By Shirley Svorny
The state reimbursement rates for MediCal are so low that few doctors will take MediCal patients. The current state budget shortfall portends even greater cuts in MediCal reimbursement rates.
Yet the California State University system, including its faculty, students and administration, continues to pressure the state for huge subsidies. Rallies on CSU campuses across the state suggest an attitude of entitlement to state funds. If higher education is as important as proponents of state subsidies claim, students should be willing to borrow to finance their education.
The cost of a year of college education in the CSU system is about $13,500. This is what out-of-state or foreign students pay. In-state undergraduates pay only a small portion of this cost. According to the College Board, the contribution of in-state students in California (about $3,300) is substantially less than at state colleges in Arizona (students pay $4,508), New Mexico ($4,452), Colorado ($5,418), Utah ($4,199), Oregon ($5,911) and Washington ($6,866).
Thinking about the proper role of government, it hardly seems necessary or appropriate to subsidize moderate- to high-income households (or individuals who will end up in that category). If it is not worth the $13,500 a year it costs to attend the university, perhaps students should rethink their options. It's true that, on average, there is a substantial return to a college education, but researchers have found that the average return masks the fact that the return is great to some and inconsequential to many.
We know that's true because few CSU students seem in a hurry to graduate. According to Office of Institutional Research at Cal State Northridge, 39 percent of students who entered as freshmen in 2001 graduated in six years or less (a sizable group drop out, the rest remain enrolled at CSUN or another institution). Of students who transfer in with two or more years of college, about 70 percent graduate within an additional four years.
Almost all of the benefits of a college education accrue to the individual graduate. The claim that the state benefits from subsidies to college education ignores the fact that graduates are more likely to make postcollege location decisions based on opportunities for employment than state subsidies to education. The claim of benefits to the state is certainly not true with respect to students for whom college offers minimal long-run financial benefits.
Here is how I would change the funding scheme for CSU: First, lock the fees that any particular student pays during a four-year period (two years for transfer students). That way, students and their families can plan.
Second, limit the state's financial subsidy to any particular student to 120-130 units of undergraduate education, the amount needed to earn an undergraduate degree. Students who plan poorly would have to pay the full cost for additional classes (about $450 a unit).
Third, increase fees for new students each year (perhaps by the rate of inflation plus 3 percent) so that, over time, students take on a greater share of the cost of their education. With annual increases in fees, students would not face huge fee increases whenever there is a state budget shortfall.
In 2006-07, students graduated from Cal State Northridge with an average of 138 units (including up to 70 transfer units from community colleges). If this holds for the system as a whole, and if each student were to graduate with 130 units, the savings to the state of California would be $255 million a year. Compare these savings with the $213.8 million budget reduction proposed by the governor for academic year 2008-09 that has the CSU system up in arms.
Colorado's College Opportunity Fund offers an example for Californians interested in limiting subsidies. Colorado allows each student 145 lifetime units across all Colorado schools. California could limit it to 130 units. As long as students know up front that there is a limit on how much the state will pay for their undergraduate education, this seems a fair and fiscally responsible system.
Couple this with annual fee increases of inflation plus 3 percent and financial aid (loans) for low-income students who have limited ability to borrow on their own, and you have a rational and sustainable model for funding undergraduate education in California.