How to Help Public Colleges by Helping Our Private Ones

The wild card in the California higher education deck is the forgotten independent sector, which grants one-third of all four-year degrees in the state. The last major state report on higher education acknowledged: “In the past . . . planning for postsecondary education in California has overwhelmingly focused on public postsecondary education. . . . Because of the potential ability for (private) institutions to contribute in easing the demand for public educational services, their potential capacity available to California residents must be considered in statewide planning.” We think the time for consideration is now.

PRIVATE OPENINGS: The state’s higher education budget provides no funds directly to private institutions such as Stanford, the University of Southern California, Loyola-Marymount, etc. A private school gains only indirectly when it enrolls a student who has a state tuition grant. Such grants, called Cal Grants, are awarded on a basis of both merit and need and, according to the state master plan for higher education, were to have been funded up to an eventual ceiling of $7,200 for students at independent schools. In 1976, a $2,650 maximum Cal Grant equaled about 75% of the typical private college tuition, while in 1991 $5,250, the ceiling since 1989, covered only 40% of the tuition. Result? More and more Cal Grant recipients have taken their grants to one of the state schools, where a Cal Grant pays 100% of fees. The independents, which once received half of all Cal Grants, now get only about 26%. Their classrooms have empty seats, while state-run classrooms are packed.

The amount of unused private-sector capacity is significant. USC’s undergraduate enrollment is down 20% from 1989 levels, leaving hundreds of seats empty. The California Postsecondary Education Commission estimates (and University of California officials concur) that private schools with admission standards broadly comparable to those of the UC and California State University systems can accommodate 6,000 students above current enrollment. Conversely, should lost enrollment bring about the failure of some of the private schools, their thousands of abandoned students could swamp the public sector. Such failures now threaten.

Will thousands of incoming freshmen, otherwise hot prospects for UC and Cal State, really choose private schools instead? The numbers seem to speak for themselves: In the recent past, when Cal Grants covered more of private school tuition, thousands made just that choice.

Six thousand additional students shoe-horned into the public sector would cost the state $112 million, given the huge, non-need-based subsidy that UC or Cal State students receive above Cal Grants. According to the state Postsecondary Education Commission, the same 6,000 students in the private sector on Cal Grants with the $7,200 ceiling would cost the state only $55 million, a $57-million savings.

PUBLIC CROWDING: The cost of establishing the higher Cal Grant ceiling, with the new amount going only to new recipients and the number of recipients growing by 6,620 (about 20%), is estimated at $25 million for the first year and $178 million over a six-year phase-in period. Only $9.7 million in the first year and $45 million over the six years would actually go to independent schools. The remainder would continue to go to the lower-priced public sector. This $45 million alone, however, could divert the mentioned 6,000 students from the public to the private sector, thus both relieving pressure in the public sector and preserving viability in the private.

Unwisely, in our view, Gov. Pete Wilson’s education budget includes no new money for Cal Grants. Instead, it adds $34.4 million for increased, largely undergraduate enrollment at UC and Cal State. In itself, this increase over last year’s combined UC-Cal State budget of $4.8 billion is depressingly tiny. On the other hand, both of those systems are at capacity. In a year of massive cutbacks in other programs, the state should call on UC and Cal State to stress quality, temporarily, over increased access.

LOGICAL SOLUTION: Meanwhile, the way for the state to buy undergraduate education on the cheap--with no capital outlay at all and at a fraction of public-sector operating cost--lies clear. It is to raise the Cal Grant budget to the level called for in the master plan and thus reverse the recent flood of students from the private to the public sector. If this means a temporary retreat from the master plan’s mandate for UC and Cal State to provide a place for every eligible student, the trade-off strikes us as prudent; for if any significant chunk of the private sector goes under, the consequences for the public sector will be catastrophic. Twelve and a half percent of high school seniors are UC-eligible, but only 7.5% actually apply. In 1980, only 5.2% did. If the UC market share is forced further upward by private-sector default, UC will be worse off, and the taxpayers much worse off. The same, analogously, goes for Cal State.

Gov. Wilson’s UC budget hike is not intended entirely for undergraduates, however. It is also intended to fund a modest, 1,200-student hike in graduate enrollment and as such represents the first new money for UC graduate education since 1987. A shortage of professors is due to hit in the late ‘90s, just when enrollment is expected to boom. Because in graduate education no one in the private sector can step in for UC, which produces fully 10% of America’s Ph.D.’s, this act of preservation is just as important as the one that would preserve the viability of the private sector.

In the time frame of an eventual Master Plan II, expansion of all segments of public higher education will occur or, at serious long-term cost to its prosperity, the state will admit failure and aim lower. In the time frame of 1992-93, however, full funding for Cal Grant and modest expansion of UC graduate education strike us as the right educational triage.