Every choice has consequences, but sometimes, the choosers aren’t the ones who feel the pinch. A couple of days ago I wrote about a community college in Elgin, IL. The school plans to build an $80M manufacturing education facility. According to the school’s outgoing president, the majority of the bill will land on community college students. The good news, however, is that the local taxpayers won’t need to chip in, even though the taxpayers are the primary beneficiaries of the new facility.
Community colleges derive their funds from three major sources: the local community, the state, and the students. When community college trustees decide to avoid the local community and cannot get sufficient funding for their Barbie Dream House from the state, that leaves only one group standing: the students. Technically, I suppose there could be a fourth option, which is to conduct a capital campaign and seek funds from corporate sponsors and charitable givers. I’m not sure why one would go that route when it is easier, faster, less expensive, and more successful to ask the taxpayers.
The Elgin Community College students’ new $55M debt package for the manufacturing center actually stacks neatly on top of the $128M they already owe. I say that this is student debt because the Trustees have chosen to authorize four different bond issues over the last decade for which they also didn’t seek taxpayer approval. According to the school’s latest financial filings, the face value of the remaining bond debt on those issues is $128M. In other words, that doesn’t include the interest on the debts that the students will need to pony up twice a year. I don’t know how much interest $183M can accumulate every 6 months, but I’m sure the students will figure out some way to pay for it.
Students shouldn’t be the go-to funder for community college construction
There are only a few explanations for why today’s community college trustees refuse to go to the taxpayers in their district to seek additional capital support. None of them are good. One is that they’re craven, sniveling cowards who can’t gather the courage to ask the voters for money. Another is that they are truly ignorant of the financial consequences of their decision to do an end run around the taxpayers, or they somehow think they’re doing the taxpayers a favor by shoving tens of millions of dollars in additional costs onto people who can least afford to pay them. The third possibility is that they’re deliberately attempting to raise the cost of higher education so much that they put it out of reach for income-limited students.
Eventually – and with $183M in face-value debt – Elgin Community College might be at this point right now, students will stop attending because they cannot afford their share of the debt. The debt is something around $500-$600 per year per student, assuming that ECC’s enrollment stays constant for the next 30 years. If a part time student takes four years to finish a degree, that raises the cost of that student’s education by $2,000-$2,400 – regardless of whether that student ever takes a single class in that facility or not. And the longer the student takes to finish a program, the higher the penalty becomes for them.
Relying on students for capital funding isn’t sustainable
And for what? To avoid asking district taxpayers to raise their taxes by $0.20 per $1,000 of valuation each year? The average home in Elgin is worth about $200,000, so at worst, if the taxable value of a home there is its actual market value, the tax increase on the average home would be less than $40 per year. It’s somehow easier for these cowards to tell students they’ll need to pay an additional $2,400 over the course of a degree program for buildings they might never use than it is to ask the local taxpayers for $40 per year?
Really?
What this situation requires is a little sunshine. If Trustees insist upon passing the cost of their debts along to students, the institution should be required to disclose how much debt the school has, how much per credit hour goes toward paying off debt, and why the debt was authorized.
It’s kind of a “truth-in-lending” disclosure for students. If the trustees are going to obligate students to pay for the trustees’ decades-long promises to investors, then students should know how much these loans are increasing their cost of attendance. Students should understand how much of their own student loan debt and interest is a result of their alma mater’s debts.
When the school has to disclose that the Trustees’ borrowing habits account for $40-$50 per credit hour of students’ attendance costs, how many students would enroll?
This is how the WCC Trustees fund capital projects. So, what do you call someone who went to WCC?
Photo Credit: Farrukh, via Flickr
