AHA Roundtable

What Obama Should Have Said: An Alternate Text

Terrence J. McDonald, July 2013

At the University of Michigan, the nearly unremitting decline in the share of the state appropriation in the university’s general fund revenue began in the late 1980s. Already by the early 1990s tuition was providing more revenue than the state appropriation and today the share of the appropriation is 17 percent. In 1960 it was 80 percent. In current dollars the 2102 state appropriation was at the level of 1991; in real dollars, 1964.

In Michigan, state higher education expenditure is “discretionary,” not constitutionally mandated. No one sat down and said, “Let’s defund the universities,” but as other expenses grew—K–12 schools, which are mandated; Medicaid; prisons; etc.—and as state leaders noticed that universities could increase their tuitions, the slow privatization of a great publicly based system of higher education took hold.

A story like this could be told in almost every state in the nation. It was unfortunate, therefore, that President Obama and his advisors could not resist the political red meat of “cost control” as the starting point for his important address on higher education last week. As the qualifications later in the speech made clear, they understand that the claim that “tuition has gone up 250 percent over the past three decades” (repeated five times in the speech) needs to be carefully decomposed.

Here is a new introduction for the president’s speech:

Here’s a surprising fact: for the last decade, during one of the worst economic times in our history, the average price that students have paid for public higher education in America has remained stable. Yes, you’ve seen the headlines about tuitions going up, but that’s the “sticker” price. Public universities in America have worked hard to cut costs and increase financial aid so what students actually pay, the “net” price, has remained the same. Federal aid to higher education has helped with this in a variety of ways and this is an example of the great state and federal partnership stretching back to the Northwest Ordinance and the Morrill Act that has made America’s public universities the best in the world.

But the situation is not sustainable. The great public universities in America have been built and maintained by the states. Pressure on state budgets over the last 30 years has led to shrinking state subsidies for universities and more costs passed on to parents and students. This has been one of the major factors in the rise of sticker prices. Another has been the multiple missions we expect our universities to perform: we want them to be engines of social mobility, hothouses of new ideas in all fields, contributors to economic development, launching pads for cutting-edge science and, in many cases, providers of top quality health care. Any one of these missions is expensive; all together they are phenomenally so. 

So let’s cut through the political rhetoric, stop the blame game and ask the question: What can state and federal governments, philanthropists, universities, students, and parents do together to insure that American public universities continue their multiple missions and remain the best in the world? The key word here is “together.” This must be a strategic partnership among allies who have been working hard but without a strategic plan. We must develop shared goals, agree on measures of success, ensure that each of the partners is contributing a fair share of resources and ideas, but also recognize that no one partner has all the answers. One of the great public institutions in American history is at stake; we can all do no less.

—Terrence J. McDonald is Arthur F. Thurnau Professor, professor of history, and dean of the College of Literature, Science, and the Arts, University of Michigan.