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LA higher education heads misintepret election results

Louisiana higher education leaders they may be, but they drew the wrong lessons from election night results.

Disappointingly, Amendment 2 went down to defeat at the hands of voters last week. This would have transferred tuition authority from a supermajority of the Legislature to university management boards. This makes tuition changes fairly inflexible in a marketplace demanding more and more adroitness in pricing decisions.

While difficult to ascribe motivations for voting behavior on this issue, perhaps the majority felt the Legislature would look less kindly on hiking tuition than the appointees it vets for the boards. Currently, the GRAD Act has delegated in a limited fashion the Legislature’s authority for this by allowing schools to increase tuition up to 10 percent annually until reaching the southern regional average, under contracts that will expire soon. Successful negotiations for new six-year contracts could continue this power exercised by the three boards.

So, the election results support the status quo on this issue – but not in the eyes of Commissioner of Higher Education JosephRallo. Instead, he made the inferential leap that the amendment rejection served notice that the people wanted to keep tuition increases down, because they want the state to spend more taxpayer resources on higher education.

Much has been made over the past six years of the decline in taxpayer bucks going to Louisiana higher education coupled with increases in tuition, both among the highest among the states in that period. Much less commonly known is that Louisiana acted as an extreme outlier in that regard. In most states during these years, both taxpayer spending and tuition increased a small amount. Keep in mind as well that at the beginning of this period Louisiana spent on a per capita basis in the top ten of states on higher education and had the lowest average tuition and fees for senior institutions, so this rebalancing was more than in order.

These data also put into perspective comments made by Louisiana State University President F. King Alexander, who noted that in the 2001-11 period the substitution effect present recently in Louisiana played a much more prominent role in national trends. If that happened, outside of Louisiana that certainly has stopped since then.

King made this observation in the context of arguing that a “federalization” of education had occurred, pointing to the fact of a massive increase in federal government assistance to state institutions of higher education over the past half century. Indeed, in 1976 the federal government spent about $5.4 billion in direct grants and about $2.6 billion more in indirect aid (grants and subsidized lending to students). This year, direct aid will be about $25 billion and indirect aid around $49 billion. This 825 percent increase far outstrips the inflation rate over the period of 325 percent, while tuition at four-year schools nationally increased 612 percent over this span and state support increased 221 percent (although this figure does not include two 2016 state budgets, Illinois and Pennsylvania, that remain unresolved, so this understates the actual increase by dozens of percentage points).

Yet instead of arguing that federal support created an inflationary bubble advancing much faster than the cost of living, King incredibly uses these data to argue that states fell behind. This entirely misunderstands the issue: it’s not a matter of relative state and federal spending, but of whether absolutely too much has occurred that artificially pumps up pricing.

As for Louisiana. the state still has below-average tuition for baccalaureate and above institutions, ranked 29th among the states – although note that the presence of the Taylor Opportunity Program for Students means the actual mean would be about 20 percent lower. State taxpayer support per full-time equivalent enrollee (2015 data) ranks 33rd, while per capita income ranks 34th. In other words, taking TOPS into account, Louisiana’s pricing and support of education has gravitated to a proper balance, contrary to Rallo’s assertion, and taxpayer effort has no need to go higher, when understanding the flaw in Alexander’s argument.

This means if state higher education wishes to increase the breadth and depth of its product, it must look within to garner efficiency gains. It must address questions such as whether too few students chase too many campuses; if existing programs genuinely contribute to educations based upon the liberal arts or science/technology/engineering/mathematics or if some curricula chase trendy, vainglorious projects based more on ideology than intellectual inquiry; should faculty expectations for teaching and researching need rebalancing; whether administrative superstructures has grown too much, etc. Meanwhile, a parallel national debate must occur over how the federal government should fund higher education to make sure its actions do not distort, to taxpayers’ detriment, the marketplace.

Those kinds of questions represent the proper perspective that the election results should produce, not that elicited from Rallo and Alexander.

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