Michigan universities face hostile financial, political circumstances

There’s little doubt that our universities are among Michigan’s most valuable and important assets. But real alarm about public higher education is spreading throughout the country -- and threatening profound consequences for our state and it colleges.

Take the case of Teresa Sullivan, a former provost at the University of Michigan and now president of the University of Virginia. On June 10, with no advance warning, she was forced to resign by the university’s board, which said she wasn’t making changes fast enough. The campus erupted in anger. Under pressure from the governor, the board quickly reinstated Sullivan.

This is not a unique scenario. Richard Lariviere, president of the University of Oregon, was fired. Carolyn Martin, chancellor of the University of Wisconsin-Madison, resigned to go to Amherst, a small private college. Michael Hogan, University of Illinois president, resigned after a faculty revolt. Bill Powers, president of the University of Texas, is in big-time conflict with his board over tuition increases.

Underlying these events are a series of structural problems affecting public universities. Once among America’s proudest achievements, they now face a set of unprecedented threats:

* Declining public support. According to higher education’s respected Grapevine Survey, overall state appropriations to universities have deteriorated by $6 billion, 7.6 percent, over the past decade, with more cuts likely coming. Over the last decade, successive Michigan Legislatures have cut $536 million from higher education support, according to the Senate Fiscal Agency; that amounts to a 29.3 percent drop, the most of any budget category. This year’s state budget increased support for higher education by 3 percent overall, the first in years. Twenty years ago at the U of M, public support provided 75 percent of costs; tuition and fees, only 25 percent. Today, you may be shocked to learn it’s exactly the reverse.

* Increasing tuition and fees. According to the National Report Card on Higher Education, tuition nationwide has increased by 375 percent since the early 1980s; the inflation-measuring Consumer Price Index by only 95 percent. The result? An explosion of student debt, now approaching $900 billion nationally. In Michigan alone, student debt now has to be in the tens of billions.

* Fraying public relations. By increasing tuitions and making education less accessible, universities are aggravating students, their families and politicians. Lawmakers are also meddling; in Michigan, the Legislature this year bizarrely attached various restrictions to higher education appropriations.

* Changing technology. The basic business model of many residential universities is suddenly at risk, thanks to new technology. Coursera, a start-up nonprofit joint venture among the U of M, Princeton, Pennsylvania and Stanford, is offering for free online courses taught by world-famous professors -- “education for everyone.” The initial response was overwhelming -- more than 100,000 students worldwide have signed up. 

But the new delivery platform raises a host of questions. If students can get classes taught online for free, why should they pay expensive tuitions? Why should professors, already under criticism for low productivity, teach classes face-to-face when lower-cost alternatives are available? How much will a certificate from an online class cost, compared with traditional tuition -- and how much will it be worth as a credential?

Any industry facing fundamental changes in its basic business model inevitably comes under extreme stress, and public higher education is no different. One of the biggest stress points is the relationship between governance (exercised at universities by their boards, which set overall policy and hire and fire presidents) and leadership (exercised by presidents, who need to manage the rate of change their institutions can tolerate.)

The dispute at the University of Virginia between President Sullivan and the rector (chairwoman of the board), Helen Dragas, was exactly about this. Dragas said “the world is simply moving too fast” for the university to maintain its position “under a model of incremental marginal change.” However, Sullivan argues that universities are not like businesses, which can be managed forcefully from the top down. Instead, colleges require careful consultations with various constituencies, including faculty, students and alumni. 

So far, we have yet to see dramatic conflict occur at Michigan’s public universities. As far as I know, no president is about to lose his or her job. And students do not appear to be rioting over tuition rates.

But pressure is building statewide, best seen this year in the Legislature. At hearings in May on state support for higher education, lawmakers criticized universities for arrogance, unwillingness to provide information, rigidity and whining. Reportedly, some higher education officials are not welcome in the office of House Speaker Jase Bolger, R-Marshall. Worse, recent talks with a number of university board members revealed that most have no idea of just how unpopular their institutions are inLansing. 

This is a big issue that can only get bigger. Michigan has 15 public universities, all struggling to cope with pressures that have been building in recent years. Whether that can be done successfully will go a long way in determining how effective they can be in meeting our future needs -- and those of our students. 

Coming Thursday: The University of Michigan pioneers a new business model for public universities.

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of the Center for Michigan, a nonprofit, bipartisan centrist think–and–do tank, designed to cure Michigan’s dysfunctional political culture; the Center also publishes Bridge Magazine. The opinions expressed here are Power’s own and do not represent the official views of the Center. He welcomes your comments via email.