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Former Chancellors of Research Universities Warn Their Future Is in Peril

New Report Urges Dramatic Changes to Save a System That’s “Breaking Down”

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The system for funding American flagship public universities is “gradually breaking down,” said Robert J. Birgeneau, a former chancellor of the University of California, Berkeley, and the co-chair of a two-year project to examine the role of public research universities and recommend changes to help them stay competitive.

With states’ investment in public universities having sharply declined since 2000, Birgeneau and Mary Sue Coleman, a former chancellor of the University of Michigan, urged the adoption of new funding methods that rely less on tuition revenue and more on a combination of private, federal and state resources.

The recommendations came Thursday, in the last of five reports by the group that Birgeneau and Coleman co-chaired, called The Lincoln Project: Excellence and Access in Public Higher Education, an initiative of the American Academy of Arts and Sciences. The name is a nod to President Abraham Lincoln, who signed the 1862 Morrill Act allocating federal land to the states to be used for public higher education.

The report recommended that states reverse the deep cuts to their higher education budgets and, together with the federal government, create tax incentives for businesses to encourage donations to scholarships. It urged businesses to be more vocal about the importance of fiscally healthy public colleges, and to contribute money to their scholarships and endowments. It had a longer list of proposals for public research universities, including making public yearly financial targets, increasing alliances with other colleges to forge reductions in expenses, and simplifying the process for businesses to use important university research.

Public research universities are often the top public colleges in their states and enroll students who are typically in the upper half of their high school graduating classes. Nearly four million students attend public research universities. Since 2000, their state appropriations per full-time student have dropped from 32 percent to 18 percent.

“As a result of these cuts, public research universities have been forced to make difficult choices about institutional priorities,” the report stated. “They have reduced expenses and raised tuition. For the moment, they have maintained their educational and research missions. But this trend is not sustainable.”

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The perception that public universities spend at will on administrators and new facilities doesn’t help, Birgeneau said, adding “one of the things that we suffer from in higher education is not doing our communication as well as we need to.”

The Lincoln report cites several cost-saving tactics that have gone largely unnoticed. For example, the University System of Maryland’s Effectiveness and Efficiency Initiative saved $356 million between 2003 and 2013, which helped keep tuition flat from 2006 to 2009. Also, the Committee on Institutional Cooperation helps 15 midwestern universities share expenses and cost-saving ideas. Those schools netted $20 million in savings on library, Internet and other expenses in 2014, a CIC report says.

Birgeneau said that while he was chancellor at Berkeley from 2004 to 2013, the economic downturn forced the university to make significant changes. “We reduced Cal from 11 to seven layers of management and eliminated a lot of middle-level administration positions,” he said. “There were no choices. We had to become more efficient.”

[On Wednesday, the current Berkeley chancellor, Nicholas B. Dirks,announced plans to find further efficiencies.]

State support of public higher education has recovered slightly in the past few years, although it still falls far short of prerecession figures. Increasingly, public universities compete for funds with other big-dollar state programs, such as Medicaid and prison systems.

To make up for state cuts, universities raised student fees and tuition bills. In 2013 the Delta Cost Project calculated that these accounted for nearly two-thirds of the educational expenses at public research universities, writing that “even when faced with significant revenue constraints, colleges and universities were unwilling or unable to make drastic spending cuts.”

Some public research universities have also looked elsewhere for revenue, the Lincoln Report says. The University of California, Los Angeles, the University of Michigan, the University of Texas at Austin and the University of Virginia each had $3 billion-plus donation campaigns, according to the report. But because donations – and some federal funds – are often tied to certain departments or disciplines, schools typically can’t use those resources to address shortages elsewhere in their budgets. The report encourages philanthropists and the federal government to give universities more freedom in how to spend the donations.

Large companies are another revenue source, although the report argues they should do more, because healthy universities can produce more highly qualified employees and can advance useful research. According to the business analytics company PitchBook, U.S. public research universities comprise 20 of the world’s top 50 schools in producing graduates who receive venture capital investment.

The report also gives examples of collaboration between the universities and industry. The Georgia Research Alliance, a joint effort among several of the state’s universities and its employment development agency, has converted $600 million in state support into more than $3 billion in private and federal investment, 150 companies, and more than 6,000 high-paying jobs since 1990. In 2014, the defense contractor Raytheon partnered with the University of Massachusetts Lowell faculty and students on research projects.

Additional ideas for business support of higher education in the report included offering universities compensation similar to the finder fees that employers offer to job recruiters, and urging businesses and philanthropists to develop endowments to which other wealthy institutions could donate. The proceeds could be distributed to state higher education agencies or to universities directly.

But while these ideas are transformative, implementing them is a tall order.

“I talked to the head of one major corporation about this in some detail,” said Birgeneau. “He said he would love to do this, but if in his next quarterly report he reported to stockholders that one percent of their profits went to support universities, he said he’d be looking for a job.”

This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Read more about higher education.