As the United States gets down to war with Iraq, the superpower’s dominance of the world stage has never seemed more certain.
Back at home, though, signs of weakness abound. Stock markets are tumbling, petrol prices are rising, and the budget deficit grows larger every day. There is talk of another recession.
The sickness of the US economy is beginning to affect the country’s much-admired university system. Apart from a few very wealthy private institutions, the whole higher education sector is in pain. And regardless of what happens in Iraq, it’s going to get much worse.
For the nation’s private universities, the problem begins on Wall Street. It’s not a big problem for Harvard, which holds billions of dollars in reserve, but the effect on smaller colleges can be catastrophic.
‘Private institutions like ours derive a lot of their money from donations,†explains Martin Terry, vice president for business affairs at the University of Findlay in Ohio. ‘And if stocks are not doing well, then people simply don’t donate as much.â€
Experts predict that several small private colleges will go to the wall this year. Among them, sadly, are likely to be some southern black institutions that have been around since the 1880s. A few of these are already on their last legs: Morris Brown College in Atlanta has lost its accreditation and is $ 27-million in debt.
But the financial problems of America’s private colleges pale next to those of state institutions. These are facing giant-sized deficits and potentially lethal cuts.
State universities and community colleges receive a good chunk of their income from tax revenues. Until recently, there was plenty of the stuff around. But the collapse of the financial markets means that capital gains revenues have dried up, and the slowdown in consumer spending has eaten into the takings from sales taxes. The states are beginning to starve.
Collectively, the 50 state governments are facing a deficit of at least -billion. A shortfall of this size hasn’t been seen since the second world war. And unlike the federal government, the states have to balance their books every year. Almost all are slashing higher education spending. California, which is projecting a record deficit of $ 35-billion, has taken the unprecedented step of cutting research funding and access programmes in the middle of the year.
Predictably, many universities are trying to squeeze cash out of students. Tuition fees at state institutions went up by an average of 10% last autumn, and bigger increases are now in the pipeline. The State University of New York is pondering a 40% rise in fees. The University of California upped tuition fees for its 180 000 students over the Christmas holidays – the first time for two decades. It is now talking about a further 25% increase.
Students are furious. Stephen Klass, chair of the University of California Student Association, complains that the fee increases will cause many people to drop out. Hispanic students, already thinly represented in America’s universities, are thought to be vulnerable.
It’s not entirely the states’ fault that they are in this situation. They were advised – wrongly, it turns out – that the economy would bounce back in 2002. And they haven’t been helped by the White House, which has burdened them with new and costly administrative duties.
But it’s the states’ mess to sort out, and the universities will have to be part of the solution. Travis Reindl, director of state policy analysis at the American Association of State Colleges and Universities, predicts that state universities will make cuts on three levels, each more unpalatable than the last.
The first level of cuts is ‘invisibleâ€, in the sense that students don’t notice them. Administrative offices are merged; travel budgets are cut. Many state universities have already taken these steps and are moving on to the second level, in which hiring freezes are enacted, repairs postponed, and research projects scaled back.
Then there’s the third level, where universities abolish departments and lay off tenured faculty. Such drastic measures have mostly been avoided so far, but Reindl believes they can’t be held off for much longer. ‘Once you’re three or four years into a fiscal reduction, there’s no more low-hanging fruit to be picked,†he says. – Guardian Newspapers Limited 2003