Universities cut spending as costs rise, enrollments fall

Universities across the country faced with falling enrollments and skyrocketing costs are cutting back services, jacking up tuition and eliminating some less popular majors.

Most of the changes were announced at the end of the spring semester and over the summer, but some students and faculty are pushing back this fall.

  • In Morgantown, West Virginia, home of the state’s flagship West Virginia University, students have walked out of classes to protest the cash-strapped school’s proposal to lay off as many as 169 faculty and eliminate most foreign language programs.
  • The University of Wisconsin system, where fall enrollment fell from 182,090 students in 2010 to 160,782 in 2022, recently approved a budget that projects 10 of its 13 campuses will run deficits this year after the GOP-led Legislature cut $32 million in funding to purge diversity programs. State media outlets report that at least three schools in the system — UW Oshkosh, UW Parkside and UW Platteville — have announced they will implement layoffs, retirement incentives and furloughs to compensate. 
  • Bemidji State University and Northwest Technical College in Minnesota recently announced layoffs and retirement bonuses to cover a 20% loss in post-pandemic enrollment and a related $9 million budget deficit. The schools are located near each other and already share housing, student services and the same president to save money.

The trend toward higher costs and fewer services comes as schools are competing over a shrinking pool of students.  

Enrollment at four-year public colleges and universities fell by 3.3%, from 5,491,391 full-time students in spring 2019 to 5,308,277 in spring 2023, according to the National Student Clearinghouse Research Center.

More high school graduates are reluctant to take on the student loan debt that comes with pursuing a college degree and some have deferred or skipped college since the COVID-19 pandemic shuttered campuses in March 2020.

As enrollment declines, states are scaling back spending for public universities.

The National Education Association reported in October that 32 states spent less on public colleges and universities in 2020 than in 2008, with an average decrease of nearly $1,500 per student.

“Because higher education is discretionary funding in the state budget, the sector faced greater cuts compared to other areas,” the American Association of State Colleges and Universities, a network of public campuses, said in an email.

“Demographic changes are hitting regional public colleges in the Midwest and Northeast hardest, but everyone is feeling the pinch of inflation,” said Thomas L. Harnisch, vice president for government relations at the State Higher Education Executive Officers Association. “The key focus is to protect academic functions by looking for ways to cut nonacademic costs.”

“With the reality of enrollment declines, institutions have to [consider] faculty and staff salaries and benefits, the operation of certain campus facilities, the amount of services offered to students and even access to state of the art technologies,” Emmanual Guillory, a government relations analyst at the American Council on Education, a network of college administrators, said in an email to The Washington Times.

Hard choices

West Virginia University President E. Gordon Gee, who has been criticized by students and faculty for implementing cuts instead of lobbying the state Legislature and the governor for more funding, said taxpayers’ trust has been eroded in institutions of higher learning.

“We simply have lost the support of the American public,” he told The New York Times in an interview earlier this year.

The 79-year-old administrator, whose resume includes stints as the president of Ohio State, Vanderbilt, Brown and Colorado in addition to WVU, has been blasted by some faculty members for building projects that increased campus debts in recent years.

Those building projects will end up costing jobs in Morgantown, the president’s critics say. 

“The vast majority of people who’ll be fired may not know until October,” R. Scott Crichlow, a tenured political science professor and faculty senator whose job is not in danger, told The Times. “What’s causing so much stress and frustration is that this appears to be chaos, not change.”

He said the cuts would also include up to 17% of the chemistry and law faculties; 20% of the music, pharmacy, computer science and electrical engineering faculties; 30% of the art design faculty; and 36% of the public health and mathematical and data sciences faculties.

In neighboring Pennsylvania, an aging state with an average in-state tuition of $26,040, massive enrollment declines have driven recent cutbacks.

For example, in the University of Pittsburgh system, the trade publication Inside Higher Ed reported in July that fall enrollment at Pitt Titusville fell by 96% from 2010 to 2022, leaving only 23 students on campus last year. According to the school’s website, it employs 26 full-time faculty and staff.

The Pennsylvania State System of Higher Education, which offers a budget-friendly average tuition of $7,716, merged six universities (Bloomsburg, Lock Haven, Mansfield, California, Clarion, and Edinboro) into two multi-campus institutions last year. The system’s 10 regional public universities cater to in-state residents from rural households of modest income.

“Generally speaking, regions with enrollment challenges are rural communities experiencing population weakness or decreases,” Kevin Hensil, a spokesman for the PASSHE chancellor, told The Times. “Enrollment is increasing in the growing suburbs around Philadelphia.”

In internal documents shared with The Times, PASSHE noted that fall enrollment headcount at its campuses declined yearly from a high of 119,513 students in 2010 to 84,567 in 2022.

Rising costs

While public universities have modest endowments, most are restricted to scholarships and cannot go toward salaries. That has left campuses dependent on state tax dollars and tuition revenue to pay employees as labor costs rise.

Pandemic stimulus money only partially reversed years of state budget cuts that hurt campuses before COVID-19, said Liz Clark, a vice president at the National Association of College and University Business Officers, a network of campus budget chiefs.

She said schools must confront the reality that “relief aid is no longer available” this year.

“Without it, some institutions are now facing difficult decisions about where to cut operating or personnel resources,” Ms. Clark said in an email.

Thanks to COVID stimulus spending, state funding for public universities jumped 4.9% without adjusting for inflation from 2021 to 2022, surpassing prerecession spending-per-student for the first time since 2008, the State Higher Education Executive Officers Association reported in May. 

State and local government funding for higher education totaled $120.7 billion in 2022, including more than $2.5 billion in federal stimulus money, found SHEEO, which represents executive officers of the statewide governing and policy boards that oversee public colleges.

According to SHEEO’s Mr. Harnisch, about 75% of state university budgets go toward employee salaries and benefits. 

He said that because many families had fewer children after the 2008 recession, public campuses will hit a “demographic cliff” starting in 2026, as they compete for a shrinking pool of applicants.

With revenues dipping during COVID, many state universities raised tuition, adding to the larger student debt loads that have discouraged some applicants.

According to the College Board, which does not adjust its numbers for inflation, the average tuition for in-state students at a four-year public university rose 1.8% from $10,740 in fall 2021 to $10,950 in fall 2022. For out-of-state students, tuition rose 2.2% from $27,560 to $28,240 over the same period.

Even some flagship state systems with growing enrollments have announced budget cuts, citing rising labor costs for instructors and staff.

The University of California, Berkeley plans to reduce library services and close its anthropology, physics-astronomy and mathematics statistics libraries by 2025 to save $1 million annually.

Despite a growing enrollment of over 30,000 students and a $6.8 billion endowment, UC Berkeley is scrambling to finance millions of dollars of salary hikes that graduate student researchers and instructors won in a system-wide strike over cost-of-living increases.

A former department head, who asked to remain anonymous, said cutbacks are the only option the school has left to pay these bills.

“The campus’s massive financial mismanagement over many years has left its debt capacity maxed out, so that it effectively cannot borrow to meet any of the needs,” the professor said in an email. “I’ve heard of tenure-track and tenured faculty who are contemplating a change of careers as they watch the transformation of U.S. universities into administrative units existing chiefly to administer themselves.”

According to state university finance officers, the future looks bleak.

In July, Hanover Research and Inside Higher Ed released a survey of 219 college chief business officers. It found that 36% of all CBOs and 47% of those working at public campuses expect their financial condition to worsen over the next year.

“It’s a case of profligate spending by universities that thought they could build beautiful Taj Mahal campuses and spend freely, with the expectation that increasing enrollment and fees would sustain them,” Peter Wood, president of the conservative National Association of Scholars and a former associate provost at Boston University, told The Times. “COVID put the nail in that coffin, and it’s going to get worse.”

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