 50K and up at the same time we argue that providing community college to other kids is an unwarranted “subsidy” and govt money for Head Start and Title 1 are also not what govt should be doing if the parents are “lazy” and have “bad genes”.

            it appears we have different America’s where the middle class is “entitled”… to thousands of dollars in “entitlements” on the premise that SOME of them will become significant income earners…who will then be subjected to onerous govt taxes to fund the lower classes.

            I guess it has a certain symmetry to it.

    2. DonR Avatar
      DonR

      So, the smartest kids who get into the top schools and get the best education while working through the most rigorous academics get the best jobs. And somehow this is surprising?

      This has nothing to do with a school having the connections to put a kid in a job. It has everything to do with an intellectual meritocracy which puts the best students with the highest high school GPAs and sat scores into the most academically challenging universities.

      Trust me – if I could recruit MIT caliber talent from Whatsamatta U I’d spend a lot more time at Whatsamatta U.

  6. LifeOnTheFallLine Avatar
    LifeOnTheFallLine

    Let me just make sure I understand this: students disrupting the BOV meeting by blocking the doors over money is acceptable and doesn’t warrant editorializing.

    People protesting in solidarity over police killing and assaulting black citizens get called a “traveling minstrel show.”

    And you get offended when people suggest your views on race might need to be reconsidered.

    1. James A. Bacon Avatar
      James A. Bacon

      Actually, I agree with you. I have no patience with student protests that disrupt deliberative proceedings. None. I didn’t editorialize because I had an entirely different point to make. But your comment is a fair one.

    2. DonR Avatar
      DonR

      Good for the students and good for the anti-police-violence protesters. Our governing elite are making a hash out of this great country and it’s about time the huddled masses started to lash out.

      It will be interesting to see if any of the student protesters read Jim’s article and start to see Sullivan as even more of the problem than the BoV.

    3. larryg Avatar
      larryg

      I still think calling 100K for a degree “affordable” a hoot!

      1. JNL Avatar
        JNL

        I totally agree with Larry on this point. Except that it won’t be 100K in the end. My son is a sophomore in high school. I am expecting another five years of tuition increases to pay before my son would graduate from UVa (making the assumption he gets in.) I am looking at a total price tag a lot closer to $120K for a UVa education. My wife and I are solid middle class; we can’t afford to pay that kind of money out of pocket, but we make too much to count on a lot of tuition assistance. We are left with praying for scholarships and taking out student loans. Sorry, but UVa has priced themselves out of what we can afford. And, in my opinion it is sad that a middle class couple can’t afford to send their kid to one of the public colleges in the state.

        1. DonR Avatar
          DonR

          Do what my Dad did – make your kid pay off the loan. Funny how focused even a college student can get on:

          1) getting a degree that will get him / her a job
          2) working during school to minimize the loan amount
          3) graduating in 4 years

          when they know they will have to pay off the loan

          In retrospect, that was one of the best things (of many) that my Dad did for me.

          1. larryg Avatar
            larryg

            well I agree with what your Dad did and for the life of me, I do not understand why kids cannot work while attending school if it’s the difference between a huge back-breaking loan that lasts forever and a lower debt burden paid off quicker.

            people are getting college loans like they get car loans these days.

      2. DonR Avatar
        DonR

        Maybe. A $100,000 loan at 5% interest over 10 years requires a monthly payment of $1,060,66. The average “early salary” for a UVA graduate is $54,100 per year (before taxes are deducted). That’s $4,508.03 per month (before taxes are deducted). After taxes, I get $3,294.73 per month using this payroll calculator (for Virginia) –

        http://www.paycheckcity.com/cokronos/netpayCalcResult.asp

        Can a young person live on $3,294.73 – $1,060.66 = $2,234.07 per month (after taxes)?

        That’s a close call. It’s certainly possible to live on that much (that little?) money per month but you would be pretty much scratching by in NoVa.

        1. larryg Avatar
          larryg

          well your loan repayment is right on the money – but I question the starting salary of the “average” graduate.

          I do not doubt that some grads from Darden and other places start good but one of the problems if people graduating with flabby credentials that is not going to get them a 50K starting salary.. and actually they may end up even lower..

          the other thing to consider – and this should be important to a business guy – is what if the govt was not guaranteeing these loans? what would the going rate be? so there are huge govt subsidies that are driving this.. you know all that “liberal” thinking that you go on and on about. These subsidies are tax-funded and just as bad as Solyndra or ObamaCare or Food stamps.

          the truth hurts. we got all these UVA grads here in BR blathering about how the govt is “wasting” money on SNAP, Head Start, Title 1, economically-disadvantaged, rural RoVA.. on and on.. and not a peep about these govt loans that are, by some accounts, on the verge of a sub-prime loan-like meltdown.

          giving special education dollar help to economically-disadvantaged kids – OUTRAGE!

          give 100K loans to UVA kids – zippidty doo dah

          1. DonR Avatar
            DonR

            Here you go, LarryG –

            http://www.payscale.com/college-salary-report/bachelors

          2. larryg Avatar
            larryg

            re: ” Colleges by Salary Potential”

            looking for their methodology..

            I’m not arguing that college is not “worth it”.

            I’m arguing that 100K in loans is a heavy entitlement/subsidy that is not justified as a tax expenditure and not necessary for a good 4 year degree.

            taxpayers should not be subsidizing MORE than a basic 4yr degree no more than they should be subsidizing a tax deduction for a mortgage more than a median priced – home – more than a core academic K12 education and when we do “more” we typically favor those of means over those without means.

            A straight A kid from a poverty-stricken family does not have the same chance at an education because they’ll offer 80-90% and his parents don’t even have the 10%.

            it’s like people who pay taxes on 30K in income but cannot itemize even though they give 2000 to the church.

            these programs favor those who have money over those who have little.

          3. DonR Avatar
            DonR

            Solyndra tried to make a commodity in Silicon Valley and went bankrupt (after enriching its already wealthy owners), you picked a rather poor example there.

            I used 5% just because it sounded like a good number to use. The question was never about fairness of guaranteeing student loans, only whether a $100,000 note was reasonably repayable. Try to regain the thread here.

            The student loan program should be self-insuring. The cost of defaults should be factored into the loan rate. There should be no need for subsidies from the government for the program.

            If there is a student loan meltdown it will largely be due to the Fed’s maintenance of near zero interest rates. That policy is required because of our government’s endless deficit spending. As I’ve written many times, whenever government artificially manipulates the price of something (including capital) they light the fuse on an economic bomb. When and where that bomb goes off is anybody’s guess. However, be assured, it will go off.

          4. larryg Avatar
            larryg

            nice try but no dice.

            how much would a 100K loan cost if the govt would not subsidize it?

            and no .. no matter what the Feds “policy” is – they don’t typically subsidize loans for any and all.. so yes.. it’s more like Solyndra where they throw money at something hoping some of it will bring returns but knowing not all will “graduate”.

            DonR – the Feds have been manipulating policy for how long?

            so let me get this straight – the taxpayers have to subsidize 100K loans because of the Fed Policy?

    4. Acbar Avatar
      Acbar

      Compelling middle-class parents to spend $120K on each child’s college education is totally inconsistent with the State’s interest in, and benefit from, an educated electorate and an educated workforce. We really have to mention the Tennessee approach here also, providing a community college path to a bachelor’s degree for free; if that option were available as the baseline in Virginia I’d feel a lot better about all this talk of privatizing the University of Virginia and William & Mary as elite alternatives. But so long as the expectation for a mainstream middle-class education includes the completion of college, our commitment to provide free public education should extend that far also, at least via the community college path.

      Meanwhile we are indeed engaged in wealth redistribution (call it a hidden tax if you prefer) when we make our middle class children pay a big tuition hike in order to subsidize those with less resources who cannot attend any State college without that assistance. Although, I don’t see any alternative under current circumstances. Sending our kids into the workforce with huge undergraduate debts is hardly helpful to them or to their parents.

      BTW, I still don’t understand how UVA/W&M privatization would work. Sure it’s not a stretch to see how they might cover current operating costs out of higher tuition and fees. But how are grants and contracts generated by existing departments going to contribute to the development of new graduate programs if the administration can’t even compete in the marketplace to support existing ones? Are they really going to raise all the additional capital needed for new construction and other investments all from alumni and other donors? How are these schools going to buy out the State’s ownership interest in existing facilities? Who is going to donate the wherewithal to make this transition possible while the State continues to appoint all BOV members? Just a few unanswered questions.

      1. larryg Avatar
        larryg

        I actually don’t see the middle class subsidizing the lower classes.

        I see the middle class getting thousands of dollars of subsidies from the state and from the Feds on loans – and the lower classes not getting anything close to that amount of aid.

        the Middle class does not really pay anywhere near in taxes what those subsidies cost. They come from people who do not have kids currently.

        but as pointed out – purely from an ROI view – I suspect Community college would beat the socks on UVA type places on an aggregate basis.

        the same is true for K-12. If schools spend discretionary money on AP and IB and not vocational ed.. it’s the same thing.

        It just makes no sense to not have a robust community college system for Voc Ed..because once those folks have a certificate and a job -they become taxpayers rather than entitlement takers.

        1. DonR Avatar
          DonR

          I think you need to define upper class, middle class and lower class (by income level). Then, you need to ask what education financing opportunities are available for each class. You will find that the children of poor parents (who qualify for college) have a considerable number of options for financial aid. The children of middle class parents have no real options for pure financial aid although the federal loan guarantees are a form of aid I suppose. The children of wealthy parents have the same options as the children of middle class parents.

          Of course none of these students are children. They are actually all adults. And, they are actually all poor (give or take the odd Taylor Swift).

          As for subsidies – let’s look at the macro picture:

          The wealthy parents subsidize more than any other category. People with adjusted gross income over $250,000 per year (presumably within your definition of upper class) pay 48.9% of all income taxes. That group constitutes 2.4% of federal tax returns. An additional 6.1% is contributed by the 1.4% of Americans making between $200,000 and $250,000.

          So, 3.8% of tax returns pay 55% of all income taxes.

          Well, it seems the upper class is doing the subsidizing.

          Let’s call the middle class between $50,000 and $200,000. That’s 32.8% of the population and 38.8% of the taxes paid.

          That sounds pretty close to a wash to me. Probably some subsidization there but not much.

          Below $50,000 is your lower class (I don’t much like these terms but I want to parallel your comment). 63.3% of the tax returns and 6.2% of the taxes paid.

          Looks like that’s where the money is going.

          Please note: I made no comment about fairness. Perhaps the upper class should be subsidizing more. Perhaps less. All I know is that virtually all the subsidies for taxes vs costs in the United States today comes from a very small percentage of relatively high income to extremely wealthy people.

          http://www.pewresearch.org/fact-tank/2015/03/24/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/

          1. larryg Avatar
            larryg

            re: define the classes

            ok.

            middle class Mom and Dad have 20-50K socked away to help their kid through college and have employer-provided health insurance in place so they have accumulated that money and preserved it

            the lower class has no such bankroll..

            the upper class are rolling in it …

            the middle class when they send their kid to a university that accumulates huge debt are living above their means… courtesy of the govt.

            I know more than a few folks who are “middle” that could not afford UVA but could afford a more modest college for their kids and they got their 4 yr and they had low debt.

            people who are sending their kids to UVA come hell or high water and incur huge debt are not financially responsible and they are depending on govt loans just like Sub Prime and yes.. just like Solyndra.

  7. James A. Bacon Avatar
    James A. Bacon

    “I actually don’t see the middle class subsidizing the lower classes.”

    Let’s look at state-level policy. The state supports *all* students of public colleges and universities through financial support of those institutions — both middle-class students and poor students alike in this way. Then colleges (some more than others) use tuition as a mechanism for transferring wealth from the families of better-off students to poorer students. Of course the middle-class is subsidizing the lower classes.

    Now, let’s look at federal policy. The feds subsidize poor students through Pall grants. The feds subsidize *all* students through student loans. Who would you imagine needs to take out bigger loans on average — poor students or middle-class students whose families help pay for their expenses?

    1. larryg Avatar
      larryg

      re: using tuition to transfer wealth.

      how about some numbers.. to back that up?

      UVA has token poor attending “free” – nothing like a big percentage.

      you say yourself the tuition keeps going up .. why? is it because they’re
      funding the poor?

    2. larryg Avatar
      larryg

      re:
      ” Let’s look at state-level policy. The state supports *all* students of public colleges and universities through financial support of those institutions — both middle-class students and poor students alike in this way.”

      not in the same way. parents with no financial reserves generally cannot pay – other out-of-pocket costs not covered by tuition and loans.

      “Then colleges (some more than others) use tuition as a mechanism for transferring wealth from the families of better-off students to poorer students. Of course the middle-class is subsidizing the lower classes.”

      that’s bull unless you can show numbers more than small token amounts.

      the majority of the lower class cannot afford college even with loans and tuition subsidies ..

      but show me how many at UVA are poor and getting 100% free rides …

      “Now, let’s look at federal policy. The feds subsidize poor students through Pall grants. The feds subsidize *all* students through student loans. Who would you imagine needs to take out bigger loans on average — poor students or middle-class students whose families help pay for their expenses?”

      not the poor – they do not have the financial reserves that the middle class has … and actually if the govt is giving them loans without qualification – it will likely end up worse than the sub-prime crisis.

      they also typically go to crappier schools and don’t have the academic rigor to qualify …. you’re talking about parents who themselves are surviving on entitlements. there is no way most of those kids -no matter how bright they are – are going to end up at UVA.

      this is why we should be pointing those folks to 2yr institutions to get a vocational certificate or at least 2yrs to get them pre-qualified for the other 2 yrs.

  8. DonR Avatar
    DonR

    CVille Resident:

    Glad you are proud of your home town U. Turns out that I have a degree from there myself. They taught me that the market price for goods and services is a reflection of the relative demand for those goods and services (given constant supply).

    Let’s look at the market price for undergraduates from the various universities we have been discussing:

    (Hint: Early career salary and mid career salary are both sortable columns)

    http://www.payscale.com/college-salary-report/bachelors

    I guess you could say that these salary averages reflect past success and the future is dim for the schools you disdain. Unfortunately, I would then have to cite UVA’s fall in US News and World Reports from #15 twenty five years ago to #25 today.

    As for Michigan being in a dying part of the country – really? North Dakota is the fastest growing US state. Should I go long on the University of North Dakota? Florida and Texas are growing like weeds. Are UCF and Baylor destined to be the next “top schools”?

  9. larryg Avatar
    larryg

    I know quite a few folks who, in the good old days, worked their way through college and graduated debt-free.

    it was not easy. They could not afford the higher end colleges.. like UVA. They got summer jobs and some had to forgo a half-year or more until they got more money. they lived off campus in a tiny room eating baloney sandwiches.. and bought dented canned goods… and out-of-date bread..

    I know one who had straight A’s in calculus and every other hard science that was available at his school and got a full scholarship at UVA and graduated with honors.

    but they owed zero dollars on graduation…

    now days – all around me are folks whose kids have god awful debt burdens .. when they graduate…

    it walks and talks like the run up to the sub prime loan fiasco.

    People do not – not attend UVA – because they can but choose not to.

    finances are usually the reason why they can’t – even with the loans.

    keep that in mind.

  10. Cville Resident Avatar
    Cville Resident

    Don R,

    All I can say to you is this: I went to U.Va. undergrad and got my MBA from Cornell (Johnson). My wife and I met in business school. She got her undergrad degree from G’town. Our son, as mentioned, went to Dartmouth and Harvard.

    I think I’ve had enough experiences with different higher ed institutions to have a rational view. Does U.Va. have problems? Sure. Do all of them? Yeah. My son got some help when he went to Dartmouth due to athletic prowess (yeah, the Ivies say they don’t….but certain grants do end up going to athletes….hmmmm). Otherwise, I would not have hesitated to send him to U.Va. He had no interest in Wall Street (Dartmouth’s real strength as an undergrad institution). He just wanted to “get away from home”…understandable and study to become a physician. He wasn’t (and my wife and I weren’t) very impressed with Dartmouth. Their frat boys make U.Va.’s look like choir boys. You’d think you’re in Manhattan when you’re in Charlottesville compared to Hanover. It’s pretty much Wall Street, high end consultancy or bust if you’re at Dartmouth. Everything else is somewhat mediocre.

    Wanna see the rankings for years past? Here you go….wanna know who’s actually “slid”? Berkeley, Michigan, Wisconsin, and UNC…..

    http://web.archive.org/web/20070905010206/chronicle.com/stats/usnews/index.php?category=Universities&orgs=&sort=1983

    Yep. Berkeley was 5th is 1988 when U.Va. was 15th. Michigan was 8th. Wisconsin was 23d and UNC was 11th.

    So please…you and Bacon need to stop with your idiocy about this “slide”….U.Va. has “slid” 8 places since 1988. UNC has “slid” 19 places. Berkeley has “slid” 15 places. Michigan has “slid” 22 places. How does that look when there are cold hard numbers in front of you? Are you and Bacon going to still talk about U.Va.’s slide when you look at these other public schools? After seeing these numbers, if either of you make that comment again…I won’t have much respect for your quantitative skills. A slide from 15th to 23rd compared to a slide from 5th to 20th (Berkeley) or 11th to 30th (UNC)…..U.Va. looks like a golden child if you know anything about stats.

    Anyone with an ounce of critical thinking skills would look at these numbers and realize that all of the private schools have made enormous leaps and none of the public schools have been able to compete with the private schools. The way for the U.Va.s and UNCs to compete in those rankings is to privatize so they can be more selective and not have in-state quotas or a set number of slots they have to fill each year (shrink the undergrad population from 15K at U.Va. to 10K, cut the percentage of Virginians down to 10% and they probably shoot up to the top 10 in USNWR).

    1. James A. Bacon Avatar
      James A. Bacon

      Interesting stats. My main concern about UVa’s slide was in its research rankings since 2011. I have concerns about how UVa is administered, but I have no basis of comparison to say whether it has slid in comparison to other institutions overall.

      The debate seems to boil down to this: Do we choose a path for UVa that allows the institution to maximize prestige and excellence by privatizing, or do we choose a path that serves Virginia’s middle class? The first path arguably would be good for localized economic development — more revenue for UVa, more economic activity in Charlottesville. The second path would make a high-quality education more accessible to native Virginians. There’s no right or wrong answer here. It’s a matter of what you think is most important.

      1. Cville Resident Avatar
        Cville Resident

        Those are fair points. The research numbers are concerning.

        I’m just trying to combat this notion that U.Va. has had some sort of “fall”…the reality is this: Every public institution has taken a falling in the undergrad rankings. In fact, U.Va. has managed this better than all of its peers (Berkeley, UNC, Michigan, Wisconsin). When you look at the numbers, outside of that one year of ranking 15, it’s always been around 20. This year its 23. Not a huge difference either way.

        Why do private schools dominate the rankings nowadays? Because selectivity/resources are a heck of a lot easier to manipulate when you’re a private school with a tiny student body.

        I agree there are 2 ways to look at it. But one of those ways also looks at is that the 21st century is a century of scarce public resources. If you take the view that government should focus on its core functions and cut “unnecessary” expenditures…I can’t see the state continuing to support U.Va. or William and Mary. There are plenty of public schools that money could go to. William and Mary and U.Va. would be happy to privatize. I don’t understand what holds up the train except the legislature if you look at this issue from a purely fiscal perspective.

        1. larryg Avatar
          larryg

          I think the WAY the state funds UVA contributes to the problems.

          it basically encourages UVA to see itself as an organization with different revenue sources that it can mix and match and move around to keep the ship afloat rather than a cogent process for determining what is not of good value vs what is and establishing priorities to do triage when necessary rather than continuing to increase tuition costs to make up for the shortfalls.

          smaller colleges have tighter bottom lines and they are closer to falling off the edge if they don’t control costs.

          UVA and others like it are huge lumbering beasts financially that don’t exactly turn on a dime.

          This was what Dragas was concerned about but how she went about it was Ham-fisted and Sullivan and company were in no mood to change anyhow.

          The problem is that their solution is to 1. increase tuition and 2. lower entrance standards…to recover enrollment loss due to high tuition and 3. depend on govt loans to clinch the deal.

          that’s going to ultimately harm the University.. in my view.

          however, I never thought it was financially friendly to middle-class – ever – anyhow – unless dad was an alumnus and/or a scholarship was offered.

          UVA was always considered a “premium” University by many.. VCU and JMU are middle-class friendly .. and Tech to a certain extent before.

  11. Peter Galuszka Avatar
    Peter Galuszka

    A few points:
    (1) While the statistics suggest there may be concerns about UVA, it is way too soon to start talking about an enormous upheaval and blaming Teresa Sullivan and so on. Other than her bizarre and short-lived ouster, most of the school’s problems (murder, phony rape) don’t deal directly with academics. UVA, for instance, is not responsible for renegade ABC police.

    (2) Conservatives and some liberals are way too concerned with STEM. It’s not the only thing in the world. And UVA has good and consistently well-ranked grad schools like law and business that go way beyond Virginia.

    (3) I agree that rankings may show some slipping but it’s really not that much.

    (4) I am highly suspicious of U.S. News & World Report rankings. The magazine has been shrunk to JUST rankings. Some colleges simply refuse to participate. What you have is a dying magazine brand name affixed to some rankings that they are trying to peddle.

    (5) According to the U.S. News, my college, Tufts, is just a couple of points below UVA and its rankings haven’t changed very much over the years. It is a smaller and much different place so what difference does it make? What relevance can you draw? It’s not Harvard which is just down the road but it’s good and has offered a great place to learn since the 1850s.

    (6) We forget that there was a deliberate effort in Virginia back in the middle of the last decade to slow the flow of state money to UVA and CW&M, etc. The chart shows that. Yet, commenters are seeing the aggregate results as some kind of, dare i say it? BOOMERGEDDON! There’s a lot of exaggeration here.

    1. Acbar Avatar
      Acbar

      Yes, it’s interesting to ponder how much of what we see today in the GA’s attitude toward funding higher education in Virginia was born in that effort two decades ago to privatize our finest Virginia public universities?

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