So You Say You're Broke? An Analysis of Educational Costs and Revenues

Kevin Kiley:

Hearing that the University of California system had $2.5 billion in "unrestricted net assets" on hand in 2010 could make anyone question the necessity of the 32 percent tuition hike that has been proposed, or the 11 to 26 furlough days that more than 100,000 employees were forced to take in 2009.

Similar skepticism has been expressed in two other states in the last month, as different groups suggested that state universities were, in their view, hoarding funds while simultaneously demanding more money from students, denying pay increases to faculty and staff members, and fighting against cuts in state funding. In Michigan it was a faculty union in the middle of contract negotiations. In Ohio it was the state senate's finance committee chairman.

The problem with the claim, administrators say, is that unrestricted net assets are not just piles of cash lying around to be used for whatever they want. The accounting term, which they admit is confusing, refers to any money that doesn't have some specific restriction placed on it by a donor. That includes a whole host of different funds, most of which have been designated for some purpose, they say.

Using U.S. Department of Education data, this report compares estimates of colleges and universities educational revenues and costs and finds that many colleges and universities are paid more to provide an education than they spend providing one to their students. These findings challenge the conventional wisdom which holds that the education for virtually all students is heavily subsidized. Although total university spending is often in excess of the tuition charges students pay, in reality only a portion of many institutions' budgets go directly to educational spending, meaning that many schools spend large amounts on things totally unrelated to educating students. Ultimately, many students are left paying the bill through tuition bills which are greater than the costs of their education.

Posted by Jim Zellmer at May 28, 2011 1:51 AM
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