Princeton President Shirley Tighman warns on endowment declines - 30% and not just 25%.

These enrollment cuts are a watershed for the downsizing of public higher ed, as reported in the very good piece by Josh Keller, in the Chronicle of Higher Education

The California State University is the classic social escalator, the gateway for California's racially diverse and international population. It has been slowing down for years, drained financially for years by Republican minority anti-tax blocs in the state leg (Proposition 13 and the need for a 2/3rds majority to pass any budget measure is the recipie for this Country Party lock on the budget). Now is now being monkeywrenched with the excuse of the financial crisis. Faculty and students are striking all over France, and I can't understand what it will take for people to finally say ENOUGH in California.
***

Friday, March 27, 2009

Forced to Downsize, Cal State Campuses Reject Thousands of Eligible Students

By JOSH KELLER

San Francisco

Faced with severe budget cuts and an increase in applications for this fall, nearly half of California State University's 23 campuses may have no choice but to turn away students who would normally be promised admission.

Campuses across the state are rejecting or wait-listing students who meet the system's minimum admissions standards. The restrictions are a response to a call in November from the system's chancellor, Charles B. Reed, to cut systemwide enrollment by 10,000 full-time equivalent students in view of the state's budget crisis.

This year's enrollment cuts may not be the last. Given California's continuing budget problems, Mr. Reed said on Wednesday that he would "probably" have to order additional limits in enrollment in the future.

The scope of the restrictions may be unprecedented in California, where the state Constitution dictates that California State University serve the top third of graduating high-school students each year. Eleven of the system's 23 campuses have adopted tougher admissions requirements, in many cases sharply limiting the number of students they admit from outside their local area.

"Never has the demand for the university been higher, but rarely has our ability to meet it been as challenged," said James C. Blackburn, the system's director of enrollment management.

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The College and University Professional Association for Human Resources has released a pay study that shows that public university salaries continue to fall behind privates. In other bad news, pay for the humanities disciplines lag enough to cast doubt as to whether they are in the same profession as fields like business. The Inside Higher Ed coverage notes:

the CUPA data suggest that the gaps between those in some professional schools and everyone else remain large, and that some humanities disciplines remain stuck with salaries much lower than counterparts across the quad. The median salary for a full professor of English for example ($79,854, across sectors) is less than the median for an assistant professor of business ($84,025). Instructors in English or in philosophy have median salaries below $40,000 at public institutions, while instructors in law and legal studies earn over $60,000 at public institutions.

These salaries do not come from the market but from custom, status differences, and other unjust lock-ins. Will the crisis help us rethink any of this?

California finally passed its latest terrible budget. Amidst an avalanche of cuts and regressive tax increases, it cut the University of California another $115 million and Cal State another $165 million.

The conventional wisdom is that it could have been worse. This view doesn't express budgetary reality. It expresses long-term budgetary trauma and the successful lowering of expectations into the basement.

UC had already suffered a mid-year cut of $65.5 million on top of the budget freeze of last year, had already enrolled 10,000 undergraduates for which the state paid zero (scroll down to p 4 in this Department of Finance document). The current-year cuts amount to 3.5% (on a presumptive state base of $3.24 billion). There is another $122 million in missing general funds for the 10,000 students that were not budgeted by the state (assuming about $10,000 in GF per student), so UC is about 7.3% below where it expected to be a year ago after the last bad January budget proposal from the governor. Given other necessary increased spending - "$213 million in unfunded mandatory costs" - UC is 14% below where the Regents budget had imagined the university to be way back in November 2007 . And that was just to stay even, not to expand or improve anything.

The budget also assumes a 10% fee hike. This will bring mandatory fees from about $7126 per year to around $7850, pushing overall fees (including variable campus fees) to around $9000. Fees have risen every year in this decade by 7-10% except, coincidentally, for the year when the governor was running for reelection.

An equally important question is where is this all heading? The short answer is down. Two reports (1 and 2) that I co-authored showed that the legislature and governor had already cut 40% of UC's General Fund since 1990 (in inflation-adjusted dollars), so we've rounded that corner and are heading for 50%. Operating units on my campus have been told to plan for 20% reductions in academic operations, just for this year. The reason is that most planners have decided that a) the recovery they were holding out for will never happen, and b) the decline will continue next year and after.

We are heading toward Scenarios 4 and 5 in the UC Senate reports linked above. The first was the "Futures Report," where Scenario 4 - the "Public Funding Freeze" - was first defined. In the second, the "Cuts Report," we mapped the freeze as modified by the "Schwarzenegger Revision." Here's how it looks when graphed.
The new budget deal appears to put UC on the Scenario 5 pathway, in which it loses $1 billion below the Compact and $2 billion below where it would have been had the 2001 budget continued to increase at the rate of growth of state personal income.

Our reports showed that private fundraising and research funding cannot come close to filling in this shortfall. This leaves student fees as a revenue source. You can see in our reports where they wouldhave to go to offset the state cuts - towards about $15,000 per year by 2011-12 or so. The "Cuts Report" showed that were UC to fill in the entire state funding shortfall between 2007-08 and 2008-09 (over $400 million) with fees, however politically untenable and ethically and educationally undesirable this would be, fees would have to increase in one-year over 40%.
What UC has done instead is combine lower fee increases with service cuts, always hoping against hope that they will be temporary. These service cuts have the political advantage of being largely invisible to students and the public. But they are eroding UC educational quality at an ever faster rate.

Making matters worse, UC's Office of the President went on record thanking the legislature and the governor for not cutting more.

“I am compelled to note that the proposed cuts to the university, while serious, do not appear to be disproportionate,” Mark G. Yudof, president of the University of California, wrote in a letter to its regents on Tuesday. “Indeed, I believe the Governor and the Legislature have helped to protect the university’s base budget from potentially even deeper cuts.”

Well yes, but only in the sense that before cutting off 1 of the university's fingers, the governor had threatened to cut off 3 or 4. He helped to protect all right, as in the phrase "protection racket."

I am completely mystified by the tradition in which the UC president always says how good the cuts are. It is simply bizarre this year, in the context of years of cuts, no recovery even to 2001 budget levels, yet another year of tuition hikes for students, and an enrollment freeze.

The presidential thank you signals that cuts don't really make much difference to us. The thank you says that future cuts will be ok too. The thank you says that UC is led by patsies who will take whatever they are given. The thank you this year ushers in further cuts in the next, and that is what's been happening for most of this decade.

While all other state workers lost 2 holidays and 2 working days of pay per month, California's prison system was not cut at all. Our prison system is famously overcrowded, dangerous, mobbed-up, racially segregated, and fatal to its inmates, particulary if they are being treated by the prison health-care system, which was so atrociously run that it was put in federal receivership.

We have an infuriating situation in which the budget is blocked every year for months at a time by minority Republican rule, and then this year by a lone nut with a fixation on an allocation for the state Comptroller's office furniture. "Success" - an actual budget - means that no bad deed goes unrewarded - incompetence and criminality in the prison system get a budgetary pat on the head, while disabled people, low-to-medium wage state clerks, and very successful professors and their college presidents do "more with less" and receive a fiscal kick in the pants. And then to make it completely absurd, the college president bows and says thank you.

Mark Yudof has lots of competition for the prize of "leader with the lowest expectations." The state of California is behind other big states in most things now, and not the cutting edge of much of anything, except decline. LA Times columnist George Skelton summed it up nicely during the similar budget fiasco one year ago. The question is whether the state's leaders are able to make any kind of a rational list of priorities, set any kind of intelligent goals, and take the population anywhere that it wants to go.

And if they can't, what are we going to do about it?

The best tabulation of the final compromise stimulus for research is AAAS's. A good summary of the overall picture for higher ed can be found at Inside Higher Ed.

I will have to do some studying to find out how much of this is new money and how much already in the works.

Meanwhile, the State Higher Education Executive Officers (SHEEO) have come out with their important annual report on state expenditures on higher ed.

The background for the current downturn is as follows: "The report . . . indicates that per-student state appropriations were on the rise from 2006 to 2008, following four consecutive years of decline. Even with these gains, however, state-supported colleges are receiving less in constant dollars per student than they were in 2001 — a peak year in data that stretch back to 1983."

Since public higher ed is still underwater in relation to 2001, we're going to need a whole new stimulus to avoid another dive towards the bottom.

Here's the best official pitch I've heard in a while to replace competition among stratified universities with something like the general development of the whole system.

I have started an archive of materials on the French university strikes (in French).

The most typical thing about the Sarkozy "reforms" are that they are no-money propositions. This is in spite of the fact that biggest problem with French universities is that on the Western scale they are poor.

The "reforms" are cost-free substitutes for better funding. Among other things, they

• enhance the powers of each university president to reallocate the time and functions of teacher-researchers
• increase the teaching hours of researchers

The theory seems to be that efficiency flows from having someone at the top giving orders. Command-and-control is a widely admitted failure in classrooms and laboratories, and it doesn't really work in the corporate world either. But it does allow conservative politicians to make moralizing statements about the shortcomings of everyone else, publicly flog their traditional enemies among scientists, teachers, and intellectuals, and save public money for more important things, like bank bailouts and tax cuts for the wealthy.

The same cheapness was also the case for Germany's "Elite 10" program for creating a German Ivy League. The idea came in the first place from the methodologically bad world rankings cranked out by Shanghai Jiao Tong University. The literal bait was utterly puny - 13.5 million Euros per year per winning campus through 2011. 37 universities turned themselves upside down to apply for money that would add about 5% to the research funds of an ordinary medium-sized campus in the United States. The real incentive was the status of the "German Ivy League" label. More accurately, the incentive was avoiding defeat and demotion to a lower university caste. The outcomes are always the same:

1. less pressure to spend real money, in this case to improve Germany's overall higher education system.
2. university personnel distracted from common advancement by competition
3. rankings that justify fewer resources for the newly-invented lower orders
4. less development for society overall.
   

I'll write a comparison soon on the French and American "how to," as in how to avoid spending actual money on higher education.

Any illusion that higher ed has entered a new era of as a high government priority has been shattered by the Congressional negotiations over the stimulus package. The Senate has come to a "bipartisan compromise" that comes to about $820 billion before interest. It includes $116 for infrastructural improvements, $250 billion in tax cuts, and this:

Under the terms of the deal, Senate Democrats agreed to cut some $100 billion from their original proposal. Spending for the states and education took the biggest hit, compared with the House bill. State fiscal stabilization funding was cut back $40 billion, school construction dropped $16 billion, and a proposed $3.5 billion line for higher education construction was zeroed out.

Unfortunately, the states are where people actually live and spend their money, so it would make sense to send money there. In states like California, 100% of bond-dependent University of California construction has been put on hold, so some piece of $3.5 billion would have been exactly the stimulus we're supposed to get. They're our damn tax dollars, and we've already spent nearly that amount on bailing out banks that were blown up by genius executives who in many cases earn in one year what a beginning college teacher earns in a thousand.

In California, Pell Grant students were already facing freezes and rollbacks in Gov. Arnold Schwarzenegger's proposed budget. The new round has Pell Grant funds being paid as I.O.U.s, and UC and Cal State having to swallow the cost by not charging Pell Grant students the missing amount until it's made up. And this is in fact a federal program.

Completing the good news from yesterday, the National Science Foundation reported that the federal R&D funding in FY 2008 is nearly 5% below that of FY 2007 (after inflation), and down over 7% from FY 2005. Basic research fell an incredible 25% percent.

This is bad for knowledge and bad for university products. The only good news is that it may be another nail in the coffin of the failed funding policies of public higher education leaders that I analyzed in the Chronicle of Higher Ed last year and have posted here. This defeat might start forcing more public universities finally to admit how dependent they are on public money, and fight to get it back. The events this week show just how badly off the game they are.

The formal count is finally in: university endowments fell an average of 22.5% in the first six months of Fiscal Year 2008-09 (starting July 1, 2008). Returns for 2008 overall, including the first half of the year, were better, but that was the end of an era. The Inside Higher Ed coverage linked above also noted the continuation of an established trend:

The richest colleges performed best. Colleges with endowment assets of greater than $1 billion were the only colleges with positive investment returns — 0.6 percent – in 2008, the study found. Colleges with the smallest endowments, below $50 million, had the largest losses — 4.3 percent on average.

Dependence on endowments has been desperately short-sighted. So are the responses to endowment declines. The two saddest involve university museums. Brandeis is thinking of trying to get a one-time kick in revenues by selling its entire art collection. Penn has announced the firing of all 18 of its museum's academic research staff - unless they can fund-raise for their own salaries.

There are all sorts of problems with the fundraising strategy - it costs a lot of money to raise money, the returns are narrowly targeted to donor projects (98% so at the University of California), they allow donors to short-circuit academic planning. Universities should publish net donor figures so we can account for the costs of raising the money in the first place.

Donations are going to fall even more than they have, so the weakness of fundraising as a main financial pillar is going to get more obvious in the next couple of years. But few people really understand the tension, and often the flat contradiction, between academic research and fundraising. The retro-philistinism of the Penn museum director helps us out here:

Richard Hodges came to the museum as director in 2007, moving from Britain, where he was director of the Institute of World Archaeology at the University of East Anglia. He repeatedly described the changes he is leading as being about moving the museum “into the 21st century.” To do that, he said, the museum needs both money and a change in attitude.

“What we hope is that as a museum we will focus not on the personal research of the range of individuals, but essentially concentrating on the museum’s extraordinary collections and getting those out to a world audience,” he said. By eliminating the salaries of the 18 researchers, the museum will save about $1 million a year, he said.

Told that some of those whose jobs are being eliminated have said he is trying to run the museum like the Wharton School, with the assumption that anyone good can find money, he doesn’t balk at the comparison with Penn’s acclaimed business school. “Why not?” Hodges said. Many scientists of course must win grants to cover salaries if they want to win tenure. Hodges said that in his position in Britain, if he didn’t land grants, his team members would lose their jobs.

Of the prior approach at the Penn museum, he asked, “Why are we sustaining a tradition that believes that all we do is go out and do research for our ends?” He said that the current researchers “through no fault of their own” have been working in an outdated model of following their research interests and not raising money. “They have been in a different kind of institutional structure,” he said.

He added that “the critics are saying we should be frozen in time, speaking a language which is different from the language I speak.”

One idea being discussed — and much criticized by the scholars angry over the job eliminations — is adding an upscale restaurant to the museum.

A Personal Finance column in today's Los Angeles Times has one of the clearer sagas I've read of how a college student can get caught in a debt trap. The key line: " some students who think they are getting a federal loan find out later that they hold a private loan." They end up paying credit-card style interest on what they had assumed would be federal loans.

President-elect Obama has shown an interest in the dubious role of private banks in the college loan industry. It is going to take real concentration to pave over this quagmire.

HOOKED ON DEBT

Student loans turn into crushing burden for unwary borrowers
Some who think they are getting a federal loan find out later that they hold a private loan. The difference can be costly.
Kathy M. Kristof
Personal Finance

December 27, 2008

One in a series of occasional stories

Natalie Hickey left her small hometown in Ohio six years ago and aimed her beat-up Dodge Intrepid for the West Coast. Four years later, she realized a long-held dream and graduated with a bachelor's degree in photography from Brooks Institute in Santa Barbara.

She also picked up $140,000 in student debt, some of it at interest rates as high as 18%. Her monthly payments are roughly $1,700, more than her rent and car payment combined.

"I don't have all this debt because I was buying stuff," said Hickey, who now lives in Texas. "I was just trying to pay tuition, living on ramen noodles and doing everything as cheaply as I could."

Hickey got caught in an increasingly common trap in the nation's $85-billion student loan market. She borrowed heavily, presuming that all her debt was part of the federal student loan program.

But most of the money she borrowed was actually in private loans, the fastest-growing segment of the student loan market. Private loans have no relation to the federal loan program, with one exception: In many cases, they are offered by the same for-profit companies that provide federally funded student loans.

As a result, some students who think they are getting a federal loan find out later that they hold a private loan. The difference can be costly.

Whereas federally guaranteed loans have fixed interest rates, currently either 6% or 6.8%, private loans are more like credit card debt. Interest rates aren't fixed and often run 15% or more, not counting fees.

Most students have little experience in taking out loans, yet the federal government doesn't require lenders to disclose the total cost of a student loan and other terms upfront -- before signing -- as it does for car loans and mortgages.

"Students are in the cross hairs, being bombarded by very sophisticated and, to some extent, ethically marginal lenders," said Rep. George Miller (D-Martinez), who sponsored legislation passed this year that will require lenders to provide more disclosures on fees. "My fear is that we are developing a predatory market, just like we have had in mortgages."

About $15 billion in private student loans are expected to be funded this year, a 900% increase from a decade ago, according to the nonprofit College Board. Private loans are growing faster than federally guaranteed loans, which rose 59% over the same period, in part because of limits on how much students can borrow with the government's backing.

Four years at a public university, including room and board, costs an average of $57,332, according to the College Board. The average tab for a private university is $136,528. Yet the maximum that can be borrowed under the federal loan program is $31,000.

High-cost private loans fill that gap. One result is that students now average nearly $20,000 in debt by the time they graduate, twice as much as a decade ago.

"There is an alignment of interests that lead students to take out larger and larger amounts of debt," said Luke Swarthout, a former higher education advocate at the U.S. Public Interest Research Group in Washington.

"The students think it's an investment in their future, and the colleges are willing to let them borrow heavily because it helps them fill in their enrollment."

In the dark

Hickey knew she would need loans to complete her degree, so she went to the campus financial aid office as a freshman. After she filled out paperwork, Brooks Institute set her up in a loan program administered by Sallie Mae, the nation's biggest student lender.

Sallie Mae was chartered by the federal government in 1972, and most of its business is in issuing federally insured student loans. But while it may appear to be a quasi-government agency, it is in fact a for-profit company whose stock trades on the New York Stock Exchange.

Hickey ended up with $20,000 in low-interest federally guaranteed loans issued by Sallie Mae, and $120,000 in higher-interest private loans issued by Sallie Mae.

Hickey said no one explained the difference to her.

"The financial aid officer just said that my federal loans weren't enough to pay the tuition, but that was OK because they had these great alternative loans," Hickey said. "They made it sound so good that I didn't ask that many questions."

Tim Halsey, vice president of finance for Brooks Institute, declined to discuss Hickey's case directly, citing federal privacy laws. But he said the school's financial aid officers take great pains to explain the differences between loans and to guide students to the best deals.

"It is really to our advantage to get the loans and interest rates as low as possible," Halsey said.

"My motivation is to get that person to come to the school, if that's what they want to do. If I can get those costs as low as possible, it benefits us both."

Spotty disclosure

But some lenders market directly to students, and consumer advocates say they often fail to clearly detail loan costs and may even seek to present themselves as part of a school's financial aid office.

For a glimpse into how lenders operate, The Times filled out online loan applications with JPMorgan Chase & Co., Sallie Mae and MyRichUncle. An 18-year-old student who began college this fall agreed to provide personal information, including her Social Security number, so that lenders would provide detailed loan terms.

JPMorgan Chase, the giant New York bank, did not disclose its interest rates or fees in the online application.

Sallie Mae, which is based in Reston, Va., disclosed an interest rate and fee, but an attached disclaimer in capital letters said the numbers were preliminary "and may change."

The third, MyRichUncle, a New York-based student loan firm formed in 2005, disclosed a variable rate that starts at 9.6% and said there would be an unspecified origination fee.

The loan companies provided a bit more information over the phone. A MyRichUncle representative said its origination fee would be 2%. A Chase agent said the variable rate would start at 7.5% with no origination fee, and Sallie Mae said its variable rate would be 8%, also with no fee.

After initially resisting, agents for Sallie Mae and Chase both agreed to provide summaries of the loan costs in writing. But the one-page letters they mailed did not include the total cost of the loan over time.

The Times then called all three lenders to discuss their practices. MyRichUncle co-founder Raza Khan said that the failure to state the amount of the origination fee in the online application was a mistake and that the information was now included.

Sallie Mae spokeswoman Martha Holler maintained that the company's disclosures were adequate.

JPMorgan Chase spokeswoman Mary Kay Bean said the loan terms would be sent after the loan had been approved, pointing out that the company was not required to do so beforehand.

"We send borrowers a letter with the rate," Bean said. "We comply with the law. That's it."

Lenders in disguise

When Shianily Torres took out $38,000 in student loans at Florida's International Academy of Design and Technology, she thought she was dealing with the college financial aid office.

She now thinks it may actually have been a representative of Sallie Mae -- in part because that was the only company that offered her a loan.

"My father asked if there was somewhere else we could get the loan and they said no. The school didn't accept money from just any bank," Torres said.

Torres said she didn't learn the rate on her loan until after graduation, when she got the bill. The variable rate rose as high as 18.5%, which requires a monthly payment of $650 -- more than twice what she makes in her part-time job.

She said that she couldn't make the payments, and that Sallie Mae had not responded to her efforts to renegotiate terms.

An investigation last year by New York Atty. Gen. Andrew Cuomo found an "unholy alliance" between lenders and hundreds of schools across the country.

Charging more than a dozen lenders with wrongdoing, Cuomo cited a pattern of bribes to financial aid officers making decisions about which lenders would appear on school-preferred lender lists and "revenue-sharing" kickbacks -- in cash or products -- to schools that led their students to specific companies.

Hundreds of colleges agreed to abide by new ethics rules and not to accept gifts, and half a dozen even refunded money to students. The U.S. Department of Education tightened its guidelines to discourage quid pro quo arrangements.

More than a dozen student lenders, including Sallie Mae, Bank of America, Citibank and JPMorganChase, paid a combined $13.7 million to settle Cuomo's charges, without admitting or denying the allegations.

Private litigation continues, however. Torres is one of dozens of students who are suing Sallie Mae, alleging deception and discriminatory practices that left low-income and minority students saddled with the highest-cost loans.

Andrew Meyer, the Tampa, Fla., attorney handling the case, said his law firm gained insight into Sallie Mae's practices from people who formerly worked there as loan officers.

A key strategy was to make students believe the loan officers worked directly for the college, he said. Meyer said Sallie Mae purposely sent disclosure forms a month or more after classes had begun so that students would be less likely to protest onerous terms.

Sallie Mae's Holler said she could not comment on litigation, but she defended the company's lending practices.

"It's risk-based pricing," she said. "Students can take advantage of an interest rate decline, like we've seen in the past several months, but the loan rates also have the potential to rise when there is a rising rate environment."

Direct marketing

In addition to working with schools, lenders try to reach students directly. Although some companies have failed in the credit crunch, dozens remain in business, sending e-mails to students and advertising on sites such as YouTube.

Loan-shopping websites also lure young people into private loans, said Nancy Coolidge, a financial aid executive with the UC Board of Regents.

She noted that one site -- TuitionBids.com -- encouraged students to seek federal loans first but also had a "let the bidding begin" button that directed users to an application for a private loan.

"The way the site is set up encourages misunderstanding," Coolidge said. "They do what we ask by saying that private loans should be a last resort, but then ask, 'Are you interested?' When the kid clicks yes, they're catapulted to a private loan."

Keith Alliotts, chief executive of TuitionBids.com, counters that customers are able to choose either a private or a federally guaranteed loan.

"We don't advocate just private loans, we tell borrowers to get federal money first," he said. "But a lot of people need private loans."

But Alliotts acknowledged that TuitionBids.com receives a loan fee when a customer secures a private loan. The website makes nothing when consumers get a federally guaranteed loan.

Federal loan limits

Marja Lopees of Burbank is a few years out of school and makes about $70,000 a year as a lawyer. But she racked up $196,253 in debt and says her student loan payments swallow 40% of her earnings.

Lopees turned to private loans when she hit borrowing limits imposed by the federal student loan program. Now she has $88,303 in private loans that charge an interest rate of 8.84%. The payment on that loan is her second-largest monthly expense, after rent.

"I'm making interest-only payments on one of the loans, and still the payments keep going up," she said. "It's just overwhelming."

When she just makes minimum payments, her debt and rent consume 60% of her after-tax income. That's before she pays for food, clothing, utilities, and gasoline or saves for long-term goals.

"No one tells you to be careful of taking on too much debt when you're in school," she said. "It's just the opposite. They just keep giving you loans and saying, 'Don't worry about it. You're going to be a lawyer. It's no big deal.' "

Kristof is a freelance writer.
http://www.latimes.com/business/la-fi-collegedebt27-2008dec27,0,4636992.column

Also from the Chronicle, but a very different tone

http://chronicle.com/daily/2008/12/8770n.htm

Wednesday, December 17, 2008

Obama Praises His Education-Secretary Choice for Relying on Data to Improve Schools

By PAUL BASKEN

Washington

President-elect Barack Obama said on Tuesday he values his choice for education secretary, Arne Duncan, for his dogged determination to use data to drive his decisions about how he sought to improve the Chicago Public Schools.

“When faced with tough decisions, Arne doesn’t blink,” Mr. Obama said as he presented Mr. Duncan, the chief executive of Chicago's public-school system, as his choice to run the Education Department. “He’s not beholden to any one ideology, and he doesn’t hesitate for one minute to do what needs to be done.”

The choice met with virtually unanimous acclaim, even among Republicans and teachers'-union leaders who chafed at some of Mr. Duncan’s plans to overhaul Chicago's schools but have said they appreciated the respect he showed them in the process of finding compromise.

National higher-education leaders joined in the praise, saying they hoped Mr. Duncan’s record in Chicago of emphasizing cooperation over confrontation will also characterize his relations with colleges when he gets to Washington.

“He demonstrated effective leadership at the K-through-12 level and has a clear appreciation for, and connection to, higher education,” said William E. Kirwan, chancellor of the University System of Maryland. “So it just seems to me that it’s a great choice.”

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The Chronicle of Higher Ed reported President-Elect Obama's pick for Education as neutral at best for higher ed. Critics cited in the piece I post below call the nominee, Arne Duncan, a kind of corporate choice. It is true that higher ed's managers are pretty much out of ideas, and cling to myths I've described elsewhere. Here's the not-so-encouraging report, pasted below.

Optimism about the Obama science picks runs much higher. Many folks are missing the crucial point that you can't have a boom in basic scientific research without a boom in higher education support. The latter is nowhere in the cards. I'll say more about this soon.

http://chronicle.com/daily/2008/12/8730n.htm

Tuesday, December 16, 2008

Obama to Pick Arne Duncan, Leader of Chicago's Public Schools, as Education Secretary

By PAUL BASKEN

President-elect Barack Obama will pick Arne Duncan, a longtime friend who leads Chicago’s public-school system, as his education secretary, Democratic party sources said.

Mr. Obama’s choice of Mr. Duncan may signal the president-elect’s support for approaches to education policy pressed by advocates of deep structural change in elementary and secondary education. It is less clear what the selection might mean for higher education.

Mr. Duncan’s seven-year record as chief executive of Chicago Public Schools, a system with more than 408,000 students and an operating budget of more than $4.6-billion, has been marked by battles with teacher unions over salary structures and a record of increases in student test scores.

Mr. Duncan, however, has little policy-making experience at the federal level or in postsecondary education generally, leaving college officials still wondering what to expect from the Obama administration.

Mr. Duncan isn’t completely without higher-education experience. He serves on the Board of Overseers at Harvard University, where he earned a bachelor's degree in sociology. He also serves on the Visiting Committees for Harvard’s Graduate School of Education and the University of Chicago’s School of Social Service Administration, according to his Chicago-school-system biography.

Indications of Approach

Other clues about Mr. Duncan's approach and authority as education secretary may lie in his being a friend, neighbor, and basketball-playing partner of the incoming president, rather than one of the political rivals being named by Mr. Obama to some other Cabinet positions. Mr. Duncan cultivated a reputation in Chicago as a leader who is willing to make unpopular decisions and carry out controversial plans.

That could suggest that Mr. Duncan would be a forceful advocate of changes Mr. Obama decides to make on higher-education policy, regardless of what at times could be ardent opposition from lawmakers on Capitol Hill or from college lobbyists.

College leaders wouldn’t have expected Mr. Obama to choose a higher-education specialist, given the federal government’s need to keep its focus on promoting improvements at the elementary and secondary level, said Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education.

“He obviously has some knowledge of higher education, being on the Harvard Board of Overseers,” Mr. Hartle said of Mr. Duncan. The unique nature of Harvard hopefully won’t lead Mr. Duncan to “generalize too much from that experience” in formulating higher-education policy, Mr. Hartle said.

That aside, Mr. Duncan is “a terrific choice,” given his demonstrated ability to find middle ground between competing factions, Mr. Hartle said. And a personal friendship between a president and an education secretary is good for all involved in education, he said.

“One suspects that the Oval Office door, or at least the gym, will always be open to him,” Mr. Hartle said of Mr. Duncan.

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The bad news in higher ed is always the same: some person with great power showing they understand nothing about higher education funding.

At a conference sponsored by the Higher Education Government Relations Conference called "Making the Case," the chancellor of Ohio's Board of Regents said that colleges can do more with less today because the Wright Brothers "created their flying machine without government grants, a subsidized research laboratory, or even college degrees."

This is like saying that Mr and Mrs Smith conceived Johnny late one night with the help of Mood Candles and red wine, so candles and wine are all the parental support Johnny will ever need.

Forget the rest of the history of aviation, from the patent pools created by the federal government after World War I to the massive government research and procurement money ladeled on the industry annually for the past seventy years. Without government money, we'd still be making airplanes in bicycle shops.

The good news is that there were hints that higher ed leaders aren't going to take cuts lying down, as they often have in the past. UC President Mark Yudof

said it was time for students, faculty members, and administrators to “go over the heads of legislators” and do more to clearly explain to members of the public that “if we don’t do well, they won’t do well.”
Mr. Yudof also said that he and the other higher-education leaders nationally are looking for help from the federal government. They have drafted an economic-stimulus plan for higher education that they will pitch to Congressional leaders and President-elect Barack Obama.

They need to push hard on this, starting with the heads of their own Boards of Regents

The best summary of the very serious results of the report, Measuring Up 2008 is in Inside Higher Ed. More on this report soon:

The states performed best on preparation and completion, worst on affordability (49 F’s) and learning (all incompletes). Highlights are below:

Preparation: 6 A’s (Colorado, Connecticut, Maryland, Massachusetts, New Jersey, Vermont), 18 B’s, 21 C’s, 5 D’s, and no F’s. Thirty-four states showed improvement or stayed the same on the number of 18- to 24-year-olds with a high school credential, but the high school graduation rates of black and Hispanic students in many states lagged badly (82 percent of black young adults in Illinois had a high school credential compared to 95 percent of their white peers; 56 percent of Hispanic 18-24-year olds in North Carolina had a high school degree, compared to 92 percent of whites.)
Participation: 2 A’s (Arizona and Iowa), 8 B’s, 22 C’s, 15 D’s, and three F’s (Alaska, Louisiana, and Nevada). Forty-three states improved or stayed the same on the number of 18- to 24-year-olds enrolled in college, but a majority of states showed decreases in the number of 25- to 49-year-olds in college-level education or training.

On this and other measures, the gaps by racial and socioeconomic status are significant.

Affordability: 49 F’s and one C grade, for California. “The whole country has gone south on affordability,” said Callan. He called the picture a “national disaster” as tuition continues to outpace family income, increasing the burden of paying for college particularly for low- and middle-income families. The states are graded on families’ ability to pay (percentage of income needed to cover the students’ costs minus financial aid) at different types of institutions, the states’ emphasis on need-based aid (their own investment in such aid as a percentage of the federal investment in their states’ students) and lower-cost colleges, and students’ reliance on loans. Two states improved or stayed the same on the percentage of family income needed to pay for a four-year public college, while 48 states fell on that measure.
Completion: 11 A’s ( Iowa, Massachusetts, Minnesota, New Hampshire, North Dakota, Pennsylvania, Rhode Island, Vermont, Washington, Wisconsin, Wyoming), 20 B’s, 16 C’s, one D and two F’s (Alaska and Nevada). All but those two states improved in the number of college degree completions per 100 students, but the caveats here, in the eyes of the Measuring Up crew, are that the rates remain low, especially as measured against those in other countries. “The United States’ world leadership in college access has eroded steadily,” he wrote in an analysis of the report. “In college completion, which has never been a strength of American higher education, the U.S. ranks 15th among 29 countries compared.” While older Americans still fare well in international comparisons of degree holders, “the U.S. population has slipped to 10th in the percentage [of 25- to 34-year-olds] who have an associate degree or higher. This relative erosion of our national ‘educational capital’ reflects the lack of significant improvement in the rates of college participation and completion in recent years.”

Learning: Here’s what the report had to say on this front: “All states receive an ‘incomplete’ in learning because there are not sufficient data to allow meaningful state-by-state comparisons,” a point made in by Ewell in an Inside Higher Ed essay last month.

An undercurrent of the report is the significant gap that exists between the haves and the have-nots on college access and affordability. “It has always been an ethical and moral problem that we undereducate minorities and low-income students,” Callan said in an interview. “But for the first time, we are going to pay an economic price as well” if more of those Americans are not made ready to enter the work force and contribute to society.

But let me repeat the ticking time bomb, as expressed by the Chronicle story:

Other countries are surpassing the United States, whose educational strength lies in its older residents, on measures of participation and degree completion, the report says. The United States ranks second, behind Canada, in the proportion of its adults ages 35 to 64 who hold at least an associate degree, according to the report. . . . But among adults ages 25 to 34, the United States ranks 10th.

10th is based on averages. If you look at the high-growth sectors of the younger US population, particularly Latinos, we are doing even worse.

Higher ed should get to the top of the infrastructure priority list, basically right now.

Harvard's endowment losses joined other endowment losses in the New York Times today. The endowment lost 22% of its value in the last 4 months, or $8 billion. It could be quite a bit more than that, the article suggests. The breakdown of holdings is incomplete, and it would be amazing if only 11 percent of the endowment has been in private equity, as the article states. Their huge past returns (up 21.3% in 2007) meant huge risk even if they didn't really know the risk at the time.

This is the end of an era, since Harvard's endless endowment growth had a revolutionary impact on the funding of all of higher education. Reports constantly marveled at its enormous size. This was in turn taken to be a tribute to the triumph of private investment, of privatization, of private equity, of philanthropy and wealth as the root of enlightenment itself as embodied in a great research university like Harvard University. Articles were filled with tributes to size majesty:

If you took just the gain in Harvard’s endowment in 2007 ($5.7 billion), that sum alone would be larger than the endowments of all but 15 universities.

Or

Harvard’s gains alone are more than the combined endowments of every historically black college in the country (and plenty of other categories of college, too)

Or

If you added the endowments of Johns Hopkins University, Cornell University, Duke University and the University of Chicago, you wouldn’t equal the total of either Harvard or Yale University, which is in second at $22.5 billion.

There was obviously a gigantic disporportion and educational injustice in the comparison with historically black colleges. And yet in the general discourse intellectual greatness coincided with financial greatness: there was no contradiction, there was only mutual support. Bigger was better, bigger was institutional goal one, staff, resources, talent, thinking within the university poured increasingly into the project of raising endlessly more money.

The huge stupidity of American (non) thinking about the meaning of life was incarnated in Harvard's endowment.

The sickening corollary was that all over the country public university leaders quietly consented to decades of state funding cuts in the arithmetically absurd belief that private money like endowments could make up the lost public funds. The private money they that could coerce they did coerce from thee - tuition and fees, going up year after year at 2-3 x inflation, except for years when some big politicians were looking for votes.

Last week's prize in the Thinking Nothing Has Changed department went to Chancellor Bob Birgeneau at UC Berkeley, who wants to charge higher tuition at Berkeley than at other UC campuses - that is, charge a status premium. See the same idea for Buffalo coming from its current President, aka UC Santa Cruz's former Executive Vice Chancellor John Simpson.

Simpson does have a good point about the way New York subsidizes private and church schools while cutting its publics. But the obvious solution is to shift public money towards the publics, not raise tuition at the publics. These guys have been making the same mistake for decades: increasing tuition decreases public support for publics. If Simpson raises Buffalo tuition, it means more cover for the state to subsidize privates. Um, duh.

These guys really bug me. This is the generation that was created by the boom in low-cost / no-cost higher ed and that is now, in its upper reaches, abandoning the institutions that made them. Leaving aside the strategic folly, the sheer disloyalty of it amazes me.

Organizations keep trying to rebuild the public base (another very good report is here). These folks have done the actual math. They are undermined by the shortsighted heads of their own university members.

the Era of Harvard's Endowment correlates with, and, as we continue the research, will be shown to have caused, 2 things:

- unaffordability going up up up (see the story about the report in which 49 of 50 states flunk)
- educational attainment going down down down

As Patrick Callan put it, "Already, we’re one of the few countries where 25- to 34-year-olds are less educated than older workers.”

Big endowments and big tuition have hurt higher education. It's time for something completely different.