California Higher Education at the Brink

Too many students, too few dollars and a demand for better skills

A friend is nearing the edge of a cliff, seemingly oblivious to the danger. Do you cry out a warning? Or do you say in a reasonable tone, "I believe if you continue walking in that direction, you may fall off a particularly steep and nasty precipice"? The latter is certainly less alarming, but will it arouse the friend to the peril in time?

In a recently released study of California's higher education system, RAND researchers Roger Benjamin and Stephen J. Carroll opt for the first approach. Their study sounds an urgent alarm--that a deep financial crisis looms for California higher education--and offers the first outline of a plan to cope with it.

By 2015, write the authors, a combination of tight public funding, rising educational costs and growing population could shut out one of every three potential students from California's public colleges and universities. The effects of such exclusion in an increasingly skill-based job market could be "calamitous," they add, "a time bomb ticking under California's social and economic foundations."

The study warns that the state's leaders have only three to five years to act before they are overwhelmed by a crush of students and a shortage of money.

The remedy outlined in the study represents a "marriage of increased public investment and institutional restructuring." It calls on federal, state and local governments to make up half of what the researchers estimate will be a $4 billion to $6 billion funding shortfall by 2015. For their part, California's public colleges and universities must supply the rest of the resources from productivity gains achieved by a comprehensive redesign of their own organizations, governance practices and cross-institutional relationships.

Breaking the Social Contract: The Fiscal Crisis in California Higher Education was requested by the California Education Round Table, which is composed of leading education officials throughout the state, and supported by a grant from The William and Flora Hewlett Foundation.

Already the state's systems--the University of California, California State University, and the community colleges--have each experienced admission increases for the last three years. Enrollment now stands at 1.3 million, with a "tidal wave" of 700,000 additional students expected to hit higher education's shores by 2015.

That trend, compounded by rising per-student costs and 20 years of insufficient funding for higher education, is setting the state on the road to reneging on its goal of providing postsecondary education to all residents who can benefit from it.

Tuition increases, which have been used to make up the balance between what the state pays and what it costs to educate a student, constitute another hurdle to access to postsecondary education. As government funding declined beginning in the 1980s, tuition in California's public institutions soared, quadrupling in the last 20 years and far outpacing inflation. Without more money, the state's system cannot hope to absorb the expected enrollment growth unless it imposes even higher fees, thus shutting out low-income students.

One reason education has become so expensive is that there have been no gains in productivity to offset the rising costs of, for example, faculty salaries. "Colleges and universities still operate much as they did in medieval times--one professor in front of a relatively small group of students--despite such modern technologies as satellite broadcasting and the Internet that allow educational institutions to reach thousands and even tens of thousands of students at once," Carroll observes.

"If Californians had known how the educational requirements of the workforce were going to grow in the 20 years from 1976 to 1995, it is doubtful they would have allowed public funding for higher education to stagnate as it has," the report says.

Those who count on the state's recent economic revival to create jobs for even the least educated workers are blind both to the cyclical nature of boom times and to the social consequences of huge numbers of workers trapped in low-paying jobs while the rest of California grows richer, contend the authors.

The solution to the coming crisis lies in increasing public funding for higher education, "even if that means reducing the level of support for other public sectors," assert the authors--and, equally vital, in making that financial help conditional on fundamental institutional reforms.

The study outlines four steps colleges and universities will have to take to achieve high-quality education at lower cost:

• Make major structural changes, including installing decisionmaking systems that enable performance-based assessment, improving internal financial management and accountability and--most provocatively--hitching faculty salaries and other incentives to productivity gains.

• Clearly differentiate the roles of the state's three postsecondary systems--workforce preparation for the community colleges, teacher training and regional economic development for the California State University system, and research and graduate training for the University of California. Schools should also evaluate their individual missions more tough-mindedly, emphasizing areas and departments in which they have comparative advantages while reducing or eliminating others.

• Align entrance requirements and combine faculty and curricular resources with those of other institutions rather than allowing each campus to offer a complete range of introductory courses. Campuses should also pursue joint outsourcing of service functions, and trim and even share physical plants as the information age proceeds and space needs are reduced.

• Reaffirm the California master plan--which guarantees University of California admission to the top 12 percent of the state's high school graduates, California State University admission to the top third, and a community college seat to all other high school graduates--and raise the educational level of all California citizens from high school to the completion of appropriate postsecondary education or training. In the future, the report adds, the focus should "move away from bachelor's degrees and toward more specific, measurable knowledge sets."

The study is the first state-focused application of an earlier analysis by the Council for Aid to Education of the postsecondary school challenge facing the nation as a whole. The CAE is an independent subsidiary of RAND. That study was issued in June and has since been widely reported and discussed.

Breaking the Social Contract: The Fiscal Crisis in Higher Education, Council for Aid to Education, 1997, $7.00; also on the Web (/publications/CAE/CAE100/index.html) Breaking the Social Contract: The Fiscal Crisis in California Higher Education, Roger Benjamin, Stephen Carroll, RAND/CAE-01-IP, 1998, 32 pp., ISBN 0-8330-2598-8, $10.00. Both are available from RAND, or from CAE at: Publications Department Council for Aid to Education (EIN 95-4570253) 342 Madison Avenue, Suite 1532 New York, NY 10173 Telephone: (212) 661-5800; Fax: (212) 661-9766

Related Reading Benjamin, Roger, and Stephen J. Carroll,A Framework for Linking Resources to Mission in Higher Education, RAND/DRU-1623-IET, 1997, 5 pp., no charge. Benjamin, Roger, and Stephen J. Carroll, "Impediments and Imperatives in Restructuring Higher Education," Education Administration Quarterly, Vol. XXXII, Supplemental, December 1996, pp. 705-719; also available as RAND/RP-639, no charge. Carroll, Stephen J., and Eugene Bryton, Higher Education's Fiscal Future, RAND/DRU-1601-IET, 1997, 29 pp., no charge. Gates, Susan, and Ann Stone, Understanding Productivity in Higher Education, RAND/DRU-1596-IET, 1997, 51 pp., no charge. Guess, Gretchen, and Stephen J. Carroll, Patterns in Federal Support for R&D: 1973-1994, RAND/DRU-1598-IET, 1997, 50 pp., no charge. McArthur, David, and Matthew Lewis, Untangling the Web: Applications of the Internet and Other Information Technologies to Higher Education, RAND/DRU-1401-1-IET, 1997, 96 pp., no charge. Way-Smith, Susan, Information and Resource Systems for Higher Education: A Briefing, RAND/DRU-1599-IET, 1997, 20 pp., no charge.