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Mastering the Art of Educational Disinvestment

The tuition Washtenaw Community College students pay does not resemble WCC’s costs to educate them. WCC receives money from a variety of other sources, including property tax revenues and state funding. These other sources of revenue act like financial aid – reducing the student’s out-of-pocket costs to attend. State funding does the same thing.

Student, in effect, pay the “last-dollar” costs of their educations. The community and the state collectively invest in students, knowing that they will ultimately become productive, tax-paying citizens.

In the past few decades, there has been a move to shift more of the institution’s cost of educating a student to the student himself. In some ways, that sounds right. Why shouldn’t a student pay his or her own way through college? On the other hand, the more costs the institution shifts to the students, the fewer the number of students who can afford to attend. By shifting costs to the students, the community and the state disinvest in students. Fewer students become productive, tax-paying citizens. Or they work for a much lower wage, which means they pay less in taxes, if anything at all.

So, how does an institution facilitate state and local disinvestment in students? Each year, the institution creates an annual budget for the following year. At its most basic level, the budget compares income revenues with planned or projected expenses. If planned expenses exceed projected revenues, the institution needs to make some changes. It can either reduce its expenses or increase its revenues.

Educational disinvestment takes many forms

Raising tuition is, by far, the easiest way for a community college to increase revenues. In most cases, the Board of Trustees simply approves an increase in the per-credit cost of attendance. Applying fees is another way to raise revenues. If tuition and fees rise more than other sources of institutional funding do, the institution has facilitated educational disinvestment.

Not cutting or controlling costs is another form of disinvestment. By increasing the institution’s expenses (or by failing to keep them low), the administration reduces the funding available to educate students. It must spend a larger percentage of every dollar on expenses. The net result is that less money is available to educate students. Again, the institution has reduced the state and local investment in students.

Borrowing money against the institution’s General Fund is another form of disinvestment in students. Loans encumber a specific amount of funding for debt service. That debt service becomes more important than any other expense, including instruction. Institutions will sacrifice instruction and new programming to pay their debts. Debt service facilitates state and local disinvestment in students.

All of this disinvestment has an impact, but the impact is especially bad if it results in a tuition increase. Each dollar the Board of Trustees raises tuition makes the school slightly more unaffordable to the people it was built to serve. Each time the Board raises tuition, it authorizes the institution’s disinvestment in someone.

Disinvestment’s long-term cost

To be clear, the Board has both the responsibility and the authority to protect the community’s investment in students. When they choose to raise tuition instead of cutting expenses, they negate the community’s investment in students. When the Board chooses to borrow money against the General Fund instead of seeking taxpayer approval, they disinvest in students. And when they authorize an unending parade of executive hires, they deliberately raise the institution’s expenses and guarantee educational disinvestment.

The larger-scale impact of this disinvestment is felt by the community. Fewer students complete an education. That means fewer students maximize their earnings. When they don’t earn as much as they could, they pay less in taxes. Fewer of them buy houses. More of them rely on public assistance. Some of them leave the area altogether.

Worse than this, the simple act of raising tuition increases inequality in the community by making education selectively unaffordable. When the Board of Trustees decides that $10 per credit hour is not going to “break the bank,” it denies the lowest-wage earners the opportunity to escape poverty. That frustrates investment at the community and state levels and runs counter to community and state-level goals.

So what does a community do when the biggest disinvestors in education are those we elected to manage our investment in education?

Photo Credit: Scott Maxwell , via Flickr